Tale of Two Startups in the K-12 Marketplace
Michele McKeone and Adam Geller were teachers with ideas they thought would improve the education process. Ms. McKeone wanted to boost the digital skills of students with autism; Mr. Geller wanted to use video to facilitate observations and feedback for teachers.
But bringing a concept from the classroom or the office, as Ms. McKeone and Mr. Geller are doing, and building it into a business for the K-12 market, is hard. The process can be uncomfortable, intimidating, and messy. And it's costly, both in time and money.
More and more entrepreneurs are taking the plunge, though, particularly in the educational technology arena. Those with ideas for new businesses are coming from the classroom, like Ms. McKeone, a special educator in Philadelphia who has launched Autism Expressed, and Mr. Geller, a former St. Louis science teacher, who created San Francisco-based Edthena.
They're also coming from the technology and business worlds, like Mr. Geller's partner David Weldon, who has been involved in previous startups, worked at Intel, and has an M.B.A. from Cornell University.
To take a closer look at this growing phenomenon, Education Week partnered with the University of Pennsylvania Graduate School of Education to identify and follow these two ed-tech startups for a year as they strive to find funding, navigate contracts and legal issues, and determine what it takes to construct and grow a viable business from the ground up.
This article is the first installment in an occasional series about the ongoing successes and setbacks of two educational startups. The series—which will appear throughout the 2013-14 school year—will also feature interactive and multimedia elements, such as online chats, video stories, LinkedIn discussions, and a blog, which launched earlier this week.
Visit The Startup Blog: Ed Tech From the Ground Up, to follow startup entrepreneurs Adam Geller and Michele McKeone as they chart their efforts to launch and build ed-tech companies. Read their first posts:
The series aims to illuminate such undertakings not just for aspiring entrepreneurs, but also for school leaders and other educators who are targeted by companies pitching an often head-spinning array of new products and services.
"Some of the digital stars are aligning in ed tech," said Richard Culatta, the director of the U.S. Department of Education's office of education technology, who helps guide ed-tech entrepreneurs through an online startup course. "There's a huge amount of energy and excitement in this area."
That alignment includes more affordable devices allowing students and teachers greater access to technology, the abundance of open educational content, and a new interest on the part of funders, particularly venture capital firms, in investing in the K-12 technology sector.
The Contest Circuit
In 2005, $13 million in venture and growth capital was invested in the K-12 market; by 2012, such investment stood at $305 million, according to GSV Advisors, a Chicago-based education investment bank that tracks the precollegiate market.
That attention to the K-12 ed-tech sector has sparked creation of a rising number of education-related business incubators—such as Imagine K12 and one created by the Software and Information Industry Association—that seek to nurture and mentor new startups. While some of those initiatives have been around for years, others are new. In June, for example, education publisher Pearson announced the inaugural class of six startups for its Catalyst incubator.
Entrepreneurs like Ms. McKeone and Mr. Geller also find themselves on the startup-contest circuit. An increasing number of conferences hold such events. The International Society for Technology in Education, for instance, featured an ed-tech "pitchfest" with a $15,000-prize-package award earlier this year.
Ms. McKeone's Autism Expressed won $20,000 this year through the University of Pennsylvania's Education Business Plan Competition, sponsored by the Milken Family Foundation; Mr. Geller's Edthena was a finalist in the same competition in 2011.
Through numerous rounds, the judges of the University of Pennsylvania competition—including business experts and entrepreneurs themselves—examine whether the startups are scalable and can significantly affect student achievement.
But what does it take to succeed?
Ms. McKeone, 31, is slowly figuring that out. As a college undergraduate at Philadelphia's University of the Arts, she studied digital media, but upon graduation went into education. Six years ago, she landed a job as a high school special education teacher in Philadelphia, teaching life skills to students who had autism as part of the curriculum.
Then, she said, "I applied my own education to my classroom."
She began teaching her students how to turn on and log in to a computer, follow email etiquette, and fill out forms online. Later, as they got more confident, she taught them video and photo editing. She ultimately led them to a regional computer-fair competition, open to all students, and her team placed third.
"My students were still perceived as low-functioning and [were] pigeonholed," Ms. McKeone said. "There was no thoughtful approach for their possibilities."
The district began asking Ms. McKeone to do professional-development sessions with other teachers and to present at conferences. Teachers and parents of students with autism wanted to use her curriculum.
At first, Ms. McKeone envisioned a paper curriculum, but then decided she needed to be explicit in how to present the material. So she developed video lessons on digital skills, with short projects and interactive lessons, designed specifically for the learning needs of children with autism. And she realized she might be able to sell the curriculum.
Currently, school districts, behavioral-health clinics, and others are using her product and paying a per-student fee. But Ms. McKeone knew nothing about starting a business. So in the winter of 2010, on the advice of her former mentor at the University of the Arts in Philadelphia, she attended a six-week workshop at the university's Corzo Center for the Creative Economy, an incubator that features mentoring and free access to lawyers, accountants, and marketers. At the end of the program, she won $10,000.
Though she felt comfortable with the education side of Autism Expressed, she felt decidedly uncomfortable with the business aspect of the company.
"I didn't have a clue," she said. "The hardest part is knowing you don't know what you don't know."
After winning the grant, Ms. McKeone was invited to participate in a Philadelphia venture capital incubator, GoodCompany Ventures, where she was introduced to "pitching and investor terminology." She realized how much she was lacking in that area.
"I had the language for education and digital media, but no language for business," she said. "It was very intimidating to be in a program with M.B.A. types or those who had already been involved in startups."
Ms. McKeone said it gave her startling insight into what her students experience.
"They are navigating a world in which they don't necessarily know the rules and the language, and they experience failure and it creates insecurity," she said.
The incubator didn't provide financial support, but at the end of the program, participants could pitch to investor circles.
"I knew I wasn't ready," Ms. McKeone said. So she took a step back and worked on developing a beta version of her product.
In the winter of 2012-13, she launched pilot projects with 15 organizations throughout the Northeast. She spent that time getting advice from mentors who had already been through the startup process. And after winning the University of Pennsylvania grant in May, Ms. McKeone feels ready to move forward, she said.
Barbara "Bobbi" Kurshan, the executive director of academic innovation and a senior fellow at the University of Pennsylvania education school, said she could see a change in Ms. McKeone through the rounds of the contest, which began in October of last year.
"When I saw her back in October, she was not polished at all," said Ms. Kurshan. "When she got up there in May, it was like a whole different company."
Like Ms. McKeone, Mr. Geller has a background in education. He was a Teach For America science teacher in St. Louis, then worked on national strategy for the TFA organization. He had always had an interest in technology, and had developed a website called Teach For Us to provide a space for TFA teachers to gather virtually and blog about their experiences.
But he also felt there had to be a better way for teachers to improve their practice.
"When I was a first-year science teacher, I never had anyone with science expertise come and give me feedback," Mr. Geller said. "How we train teachers at scale, everywhere, is something that needs to be solved, not something that it would be nice if we solved."
In 2011, he landed an education venture fellowship through the Ewing Marion Kauffman Foundation, based in Kansas City, Mo. The four-month fellowship came with a stipend and support for learning how to launch a startup. Shortly after that, Mr. Geller developed a prototype of his product for Edthena.
The idea behind it is that teachers can videotape their practice, and Edthena's platform allows that video to be easily loaded onto a site where mentors can provide targeted professional development.
Live observations can be time-consuming, resource-draining, and often doesn't provide subject-specific feedback, Mr. Geller said. So Edthena's product allows educators to take large video files of their teaching and upload them quickly, agnostic of the technology used to shoot the videos. The tool provides a way for mentors to give embedded comments and feedback.
Right from the start, even though the product was still a prototype, education colleges and others were willing to pay for it.
Kara Suzuka, an assistant research scientist at the University of Michigan school of education in Ann Arbor, said she met Mr. Geller at a conference and the idea behind Edthena resonated with her. "Even without seeing it, it seemed to be meeting a need we had been struggling with for years," she said. "Even if it wasn't perfect, it was still way better than what we had been doing."
Ms. Suzuka said students in the Michigan program videotape their practice, upload it through Edthena, provide embedded written context when appropriate, and ask questions or make comments about themselves, while professors do the same.
Because the aspiring teachers are working in real schools with young students, privacy issues arose, but Edthena addressed those concerns by making the platform secure, Ms. Suzuka said.
Working with a startup has also allowed the Michigan program to make suggestions for the features Edthena offers, said Tim Boerst, a professor of clinical practice and co-chair of the elementary teacher education program at the University of Michigan's education school.
"We can influence how the product is actually developed," he said.
Though good with technology, Mr. Geller does not have a formal technology background. So last year he moved to San Francisco, a hotbed of the startup world, to look for a co-founder for Edthena.
"I was really trying to find that person who could take us from the prototype level to the full product," he said.
Mr. Geller linked up with Mr. Weldon, a process they both compare to a courtship and then a marriage. They had to get to know each other, see if they worked well together, and then determine if they had the same goals.
Mr. Weldon said he was looking for an entrepreneur with specialized knowledge doing something that had some "social good." But he said Mr. Geller, who was the sole person behind Edthena until partnering with Mr. Weldon, had to make adjustments.
"It was a big challenge for both of us to learn to trust each other's judgment," Mr. Weldon said.
And the evolution of the company continues to hit bumps in the road. The two partners had technical challenges dealing with large video files and a tight time frame for developing an enhanced product. And money has been scarce.
Convincing Customers to Pay
Mr. Geller sunk some of his own money into the venture, and friends and family contributed, too. He had paying customers from the start, which helped him scrape by, he said.
"You probably don't need half a million dollars in seed capital to test the waters," he said. "You really need to be scrappy."
More recently, Edthena took an undisclosed investment from a single outside investor, known in the startup world as an angel investor, to start scaling up and looking for new customers.
Such challenges are common for those with startup experience in other fields, said Steve Blank, a longtime technology entrepreneur and the author of The Startup Owners Manual.
He said the ed-tech sector is becoming hot for venture capitalists—he recently spoke to a group of 80 CEOs from the NewSchools Venture Fund, a nonprofit venture capital firm—but they often don't understand the unique challenges of the K-12 market.
Pairing technology and education "is a new fad for venture capitalists and entrepreneurs who want to do good and well at the same time," Mr. Blank said. "But they're discovering it's not as simple as adoption happens when you have a good product."
Issues not normally found in the regular technology marketplace are long product-adoption cycles, the role of teachers' unions, and the demands of state standards, Mr. Blank said.
What's more, Mr. Culatta of the federal Education Department said, companies are not always selling directly to their customers when they are working with schools. Creating a product for students means adults have to like it to choose or buy it.
To make matters more complicated, classroom teachers often don't have purchasing power or must contend with procurement offices or technology directors for permission to use certain ed-tech products.
Though both Autism Expressed, which recently won "startup of the year" at Philadelphia's Geek Awards, and Edthena are finding their footing in the startup world, they have a long way to go. And success is not always based on whether the startup idea is a useful one, Ms. Kurshan of the University of Pennsylvania said.
"Whether they can scale will be about how truly savvy they are about their business, and not about their product," she said of the fledgling companies. "Both are missing pieces of what they need to have access to, but, hopefully, they'll figure out how to get that."
Vol. 33, Issue 08, Pages 1,14-15
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