Executive Skills & Strategy

Ed. Startups Navigate the Hard Market Realities for Sustaining Success

By Michelle R. Davis — April 01, 2014 8 min read
Autism Expressed Founder Michele McKeone conducts a training session last month at a school for students and adults with disabilities in Haddonfield, N.J.

Launching an ed-tech startup is a daunting task, full of fears of failure, worries about money, and questions about the K-12 marketplace. The bigger challenge, though, can be sustaining the business once it gets off the ground.

That is when most education startups take a nosedive, whether because of poor planning, unfriendly market forces, simple bad luck, or other factors, according to market observers.

Adam Geller and Michele McKeone are working their way through that phase right now, as they strive to move forward and develop their separate ed-tech businesses. They’re brainstorming about how to get the dollars they need to continue improving their products and services, identifying financial models to sustain their businesses, and hiring new employees.

All the while, they sometimes wonder how their startups will affect their own career paths.

Mr. Geller, a former science teacher and co-founder of Edthena, a secure video-sharing platform designed to provide feedback for teachers and teachers-in-training, and Ms. McKeone, a special education teacher who created a digital literacy program for students with autism, called Autism Expressed, are navigating the educational technology startup arena and learning important lessons along the way.

Education Week, in partnership with the University of Pennsylvania Graduate School of Education, is following these two startups to provide a closer look at the ed-tech industry, which has become a popular investment area and has spawned numerous products that educators use or are considering for use in their schools and classrooms. Both startups participated in the university’s education business plan competition, which provides financial awards and mentoring.

Edthena co-founder Adam Geller demonstrates his product to educators during the American Association of Colleges for Teacher Education annual meeting in Indianapolis last month.

“Entrepreneurs get to the spot where they have a vision, some passion, a product or service, and they get a handful of customers,” said Joseph Olchefske, the board president of the Education Industry Association, a trade group based in Vienna, Va. “They’ve proven they have a reason to exist. But then how do they build the business and make it a thriving concern?”

Though the buzz and hype around the ed-tech marketplace continues to grow, the reality is that most ed-tech startups are likely to fail, said Barbara “Bobbi” Kurshan, the executive director of academic innovation and a senior fellow at the University of Pennsylvania Graduate School of Education. Only one in 10 startups that go through incubators or accelerators, which provide support for these new companies, will be able to raise additional rounds of funding, she said, adding that those statistics generally carry over to the ed-tech startup world.

Edthena, based in San Francisco, and Autism Expressed, based in Philadelphia, have both reached the point where they have to make a leap to scale up, she said.

They need employees to make sales pitches and oversee contracts, they must develop a business infrastructure, and Ms. McKeone and Mr. Geller need to focus on making the product—not their own journey—the story, Ms. Kurshan said.

Some factors are in their favor: Both companies have paying customers, and both have had either investors or the possibility of outside funding. But it remains to be seen whether the companies can take their products forward in the K-12 marketplace, which has a distinctive set of hurdles.

The Sales Challenge

Mr. Geller is trying to overcome those barriers. After launching Edthena in 2011, he’s aiming to grow the company. In October, he hired his first salesperson—paid through a salary, commission, and stock options—to pursue new customers.

The sales strategy relies, in part, on Internet-based demonstrations, Mr. Geller said.

“We’re trying to sell the fact that we can make video feedback and observation online easy, so it’s a natural fit to have someone try it out on their computer,” he said.

Mr. Geller has also made inroads with the Washington-based American Association of Colleges for Teacher Education, which accepted Edthena as an affiliate member, since the company provides a service to full members.

Startup Stories

This article is the second 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.

Read The Startup Blog on edweek.org, co-authored by the founders of the two startups featured in this article.

It’s a designation that gives Edthena entree to the 876 schools and colleges of education that are members, said Christina A. Jackson, the director of public relations and fund development. “Our members get a lot of solicitation,” she said. “They are very wary about who they partner with.”

A new teacher-certification initiative is also emerging as a boon for Edthena, Mr. Geller said. The performance-based licensing assessment for new teachers, known as EdTPA, is being adopted by schools of education and state across the country.

The certification steers participants directly toward video for both feedback and to submit proof of their skills, Mr. Geller said.

Even so, it’s been a challenge to get the Edthena product into teacher programs, particularly in the middle of an academic year, he said.

But Mr. Geller discovered people were willing to experiment with small, pilot programs because the difficulties of incorporating video feedback effectively into teacher-training programs are significant.

“People are willing try things in the middle of the year if what you’re solving is one of their top-priority problems,” he said.

For ed-tech startups selling directly to school districts, timing can be even more tricky, said A.J. Juliani, a K-12 technology staff developer for the 4,400-student Wissahickon school district in Ambler, Pa., and a co-founder of Collabo, a lesson-plan-collaboration startup, launched in 2010 and shuttered 18 months later.

Collabo’s financial plan was to provide the product free to teachers and sell a premium version to districts. But Collabo never got enough traction to get to that stage, Mr. Juliani said.

“If you’re trying to sell to a school or a district, there are a lot of loopholes and hoops to jump through,” he said. There’s a long lead time on sales, he said, and the administrator making the purchase may not be tech-savvy or be the person who will use the product.

But Adam Frey, a co-founder of Wikispaces, a successful educationally oriented Web-hosting company established in 2005, said new ed-tech companies need to get creative in how they pursue K-12 customers.

“There are purchasing cycles and regulations and a decisionmaking process,” he said, “but we’ve found that you can skip by that if you’re clever and can find decisionmakers at a low enough level to operate quickly and effectively.”

Broadening the Brand

For Ms. McKeone of Autism Expressed, the difficulty of getting her program into traditional school districts also meant looking elsewhere for customers, including private schools and organizations, like Haddonfield, N.J.-based Bancroft, a nonprofit company that runs schools and programs for students and adults with cognitive disabilities.

Though Autism Expressed is being used in the Philadelphia school district where Ms. McKeone teaches students with autism, and contracts with a few other districts are “in the pipeline,” Ms. McKeone has made better inroads with more nimble organizations.

That’s led her to a big decision. Though her product is aimed at students with autism, Ms. McKeone said she realized that the curriculum could help many other students.

She’s now rebranding her product, creating a separate but connected company called Digitability. It will be the same curriculum, but without an autism tag narrowing the customer base.

Dennis Morgan, the executive director of education programs for Bancroft, said he encouraged Ms. McKeone to widen her scope so he could use the product with adult brain-injury clients or even senior citizens.

“In the world of special education, labeling is very dangerous,” he said. A brain-injury patient might resist using an autism product, Mr. Morgan said.

Special education is also an area, like many others, where proof of impact is critical. Ms. McKeone has applied for a small-business innovation research grant through the U.S. Department of Education that could provide up to $900,000 over two years to research the effectiveness of the Autism Expressed program.

If the grant is approved, Ms. McKeone will work with Michel L. Miller, an assistant professor of special education in the school of education at Philadelphia’s Drexel University. Ms. Miller said she’d track student progress and outcomes, as well as how the curriculum should be implemented.

With hard data that show positive outcomes, for example, Autism Expressed could get on the endorsed product list of the Washington-based Council of Administrators of Special Education, or CASE, said Ms. Miller, who serves on the organization’s research committee.

“If [Ms. McKeone] went to submit her product right now, she wouldn’t have the data” to be approved, Ms. Miller said. “A lot of supervisors use a CASE endorsement as one of the ways to determine what products they’re buying for their schools.”

Ms. McKeone is also debating whether to leave her full-time teaching job at some point to focus on the business.

“If your company is gaining traction, there’s a point where you take the leap, understanding that it’s a risk,” she said. “But I’m someone who loves what I do in the classroom.”

Failure Is a Bad Option

As for Mr. Geller, he has accepted funding from some angel investors and also recently garnered an undisclosed investment from the NewSchools Venture Fund, a nonprofit venture capital firm based in Oakland, Calif.

Kristina G. Ransick, a principal at NewSchools, said Edthena was an attractive investment because it “has an end-to-end solution” and paying customers. “That shows real demand, not just perceived demand,” she said.

Because Edthena has a customer base, the NewSchools funding wasn’t critical to the survival of the company, Mr. Geller said, but those dollars give “us the assurance that if we hit a bump in the road, we’re not going to be teetering toward a crisis.”

That risk is something ed-tech companies should keep in mind, said Mr. Frey, of Wikispaces, since “trying and failing in the world of education can have a bigger, more meaningful impact than in other industries.”

“If you get teachers using your product,” he said, “and you have to pull the rug out from under them, that’s a real problem.”

Coverage of entrepreneurship and innovation in education and school design is supported in part by a grant from the Carnegie Corporation of New York. Education Week retains sole editorial control over the content of this coverage.
A version of this article appeared in the April 02, 2014 edition of Education Week as Ed-Tech Startups Navigate the Hard Market Realities for Sustaining Success

Events

School & District Management Live Event Education Week Leadership Symposium
Education Week's Premier Leadership Event for K12 School & District Leaders.
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Law & Courts Webinar
The Future of Criminal Justice Reform: A Sphere Education Initiative Conversation
America’s criminal justice system is in crisis and calls for reform are dominating the national debate. Join Cato’s Sphere Education Initiative and Education Week for a webinar on criminal justice and policing featuring the nation’s
Content provided by Cato Institute
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Student Well-Being Webinar
Equity, Care and Connection: New SEL Tools and Practices to Support Students and Adults
As school districts plan to welcome students back into buildings for the upcoming school year, this is the perfect time to take a hard look at both our practices and our systems to build a
Content provided by Panorama Education

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Executive Skills & Strategy Opinion Stop Ignoring the Innovation That Happens in Traditional Public Schools
Three national educational funders explain a new program that is highlighting innovative practices in schools around the country.
Jenny Curtin, Britt Neuhaus & Saskia Levy Thompson
4 min read
BRIC ARCHIVE
Getty/Getty
Executive Skills & Strategy 'Genius Hour' Lets Kids Take Charge: Would Einstein Have Liked This?
Teachers open doors for students to fuel their curiosity and pursue passion projects, but educators warn against making it a free-for-all.
10 min read
Quin, Ezra, and Owen participate in genius hour in teacher Melisa Hayes’ 2nd grade class at Avery Elementary School in Hilliard, Ohio.
Quin, Ezra, and Owen participate in genius hour in teacher Melisa Hayes’ 2nd grade class at Avery Elementary School in Hilliard, Ohio.
Maddie McGarvey
Executive Skills & Strategy K12 Inc., Ga. Cyber Academy Contract Battle Brews
Students locked out of their school's computer systems. Educators unable to get access to some students' records. Parents receiving emails asking that they return their children's laptops.
6 min read
Executive Skills & Strategy Report Roundup Teaching
Forty percent of what elementary school teachers do on a typical workday could be automated by 2030, predicts a new report by the McKinsey Global Institute.
1 min read