Education Funding

Startups Target Teachers as ‘Consumerization’ of Education Emerges

By Jason Tomassini — December 04, 2012 8 min read
Jeremy Friedman, 25, the chief executive officer of Schoology, in his Manhattan office, created a product that he markets directly to teachers.

Before the 2011-12 school year, a high school journalism student interviewed Keith Pomeroy about the technology tools used in the Olentangy school district, the Ohio system where Mr. Pomeroy is director of technology.

When the student asked about Schoology, the online course-management system many teachers in the district were using, Mr. Pomeroy found himself at a loss for an answer.

“I looked around my office and asked, ‘Does anyone know what Schoology is?’” Mr. Pomeroy recalled.

Without his knowledge, 500 students and their teachers within one Olentangy high school were using Schoology, which is available online for free. The district was reviewing learning-management systems at the time, and after three weeks of researching the products and talking to teachers, Mr. Pomeroy reached out to the New York City-based company. By then, he said, 1,500 students across the district were using the product in their classrooms. After evaluating some demos, the district bought an annual subscription.

“I’ve never seen this trajectory on any other tool,” said Mr. Pomeroy, who has held his position at the 17,500-student Olentangy district for 12 years.

Schools throughout the country are experiencing the same teacher-driven adoption of technology tools. Internet-savvy teachers are increasingly finding tools to use in the classroom on their own, and lower business-startup costs mean the tools are more readily available.

In response, many education companies are changing how they market and sell their products. Nationwide sales teams and central-office visits are giving way to word-of-mouth and sophisticated business-intelligence software as preferred methods for pushing adoption. Companies offer free products to teachers with the goal of influencing districtwide purchases of more-robust versions—known as the “freemium” pricing model.

But in most sectors of the existing K-12 system—with its various stakeholders, budgetary restrictions, and procurement regulations— the so-called “consumerization” of education faces many barriers, experts say, making it difficult to find the right balance between selling directly to teachers and addressing the needs of central-office administrators.

“Investors get excited,” said Adam J. Newman, a founding and managing partner of Education Growth Advisors, an education business-advisory firm in Stamford, Conn. “But I think anyone is lying to themselves if they say they know which consumer models will become successful.”

‘What’s Radically Changed’

Schoology’s Manhattan offices are what most people would expect for a startup company. On one afternoon before the start of the school year, young adults in jeans and T-shirts sat in front of their computers in ergonomic chairs and sported headphones, or they gathered around one another’s desks talking shop. There is a pool table, a Ms. Pacman machine, and a flat-screen TV with a real-time map of the product’s usership across the country.

The Schoology website itself is familiarly modern. The home page for users looks similar to that of Facebook, with a left navigation bar and a center column of notifications. In its early days, the company interviewed hundreds of teachers, who said they wanted a learning-management system that felt like something they actually use in their everyday lives.

“Typically, students have had to find things; with social networks, it comes to you,” said Jeremy Friedman, the 25-year-old co-founder and chief executive officer of Schoology, which began in 2009 as a class project at Washington University in St. Louis.

For free, teachers can sign up and use Schoology to upload class rosters, manage attendance, keep grades, create calendars, chat with students, and deliver assessments. Schoology can offer those features for free because hosting and developing a website is cheap, and the company believes teachers shouldn’t have to pay for classroom tools, Mr. Friedman said.

Schoology also offers an enterprise product for schools and districts, with a per-student fee that varies depending on the customer. That version allows for greater central-management ability, advanced student-data analytics, and professional-development resources.

That’s what makes Schoology a “freemium” model, and Mr. Friedman acknowledges it’s the latter part of its business that allows it to succeed and grow.

“We’re an enterprise company that has consumer functionality,” he said.

That approach is beginning to take off in education, but it’s more common in other sectors. For instance, Apple’s iPhone overtook Research in Motion’s BlackBerry as the corporate phone of choice because the former gained so much traction in personal use.

“What’s radically changed is the amazing, incredible realization that people who work in enterprise—or schools—are people, consumers,” said Geoff Ralston, a former executive at Yahoo and a partner at Imagine K-12, a Palo Alto, Calif., startup accelerator that invests in and advises education technology companies. “If you get consumers, you have pull,” he said.

Newer companies, such as Edmodo—a San Mateo, Calif.-based competitor to Schoology that doesn’t charge its users—have embraced that concept. Recently, Edmodo launched an app store, similar to the iTunes store, and it is rolling out a feature that allows districts to funnel dollars into teachers’ accounts so they can buy software applications independently.

Kickboard, a data-analytics and gradebook startup based in New Orleans, is working backward through this trend. It began only as a paid product for district or school adoption, but last week launched “starter accounts” that teachers can use for free.

The most prominent example of the consumer-focused model in education is Blackboard, the learning-management-system giant. The company began in 1997 as a way for teachers to set up class websites for free, and now it is a billion-dollar corporation used in thousands of schools and universities.

“We always very explicitly believed what we were trying to do with teachers is gain mind share,” said Matthew Pittinsky, a co-founder of Washington-based Blackboard and now the CEO of Parchment, a transcript-management company based in Scottsdale, Ariz. “The revenue model was always to sell software to schools and universities.”

Mr. Pittinsky left Blackboard in 2008 on good terms, but he said his one regret was shifting too much of the company’s sales efforts toward institutional customers rather than continuing to focus on teachers.

For much of its existence, Schoology didn’t even employ a dedicated sales team. The company interviewed and even hired teachers to develop a product they would like and could spread by word-of-mouth. As the company grew—it is used by nearly 2 million students, employs 38 people, and has raised $10 million in venture capital funding, Mr. Friedman said—it did hire a sales team of seven people. The company competes with larger, more established businesses by using what is known as intelligence software.

‘Gives Them Ownership’

The software presents a map showing which users are teachers, which are administrators, and whether they are using the site for free. Districts with many free users are targeted for sales calls, during which a company representative tells an often-surprised technology director how many teachers are using Schoology and why an enterprise version might help. The information also influences what conferences the company attends and where it should direct its support and marketing resources.

Of course, the emerging sales models used by Schoology and other companies are made possible by educators who actively look for technology.

Little information is available on how teachers spend money on instructional technology, but a recent survey of 1,200 teachers by AdoptAClassroom.org showed that 28 percent of respondents spent their own money on products that include technology. Biannual surveys from the National School Supplies and Equipment Association showed that while out-of-pocket teacher spending dropped from an average of $552 per teacher in 2006 to $356 in 2010, the percentage of that money spent on instructional materials, including technology, grew from 44 percent to 52 percent.

Myla Lee, a 42-year-old teacher at Deerfield Elementary School in Novi, Mich., follows education technology blogs, attends conferences, and uses online forums like Edutopia to learn about instructional technology. She began using a free tool called PB Works to manage content for her classes, after a teacher friend used it during a workshop presentation.

Ms. Lee recommended the product to other teachers, who approved of its simplicity and wiki-type format, and then persuaded the principal to buy an annual subscription, which the school used for four years.

As a math teacher at Northwest Classen High School in Oklahoma City, Telannia Norfar used student-response clickers on the recommendation of a friend and encouraged the 43,000-student district to put the manufacturer on its preferred-vendor list.

But Ms. Norfar, 36, acknowledged that districts aren’t always ready for this kind of bottom-up change. When she pushed her school to buy a new brand of graphing calculator for math teachers, there was enough initial interest to make a purchase. However, the devices ended up gathering dust on the shelves because the teachers not familiar with the technology didn’t want to risk incorporating new technology during tests, she said.

For such products to succeed, companies and schools must provide training, said Ms. Norfar, who is now an instructional technology coach for the district. And the training must be practical. To achieve that, teachers must influence decisions on which products are used in the classroom, Ms. Norfar said.

“If we found success by doing this, how can we do it again and purchase it?” she said. “Sometimes it’s technology and sometimes it’s not, but it came from [teachers] and that gives them ownership. “

Editorial Interns Mike Bock and Nikhita Venugopal and Research and Development Associate Amy Wickner contributed to this article.

Coverage of entrepreneurship and innovation in education and school design is supported in part by a grant from the Carnegie Corporation of New York.
A version of this article appeared in the December 05, 2012 edition of Education Week as Startups Target Teachers to Fuel ‘Consumerization’

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