Last year, I called “disrupting procurement” a trend to watch, noting the repeated argument that the reason why the ed-tech industry struggles – with making money, with making decent products – is that the market is so difficult to crack; the procurement process is so cumbersome.
When I wrote my year-end review of the “Top Ed-Tech Trends,” the “procurement problem” was subsumed under the broader category of “The Business of Ed-tech.” Here’s an excerpt from that article:
… Is procurement really why we have terrible ed-tech?
For the last couple of years – at the very least since the resurgence in venture-back ed-tech startups – there’s been a steady drumbeat of complaints that the procurement process at both the K–12 and college levels is broken. It’s inefficient. It’s “dysfunctional.” I’ve heard the complaint from entrepreneurs. I’ve heard it from their investors, many of whom argue that the challenges of selling to schools is one of the things that makes education a difficult market to crack (and in turn ed-tech startups a poor investment).
There’s a lot that’s wrong with the process, no doubt. For starters, the hefty RFP requirements almost by design tilt purchasing decisions towards big companies and incumbent players. The folks who make the decisions about what to buy typically aren’t the people who are using the products in the classroom.
There’s not a lot of transparency in the procurement process; nor is it easy to find out afterwards which products schools bought or use – although that’s not something you hear companies moan about, funnily enough. You’re just supposed to trust them when they brag they’re used in 90% of schools. (USC professor Morgan Polikoff’s research on textbook adoption, for example, has made this painfully clear. He’s sent FOIA requests to school districts, and in many cases they have been unwilling or unable to share their textbook data. And when they do, the data is often a mess.)
In the last few years, lots of consulting firms and organizations have offered their suggested solutions for fixing (what they see as) procurement problems. Last year Edsurge launched a “concierge” service in which it said it would help schools identify its tech needs and then buy things based on those needs (and then take a cut of the contracts, of course), and it continues to position itself as a liaison between startups and schools.
This spring, Harold O. Levy, executive director of the Jack Kent Cooke Foundation, launched the Technology for Education Consortium in order to offer “price transparency” around procurement. The organization’s first target was Apple, which it found charged different districts different prices for identical iPads. (Apple disputed the organization’s assertions.)
This fall, the EducationSuperHighway released a price comparison tool so that districts could see neighbors’ broadband costs and ideally leverage that information to get a better deal.
(All of these organizations – Edsurge, EducationSuperHighway, the Technology for Education Consortium – are funded by the Gates Foundation. And the beat goes on.)
Some schools made efforts to tackle procurements problems too. UNC, for example, launched a Yelp-like review site for ed-tech tools, where, according to The Chronicle of Higher Education, “it is asking professors to review and comment on how useful various digital services were in their classrooms.”
But by and large, procurement issues are a problem identified by companies that companies decide they will “fix” in turn: “Try Before You Buy,” Edsurge reported in June. “Clever’s ‘Co-Pilot’ Aims to Help Schools Pilot and Purchase.” Indeed, an increasingly popular service offered by ed-tech companies and ed-tech investors is “research” into how to buy ed-tech and into which ed-tech products are best, which “work” (whatever that means).
(These companies almost all share the same investors too. And the beat goes on.)
One of the ways in which ed-tech startups have found success in getting their products widely adopted is to sell to charter schools, particularly charter school chains. (Again, they often share the same investors.) Charter school chains, in turn, have started to license their products and franchise their models to others. As such, it’s difficult to separate “the business of education technology” from “the business of charter schools” – and why it’s difficult, as I noted in the previous article in this series, “the politics of education technology” from “the politics of education reform.”
That’s a lengthy excerpt, I realize, but it helps situate what’s happened in the first few months of 2017 with regard to this particular “trend.” I’ve already seen indications that more companies believe that “fixing procurement” – that is, selling procurement services to schools – is a big business opportunity.
- Edsurge announced in January that it was pivoting away from a focus on “journalism” to concentrate on its “Concierge” service.
- Noodle Companies announced in January it had raised $5 million in venture capital. The company helps schools with the procurement process.
- In February, Education Week reported that districts and schools will be able to make purchases online via Amazon through the US Communities cooperative.
- Education Week also reported in February that the State Educational Technology Directors Association had released a new website that offered guidelines on purchasing digital materials.
- In February, The Hechinger Report profiled LEAP Innovations, a Chicago-based non-profit, alongside the LearnLaunch startup accelerator program: “How some schools decide what education technology to buy.”
- In February, Education Dive profiled the Technology for Education Consortium, an organization whose members share data about what they’ve paid for ed-tech products, and its partnership with LearnPlatform.
Who’s Funding “Procurement-as-a-Service” Companies and Organizations?
As several of these organizations have received venture capital funding (and one must assume are promoting other venture-backed companies to the schools they work with), it’s good to know who’s investing in this idea:
Venture capital investment totals $5.66 million from 1776, Allen & Company, Catamount Ventures, Gillian Munson, Kelly Pope, David Bulfer, Joe Gleberman, George Anders, Bud Colligan, Jennifer Fonstad, (Owl Ventures’ founder) Tory Patterson, Martha Ehmann Conte, Alan Louie, Tim Ranzetta, Dale Dougherty, GSV Capital, John Katzman, Learn Capital, Lynda Weinman (founder of Lynda.com), Matthew Hanson, Nancy Peretsman, NewSchools Venture Fund, Omidyar Network, Reach Capital, Steve Blank, Graham Holdings, and the Women’s Venture Capital Fund. It has also received over $5 million in grant funding from the Gates Foundation. Additional funding comes from the Joyce Foundation.
Noodle (as Noodle Markets, Noodle Partners, and Noodle Companies) has raised $12 million from SWaN & Legend Venture Partners, 500 Startups, New Market Venture Partners, Rethink Education, and Osage Venture Partners.
Noodle was founded by John Katzman, who also founded 2U and the Princeton Review. His investments include Tabtor, Tinkergarten, Springboard, StudySoup, Rockit Online, Edsurge, and panOpen.
LearnLaunch’s sponsors include Cengage Learning, Ingram Publisher Services, McGraw Hill Education, Curriculum Associations, First Republic, Pearson, Education First, Ernst & Young, Google, Houghton Mifflin Harvourt, Ligature Partners, Muzzy Lane, Microsoft, Needham, Nelson Mullins, Nutter, Rethink Education, Tyton Partners, and Vital Source.
LearnLaunch has raised $1.14 million in funding from LaunchCapital. It has invested in turn in Learning Games Studios, Skookii, Affordable College, Cashtivity, Menlo Learn, Bab’l Books, Teachers Connect, Authess, Quill, Education Modified, Pip Learning, Knowledge to Practice, NI-O Toys, uConnect, Skaffl, Book&Table, QuadWrangle, CampuScene, HSTRY, CueThink, Countdown, Educanon, Gradeable, LIsten Edition, Empow Studios, Cognii.
LEAP Innovations has received $6.5 million in grant funding from the Gates Foundation. According to the organization’s website, it has “secured more than $15.5 million in philanthropic funding” but there are no details where this came from other than the Gates Foundation money. On its board of directors are Michael Alter (President of The Alter Group), Tim Schwertfeger (Chairman Emeritus of Nuveen Investments), Ulrik Christensen (Executive Chairman of Area9 Group), Jeffrey Hammes (Chairman of Kirkland & Ellis LLP), David Levy (founder of Volition LLC), Phyllis Lockett (CEO of LEAP Innovations), Michael Moe (CEO of GSV Capital), James Oliff (CME Group Foundation), and Leo Melamed (CME Group).
Technology for Education Consortium
The organization lists the Gates Foundation as a funder on its website. The chair of the board is Harold Levy, the executive director of the Jack Kent Cooke Foundation and formerly the executive VP of Kaplan, an investor at Palm Ventures, and the chancellor of the New York City school system. The co-founder of TEC is Hal Friedlander, formerly the CIO of the NYCDOE.
US Communities Government Purchasing Alliance
Sponsors include the National Assocation of Counties, the Assocation of School Business Officials International, the US Conference of Mayors, the National Governors Association, and the National League of Cities. Supplies include Amazon, Apple, Oracle, Cisco, Dell, HP, and Symantec.
LearnPlatform does not disclose any of its finances on its website.
And What Do These Companies Recommend Schools Buy?
One of the problems with schools’ procurement processes is that they do lack transparency. As I monitor this “trend” this year, I’m not sure if it’s worth going through a FOIA process to see what sorts of contracts Edsurge, for example, has signed with districts (and gleaning in turn what kinds of recommendations it is making).
Even if we can’t know which particular brand of presentation software or learning management system schools are being urged to buy, we can still see the overarching push here based on the rest of ed-tech marketing: all the buzzwords like “personalization” and “mastery.” And I bet no one hires an an ed-tech company to tell them that, to be perfectly frank, they needn’t buy any tech at all.