Category Archives: Entrepreneurship

What social entrepreneurs can learn from Medium’s business model shift

Medium is trying to change its business model.

I. For-Profit Business Models 

In the for-profit market, you can only sustainably solve problems when the solutions generate profits.

Overarching visions (bringing the world’s information to everyone) are brought a little bit closer through sound business models (ad driven internet searches).

The profit requirement is useful in that it ensures entrepreneurs add value to other people in their quests for solving great problems.

But the profit requirement is also limiting: an entrepreneur might complain that the quickest path to solving the far problem is not solving one close problem after another.

II. Non-Profit Business Models 

In the non-profit market, philanthropy often determines what problem an entrepreneur can try to solve.

This is useful in that philanthropy is not bound by solving profit generating problems.

But the philanthropic model is also limiting: when there is no need to add value to other people, bad endeavors can go on for far too long, thereby reducing the amount of funds available to good endeavors.

 

III. The Risk of Each Model 

In the for-profit market, entrepreneurs need to guard against the fact that solving close problem after close problem may get them off the path from solving their far problem.

This is what Medium is struggling with.

In the non-profit market, entrepreneurs need to guard against the fact that trying to solve the far problem will lead them down a path where lack of accountability prevents them from adding any value to others (despite expending large amounts of resources).

A lot of social entrepreneurs and philanthropists struggle with this. They set out to solve far problems without understanding the near problems.

Most often, solving near problems better trains you to solve the far problem.

Social entrepreneurs should keep their eyes on the far problem, but they ignore near problems at their own peril.

Medium had the discipline to recognize that they were solving close problems that were not leading them to solve their far problem.

Social entrepreneurs need to have the same discipline in the opposite direction: they need to recognize when an elaborate plan to solve a far problem is a wasteful quest that ignores real people’s acute needs.

Future rivalries: the platform vs. the chief academic officer

I’ve previously written on the rivalry between chief academic officers (who manage instruction) and chief schools officers (who manage the portfolio of schools).

In traditional districts, I deeply believe that the chief academic officer should report to the chief schools officer, who should report to the superintendent.

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In the future, I think the chief academic risks losing another battle: this time with instructional platforms.

In his book the End of Average, Tyler Cowen makes the argument that those professional who form symbiotic relationships with technology will thrive. He cites the example of hybrid human-computer chess teams.

It is likely that the same will be true in education.

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My hunch is that in the future most schools and districts will be on educational platforms that combine human curation of content and algorithms to develop an instructional program from afar.

In this sense, many school operators will outsource many of the traditional roles of a chief academic officer to a platform.

Once these platforms get good enough – chief academic officers who claim “I know our children better” and demand full control of the academic program – will lose. The platform will be better.

The platform , on average, will be better than a chief academic officer.

But this does not mean that a platform, on average, will be better than a platform + a smart / humble / hardworking chief academic officer.

As with chess, the hybrid may very well win.

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How might a chief academic officer add value in this new role?

She could:

  1. Monitor relationships and place students and teachers into groups in a manner that would be difficult for a platform to intuit.
  2. Utilize local community resources to augment instruction.
  3. Provide intensive academic support to students who are not progressing as expected.
  4. Provide non-academic interventions to struggling students.
  5. Run experiments to test whether new platforms might be better to adopt.

In other words, the chief academic officer might morph into a chief learning officer that focuses on psychology, relationships, anomolies, and technology acquisition.

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Timing is one of the hardest part about incorporating technology into daily operations.

Move too fast and you have a mess.

Move too slow and you’ve harmed those you’re serving.

Over the past year, I’ve tried to spend time learning about the major platforms out there.

It feels like it’s getting close.

Not yet sure who is Friendster and who is Facebook.

The race is on, as they say.

Why don’t we have a 10x better school?

10x

There’s a Silicon Valley mantra that your need new product needs to be 10x better than the incumbent in order for you to displace them and have a shot at a market monopoly.

Uber, for example, is a 10x product. It vastly better than taxis on so many dimensions (price, easy of use, consistency, service, etc.).

In education, it’s unclear to me that we’ve built a schools that are 10x better than the median traditional district school.

We have built schools that are 10x better than failing urban schools, and it’s no surprise that this is where the entrepreneurial sector has seen so much success.

Why haven’t we built a bunch of schools that are 10x better than an average school?

I’m not sure, but some reflections below.

1. Educators are trying to be 10x at the wrong thing 

Great tech companies usually initially succeed because their technology – not their operations – is 10x better than their competitors.

Often times, technology can be built by smallish group of highly talented people and then scaled at little marginal effort or cost.

So far, school operators have not been able to replicate this model of technological advancement and scale. This way of thinking is not in their DNA. They are still trying to squeeze 10x improvements out of areas such as program design, human resources, and operations.

It will be interesting to see if Summit, Alt School, Khan Academy and others can utilize a 100x tech backbone to scale an instructional program that, over time, evolves into a 10x better school.

2. There’s no profit motive

Perhaps. With companies like Bridge Academies, we are seeing interesting attempts at 10x breakthroughs in the for-profit international market.

On the other hand, there’s plenty of for-profit K12 and university operators in this country, and they aren’t launching 10x better schools that are displacing government and non-profit operators.

3. The education sector is over-regulated

Perhaps regulation is stifling innovation.

I’m sure that this is at least partially true, but the most in demand private schools are not very innovative. Rather, they tend to be highly selective, academically rigorous, extracurricular rich, and culturally strong.

And they also cost $30,000 a year.

So, to date, the private side of things is not exactly delivering a bunch of breakthrough innovations.

Maybe an expansion of education savings accounts will unleash some 10x products, but it’s hard to say this with great confidence.

4. The industry culture is risk averse 

Education may be attracting and retaining professionals who are generally not willing to take the risks needed to achieve 10x products.

In some sense, given that children are involved, this culture is to some extent warranted.

But maybe it needs to be loosened up a bit.

5. This is (mostly) as good as it gets

Not everything can be made better. The fork I ate my dinner with today is not that much better than a fork from the 1970s.

Perhaps this is about as good as schooling gets.

My guess? 

I don’t yet have opinions that are strong enough to warrant action beyond the work I’m already doing.

But I want to keep thinking about this.

Elon Musk vs. the Environmentalists – Some Lessons

musk

One of the core values of our team is: we face and solve brutal realities.

Another on of our values is: we ask why. 

Recently, at a team retreat, we read and discussed Musk’s biography. It is well worth reading.

In reading the book – and reflecting on our values – I was struck by how Musk differs from many environmentalists.

Facing the Brutal Reality of Climate Change

Both Musk and the environmentalists care about the future of humanity.

Both Musk and environmentalists believe that humanity is at-risk due to human induced climate change.

In this sense: each has faced the brutal reality of the dangers of climate change.

Because of this brutal reality, environmentalists are doing important policy and conservation work.

Because of this brutal reality, Musk launched Solar City and Tesla.

Facing the Brutal Reality of Single Planetary Existence 

But Musk, in considering the threat of environmental disaster, did not stop asking “why” when it comes to the risk of human extinction.

Rather than being satisfied with the (true) morality tale of humans destroying the planet; he kept on asking why humans were so exposed to environmental collapse on Earth in the first place.

The answer is of course obvious: Earth is the only planet we live on. As it goes, so do we.

In terms of human continuity, it is very fragile to only live on one planet. Ultimately, even natural environmental shifts (volcano explosion, meteor, etc.) can destroy humanity. Musk realized this was a major problem that many environmentalists did not seem to be working on.

Yes, slowing human made climate change is important, but it is only a stop-gap solution. Leaving Earth is the more sustainable solution.

Completing this logic pathway (of asking why humanity is truly at risk) only requires the knowledge one might pick up in high school.

Ultimately, getting  down to the root solutions is as much as about mental habits as it is about knowledge: facing brutal realities, continuing to ask “why,” having the boldness of vision to put forth a solution – this is what is needed…. as well as having the operational capacity to make a good attempt to realize this vision.

It is rare that all these qualities sit in one person. This is what makes Musk so special.

And it is why we have Space X.

Our Work 

I’d like to think that some of our greatest successes in New Orleans were because we faced brutal realities and we asked “why” a lot.

Some of our biggest failures likely came from a failure to live out these two values.

When it comes to facing brutal realities, I find the following to be of use: soberly analyzing existing performance data; reading the criticisms of thoughtful people in other tribes; taking the time to quantitatively role forward your expected impact over 10-20 years.

When it comes to asking “why,” I find the following to be useful: sitting on potential solutions before acting on them; setting-up a culture and process for rigorous team questioning; having a board of directors that constantly questions your work; reading broadly to build-up false solution pattern recognition.

 

An Idea for a Pay for Success / Social Impact Bond

pay

I’ve been in New Orleans all week, which is always great.

On Friday, I got some time with Stephen Rosenthal, my former board chair at NSNO.

He made the following argument:

  1. We spend ~150K to educate a child K-12.
  2. Then we send many of these children to college, where many of them drop out.
  3. Groups like KIPP to College and POSSE are demonstrating that spending another ~5K per kid can significantly increase the odds that a student will graduate from college.
  4. Right now, there isn’t much public funding for these programs.

He makes a good point: would you rather spend ~150K and have a ~10% chance of getting a student in poverty through college or ~155K and have a ~30% chance of getting a student in poverty through college?

While the numbers may not be exact, you get the idea.

So why not create a pay for success / social impact bond program?

Many cities and states have “promise” scholarships that guarantee free or near free in-state tuition for qualifying students.

Why not allocate a portion of these funds to providers who are only paid for each marginal student in their program who graduates college above baseline completion rates?

A provider could then raise debt based on an investor’s belief that the provider will help students through college.

If the provider works, it receives money from the government, the debt is paid off, and college completion rates go up.

If the provider fails, tax payers lose nothing.

 

Who Will Education Platforms Liberate?

platform

I’ve been living in San Francisco for a few months now.

During this time I’ve had the chance to talk with some great educational entrepreneurs who are making different platform bets.

A platform is a plug-and-play business model that allows multiple participants (producers and consumers… who may be one in the same) to connect, interact, and create value.

Education platforms are varied.

Some are content neutral: numerous programs can plug in and users can access in any way they want.

Some deliver more standardized content: fully baked competency curriculum, tasks, and assessments – with  more heavy curation of user generated content.

What I’m most curious about is this: who will education platforms liberate?

Platforms could liberate students. They might be better able escape mediocre curriculum, weak assessments, and substandard teachers and get better instruction, psychological development, and career guidance through platforms.

Platforms could liberate teachers. They might be able to better escape terrible district mandates and simply close their doors, plug into the platform with their students, and execute a far better instructional model.

Platforms could liberate school founders. The barriers to entrepreneurship could significantly decrease if a new school is plugged into a platform that does a lot of the heavy lifting in terms of technological, operational, and academic infrastructure.

Of course, platforms could end up liberating them all: students, teachers, and school founders could equally benefit.

On the other hand, platforms might also not deliver and simply liberate investor of their money and educators of their patience.

The Net New Charter School Growth Rate Just Plummeted to a Decade Low

I just spent some time with charter school growth numbers from 2005 to 2015.

I think these numbers are right but please do correct me if they are wrong.

I tried to look at a few data sources, and not all of them agreed, though they were roughly aligned so I feel like the below is a reasonable estimate of new school creation by year.

Screen Shot 2016-02-07 at 9.55.54 AM

From 2005 to 2013, net new charter schools great at a healthy ~7% a year.

And then in the past two years the net new school growth rate has plummeted, as has the absolute number of new schools created.

In 2015, there were only 132 net new school created compared to 310 in 2006. 

Some Reflections

1. If, like me, you believe that high-quality charter schools will be a major source of increased educational opportunity, this data is probably not good news.

2. There is some chance that this most recent data is reflecting a Great Cleanup. In this last year, 272 charter schools were closed, which drove down the net new school creation (404 schools opened, which is lower than one would hope, but not catastrophically low by historical standards).

3. Interestingly enough, charter school enrollment still grew by 9% this year. This could be the result of charter schools that opened in previous years growing to full enrollment (this often takes 3-4 years); new schools are being opened in ways that aren’t showing up in the data (a middle school adds a high school under the same charter); or virtual schools distorting the school to enrollment ratio (by enrolling thousands of students). Or something else I’m not thinking of.

4. All these closures + lower rates of new school creation could just mean that the sector is taking quality much more seriously. Perhaps the result of the Great Cleanup will be that the next CREDO national study will show better results.

5. My biggest worry is that this data reflects a slowdown in entrepreneurship; that some combination of politics, regulation, national mood, vision, etc. is causing great educators to not take the jump to open an awesome school.

6. I feel a little lonely in digging through this data! When labor data is announced, you have 10,000 economists and pundits analyzing the numbers. I feel like there’s about five of us in the country who do this with charter data. Of course, I don’t expect the amount of analysis to rival national economic data, but it feels like that for a sector of this maturity there is not a ton of data analysis. And, yes, I’m now in a position to fund others to increase this capacity, so if this doesn’t get fixed I’ll share some of the blame.

Let me know if any of this data is off and I will correct it.