October 3, 2023

Is Ed Tech Hype in Remission?

Author: Michael Feldstein
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Last Wednesday, there was an announcement about an investment in Civitas Learning that appeared to escape the notice of the educational press. Even EdSurge and Education Dive, which are both pretty good about covering the investment side of ed tech, seem to have missed it.

And at first blush, it’s easy to see why. The press release reads like a generic funding round that was successfully closed:

Civitas Learning today announced a significant growth investment from Francisco Partners, alongside current education and impact investors including Rethink Education, SJF Ventures, and Lumina Foundation. The Austin-based company pioneered the use of advanced data science, design thinking, and machine learning to inform initiatives and improve student outcomes.

That’s the meat. The rest of the press release is the usual anodyne quotes from the CEO and investor, fun facts about the company, and so on. Blah blah blah.

But there’s more here than meets the eye. First, Francisco Partners is not a venture capital fund. It’s a private equity firm. If Civitas were experiencing enough success to raise a growth round of funding, then a PE firm with no obvious experience in higher education would not be a conventional candidate for a funder. And we at e-Literate have seen no evidence that Civitas is, in fact, growing in a way that would justify a next round of investment. We haven’t heard about any new Civitas customers in quite a while (though we’ve heard about some customer losses and some grumbling among their current customer base). A quick perusal of their press pages doesn’t show any announcements of big customer wins either. It does reveal an announcement of a partnership with recruiting and retention company Ruffalo Noel Levitz, which is interesting and which I’ll return to later in this post.

Put all this together, and the deal looks more like a fire sale than a growth round. We have some information from sources familiar with the deal which supports this inference, although we do not have enough independent sources to confirm it yet.

I have no major beef with Civitas on the fundamentals of what they’re trying to do. But the buzz they generated, the valuations they got from investors, and the cool kids’ club that seemed to hover around them for a while are all symptomatic of a company that, whatever the soundness of its fundamental aspirations may be, was hyped by the markets and the press. The bubble may be deflating now.

A smart friend commented to me the other day that there are fewer of these lo-how-the-mighty-have-fallen stories than there used to be. I think this is a profound observation. Something has been shifting in the ed tech markets over the past five years or so. The ed tech hype cycle seems to have at least partially and temporarily burnt itself out. While I have no illusions that hype cycle is dead, or that it will stay relatively dormant, the quality and intensity of it is definitely different than it was five or six years ago. And that change may be a visible symptom of some more fundamental changes that are happening in the educational landscape.

Remember the days?

Remember the days when EDUCAUSE was partly a kind of fashion show? I could always go there and come away with a good blog post about that year’s ed tech darling. One year it might be open source LMSs. (Did you blink? Ah, too bad. It was a sight to see.) The next year it might be Pearson’s OpenClass. (Remember that?) Or Knewton. (Yes, they do still exist. I checked.) But there was a moment about six or seven years ago—I remember talking to Josh Kim about it at the time—when the theme of EDUCAUSE became that there was no theme. It has stayed that way ever since.

That wasn’t the end of hype. It shifted to other places. The fashion show moved to SxSWedu for a few years. And online. And in the mainstream press.

One could argue that we hit peak ed tech hype in 2012. The Year of the MOOC. Remember how there were only going to be 10 universities in the world, and only one lecture for every subject, given by the very best lecturer in the world? Remember how everyone was going to get a Stanford education for free?

Yeah. Good times.

Since then, the hype cycles have been shorter and less intense. Sure, there was the whole adaptive learning bubble (or “personalized learning,” as it is inaccurately called), but a lot of that was the knock-on effect of a flood of Gates Foundation money. I never got the sense that there were many True Believers in adaptive learning as a magic bullet. There are still some True Believers in learning analytics, but it’s a small group. In fact, the OER True Believers club may now be larger than the learning analytics club.

Mostly, people seem to be approaching all of these things—learning analytics, adaptive learning, OER, inclusive access, etc.—with a little more sobriety. These developments are all getting attention, but not a lot of hype (though not always for lack of trying). The general attitude among educators and institutions seems to be more like, “Huh. So that’s a thing now. Good to know. What can I do with it?”

Gone are the days—at least for now—when provosts or presidents emerged from their offices all across the country and proclaimed, almost in unison, “Hear ye, people! I hath spake with the good people from Coursera, and they have shared with me the miracle of recording lectures in four-camera studios and giving away the courses for free. Huzzah! Huzzah! Let us be fruitful and make MOOCs with great haste!”

Don’t get me wrong; there are still presidents and provosts emerging from their offices and making pronouncements. But I’m seeing a lot less of it than I used to. The fever seems to have passed and left some antibodies in its wake.

The one area in the market where I see something approaching hype, which I would characterize more as “intense interest coupled with a lot of hand-wringing,” is in the Online Program Management (OPM) space.

It’s worth asking why this is so.

Operational excellence is the new hotness

I have an optimistic and a pessimistic take on why ed tech hype is cooling and focusing at the moment. The optimistic take is that the sector is finally learning that there are no magic bullets. There used to be a lot of frantic effort generated by of fear of being left behind. That fear is now balanced by a healthy fear of wasting time, energy, and reputation that could be better invested. The pessimistic take is that, as a wider swath of institutions faces the existential threat of financial insolvency, they don’t have cycles to waste on trying to do cool things. They need to be focused on effective things. When an elite liberal arts school like Hampshire College is teetering on the edge of extinction, you know that #*@!& is getting real. There is likely some truth to both of these takes, which tend to feed each other.

What do OPMs do for universities? The simplistic first-approximation answer is that they enable the schools to generate more live-and-thrive revenue by generating more enrollments. How do they do this? Again, the first-approximation answer is that they provide operational excellence at building, launching, and filling new online degree and certificate programs. The good ones can do it quickly, efficiently, and with decent quality levels relative to the current baseline of quality in online learning. And if you believe that the OPM solution category is partly defined by revenue sharing (which I do), then true OPM offerings include a financing service, which enables the schools to get more programs up more quickly (albeit potentially at a higher long-term cost).

This value proposition is a far cry from robot tutors in the sky that can semi-read your mind. It’s less sexy, more grounded, and more strategic.

This shift toward practical operational services is mirrored by shifts in the capital markets such as the recent Civitas development. I have always felt that the potentially fatal flaw in Civitas was that it should have been a service company but chose to position itself as a platform company in order to compete for capital. VCs love platforms because they can grow very big without adding the cost of a lot more humans to run them. You know, like Google and Netflix. If you want to get a lot of money from VCs, it helps a lot to look like a platform company (although I get the sense that’s beginning to change in the education investment space).

If you want a picture of what Civitas could have been (and maybe should have been) in an alternate universe, then look at EAB. It’s positioned as a service company with some tech. Its big-picture value proposition to customers is basically operational excellence at recruiting and retaining students. Because the EAB management never had to raise venture capital, they were free to be what they needed to be in order to support their customers. They didn’t have to pretend to have a magic platform. They could be some very smart people who have some useful skills at improving end-to-end student success and who have some software that helps with that (which might also be a more honest description of Civitas).

You’ve probably heard a lot less hype about EAB than you have about Civitas. But guess what? EAB was acquired in 2017 for $1.55 billion.

I doubt that Civitas’ valuation is that high, particularly after this latest cash infusion. Their partnership with Ruffalo Noel Levitz is particularly interesting in this context. What do you get when you combine Civitas with a recruiting and retention services company? A more service-oriented offering that looks a little more like EAB—and a little more like an OPM or an Online Program Enabler (OPE).

Maybe now, with a more realistic valuation, a more service-oriented value proposition, and hopefully some patient capital, Civitas can realize its potential. I’m not making any predictions, but this feels like a course correction which both reflects the current realities in higher education and has the potential to bring the company more in line with those realities.

Operational excellence at supporting student success is the Next Big Thing

So colleges and universities are getting more focused on developing and supporting solid online programs that serve untapped student needs well enough to generate reliable additional revenue for the institutions. There are whole product categories of companies that are succeeding by providing various kinds of operational support for this growing focus. The variations among the commercial offerings are diverse and fast-growing enough that it is creating some confusion in the market, but a lot of that naturally comes with rapid growth and the bare-knuckled competition it engenders among vendors.

The nascent area that shows major yet poorly defined potential for growth is in helping universities improve the baseline for (online and on-premise) student success, whether that means college completion, career advancement, or something else. I see a lot of innovation at individual institutions and from individual vendors that gets at pieces of this problem. But the sector still lacks end-to-end methodologies for restructuring our colleges and universities to optimize themselves for this purpose and continually improve at it. Learning analytics are cool. But you know what’s really cool? Students who graduate, on time, for less money, and whose education enables them to live better lives.

That’s the next frontier in higher education. It’s a hard one, and there won’t be any magic bullets that “fix” or “disrupt” all of education. But there will be large gains in significant pockets. Universities were not designed to serve this primary purpose with excellence and efficiency in a 21st-Century world. They do surprisingly well given that fact, but we will discover some big opportunities for gains similar to the ones we see when we put an electric drive train into a conventional automobile.

“Guess what? All that up-and-down with the cylinders, all firing at exactly the right millisecond, and then the gears and contraptions to turn the up-and-down into round-and-round? Gone. Oil changes? Gone. You have a battery, you have electric motors directly attached to wheels, you have absurd amounts of torque, and very few moving parts to wear out. The power goes straight to the wheels. All that internal combustion stuff did a great job for the last 100 years, but we can propel our wheeled vehicles with more efficiency and less complexity now.”

We will discover opportunities to rethink and return to first principles in higher education. They won’t be tech-only; the machines we are talking about are the universities themselves, and the changes will be ones of process at least as much as of tech. These changes won’t work everywhere equally well to solve all educational problems. But the fact that colleges and universities have not been consciously and continuously optimized for their new role (and sustainability needs) means that we will find many gaps where simple changes will make outsized differences.

This is already happening in many individual places. You will likely find at least one such story on any given week reading Inside Higher Ed or EdSurge. What we haven’t seen a lot of yet is a knitting together of the individual innovations into a methodology for operational excellence at supporting end-to-end student success. EAB is one harbinger of things to come in that regard.

Mark my words: The institutions that figure out how to do make this transformation, and the companies that figure out how to support it, will tend to thrive in the long term. In my entire career, the only thing I’ve ever found that has come close to living up to its hype is a good education.

More of that, please.

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