Opinion | Edtech Business

Can Entrepreneurs Balance Educational and Financial Returns?

By Paul Young     Dec 5, 2017

Can Entrepreneurs Balance Educational and Financial Returns?

At the University of Pennsylvania, the Graduate School of Education is located directly beside the Wharton School, the campus’ business school. As a master’s student at Penn GSE during the past year, I often considered popping in next door, attending events at Wharton or even taking electives there to explore my interest in the cross-section of education and business.

What I soon discovered, however, was that the close proximity of the two schools belies a relationship between two disciplines that is often contentious.

While the emergence of “edtech” and the growing tide of investment towards this industry has led to a seemingly endless proliferation of new startups claiming to be in service of education, the perception of many educators, including some of my professors at Penn, is often one of skepticism. Do entrepreneurs from Silicon Valley really understand the nuances and complexity of pedagogy and learning? Are they truly motivated by the promise of helping students or do they simply see a business opportunity? And if profit is part of the motive, is it okay?

The ethics of mixing business and education seems to depend on upon how you define “entrepreneurship.” If entrepreneurship refers to an all-inclusive term meaning innovation, problem solving, creativity and leadership, then it would seem that applying it to education aligns with many of the existing lessons and goals teachers have in place.

However, for those that associate entrepreneurship with the goal of financial gain, then the answer gets a little murkier. If you adhere to this understanding, to ask whether there is a place for entrepreneurship in education is to ask whether the notion of “social entrepreneurship” has an inherent contradiction.

But why does this supposed contradiction resonate with so many? Perhaps it is because of the myth of the entrepreneur that resounds throughout popular culture: examples like Bill Gates and Mark Zuckerberg, who both dropped out of college, and in doing so, seemingly spurned education in order to build major tech companies—and yet now each have education initiatives of their own. It might also have to do with the fact that educators are paid far less than the business people pitching products for teachers and students. Or it may be that even some of the most well-funded and hyped edtech efforts have flopped or pivoted, leaving students and teachers scrambling.

In his 2010 book, Building Social Business, micro finance pioneer and Nobel Prize winner Muhammad Yunus defines “social entrepreneurship” as an “initiative of social consequences created by an entrepreneur with a social vision.” He associates social entrepreneurship with terms such as “social enterprise” and “socially responsible business,” which he sees as “varieties of profit-maximizing companies.” This is distinct what he calls a “social business,” which is “outside the profit-seeking world” and provides no financial gain for owners or investors, existing solely for the benefit of others.

Based on this distinction, entrepreneurship seems to enter into moral ambiguity with its bottom line. For those who are wary of the merging of business and education, there appears to be an assumption that the goal of making money and the goal of educating are mutually exclusive. The story goes: When push comes to shove, the profit-minded entrepreneur will sacrifice educational returns for financial ones.

Ultimately though, this assumption is misguided. It ignores instances where for-profit businesses have managed to turn a profit while simultaneously offering real help to students and educators. Curriculum Associates, for example, is a for-profit edtech company based outside of Boston with annual bookings of nearly $200 million. Its K-12 adaptive learning and diagnostic product i-Ready is used by over 5 million students, and a 2016 study found that it was an exceptionally accurate predictor of student performance on Common Core Assessments in New York State. The company also donates a significant amount of earnings to schools and charitable causes.

When evaluating an educational initiative, be it a service curriculum or product, what should matter most is not whether profit is involved, but whether or not it is effective and produces its intended results. Moreover, there is nothing that says that to make money must mean selling out on your ideals.

This is not to suggest that there are no educational ventures where profits and growth become more important than students. In such cases though, if the product or service truly suffers as a result, it might present an opportunity for other entrepreneurs to step in and do better. Blackboard Inc., for example, once known as the innovative pioneer of learning management systems (LMS) in the late 90s and early 2000s, is now a multi-billion dollar education tech giant, but has also become infamous for being despised by students. This has created opportunity for other companies such as Moodle and Instructure to enter the LMS space.

In the end, whether or not profit is part of the equation at all, just the application of entrepreneurial thinking to the problems of education can inject a much needed fresh perspective on an “industry” that is traditionally slow to evolve.

At its core, the challenge of starting a business is a challenge of finding an effective way to address a need. If we funnel this mindset towards the need to improve education, then the goals of entrepreneurship and education can align. “Disruption” in this context should not be considered a negative thing. Growth in any field requires a certain degree of upsetting the status quo. This type of mentality has the potential to drive educational innovation, and if it comes at the cost of some notion of idealistic purity, then it may be a sacrifice we have to make.

Opinion | Edtech Business

Can Entrepreneurs Balance Educational and Financial Returns?

By Paul Young     Dec 5, 2017

Can Entrepreneurs Balance Educational and Financial Returns?

At the University of Pennsylvania, the Graduate School of Education is located directly beside the Wharton School, the campus’ business school. As a master’s student at Penn GSE during the past year, I often considered popping in next door, attending events at Wharton or even taking electives there to explore my interest in the cross-section of education and business.

What I soon discovered, however, was that the close proximity of the two schools belies a relationship between two disciplines that is often contentious.

While the emergence of “edtech” and the growing tide of investment towards this industry has led to a seemingly endless proliferation of new startups claiming to be in service of education, the perception of many educators, including some of my professors at Penn, is often one of skepticism. Do entrepreneurs from Silicon Valley really understand the nuances and complexity of pedagogy and learning? Are they truly motivated by the promise of helping students or do they simply see a business opportunity? And if profit is part of the motive, is it okay?

The ethics of mixing business and education seems to depend on upon how you define “entrepreneurship.” If entrepreneurship refers to an all-inclusive term meaning innovation, problem solving, creativity and leadership, then it would seem that applying it to education aligns with many of the existing lessons and goals teachers have in place.

However, for those that associate entrepreneurship with the goal of financial gain, then the answer gets a little murkier. If you adhere to this understanding, to ask whether there is a place for entrepreneurship in education is to ask whether the notion of “social entrepreneurship” has an inherent contradiction.

But why does this supposed contradiction resonate with so many? Perhaps it is because of the myth of the entrepreneur that resounds throughout popular culture: examples like Bill Gates and Mark Zuckerberg, who both dropped out of college, and in doing so, seemingly spurned education in order to build major tech companies—and yet now each have education initiatives of their own. It might also have to do with the fact that educators are paid far less than the business people pitching products for teachers and students. Or it may be that even some of the most well-funded and hyped edtech efforts have flopped or pivoted, leaving students and teachers scrambling.

In his 2010 book, Building Social Business, micro finance pioneer and Nobel Prize winner Muhammad Yunus defines “social entrepreneurship” as an “initiative of social consequences created by an entrepreneur with a social vision.” He associates social entrepreneurship with terms such as “social enterprise” and “socially responsible business,” which he sees as “varieties of profit-maximizing companies.” This is distinct what he calls a “social business,” which is “outside the profit-seeking world” and provides no financial gain for owners or investors, existing solely for the benefit of others.

Based on this distinction, entrepreneurship seems to enter into moral ambiguity with its bottom line. For those who are wary of the merging of business and education, there appears to be an assumption that the goal of making money and the goal of educating are mutually exclusive. The story goes: When push comes to shove, the profit-minded entrepreneur will sacrifice educational returns for financial ones.

Ultimately though, this assumption is misguided. It ignores instances where for-profit businesses have managed to turn a profit while simultaneously offering real help to students and educators. Curriculum Associates, for example, is a for-profit edtech company based outside of Boston with annual bookings of nearly $200 million. Its K-12 adaptive learning and diagnostic product i-Ready is used by over 5 million students, and a 2016 study found that it was an exceptionally accurate predictor of student performance on Common Core Assessments in New York State. The company also donates a significant amount of earnings to schools and charitable causes.

When evaluating an educational initiative, be it a service curriculum or product, what should matter most is not whether profit is involved, but whether or not it is effective and produces its intended results. Moreover, there is nothing that says that to make money must mean selling out on your ideals.

This is not to suggest that there are no educational ventures where profits and growth become more important than students. In such cases though, if the product or service truly suffers as a result, it might present an opportunity for other entrepreneurs to step in and do better. Blackboard Inc., for example, once known as the innovative pioneer of learning management systems (LMS) in the late 90s and early 2000s, is now a multi-billion dollar education tech giant, but has also become infamous for being despised by students. This has created opportunity for other companies such as Moodle and Instructure to enter the LMS space.

In the end, whether or not profit is part of the equation at all, just the application of entrepreneurial thinking to the problems of education can inject a much needed fresh perspective on an “industry” that is traditionally slow to evolve.

At its core, the challenge of starting a business is a challenge of finding an effective way to address a need. If we funnel this mindset towards the need to improve education, then the goals of entrepreneurship and education can align. “Disruption” in this context should not be considered a negative thing. Growth in any field requires a certain degree of upsetting the status quo. This type of mentality has the potential to drive educational innovation, and if it comes at the cost of some notion of idealistic purity, then it may be a sacrifice we have to make.

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