VIEW FROM THE TOP: Another sign that edtech is heating up: not just the crowds but the big money investors are starting to take a closer look. Few investors pack as much entrepreneurial mojo as Marc Andreessen. We've always admired his ability to spot opportunities on the horizon. In this recent Wall Street Journal op-ed, he notes that software is on the verge of disrupting both health care and education. He wants in on the action. "My venture capital firm is backing aggressive start-ups in both of these gigantic and critical industries. We believe both of these industries, which historically have been highly resistant to entrepreneurial change, are primed for tipping by great new software-centric entrepreneurs," he writes.
So far, a16z, his firm's zippy moniker, has only tiptoed into edtech with one deal (Kno). Andreessen's skittish, he concedes, about tripping over politics and bureaucracy. "I wouldn't want to back a business that's selling to public schools or characterized by public financing, unions or government-run institutions. Those institutions are incredibly hostile to change," he told EdSurge.
Andreessen's smart enough to know the world changes, though: "Never say never; I could be surprised. But we're concerned. Startups have to be able to do business with their customers. Steve Jobs always says that Apple sells to consumers, not primarily to businesses. In the enterprise, there's another person between the vendor and the customers. That guy doesn't have the same goals and interests as the customer.
"For a startup to sell to a school district or in a union or bureaucratic environment, your odds of failure go way up," Andreessen says. "It just takes too long. The important starting point is to have direct relationship with the customer--and a financial relationship around that."
Thanks to the Internet that Andreessen has helped stoke, that logjam in front of the education customer is exactly what's breaking up, observes Alan Louie of Imagine K12 (and a colleague of Andreessen during their Netscape days). The Internet means edtech entrepreneurs can reach out to teachers, parents--anyone in the education chain. "The model of only going to schools and selling there is the hardest way for a startup to go," Alan agrees. But increasingly, teachers are telling schools what they want. "Consummating a sale generated by a teacher and then executed by the district is just fine by me," he says. "That wasn't possible five years ago."
Overseas markets look good to Andreessen, too. "People in the developing world have a much greater sense of the value of education (than many Americans). The Western model (of schools) won't get replicated. There's no point in it. Three to four billion people can do a lot more learning online than going to a classroom… I'm very excited about the prospect of using a smart phone to get a complete education--from basic skills up through post-grad. That kind of education should be available online and everyone should have access to it."
"I am not a libertarian," Andreessen declares "But you have to introduce market forces, competition and innovation to this sector--and that's our strategy."