Education Gold Rush: Who is selling picks and shovels?

“During the gold rush its a good time to be in the pick and shovel business.”  Mark Twain

There are large amounts of capital flowing into the education publishing market today.  It appears we are experiencing a small gold rush as savvy technology investors bet that the digital transition in education will yield significant returns to those doing the disrupting.

Some basic facts:

  • VC investment in education in 2012 was 4x 2002
  • Most of the growth has been since 2010
  • 50% of that investment has been in K12
  • The split is roughly 50/50 between platforms and content

In the spirit of Mark Twain’s famous quote about Samuel Brannan I’ve asked a range of experts to say who is panning for gold and who is in the shovel business in today’s education market.

Funny thing that – no one can answer the question right now because it isn’t clear.


Platforms Rule

Most VC’s invest in “first mover platform plays that disrupt the market.”   Everyone wants to be in the educational version of Twitter or Facebook   One could say that the gold rush is in platform technologies like Amplify  EdmodoGoogleAmazon, and others.  Heck, even Pearson is coming out with a platform for OER content.  There are dozens of well funded companies with strong visions for being the one education platform to rule them all.

Content Rules

But – a platform without content is useless.  In this scenario the quality content providers would be the dry goods retailers, providing the platforms the content that brings purpose (and traffic) to the tools.  Let the platforms slug it out for market share (someone WILL get rich there) but make sure your content is everywhere so that when the winner emerges, dusty and battered, in 4-5 years you are along for the ride.

On the other hand….

The content side of the business is in the midst of massive disruption right now as the value of large commodity content libraries plummets in the face of digital distribution.  The economics of that business traditionally assumed that you owned a printing press and a warehouse network to create and move the physical goods around (this was the old “platform”).

In this scenario the platform companies are shovel and pick purveyors, giving content publishers a quick solution to reaching critical mass with on-line versions of their products.

For decades publishers gave the stuff that can populate the platforms away as “free with order” deal sweeteners on adoptions.  Now OER providers are telling the world that schools don’t need to pay for content, content wants to be free.  There is a value perception crisis on the content side of the world.

Maybe Neither…

My pet theory (“awww isn’t it cute, does it bite?”) is that professional development and on-line teaching have  the potential to emerge as big winners here.  Schools don’t set out to buy a platform or content – what they genuinely want is better instruction.  Platforms and content are just means to that end.  Professional development and networks of high quality on-line teachers on the other had are directly connected to the mission and goals of educators.

Players to watch in this space include TeachscapePresence Learning, and even the Bigs.


The average fund expects their better performing investments to cash out in 4-5 years.  Since this trend began in earnest in 2010 we only have a couple more years before they start passing serious judgement on this newest wave of activity.  Chegg just did a $150m IPO.

It will be interesting to watch and learn.  It will be even more interesting to be in the middle of this titanic struggle for dominance in the market.

Next stop – Disruption Junction.