Rethink Education’s Investment Theses, 2021 Edition
Tags: Education, Venture Capital, Edtech, Social Impact, Learning And Development

Matt Greenfield, Managing Partner

Preamble: 268 billion will be spent on education technology globally this year. We are living through a watershed moment where the adoption of online learning has radically accelerated, and this mass shift in teaching & learning has exposed the deficiencies in current technology platforms.

This acceleration has clarified our long-held theses on the future of education and how technology can help unlock human potential. The principles that guide our search for solutions are detailed below. As always, our starting point is our primary values. Our mission is to lift up the vulnerable, giving them the education and training they need to be productive and happy in their work, their civic engagement, and their personal lives. Our definition of who is vulnerable includes not only the poor but also those who are cognitively or physically different and those who experience persecution or bias for any reason, including race, ethnicity, gender, sexuality, age, imprisonment or parole status, or lack of formal credentials. We also want to make our own firm, our portfolio companies, and the society they serve more humane, more just, more equitable, and more inclusive.

Our future vision for education rests on the following guiding principles.

Put human conversation & collaboration at the core of the learning experience

One of our core theses as a venture firm is that human conversation and collaboration are a critical element of education. We started the firm in 2012, the year of the MOOC, when many people believed that these pre-recorded free courses would replace universities and software would replace human teachers. We always believed that there would be a continued need for education that involved humans talking to each other and defining and solving problems with each other. In 2021, after the global coronavirus pandemic, billions of people have now experienced the power — -and the still unsolved challenges — of education that uses live videoconferencing. Although education usually also needs to include asynchronous components, synchronous education — education that involves people being present simultaneously — is here to stay. The institutions, processes, habits, tools, and platforms to do synchronous online education successfully, though, are just starting to emerge.

The rise of synchronous online learning allows us to rethink old educational institutions rather than merely attempting to transfer offline education paradigms into online delivery mechanisms. Schools, colleges, and workforce training programs today, whether online or offline, largely fail to meet the most basic requirements of learners. Learners need a safe space, one where they are not constantly feeling judged and graded and measured and humiliated. Any learning program needs to start by discovering who the student is: what kind of help does the student need at a particular moment? What are the student’s needs, goals, strengths, and interests? Today most learning platforms don’t have any capacity to discover or record this information. When great teachers meet the most urgent needs of their students, they usually do so in spite of rather than because of the structure of their institution. To generalize broadly, we need more mentoring and collaboration and less direct instruction.

When investors and entrepreneurs use the phrase “future of work,” they are often talking about the lower layers of the stack of collaboration software: the messaging, scheduling, and videoconferencing infrastructure. Our future of work thesis is more concerned with the part of this collaborative work that involves people learning in groups. We also see collaborative learning becoming an increasing percentage of all work. Any task that robotic process automation cannot handle involves continual learning, including mentoring, reverse mentoring, consultative sales processes, conferences, strategy formulation, and the examination of systems and processes. We are interested in enabling and amplifying and transforming the human part of these interactions, not in replacing them with algorithm-driven processes.

Tools for System Change

Like other venture capitalists, we are interested in tools and services that operate in the space of non-consumption. When one builds from scratch in a vacant space, one has the opportunity to get things right from the start. But we also don’t think schools, colleges, and traditional vocational training programs are going away. Therefore, we are interested in tools that have the capacity to transform existing education systems on a national and even a global scale. We will continue to invest in administrative tools that deliver improved access, affordability, employability, fairness, efficiency, flexibility, and completion rates; that integrate siloed systems; and that replace extrinsic motivation systems with intrinsic ones.

Engage students in a personalized way that recognizes their interests

Some discussions of education innovation lose track of the emotions of the learner. This is a mistake, since without joy and immersion, learning simply does not succeed. We are looking for the rare products and services that create curiosity and intense excitement in learners — that engage them deeply, help them develop a new learning habit, and ideally put them into a state of flow where they lose track of time. These products are often but not always characterized by relevance to the student’s life. They involve gamification of a deep kind, with surprises and moments of authentic self-discovery and the joy of developing new capacities, not the shallow kind of gamification that involves linear scripts of tasks, rewards, and flashing graphics. To return to our theme, these engaging products and services almost always involve some form of human collaboration, whether that collaboration is synchronous or asynchronous.

Provide continuous feedback loops between learner, peers, instructors, and employers

We are interested in software that makes education more humane and improves the feedback loops between the learner and the institution. We want to equip the institution to adapt to the unique needs and strengths of each learner. We are also interested in tools and services that improve the feedback loops between employers and educational institutions. Schools and colleges need the ability to continually tune and adjust their offerings to improve the employability of their graduates.

Elevate the teaching of human skills and not solely core academics

Schools, colleges, vocational training programs, and education tools and platforms are frequently teaching the wrong skills. The skills we all need include the ability to listen and empathize, to ask interesting questions and define problems, to collaborate, to solve problems creatively, to write and speak clearly, to evaluate the quality of information, to think critically, to analyze probabilities, to analyze and change our own habits of thought, to translate ideas and paradigms from one domain to another, to think about the behavior of systems, and to mentor and be mentored, to name just a few. We need less grading, less memorization of facts and formulae, and fewer multiple-choice tests. We need more active learning, collaboration, exploration, peer feedback, debate, simulations, interviews, metacognitive reflection, prototyping, projects, and portfolios. We need learning at every level to blend the continual play of pre-school, the intense collaboration of a hackathon, and the self-directed deep exploration of a doctoral program.

Hone the skills needed to filter, curate, and judge information

Another key challenge in education is filtering and sorting the flood of information washing over us. We have since our fund’s inception been interested in curation as a key educational function. We need many new tools to create trusted collections of learning objects and structure them into coherent learning pathways. We also need to do a better job of curating human connections for learning collaborations. We also need more tools to track and credential people’s progress down these pathways. Ideally these tools will not just help people get better jobs but will also change the way they narrate their own stories.

Parenthetically, many people worry about an excessive focus on employability displacing liberal arts education. But many of the skills employers most want are core liberal arts skills such as the ability to write well. The problem is that there are almost no colleges whose diplomas guarantee that their graduates possess those skills. If liberal arts institutions deliver on their fundamental promises, their graduates will be eminently employable. And there are many ways in which colleges and schools could learn from corporations, including a greater emphasis on collaboration and nimbleness.

Focus on Habit Formation

Nestling comfortably into people’s current habits is unquestionably a powerful and necessary strategy for most learning products. But for a small number of exceptional education products, it is possible to actually change people’s habits and transform the way they inhabit the world. Habit modification is a uniquely valuable form of education because it is so incredibly difficult. Even though it must start with the user’s consent, it still involves a kind of violence or rupture. Changing people’s habits requires defamiliarization — making a familiar object look strange and new, ripping people out of their cognitive entrenchment in a reflex action, altering the tacit knowledge people may not even know they possess. Most educational institutions pay far too little attention to tacit knowledge, the things we don’t know that we know and cannot articulate that nonetheless shape our actions. There is, for example, an argument to be made that schools should offer a course that teaches people, and especially white men like me, how to listen more deeply and interrupt less. Becoming more conscious of how we talk to each other is more important in life than trigonometry.

Advances in cognitive science are opening up some fascinating habit modification opportunities. We are excited about opportunities for habit modification in areas such as reducing gender and racial bias, mitigating ADHD and autism spectrum disorders, curing addiction, inculcating the habit of thinking in probabilities, getting people to think more like scientists, and of course language acquisition. Sometimes companies working on challenges of this kind do not think of themselves as education companies, and we ourselves regularly have vigorous debates over what fits into our mission.

Business Models for the Future of Learning

There are two key questions shaping our evolving thinking about what kind of business models we are excited about backing: is it a good business model and is it aligned with our values? First, will this business model help create a rapidly scalable, efficient, defensible business? Second, does it serve the needs of vulnerable people? Which population does it serve? Who pays for it? How long does it take? How does it change people’s lives? What is the success rate?

One of the business models we like involves selling software and services to an enterprise that serves a vulnerable population: a school or school district, a college, an employer, a government agency, a healthcare provider, or an insurer. From a business model standpoint, this can generate economically attractive recurring revenue and possibly even negative churn — annual growth within existing accounts.

The very best of these enterprise models deliver a strong return on investment to all of their stakeholders. Rethink First and Guild Education both help employers to offer their employees a free or subsidized educational service as a benefit [note: Rethink First is an operating business no longer affiliated with Rethink Education, although I co-founded it and Rethink Education invested in it]. The employees get free or heavily subsidized education. The employers get an extremely high cash return on investment from a reduction in employee churn. And, in the case of Guild, the education providers get a large number of new students without any customer acquisition effort. In the case of Getsetup.io, which offers live synchronous online education and socializing to older people, the learners get a free experience that is life-changing, and stakeholders like insurance companies and state departments of aging get a reduction in hospitalizations and an increase in engagement and retention. The strong alignment of interest between all of the stakeholders can create extremely rapid, frictionless growth.

We also like viral direct-to consumer models where the base version of a product is free. At sufficient scale, a company can monetize through premium subscriptions, transactions and affiliate relationships, or advertising and promotion.

We are much more cautious about models where the learner pays for the educational product or service. We flatly refuse to invest in companies that benefit only the affluent, and even a company that delivers some benefit to the vulnerable can on balance exacerbate inequality. If the product delivers a dramatic benefit to the learner, and if the cost is linked to outcomes in some way, we will consider these models. Bootcamps are one example. We would rather have a government entity or an employer pay. But if the cost is low enough and the experience transforms people’s lives, we are interested.

Our Next Steps and Yours

We will be launching a series of research projects that will help us clarify where the blank space and the largest needs are. Those research projects will involve one-on-one discussions, small convenings, and further blog posts.

Those research projects will dig into the transformations of education described above. We will focus on how those transformations can help some of the most vulnerable learners with key challenges in their lives.

Our first research project will center on how workers can learn new skills and move into better jobs. The tools, platforms, and services for internal upward mobility are just beginning to emerge.

A second research project will focus on career and technical education within high school and employer-funded apprenticeships. We want to help students make successful transitions directly from high school into the workforce. We are particularly interested in high-demand middle skills that do not require a college degree. The CTE capabilities of schools are far behind their college preparation capabilities, although the latter also need bolstering. Schools and employers need better tools, programs, and teacher training for CTE.

A third research project will focus on soft skills assessment. Employers currently do not have adequate tools for assessing the soft skills of potential employees and for conducting performance reviews in a fair, repeatable, research-based, and effective manner. Moreover, employers need to do a better job of complementing these high-stakes summative assessments with continual formative feedback to employees. Soft skills assessment needs to be embedded in the flow of work. Employees need a feedback loop as they do their work.

A fourth research project will focus on advances in cognitive science and the opportunities they create for transformative products focused on habit modification, human skills, and physical and mental health.

Acknowledgments: I would like to particularly thank my partner Michelle Dervan .