Predicting the tempo of an emerging market--especially how fast it moves and what customers will be willing to pay--is hard. Just ask Education Elements.
Last week, the San Carlos-based startup company, which has been a leader in helping schools adopt "blended learning," let go a significant portion of its sales force. Anthony Kim, chief executive and founder of the company, declines to comment on the scope and numbers involved in the layoff. But while the company employed 45 people a year ago, it's now down to 23. The majority of last week's layoffs came from the sales staff.
"We thought the market would be different in terms of the demand side," Kim told EdSurge in an interview. Translation: A year ago, Ed Elements bet that 300 or more schools across the US would be building blended learning programs and potentially 200 would be using its services. Now "we're building capacity for about 100 schools," Kim says.
Restructuring the sales team, Kim says, should not affect Ed Element's current customers. So far, school leaders reached by EdSurge agree.
The restructuring comes at a poignant moment for Ed Elements, which counts NewSchools Venture Fund as an early investor. At last year's NewSchools summit, Ed Elements' Anthony Kim was honored as the "entrepreneur of the year." This year's conference takes place this week.
Ed Elements got its start in late 2010 by advising schools on how to create "blended learning" programs. Kim worked closely, for instance, with KIPP Empower Academy in Los Angeles to create a blended learning program for grades K-1 that became a model for many other schools. (Here's an overview from the Innosight website.)
Under Kim, Ed Elements developed a two-part offering for schools: advisory services aimed at helping schools create blended learning programs and select digital curriculum, and a piece of technology designed to be a dashboard that pulls together multiple, independent curriculum products, which it calls a "Hybrid Learning Management System."
Ed Elements spent significant time working with schools around how to boost academic achievement, doing everything from evaluating how schools handle their "bell schedules," how they integrated new tools into teaching practices and how they trained their staff to use the data from the tools.
At the same time, Ed Elements worked on its software product by weaving independent digital curriculum products (such as Pearson, Compass Learning, and Dreambox) into a single dashboard. That means a student (or teacher) can log into products via the Ed Elements dashboard with one (or two) clicks. The dashboard also presents a portion of the assessment data collected by the digital curriculum products, again in an integrated view.
Many teachers and schools speak well of Kim and Ed Elements, which have worked hard to build school leaders' understanding that "implementing blended learning" is far more complex and involves a nuanced understanding of teaching than, say, installing a smart board or building a computer lab.
Even so, Ed Elements' services are not cheap. In addition, some teachers have grumbled that the portfolio of products supported by Ed Elements has been a bit narrow. And other teachers are finding that they want the finer-grain reports that digital curriculum products deliver rather than the higher-level overviews from Ed Element's HLMS.
The company is working hard to address these points. In mid April, Ed Elements boosted the number of products that it supports to more than 30. (Partners also include tools such as Nearpod and Kickboard. See this release for a full list.) By September, it expects to grow that collection to about 40 companies--at least two choices for the core curriculum for grades K through 12. (Some packages, particularly for high school students, offer multiple subjects.) Schools can chose to use whatever best fits their needs; Ed Elements does not collect fees from vendors for supporting their products. "We've been really integrated blended teaching environments and solving that across partners," Kim says. "That's what schools have said they're interested in."
The Ed Elements team has grown quickly. In October 2011, the company announced it had raised $2.1 million in seed venture money; that was followed by a $6.4 million round announced in March 2012. Kim says he expects to do another round of fund raising before the end of 2013.That funding fueled a big growth spurt at Ed Elements, particularly on the sales and support side.
What helped drive Ed Elements'--and its investors--enthusiasm for growth were expectations around the last award of the federal government's Race To The Top program--this one, aimed directly at encouraging school districts to deliver personalized learning. The available funding pool was $400 million. By the time the application window closed, the US government had received 371 applications--involving 1,189 school districts. The government suggested that it would award between 15 to 25 recipients (typically involving multiple districts).
By last December the government announced its grantees: 16 applications, involving 55 school districts. And of those, Kim estimates that only half may be implementing fully "blended learning" models. The other half are devoting their resources to other ways to deliver personalized learning, including heavy staff development. The government is also writing those checks only after the districts pass various milestones. (For instance, when districts learned they won in December, the government told them they had to submit a more detailed "Scope of Work" by April 8 and would only be able to spend 10% of their total grant until that SOW was approved.)
"We're a firm believer in the market opportunity," says David Sanchez, who leads product development and platform partnerships at Ed Elements. "But figuring out exactly when it's going to break loose is hard."
At this point, Ed Elements is working with about 50 schools, Kim says. It recently won contracts to help two districts that won RTTT-D funding, as well. Kim hopes to double the number of customers by the autumn as schools begin implementing their plans.
But that's still significantly short of where the Ed Elements team had hoped to be.
As part of restructuring its costs, Ed Elements will work with local education providers to do sales and outreach. It has struck deals with education service provides in four geographies: Pennsylvania, New England/Massachusetts, Maryland and the southeastern US/Florida area.
A year from now, Kim and Sanchez expect that Ed Elements may look more like a classic product company than a services business. The product, its hybrid LMS, will be a tool that Kim and Sanchez believe will help districts move forward as they invest in more digital curriculum. Districts--rather than schools--are increasingly a bigger part of Ed Elements customer base, Kim adds. That's key as Ed Elements aims to serve a larger proportion of schools in a district--not just ones that identify themselves as "innovative," he says.
"The market is still very slow to adopt change," Kim says. "Our clients are some of the early adopters. We expect significantly more districts across the country to adopt personalized and blended learning models in 2014."
