It is not uncommon to chat with a group of teachers about a new product, and hear them proclaim something along the lines of: “If it’s not free, I won’t use it.”
We all love the idea of “free.” But as the adage goes, there is no such thing as a free lunch.
Many edtech products are cloud-based, but that doesn’t mean the companies that build them run on air. Educators should recognize that free tools may not survive for long. Without fully understanding how free tools are sustained, they run the risk of adopting and relying on technology that may change significantly—or not exist in a year’s time.
So, what fuels free tools—and what implications could this have for teachers? There are three main supporting sources:
Venture Capital
You’ve likely read about large funding announcements for certain companies like Remind and ClassDojo, which enables them to offer their tools for free—at least for the time being. Venture capital comes fraught with sky-high expectations. However much money they invest, VCs typically expect a 10x multiple of that sum. They are not the only ones who want a big return, either. The money that VCs invest comes from other funders higher up the food chain who also want a big return on investment.
One might ask: If investors want big returns, why would they put money into a free tool? Here’s how the general logic goes: Investors will invest in a company with a large, non-paying user base, with the hope that even if a small percentage of users start paying, the revenue will still be substantial. Let’s take, for example, Edmodo, which claims more than 60 million users. If 15 percent of them pay $10 per month, the company’s annual revenue will surpass $1 billion. (Voilà, a unicorn!) However unlikely this scenario may seem, it’s not too far from what some investors are betting on when they put money in a company with no business model.
For companies that focus on growing their base of free users and think about revenue “later,” the deadline to make money is always looming. For K-12 companies, selling ads is not an acceptable strategy. But who’s going to pay? Teachers don’t have the budget; they may have already been conditioned to use the product for free. Can companies charge administrators? Or parents?
Companies that are unable to figure this question out will face difficult choices. Sometimes, that means building a product that prioritize the paying users at the expense of its core users. Other times, the company will completely pivot and build a completely separate product to make money, as Learnboost did in 2013.
Reality check for teachers: this may mean that the product may no longer prioritize your direct needs.
Foundation
Khan Academy is perhaps the most well-known example of a free product. But supporting those online videos is a long list of wealthy donors, philanthropists and foundations including The Bill and Melinda Gates Foundation, The Broad Foundation, Google, O’Sullivan Foundation.
Not every entrepreneur is lucky like Khan. But for those who do pursue foundation funding, the company’s product or idea must fit neatly with the strategic goals of the foundation. Most grants also require a specific timeline of deliverables with very detailed outcomes. While foundations may be more comfortable with a slower development process, they also are extremely cautious and focused on getting the results laid out in the grant.
This pace may impede process of innovation, or limit how flexible the company can be when it comes to changing plans. Building the right tool, after all, may take several attempts, and the needs of the classroom are constantly changing.
Also, grants are not sustainable in the long run; at some point, the funding will run out. By then, will the company have found its business model?
Reality check for teachers: Companies that take foundation money still have hard choices to make. How quickly can they adapt based on the needs of the classroom? And how will they continue when the money runs out? While this may mean the tool can stay free, it is not a guarantee.
Bootstrapping
This is by far the most common type of startup you encounter. For every company that successfully secures money, there are many more that don’t.
The term bootstrapping applies to entrepreneurs who have taken very little money (likely just from friends and family and small angel investors) and are being thrifty about making their ideas come to life. These startup move as quickly as they can, listen to their customers and strive to grow these free tools (often just focused on getting their numbers high enough so they can pitch to investors or foundations). The people at these startups probably aren’t paying themselves, are getting friends to pitch in free services and are likely working other odd jobs to pay the bills.
These startups are the likeliest to close shop after a few years—perhaps even months. Sweat, tears and dedication only go so far to keep the lights on.
Reality check for teachers: Eventually these companies may no longer exist.
Let’s Get Real
As a teacher, I would constantly pay for things out of my own pocket at LakeShore Learning, or drop $50 on supplies for my students to be able to make their class projects.
Given that educators are often willing to make that extra effort to buy a book that our students may read once or twice, or art supplies that will probably be thrown out at the end of the year, why would they expect that a software tool that could be used everyday to be free?
Educators should evaluate the different tools they already spend money on. Just like crayons and color pencils, software should be considered as a classroom supply. This needs to be understood not just at the classroom level, but all the way up through the administration.
I believe teachers should be empowered to have more say in what technology tools are purchased. They should be allowed to advocate for the tools that work in their classroom— and perhaps even be given a budget for making purchasing decisions. Some schools are experimenting with holding “Shark Tank” competitions where teachers evaluate products. This sort of empowerment can change teachers’ mindset about paying for the tools that will, in the long run, also help support the work of entrepreneurs that are developing them.
Free is awesome, but every free tool eventually will need to be paid for by someone. I fear that if we keep asking for “free,” we are placing an unreasonable burden for many entrepreneurs—and in the process we may lose useful tools that are developed with good intentions.
