ISTE to Acquire EdSurge, in Move to Nonprofit

EdSurge is joining the ranks of nonprofit newsrooms. Today the International Society for Technology in Education (ISTE) announced that it has agreed to acquire EdSurge, in a move that leaders of both organizations say will provide a stronger financial base to continue to produce EdSurge’s journalism, research and other services about the intersection of technology and education.

EdSurge, based in Burlingame, Calif., was founded in 2011 as a venture-backed, for-profit news organization. It has raised more than $8 million from a mix of investors, including edtech stalwarts Reach Capital and GSV Capital, along with Chinese juggernaut TAL Education. Over the years, the startup also received millions in grants from nonprofits and foundations, including the Chan Zuckerberg Initiative, NewSchools Venture Fund and the Bill and Melinda Gates Foundation, to produce stories and hold convenings on various topics impacting the future of education.

The Arlington, Va.-based ISTE, meanwhile, is a 40-year-old nonprofit membership organization of more than 25,000 educators, best known for its large annual conference and expo on edtech. The organization already publishes blogs, books and journals, but it has been interested in providing more “real-time news and information” to members, says Richard Culatta, ISTE’s CEO.

Betsy Corcoran, CEO of EdSurge, says the move to a nonprofit organization will be a better fit for the company’s mission of providing independent news and information to those in education, and it will open up more opportunities for funding from foundations, which in some cases are restricted in how they can support for-profit efforts. “What this arrangement gives us is an opportunity to focus on the work—not just focus on paying the bills, not just focus on survivability,” she says. The news comes on the heels of a similar announcement by the Salt Lake Tribune, the first major U.S. newspaper to transition itself to a nonprofit model.

The deal is expected to close by the end of the year, and ISTE expects to hire most of EdSurge employees as staff members. Neither CEO disclosed the price of the transaction. However, Culatta said in an interview that EdSurge shareholders will not receive any return on their investment, and that outside organizations are providing support for the transition.

In a recent vote, ISTE’s board—which is primarily comprised of educators elected from its member base—approved the sale unanimously following a vetting process. “We wanted to make sure, first of all, that we could support an enterprise like EdSurge,” says ISTE board president Bill Bass, a district innovation coordinator in Missouri. Bass adds that the board looked at whether the organization could support the work EdSurge does and its headcount, which numbers about 30 employees. “There’s always risk involved, but we weighed those risks carefully.” ISTE has 60 on its staff.

Readers of EdSurge articles and newsletters should expect no change. EdSurge’s editorial staff is staying intact, with managing editor Tony Wan leading the six-person newsroom in accordance with the EdSurge ethics policy. Corcoran says she will join the senior leadership of ISTE. “I will be spending a big portion of my time making sure that we do this integration in a way that, number one ... really delivers on the mission, really keeps the journalism strong and really provides great value for everyone,” she says.

Culatta says that the plan is to work together with leaders at EdSurge to figure out “the right organizational structure that supports the work.”

The EdSurge name isn’t disappearing—it will be retained for newsletters, along with the website and archives. “I don’t think it would make a whole lot of sense for us to take away from the brand that people know and recognize,” says Culatta.

Other changes, including those to staff roles and possible headcount reductions, have yet to be determined. “Any time when you look at combining teams and roles, there’s always the chance that there are redundancies,” Culatta says. “Those are questions that we’ll have to take thoughtfully.”

How They Met

ISTE has been an organization with a reputation for moving slowly. It offers a range of services, but its annual flagship conference has by far been the most popular.

Then in 2017, Richard Culatta became the group’s CEO, promising to expand and rebrand the association.

Culatta made his name in government, serving in the U.S. Department of Education under President Barack Obama as director of its Office of Educational Technology and then as the chief innovation officer for the state of Rhode Island. In both positions, he sought to move things quickly, living up to his nickname “Chief Impatience Officer.” In a 2017 interview with EdSurge, he said the nickname was even on his business card at one point earlier in his career, and stressed the value of what he calls “thoughtful” impatience. “It doesn’t mean just randomly run down the street, but there are approaches that you can use to be thoughtfully impatient,” he said at the time. “Yes, we could take six weeks in order to do this, but could we do the same thing in two? Literally asking that question sometimes is enough to get us moving.”

Early in his tenure at ISTE, Culatta and his staff brainstormed his new organization’s weak spots. Among them: the organization had no outlet for real-time news reporting, and no strong focus on higher education. Building out those capabilities internally was one solution. Acquiring an organization doing similar work was another.

“We looked at a number of organizations and, not surprisingly, EdSurge came very quickly to the top of the list,” Culatta says. Shortly after, he called Corcoran to discuss the idea—and even toured the EdSurge offices in 2017—but talks petered out. “It just wasn’t right from an EdSurge standpoint. The timing didn’t work out.”

At the time, EdSurge was attempting to diversify its revenue streams by rapidly trying various initiatives. A national conference in the Bay Area, called Fusion, was conceived. A sponsored content division was beefed up and an experiment in offering a matching service around edtech purchasing, called Concierge, was attempted and later abandoned, slimming staff.

Plenty of things have gone well, of course. EdSurge focused on newsletters before they became a trendy way to engage with audiences, and its website has jumped ahead of many of its more established edtech news competitors in traffic rankings. For her part, Corcoran, a former journalist at Forbes, The Washington Post and Scientific American, says she is proud of the impact the company’s journalism has had, and that the teacher voices that EdSurge has shared over the years in the form of op-eds and columns will continue.

But EdSurge’s challenges in finding a sustainable revenue model is typical of media organizations smaller than mammoth newsrooms like The New York Times but larger than scrappy blogging operations—especially as costs began to outpace revenue, Corcoran says. “There is not great sustainability for people who are in the middle,” she notes. Back in 2011, Corcoran looked into founding EdSurge as a nonprofit but found the path toward starting a venture-backed, for-profit company more straightforward.

EdSurge’s most recent round of funding came in December 2018, when earlier investors joined with a few new organizations in a $2.5 million round. Some of that went to developing a new market analysis subscription product aimed at investors and edtech executives, EdSurge Intelligence, an effort that is now on pause and that Corcoran says could still be revived in the future. “I think it’s deeply needed,” she says.

Conversations with ISTE resumed this year under what Culatta called a “tight timeline.” EdSurge also attracted interest from “a number of people” for possible acquisition, says Corcoran, though she declined to name them. From a mission and vision standpoint, the ISTE acquisition was certainly fortuitous, although it did not come with a huge price tag. “I would have loved it if I could have just said, ‘Here, we’ll just write a big check and buy EdSurge,’” Culatta says. “It’s not an option when you’re a nonprofit, at least one that works the way that we do where we don’t have a large reserve other than our emergency reserve, which by policy, I’m not allowed to touch.”

Like many nonprofits, ISTE balances its budget each year, reinvesting surplus revenue back into the organization. From 2014 to 2017, the latest year for which tax documents are publicly available, ISTE’s revenue has grown each year. In 2017, it reported north of $16 million in revenue—two-thirds of which came from the annual conference—with a surplus of nearly $1.9 million after expenses.

In addition to its annual conference, ISTE also publishes books and a pair of research journals. It offers a collection of graduate-level courses for educators known as ISTE U and a certification program based on a collection of education standards it produces. And, while not quite a news organization, it produces a magazine for members called Empowered Learner.

All that’s to say, ISTE doesn’t have much experience in digital news publishing. But Culatta says he’s committed to preserving EdSurge’s mission. “It is important that we remain with this neutral point of view for the journalism,” he says, “and that the teams feel able to write and report on work that’s happening anywhere in the field, including the stuff that we’re doing at ISTE.”

Wade Tyler Millward contributed research.