In the TV series Shark Tank, entrepreneurs with budding companies pitch their ideas to a panel of investors who ask probing questions and then decide whether to back the proposals. The Chronicle adopted a modified version of the format during a session at the South by Southwest Edu conference in March, with a panel of experts weighing in on five new products or ideas to fix pressing problems in higher education.
True, our panel didn’t have any money to invest. But the session was fast-paced and provided a chance to grill some innovators on their ideas and the ideas’ value.
Our sharks were Goldie Blumenstyk, a senior writer at The Chronicle; Jason Jones, a co-editor of the ProfHacker blog and director of educational technology at Trinity College, in Connecticut; and Paul Freedman, founder of Entangled Ventures, an education-technology company. Each spoke from a different perspective — Ms. Blumenstyk as a reporter surveying the landscape, Mr. Jones as a professor and administrator at a college, and Mr. Freedman as an investor looking for the next big thing in education technology. I served as moderator.
Five people presented. Most were entrepreneurs, but one, a recently retired university president, pitched just an idea for how colleges could run better. One of the entrepreneurs actually appeared on the Shark Tank television show (and won the backing of one of its judges).
Following are edited highlights of the session. Or, if you prefer, you can listen to audio of the session here:
Pitch 1: Gregor Freund, Versal
What his product does: tool to help professors build interactive online materials
Freund: When I sold my previous company, I had some time at my hands for the first time really in my life. And I took, like many of us, some online classes, and I was frankly underwhelmed. The classes were videos, texts, quizzes, they were done by Harvard professors for Harvard students who have somehow the perfect recall of that hour-and-a-half lecture. It didn’t work for me. And the couple of good ones were done by hand coding, JavaScript coding, things like that, which are impossible to do for most and out of reach for most educators.
So we started Versal to really allow anybody to create online courses, assignments, homework assignments, and so on, and really make it as easy as it is to build a PowerPoint. For that, we invented a concept called Learning Gadgets. Learning Gadgets are almost like little apps. You drag them in the canvas, and you build your courses or the assignment that way. You can create a timeline. You can create animated graphics. You can bring in 3-D pictures. And then lastly a lot of these Learning Gadgets allow you to bring in third-party content — so almost anything that exists on the web you can bring right into a Versal course, organize it, organize it in lessons, put assessments in between, and so on.
The first adopters were really educators, and particularly middle- and high-school teachers, so we’ve focused on them ever since. When we asked what they liked about Versal, the first thing they said is their students live on their devices — they live on the iPads and so on — and this for the first time allows them to create really cool interactive content for them and really speak the same language that these students are geared now to speak. The second one is it allows them to build online classes that actually locally are relevant. That means they can bring in their own knowledge, they can bring in their cultural sensitivities, they can bring in, let’s say, local biology, and so on.
Freedman: Let me start with the question that nobody in Silicon Valley should ask at first, but I will ask: How do you plan to make money?
Freund: Well, the way we’ll make money is if you build courses and publish them, we can do that for free. If you want to track your learners, if you want to see the progress of your learners, if you want to bring in the information from the quizzes into your learning-management systems, then you have to buy. There’s a $50-a-year pro pack, and then there are larger ones for school districts and organizations, and it’s really based on the number of learners that you track.
Blumenstyk: How sophisticated can this actually get? A lot of college professors are not just creating timelines or little visual charts. There’s a lot of tools out there that are pretty sophisticated right now for graphics and interfaces in college-level courses.
Freund: It can get quite sophisticated. But the cool thing about Versal is that you’re not limited to our own tools. So, for example, a lot of teachers love to use Quizlet, which is a great company — they build these really complicated quizzes, really interesting stuff, and you can just take those and bring them right into the Versal course.
Freedman: How is this different than companies like Toolwire, or Second Avenue Learning, or Smart Sparrow?
Freund: We looked at a lot of that stuff, but we’re really focusing on the creating aspect. A lot of the technology that’s built for the classroom is organizational technologies like, Hey, organize this better, organize that better, get a lot of stuff out of there. There’s really very, very little technology that says, Hey, create something from scratch that’s really good.
Freedman: Smart Sparrow the company would argue that they have an authoring platform for learning gadgets — they might call them learning widgets.
Young: Thank you. So I want to hear each panelist’s thoughts really quickly, and maybe if you’re willing to say whether you’d be inclined to — whatever it is you guys do, whether you’d be willing to write about it, or think about funding it, or maybe think about having your college look into it more.
Blumenstyk: I would write about it in the context of the other companies out there, and what it means for faculty, and how it might sort of get at these issues that faculty are now facing. I think this is part of what’s happening in the future, but this company, I don’t think it’s the only one.
Freedman: I love where you started with the criticism of the MOOCs. I mean, MOOCs aren’t learning platforms, they’re distribution platforms. So I think you’re focused on the right place. I agree with Goldie — I think there’s other people doing it, and I think at this point it’s a tool, not a company, so I wouldn’t invest yet.
Jones: I’m certainly interested in the idea of making it easier for people to collaboratively build things that are pretty cool in the classroom. From a higher-ed point of view, we generally like our students to be working with tools that will allow them to be forward-looking in their own development. So, for example, if you’re building timelines, we want you to do that with assembly tools that articulate well with WordPress, Google, and other kinds of platforms. And if you’re using maps, we want you to use Google Maps or GIS and those kinds of things. So I’d be interested in thinking about it in the context of a sort of proprietary-ish platform against those.
Pitch 2: Dale Stephens, founder of UnCollege
What his product does: gap-year program to possibly replace the need for residential colleges
Stephens: I’m going to be real simplistic about what the purpose of higher education is. There are two main things that I think happen at a college. One is that you learn to be an adult. You learn how many beers you can have before you have a hangover; you, like, have awkward sex for the first time. And, ostensibly, you also learn skills.
College doesn’t do either of these particularly well. What we’ve seen in the last four years is companies like General Assembly, Dev Bootcamp, and so on prove that you can create a model around teaching hard skills in a short period of time with high employability, right? So that part of college is moot. The other part of learning to be an 18-year-old — learning how to do your dishes, do the laundry, get groceries — is really hard, and that’s what we do. So I think, in a large context, think about General Assembly as a finishing school and us as the starting school. We help young adults figure out who they are, what they want to do, and how they learn in a gap-year program.
Students spend three months abroad doing a service-learning project, three months residentially in San Francisco, and three months doing an internship. They’re guided in that process with a coach who’s there to keep them accountable, connect them to resources and mentors as they go through that process so they’re aware of their own development. And then when they’re done with our program, they can take those skills and the self-awareness that they learn to go to college and make the most of that time. If they are in the right place, they can go directly into the work force, or they can choose to go and participate in a hard-skill training program like General Assembly. That’s what we are.
We think there’s a lot of colleges that are going to close, as we’ve seen a precedent in the last couple of weeks, and we think we’re well positioned to be that rite of passage for young adults of the next years.
Young: Sharks, your questions …
Blumenstyk: I’m just wondering, where do you see yourself in connection to the college? Do you see yourself as trying to eventually get the college to buy into your program, as you’re the orientation for them?
Stephens: I don’t know, we’ll see. I think that eventually college and UnCollege will have to come together. I don’t know when that will happen and where it will happen. I think that there are students for whom going to college makes sense and who benefit from a structured environment, but I think it’s going to take a college with a lot of vision to take that step and say, Hey, we think our students would benefit and take more out of that experience if they went to UnCollege first.
Freedman: How do you avoid being just a rich-kid product?
Stephens: Yeah, that’s a hard problem. Unfortunately, the funding models are set up such that it’s way easier for an 18-year-old to walk into a bank and get a loan for a random degree in art history, even if there’s no employability for it. We are working on setting up a scholarship foundation. I’m talking to several foundations right now. What I would like to do in the long term is set up an income-share program and invest some of our own money into it, so that we could create a scholarship pool that is a rolling scholarship pool such that students who do the program can fund the program by committing to, say, giving 5 percent of their earnings over the course of the next 10 years into this rolling scholarship fund that could then fund future students.
Jones: Actually, the art-history majors are mostly doing fine in terms of their postgraduation salaries. Liberal arts is OK. But the question I have is, the first part of this is a residential program. How do you guys manage things that a college like mine, for example, factors like drinking and other kinds of social activities that are either desirable or not desirable from a parent’s point of view?
Stephens: Yeah. Honestly, the biggest challenges we have are around who does the dishes and how they pile up in the sink. Setting very clear expectations around those things, norming and setting the goals and rules as a group so that everyone buys in is super-important. The folks on our team have 10 years of experience in social and emotional learning and group bonding and creating culture, so we create a very strong culture in the house from Day 1 so that everyone has accountability with each other and understands that everyone is responsible.
Young: Judges, what are your verdicts?
Blumenstyk: At The Chronicle I think we’ve written about UnCollege in certain contexts, but I think it’s kind of a bait-and-switch name a little bit because a lot of people who go to college right now aren’t young people, and I think you’re sort of trading on the dissatisfaction about higher education right now in the marketplace. So my issue would be maybe with the name, even though I know it’s obviously marketable at many levels, but at some level it kind of raises questions for me — not that it’s not a good name, but is it a little bit, not bait-and-switch in that respect, but a little bit trolling on the name “college.”
Stephens: Yeah, we’re thinking about changing it.
Freedman: Yeah, I like it a lot. I think so far you’re a more-successful under-the-radar Minerva. You actually have your students pay to go to your program, for example. I think the biggest concern is my question of how you make sure you don’t just end up being a rich-kid product. But I definitely would be interested.
Jones: I have almost the exact same concerns. Not only from a financial point of view, but I also wonder about the extent to which your program works well on a kind of homogenous student type, and how as you grow your program.
Pitch 3: Patrick Jones, founder and chief executive of Career Journey GPS
What his product does: career-services tool for college students
Patrick Jones: My name is Patrick Jones. I’m the founder and CEO of Career Journey GPS. The name of our platform is called Vocatio, which is Latin for “vocation.” It’s a very intentional use of that word because we view ourselves as a modern liberal-arts brand. The original meaning of the word vocatio, besides just “job” or “career,” had very much a sense of purpose or passion associated with it, so a blend of “advocation” and “vocation.”
So we’re bringing a little bit of a consumer-oriented approach to young people in this kind of career-discovery, -exploration, and -preparation mode.
I’m a big believer that this generation has a unique set of attributes and a point of view on life that’s very vital as a cohort, 80 million Millennials as they come into the work force. I know it’s very easy to kind of look at them like they did Gen Xers and think there’s all these things they don’t have and that they don’t do and that they’re not quite ready yet. We try and take the opposite point of view. When we talked to young people in the pilot testing that we’ve done at UCLA and other places, we say that there’s a unique attribute or talent index that you have.
We have a technology that allows us to quantify what the talent index is for young people and then match them with more than 450 job roles. And we use that particular matching feature to then guide them through those job roles, the industries, and eventually to the employers that find them. We oftentimes kind of compare the back-end experience of what we do to eHarmony. We’re really trying to bring more of a relationship dynamic to how employers find students and how students find employers.
A young person has an intrinsic motivation to want to do something really cool with their life, and it’s actually quite exciting. I think, unfortunately, sometimes when we jam it into this kind of academic, linear experience, it becomes kind of disengaging. So we decided that we really wanted to change that orientation and really appeal not only to the cognitive responsibility that a young person has to find out what it is that they want to do, but we want to light them up on the inside and let them know that the marketplace has an opportunity that allows them to both love what they do as well as develop their talent and their passion within that space.
Young: All right. Questions?
Blumenstyk: So I’m a career center at a university. Why do I care about your product?
Patrick Jones: Well, it’s because the students care. So one of the things that we’ve noticed from our research is that the students, when you ask them what they want, and when you design a program that kind of puts them at the center of it, that the experience you get is kind of different than when the adults, however well-meaning, design it for them to participate. So our brand is really kind of an empowerment brand for a 17 and 18, and we view ourselves very much as like a second-screen experience to the academic track.
We think that universities, whether it’s a two-year school or a four-year school or whatever, do a really good job with the credit hours, GPA, check the box here, do this. Unfortunately, I think they’re much more limited in terms of how they bring the dynamism of the marketplace. We bring it in an immersive way to the student to excite them. And that’s what we really view ourselves.
Freedman: Let me first say your product looks beautiful. It’s really, really impressive. What makes you think that 17-year-olds want to do career exploration and career planning? I know we want them to do it, but my experience — they start thinking of career planning about six months after they graduate.
Patrick Jones: Well, that’s the way the system is kind of set up. One of the things that we found in our research was this thing called the quarter-life crisis. Some of you that work with young people may understand this. It’s the sense young people have that, however well-meaning and attentive the adults have been in their life in terms of telling them the things that they need to do, there’s a sense within them that says that may be true, but I don’t think it’s as true for me. So what young people really struggle with is, How do I take that thing that’s inside of me that I want to do but I don’t have enough experience to argue against Dad or to argue against the other adults in their life and, say, allows me to discover it at my own pace and then act on it?
So we’re building a platform that kind of takes advantage of that intrinsic motivation to kind of know these things and find out how I can get paid to do something I really love to do.
Jason Jones: How long have you been going?
Patrick Jones: For about a year. The concept’s been around for two years. I actually started because I was on the board of my undergrad, and the university president came to us and said we’re looking for some ways to improve our career-services function, and frankly I was kind of embarrassed by what we had. And then we started benchmarking across other universities. I was kind of underwhelmed by what students were getting on that end of the university cycle, and so it kind of just set about this area of investigation into this space.
Jason Jones: The reason I ask is I would be fascinated to know whether that quarter-life crisis has abated by having a program reflect back your own desires. Because it seems to me that if you’re really a liberal-arts institution, one of the things you’re focused on is transforming those desires as much as possible and getting the students to recognize the extent to which those consumerist impulses are not adequately followed through.
Patrick Jones: Our classic use case is, for example, when I’m on campus and I’ll talk to someone and I’ll say, What’s your major?, they’ll very easily say sometimes, Can I tell you what my track is? I’ll say, If you put all that aside, what would you want to do? And they’ll say, Well, I’d really love to do something with horses, but I can’t get paid to do that. And then, because I come from the marketplace, I can say, Well, wow, you know what, there’s a whole range of things that deal with horses, from being on the pharmaceutical side to the management side to the agribusiness side of it. There’s operation, supply chain, there’s finance. And young people just don’t know and universities don’t do a good job of translating necessarily that that exists.
So the more that you can kind of automate that process of discovery for the young person, they can still be connected to what they love and then understand how the marketplace can deliver on that.
Freedman: Just so I’m clear on the business model, is this a platform that you’re licensing to universities?
Patrick Jones: No, it’s directly to employers. It’s a subscription model to employers, so they pay.
Young: OK, sharks, do you guys have any closing comments for Patrick?
Blumenstyk: Yeah, I like the emphasis on values in this thing because I think so much of the discussion now is about credentials and very instrumental, and this is kind of a different approach. I do wonder how this platform will translate whatever these credentials are to a broader market.
Freedman: I’m conflicted here. I’m an investor and adviser in Koru [a similar service], so I obviously like the space a lot. So I wouldn’t be able to invest, but I think the product is beautiful. I think the only concern I have is I think it’s a nontrivial challenge to get people to care about their career exploration before they’ve been sitting on their mother’s couch for six months.
Young: Thank you, guys, all for sticking with us. I think it’s interesting, we’ve tried to mix this up. We had a tool for faculty to aid in their teaching, kind of the before-college UnCollege idea of the gap year, and then the after-college of what do you do with students. These are all addressing very large issues in higher education right now.
The next person we have is somebody who until recently wore a very big administrative hat. It’s Tom Cedel, who was president of Concordia University Texas until recently. He’s now a visiting professor at Valparaiso University. And he does not have a product to sell, so he’s fine with the fact that they don’t have any money to give him. He responded when we put out a call on our Wired Campus blog at The Chronicle, and we said, If you’re going to be at SXSW Edu, and you’d like to make a pitch to this panel, approach us. And this was really interesting. It was like, What if I just tell my crazy idea and get some feedback from you guys? So here it is, and let’s welcome Tom Cedel.
Pitch 4: Tom Cedel, former president of Concordia University Texas and visiting professor at Valparaiso University
What his product does: not a product, but an argument to do away with the credit hour
Cedel: So I’ve been a college president for 12 years and in higher education for 15 or 20, and we do all kinds of really cool stuff, right? We do hybrid classrooms. We do flipped classrooms. We do online courses, competency-based stuff. But one thing we don’t touch in traditional education is the schedule. Why the heck do we schedule classes Monday, Wednesday, and Friday for an hour and Tuesday and Thursday for an hour and a half? Why do students have to take five courses at a time? Why do we set this within a framework of terms? It’s frustrating.
As a dean, I used to sit down and try to figure out where to put choir, how to deal with athletics and student governments in a traditional schedule. Let me tell you, it’s nearly impossible. So my concept is, let’s get away from this framework, and think about this in terms of learning outcomes and pedagogy, and get rid of the classic schedule.
So, first move to a framework based on student learning outcomes, faculty-student interactions based on pedagogy — not schedule. That means we have a mix of online classes, in-class and co-curricular experiences based on learning outcomes. Course might meet once a week for three hours, might meet once a week for an hour, maybe it meets every other week. But other experiences and co-curricular things occur outside that framework like labs, like service learning, like research, like case studies.
Two, that a student experiences much fewer in terms of courses, only two or three at a time, maybe only one or two, again depending on the student-learning outcomes and pedagogy being used in those. This is similar to block scheduling in professional programs. And finally, heaven forbid that we charge tuition on an annual basis, based on a minimum but no maximum of credits per year.
Those three components come together for a student, and we present them with a palette of a way to move through their educational process. I’m going to leave for the board to ask me questions about implementation — as the president walks into the registrar’s office to do this and everybody goes into apoplexy, right? So that’s it, that’s the basic concept. Questions?
Blumenstyk: I think we’re in the competency-based framework right now out there in the world. We’re starting to see some of that. Do you think that model is not going to work?
Cedel: Competency-based in what framework? Again, I’m kind of leaning more toward what we think of traditional residential. I understand nontraditional and online is changing. I’m trying to move that kind of change into the traditional.
Blumenstyk: So students would still be in a residential environment, but everyone would kind of be playing on their own card?
Cedel: Yeah, in a way. And interacting with faculty members, again based on student-learning outcome and pedagogy. So they’ll still be in groups and teams.
Freedman: So you’re describing a hybrid Western Governors [University], basically?
Cedel: Maybe a little bit. I don’t know as much about Western Governors. I know it’s completely online. I know, based on UnCollege and other things, people really do enjoy the traditional residential experience. There’s a lot to be gained in that environment. But I’m trying to move us out of that framework that constricts what we do when.
Blumenstyk: What are you going to call this thing?
Cedel: I have absolutely no idea.
Blumenstyk: Because things need a name out here.
Cedel: I was going to call it Loop.
Freedman: UnCollege could be available pretty soon. I’m stuck on the sort of financial-aid question.
Cedel: Sure, absolutely. Well, think about accreditation. That’s the other thing. What’s the framework that we set accreditation within? Let alone financial aid?
Here’s a couple of the implementation questions that I think are really important. First of all, within this context, advising becomes really critical. The student sees this palette, but they need a really strong advising environment for that to be able to happen, so I think that’s No. 1. I think, No. 2, we need to change some of the ways we think about financial aid and the ways we think about accreditation, both at the collegiate level and programmatic. Within this context, there would still be credit hours, and there would still be a way to look at whether a student is full time or part time, so that framework would still be there to be able to meet accreditation. But I think there’s ways we need to change some of that thinking.
Jones: I’m fascinated by the notion of a plan that would have credit hours but would not be organized according to hours. That’s slightly baffling to me. It’s also baffling to me in part as a faculty member who understands what a semester looks like in the context of all my other colleague’s classes and so forth. I understand what student workload is like at certain times in the year and so forth. I would be at a level panic about what to do.
Cedel: First of all, I think if an institution did this, this is one of the questions on the implementation side: Is it flips all the way or it doesn’t flip at all, because it can’t — the integration of a model like this within a traditional Monday, Wednesday, Friday, Tuesday, Thursday framework is not going to work.
I’m teaching a course now, and what frustrates me is I have student-learning outcomes and ways I want to approach my course in outcomes, but I’m hemmed in by this schedule. Why do I have to fit that? What’s the first thing you do when you sit down and deal with your syllabus? You put the schedule in it. Right? You do. So why not think of a better way to do it where if I’m doing case studies, I meet once a week for two hours? So I understand that integrating this type of approach with already-scheduled classes, like that Monday, Wednesday, Friday, Tuesday, Thursday, would be really difficult, so the whole institution has to flip.
Jones: I do think there’s been a fair amount of experimentation in recent years with alternate models of scheduling. I think at a fair number of colleges, when the right faculty asks certain kinds of questions, you can get quite different scheduling arrangements, much to the chagrin of academic-support people all over the campus who have to make it work. But people seem to be trying.
Young: Thanks, Tom. All right, so we have one more. Everyone love this clock? That’s our theatrical, that’s our big Hollywood budget. The last person we have presenting up here today is Mike Shannon, who is from Packback, and I’m pleased to say he’s actually been on the television show Shark Tank, so he has more experience than any of us in the Shark Tank genre. He is going to talk about Packback, and I will let him take it away.
Pitch 5: Mike Shannon, co-founder and chief executive of Packback
What his product does: pay-per-use textbook-rental service
Shannon: Thank you so much. My name is Mike Shannon, and I’m one of the founders and CEO of Packback. A little bit of our back story: Three years ago, I was a student at Illinois State University. A few friends and I came together and kind of started up a business fraternity — had a lot of involvement on campus with hundreds of students. And the one kind of uniform issue that every student was coming across was at the beginning of the semester, making a decision about their textbook.
So what happens is, a student goes to class, and within the first few weeks they have to make a very fast judgment call on whether or not to buy a used book for their course or to try to hold off and not buy anything at all. Students do anything possible to avoid buying a new textbook for their course.
Today’s professors can utilize a wide range of different resources to put out information for their course. The textbook in many cases becomes more of a reference point. But a student doesn’t have a lot of time to really understand that professor’s teaching style before they have to jump into the used market before supply runs out. So on the flip side of this market, textbook publishers and learning companies lose massive portions of what should be their core revenue stream to this secondary market.
A new textbook is sold once, and then, on average, it’s resold nine times, of which the content creators don’t actually see any of that revenue. And this has kept kind of the digital adoption rate in higher education very low — we’re at about an 8-percent e-textbook adoption rate because the prices of the used market directly undercut the available digital prices and certainly the new textbook prices.
And so our idea was simple: to connect the two by allowing students to pay per use for their book. Go to class, hold off on rushing into any nontransparent purchasing decision, and rent an e-textbook by the day. We rent digital textbooks for $3 to $5 per 24 hours, allow our student to go to class, rent as they have their first quiz or homework assignments, and then in the courses where they find their professor is truly utilizing the book on a regular basis, they can convert any of that money spent on daily rentals toward an extended semester-long or year-long rental, depending on whatever that learning company provides for their typical digital duration.
And so what we found is that we can actually attract students away from the used market, and certainly students don’t desire to kind of pirate the content. People will pay for something that they’re kind of seeing the reasonable value for. And so we’ve found that we can really pull these students over from the used market, introduce a positive new revenue stream for content providers. What we’ll do is analyze a given ISBN [International Standard Book Number] in a certain stage in its life cycle, and figure out when the used market has efficiently reacted to that supply, and then open up basically this window of pay-per-view for students which is an additional monetization arm for the content providers.
And then for students, what we’re obsessed with is digital adoption. So this 8-percent e-textbook adoption rate is very alarming. We see the e-textbook certainly not as kind of the future adaptive-learning technology product that the industry’s working toward, but it’s certainly a building block. And if you can get a student on an e-textbook, you lower the barriers to ultimately have organic adoption of some of the next-generation products out there.
So for us, what we’re obsessed with is getting students on the digital medium and starting to eventually look at opportunities to introduce some of the next-generation products directly to a student at their time of need. Whereas right now, to sell or try to kind of up-sell an additional value-added product to a student at a premium at the beginning of a semester is not very easy — it comes out of their discretionary income.
So the last thing I want to leave you with — it’s funny it comes up very often that the textbook cost, while it’s not cheap, is a very small percentage for most universities of what students are spending on tuition, but the key is that it comes out of discretionary income. So these students, they don’t have a lot of cash. In fact, we’ve been tracking it since our first presentation today. In the last 30 minutes or so, national student debt has gone up another $9 million. It’s over $1.3 trillion nationwide. And so when you have discretionary income, students are very kind of strong — hold on, not giving that up. And that’s where, with pay-per-day e-textbooks, we’re looking at giving students a positive solution that introduces a positive revenue stream for content providers and ultimately increases the digital adoption rate.
Young: Just on time, thank you.
Freedman: So I have a two-part question. First, how are we doing as sharks?
Shannon: Oh, you guys are doing way better than the TV show.
Freedman: I appreciate that. Second is, you know, you talk about this as an introduction to a new revenue stream for publishers. Can you go into that more deeply?
Shannon: Sure. So it’s pretty clear on kind of the textbook product alone, what you can do is look at point-of-sales data at university bookstores nationwide, and you can see what percentage of revenue came from new books versus used books. And this is how we kind of create our criteria for what the applicable window of opening up the pay-per-day digital-textbook revenue is, or kind of window to monetize.
Now beyond the textbook revenue, what we look at is, How do we start to introduce adaptive-learning technologies directly to students? So there was a panel yesterday, and there was a really interesting point. Peter Cohen, the president of McGraw-Hill, brought up that in many cases sometimes the best technologies or services are not actually adopted by the professors, and so students are never actually being introduced to these products.
And like I said, they’re not out there paying for something on their own, searching for adaptive-learning technology. So what we look at as an opportunity is, if you can get a student on an e-textbook, you now have them in this arena where you can start to look at where are they getting stuck, where are they spending the most time, and you can find the pain points which are kind of ideal for introducing and really kind of up-selling new additional products that, if they’re proven to be value added to students, should be presented at the right moment.
Jones: What’s your point of contact with students? Do they seek you out independently, or would you partner with a bookstore?
Shannon: Yeah, so we go directly to students. One of our key acquisition channels is our campus-ambassador program. We have 200 college students across 70 universities right now, and we have kind of this sort of educational program built around entrepreneurship. But these are sort of our student feet on the street. So that’s a big acquisition channel, and then we’re out there on Google ads.
Jones: But then my related concern is that my bookstore is an important revenue driver for my school. And even if it’s a used textbook, the college gets its share as well. So to the extent to which students move in your direction.
Shannon: Sure. So I think the bookstore kind of goes hand in hand with the content provider as well. So, in addition to what percentage of revenue came from used units in the bookstore, we can start to get an idea of what’s happening in the online marketplace. And so what we’ll do is kind of track what type of transactions are happening on, say, Chegg, Amazon, and online away from the bookstore.
So we don’t primarily partner with institutions, but we have a few opportunities that we’re talking about, and what we look at is, one, what is the effect of students’ actually not registering for certain courses depending on the textbook cost, and then also really if there’s a revenue increase for the bookstore based on activity in the online market.
Blumenstyk: So as an author I’m a little bit conflicted myself here because I want to sell books at the same time, but in the content of my book I talk a lot about this problem and the opportunity for open resources and sort of alternatives to the textbook because students aren’t adopting them. But what I guess is the pedagogical question — I hear that professors actually like it when the students have the book because they want them to read the book, not just the week they’ve assigned the chapter but to go back to it and refer to it. So, pedagogically, are there some issues here that you’ve encountered?
Shannon: So there are so many different styles of professors. We’ve now started kind of reaching out directly to professors and have gotten a very good initial reaction as our digital catalog has grown. And so you have professors certainly that are strong — hold on using every end-of-chapter homework assignment, having regular nightly reading out of the textbook — and those professors certainly want the student to have their book. And we offer that option, right: They can convert any of the daily rental money on the semester-long price.
But then you have professors who might want to utilize a whole range of different resources to put out information. The textbook is one source of information, but we find that, more and more, especially this next generation of professors, they want to have a portfolio to put out to their students. And if a student finds they only use the book four to eight times, the professor bears the brunt of their frustration, and so we provide kind of a nice thing for them to do for their students by offering to kind of buy à la carte.
Young: All right, so what does our panel think of our person who’s been on the Shark Tank show?
Freedman: I think it’s a really compelling idea. I mean I think the challenge is going to be getting the publishers to go along with it. Historically owners of content aren’t really excited about changing models for accessing the content. And usually it’s been somebody, you know an organization, sort of forcing them to change its model, and you’re trying to do it in a sort of partnership, but I think it’s a very compelling idea.
Blumenstyk: I came here today in a car-to-go, so I’m kind of a little bit more enthralled now with the shared economy, so I think this is kind of interesting. And I do think if it could actually drive students to buy the book, it’s got a lot of promise, and it definitely creates a challenge to the publishing industry.
Jones: I’m deeply conflicted here. On the one hand, I was a former English professor, so I would not have a life or other things without the used-bookstore market, and my basic approach to the traditional textbook industry is burn it down, so I’m kind of sad that you are sort of weaning people off the used-book market and supporting traditional content providers, as you’ll call them. That said, I completely see the value this provides to students in terms of a day where textbooks cost hundreds of dollars a year for a class that they’ll use for a couple weeks, so it seems like an interesting idea.
Shannon: Thank you.
Young: All right, well, I think we timed it out just about right. Thank you for your patience with our adjusting to this format ourselves. And let’s thank our panelists here, Goldie Blumenstyk, Paul Freedman, and Jason Jones.
