Startups Take on the Business of Education

When it comes to opportunities for entrepreneurs, the field of education has a decidedly steep learning curve.

“Education startups certainly have unique challenges,” says Ariel Diaz of Boundless, a Boston-based startup that offers free online textbook replacements for college students. “The decision-making process in education is very convoluted, slow and complex.”

But that environment hasn’t discouraged entrepreneurs from approaching education with a variety of products and services. Given that for-profit education-related ventures are often viewed as suspect — online-learning organizations like the University of Phoenix have come under state and federal investigation for potentially exploitative and fraudulent practices — the key to making a go of an education startup is identifying market inefficiencies and challenges, but with an overriding focus on doing good.

Identifying a niche market
Sometimes, doing the right thing can have surprising beneficiaries. Judy Zimet found a niche in need of attention when she began Law Student Ally to provide one-on-one guidance to law students. Her service helps them achieve higher grades, obtain internships and improve their chances of landing a job once they graduate.

“This is no longer the world of Tom Cruise in ‘The Firm,’ where huge signing bonuses and luxurious gifts are showered upon law school graduates enticing them to join prestigious big law firms,” says Zimet, who is based in Scottsdale, Arizona.

“Today, big law firms are in a financial downturn along with the rest of the world. Consequently, although there are approximately 45,000 law school graduates a year, there are only 25,000 legal jobs available. To land a job, law students need more than a juris doctorate earned with average grades. With personal coaching, law students receive higher grades, maximize class and internship choices, and receive recognition through publicized works and awards.”

Dealing with administrative challenges
Once you’ve found a problem to solve, you’re likely to come up against another one — the administrative element that plays a role in most any sort of educational system. Since, for instance, a school principal won’t actually be using products such as study-aid software, entrepreneurs are compelled to devise particularly persuasive marketing strategies — or try to circumvent administration altogether.

“Decision makers are often not the actual users of a particular product or service, similar to business IT decisions 10 years ago,” says Boundless’ Diaz. “This makes sales and distribution a significant challenge for startups who have to learn to navigate this. Some startups, including mine, are opting to go direct to students.”

Getting the timing and marketing right
If you do decide to market to students directly, academic schedules can pose still more hurdles. While many products and services know no real “season,” education entrepreneurs have to watch the calendar carefully to time marketing efforts and product rollouts.

“The school year is cyclical in nature,” says Diaz. “It means that there are fewer opportunities to iterate on the product, and creates hard deadlines — namely at the start of school year and semesters — by which new releases need to be complete.”

Entrepreneurs have responded with fresh marketing strategies, even for those education-related ventures that are a bit more traditional in nature. David Greenberg started Parliament Tutors three years ago. The New York-based company offers in-home and online tutoring to prepare students for all subjects, from kindergarten through high school, as well as tests like the SAT and MCAT.

Rather than advertising in education publications or making in-person pitches to students, parents and teachers, Greenberg opted to pursue a comprehensive social marketing strategy.

Ushering in the startup era of education?
Parliament Tutors’ growth underscores an overriding dynamic of the education system. Some schools and taxpayers pump more money into programs and services only to see scholastic performance continue to erode. Others trim budgets and, with them, valuable programs and offerings. It’s a volatile and very personal problem. Any entrepreneur with a solution that’s not only cost-effective but also boosts students’ grades and test scores will likely find an audience.

“Entrepreneurs love identifying the problem, innovating a solution and assessing the market opportunity,” says Charles Matthews, executive director of the Center for Entrepreneurship Education and Research at the University of Cincinnati. “When it comes to matters of education, however, the deliverables are focused on the patchwork of constituents that constitute the education ecosystem — students, parents, prospective employers and politicians. The bottom line is not just profit or loss, but your impact on society.”

“Right now we are seeing a boom in educational costs and a simultaneous reduction in education effectiveness,” adds Diaz. “This creates a huge opportunity to leverage the prevalence of technology and the availability of open content to dramatically revolutionize education. I believe we are entering a golden age of education startups, and that education as a whole will see more change in the next 10 years than in the previous 50.”