2014-01-31

Co.Labs

How This Ed-Tech Startup Reached 7 Million Students Without Charging Schools A Dime

Scaling is hard in K-12's fragmented market. Here's how EverFi beat the odds.



Tech-savvy kids have propelled the rapid growth of everything from YouTube to Snapchat. But achieving scale with educational technology--and no selfie strategy? That’s a different story.

Public school classrooms are typically a daunting assortment of laptop carts, used textbooks, temperamental firewalls, and clunky district-level systems for test scores and other student data. Perhaps it should be no surprise that while principals and administrators are signing on the dotted line for million-dollar software contracts, students and teachers often prefer the flexibility of cobbling together free resources in customized ways.

In too many cases, “the success of your company is divorced from your user satisfaction,” says San Kim, founder and CEO of ShowMe, an iPad app for creating whiteboard-style lessons.

Startups enter the fray at their own peril, and many have struggled to scale beyond the close-knit world of charter school leaders and Teach for America alumni.

Amid the confusion, EverFi has quietly grown to serve more than 7 million students without invoicing a single principal. What’s more, it’s been profitable from the start. How did Everfi and its online “life skills” modules--on student loans, alcohol awareness, and more--succeed where so many others have failed?

Operating Outside Of The Spotlight

Even among education insiders, the mention of “EverFi” can raise a curious eyebrow. The company flies under the radar, with a private-label model and an ability to skirt the stormy debates over curriculum and standardized testing that tend to dominate core subject areas like math and English.

The business model is simple, if unusual: Students earn badges and certifications on topics such as credit scores and civics through online lessons, and sponsors like local banks and family foundations foot the bill. It’s classic SaaS, with a social conscience twist. Sponsors identify their own partner schools and commit to funding sites for three years at time.

This year EverFi will run programs at 6,200 elementary and high schools in more than 2,000 districts, from Montana to the Mississippi Delta. To date, sponsor renewal rates are well north of 90%.

Scaling With A “Ground Game”

After building a rough prototype, CEO Tom Davidson and his cofounders--college friends reunited--crisscrossed the country in an RV, doing the the kind of in-person market research that startups often relegate to a whirlwind weekend. For the former state legislator and venture capitalist, it was an eye-opening experience.

“The structures were different, the funding was different, the curriculum was different,” says Davidson. To scale, he realized, “You have to have a ground game.”

EverFi sells to decision-makers at the top of the food chain, but its operational focus is on user experience, in the broadest sense of the term. Davidson says he receives a dashboard every morning with a list of schools where EverFi usage is behind target--the company’s “weather warning system.”

“Our implementation team looks at those schools and asks what's happening. And then we are literally getting in the car and driving there,” he says. EverFi staff meet with teachers and sometimes help lead classroom activities designed to re-engage students in the lessons.

The approach carries over to EverFi’s hiring practices--Davidson is proud to note that of his 145 team members, 64 are former educators.

Davidson and his cofounders bootstrapped the business until 2010, and have since raised $21 million from investors including Allen & Company and the personal investment arms of Amazon CEO Jeff Bezos, Twitter CEO Evan Williams, and Google Chairman Eric Schmidt.

Many Champions, Lower Churn

As any education entrepreneur will tell you, getting the product and the experience right, and near-obsessively monitoring it, is still not enough. Without a broad base of support up and down the line, new products can fall victim to neglect.

By design, EverFi programs involve a range of community stakeholders, from the sponsors to the students. In education, this kind of multi-pronged “traction” is as important as getting a specific group of teachers talking about and sharing a new product.

“Too many decisions happen in silos,” says Mandela Schumacher-Hodge, director of Startup Weekend EDU. She’s on a mission to enlist a greater variety of education leaders as judges and in other roles at her events, after observing that teams were struggling to break out of tracks set by their earliest adopters.

Sooner rather than later, she says, “Let’s have that conversation, find that middle ground.”

Designing Products With Schools In Mind

EverFi programs check off the long list of features that school leaders and students have come to expect, for better or for worse: video, animations, gamification, avatars, social networking, pre- and post-surveys, pre- and post-assessments, adaptive algorithms, and more.

Real-life scenarios do the work of tying all the pieces together. For example, take Radius, an EverFi program designed to introduce students to STEM careers (science, technology, engineering, and math) over 8-10 hours of instruction. Students are charged with delivering a top secret package to the White House, requiring that they solve 16 "missions” along the way. In one of the challenges, students apply knowledge of linear equations to repair a bridge. Later in the program, they generate basic code in order to automate their repairs. Of course, a sign of the times, they also earn avatar accessories and clothing options as they progress.

EverFi programs were initially built in Flash. New programs are launched in HTML5, which for all its sturm und drang in consumer technology has been a natural fit for education developers.

With a variety of browsers and end users to consider, the company’s quality assurance process is longer than that of most technology companies, according to Ben Hatten, vice president of product development. “We design with our schools in mind,” he says, even if that means the Internet Explorer of yesteryear.

The Complexities Of The Double Bottom Line

The EverFi model is not without its trade-offs. Ray Martinez, cofounder and executive vice president, told Bloomberg last April that the company aims to “really engage the private sector, allow banks and other financial institutions to play in education in a really meaningful way.” But should the private sector select curriculum? Everfi maintains that its sponsors have no say in the content of its online lessons.

EverFi also faces questions about its impact. The most popular program, focused on financial capability, involves only six hours of instruction--barely sufficient for a high school student to master concepts related to credit scores, insurance, and taxes. Does the time students invest merit the certification ceremonies (and photo opportunities) that sponsors seem to love?

“It's almost certainly not enough time,” Davidson says, noting that teachers can add more to the programs through EverFi-designed “booster shots” that supplement the required modules.

EverFi research on 60,000 high school students found that those who completed the financial capability course increased their knowledge of topics such as investing and mortgages by 42%.

Crossing The Chasm To Mainstream Schools

Today there are dozens of education incubators and accelerators producing startup teams with compelling ideas. In the highly networked education reform community, a promising product can spread like wildfire at conferences and over email chains. But in many cases, after saturating the charter school networks, startups hit a wall. The reform world’s comfort with data and experimentation does little to prepare founders to pitch educators in Peoria.

Education leaders acknowledge the disconnect. “I was at a potluck last night where everyone was talking about what assessments they were using,” says Katie Beck, chief operating officer of 4.0 Schools, an early-stage incubator.

Career Village, an online Q&A platform for students to ask professionals questions about careers, will have to tackle this cultural divide. The nonprofit serves 6,000 students per year and is starting to look beyond its early adopters.

“In order for us to achieve our vision we’re going to have to figure out a model that works well for districts. It's a little scary,” says Jared Chung, founder and head of the organization. “The number of constituents seems so much larger, and when we talk about innovation, testing, trying something out, the districts say ‘we can’t talk about it that way.’”

Davidson says his advice for education startups with a new product is to “visit schools and get it in action.” Maybe it’s time for education entrepreneurs with ambitious dreams to pay more attention to which schools they go and see.

[Image: Flickr user Brad Flickinger]






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2 Comments

  • Bruno Behrend

    This article illustrates the future of education, but misses an obvious point. If this all works, why in the world do we need the expensive and outdated entity called a "school district."

    It's a waste of money to maintain such infrastructure.

    If you take the information in this article to its natural conclusion, the existing education bureaucracy can be transcended and eventually dismantled. Teachers can become tutors, and parents, working with professionals, can tailor their child's education to specific needs.

    All we need to do is cut to the chase, and start funding the child directly while withdrawing funding from the needless legacy systems, and watch the education market flourish (along with America's children).

    When they invented steel, they didn't use it to build same way they did with wood and stone.

    STOP APPLYING NEW TECH TO DEAD AND DYING SYSTEMS!! It's wrong, slow, expensive, and yeah, it's pretty dumb.