Articles Posted in K12 Publishing

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rocket school busEducation is high on the list for the economic stimulus package being proposed by the Obama Administration. Congress also supports turbo charging education so the likelihood of significant aid to schools is very high. But where oh where will the money actually go?

  • Construction?
  • Maintenance?
  • Teachers?
  • Instructional Materials?

As a nation we have some clear choices to make. We should be fighting for the right things amidst all the logrolling and back slapping that go on in DC. If you are part of the education publishing industry you should be engaged with the government relations work at AEP, SIIA, or AAP. These folks are working hard to make sure our voices are heard and they need your support and engagement. All of them welcome members who get involved in this effort.

As experts in this area and as citizens we have a responsibility to speak up. This doesn’t mean pulling strings for our particular companies, it means making sure all of our money is spent wisely with the long term in view.

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139391_a_boy_a_girl_and_a_bookThe Consumer Products Safety Improvement Act (CPSIA) is punishing the children’s publishing industry. Go over to Publishers Weekly to read their summary of the disruption caused by the mandate that all products targeted at children under 12 be tested for lead and phthalates.

The law was passed in response to issues with Chinese toys – but it was written in such a broad fashion that it is sweeping into its net products that have never included lead or plastics (like paper and cardboard).

The problem is that the industry just found out in November that it applies to books and they have to be in compliance by February. Violations carry stiff fines which could bury small publishers.

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Michele-KingGuest blogger Michele King provides a practitioner’s perspective to Randy Wilhelm’s post Web Content is a Source for Differentiated Instruction. Michele is an administrator at a large urban school district and a former 1st Grade bilingual teacher.

By Michele King

As the Instructional Support Coordinator for a large urban district, I am responsible for transitioning our district away from print-based instructional resources to a database driven solution accessed by teachers over the Internet. I read Mr. Wilhelm’s post with great interest and my experience working with teachers closely aligns with the “Schools and Generation Net” survey results.

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Randy_Wilhelm_CEO_2Today guest blogger Randy Wilhelm – CEO of Thinkronize shares insights from the 3rd Annual “Schools and Generation Net” survey.

By Randy Wilhelm

As the father of five school-age children, I am reminded daily that each child is special and each one learns differently. For instance, I have one son who learns best when he can hear the text he is reading at the same time. Another of my children is very tactile and has to touch something to understand it.

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highway-rainbow-nicklen-696533-xlWhat are the prospects for raising capital for education technology companies in the current financial meltdown? Last week at the SIIA Ed-Tech Business Forum a panel of investors tackled this question. The panelists presented some solid and detailed advice for investors and companies seeking capital during the recession.

Key Points:

  • Many investors are seeing Education as a safe harbor in a turbulent market, it is seen as relatively recession resistant. Education’s profile is rising as a marquee investment arena for the next 10 years – it is a good time right now for education.
  • Take in as little as possible at as light a valuation you can get because valuations are going to be low for a while.
  • The strong are going to win big in this downturn. Access to capital is going to be an important differentiator in this market.
  • Most venture firms are not looking at new deals, they are focused on down rounds and propping up existing investments. They are also all moving up the deal chain to safer investments than they make in normal times. If you are raising money be aware of this.
  • It is all about being profitable per customer in this market. Hope isn’t a strategy – go get paying customers and drive a lifetime revenue model
  • Focus down on the core of what you have to provide and strip the organization down to doing just that. Have a crystal clear picture of who your customers will be, how they will find the money, and what are the essential features.

The panelists were:

Chris began with an overview of the market trends. Many investors are seeing Education as a safe harbor in a turbulent market, it is seen as relatively recession resistant. He noted that there is a huge capital overhang – investors have lots of funds but are making few investments. In education fundraising is actually up this year but we are seeing deals that are over capitalized. Later on Frank made the case that this is a bad deal from the entrepreneur’s side.

Most investment groups are setting the bar higher for new deals. Investors are looking for $10m Revenue and $2m EBIDTA which leaves out most K-12 Ed-Tech companies. Companies at this size need capital to invest in Sales and Marketing to scale up. Lots of education companies with good products in the last 10 years have failed because they couldn’t get past this hurdle.

His slides include a list of the private equity investors in education and a list of 100 deals that have been done in the education space in the past two years.

Follow below the fold for details on each panelists comments and the audience Q&A.

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NFImageImportThis panel is made up of seasoned veterans of the M&A markets for Education Technology companies. They addressed the K12, Higher Education / Post-secondary, and general M&A climate.

The panelists are:

It is sponsored by Empirical Education.

Key insights:

  • Look to the UK market – it is an 18 month leading indicator of what is going to happen in the US market.
  • Professional Development is now mandatory for all solutions in the UK. Are publishers using this to hold open source at bay or is this a real switch taking place?
  • The US market is contracting – there are fewer strategic buyers because they have all merged and the Private Equity guys are sitting things out for a while.
  • Buyers don’t want to take any risk right now – only companies with proven business models, strong teams, and organic growth need apply.
  • For profit higher ed is growing – the economy is actually helping with this as people look to expand their skill base.
  • Expect to see many buyers looking for bargains over the next couple of years. Don’t expect to see much in the way of IPOs.
  • In K12 multiples are higher (almost double) for companies that have a strong technology component – but it has to be integrated well – it can’t be a bolt on.
  • Multiples are higher for Higher Ed than K12.

For my more free form notes follow below the fold.

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125x125I will be blogging today from the Software Information Industry Association’s Ed Tech Forum 2008. The event is taking place at a monument to mid-20th Century American hegemony – the Princeton Club in New York.

This is the first year they have had a real blogger friendly environment – they have set up a table with power and easy access. The other bloggers here are Annie Teich and Ken Royal. Several of us will also be tweeting the event – look for the tags edtech08 and #etbf.

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245345345ertertIn the US we just had the most interesting election of my lifetime. What to do now that all the hullabaloo is over? Take the civics quiz to see much you remember from Social Studies and how closely you have been paying attention.

Take the test here.

The core message – that we ignore civics at our peril – is well taken. Social Studies is one of the subjects that has taken a hit under NCLB. Publishers, to their credit, have tried to help by creating programs like QuickReads (Pearson) that teaches reading fluency through Social Studies and Science. The reading passages are aligned to grade level standards. But don’t you think it is a little odd that we have to “sneak” this in?

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This short video chronicles the rise of credit default swaps and the subsequent impact on the financial industry better than anything else I’ve seen.

Through financial engineering – not value added – the Wizards of Wall Street were able to create a financial black hole that ultimately – well watch the video. You’ll see.

What does this have to to with education? Our industry is going to suffer along with everyone else as we work our way out of this one.

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870607_braeburn_1Products designed for the classroom must meet the needs of teachers first. If students are the primary users of your instructional materials this may sound a little backwards – but it isn’t. Teachers can make or break your product before a student ever sees it.

Designing for teacher ease-of-use should be a core competency at any education publisher.

Today we tackle issue #4 in the series on selling and marketing to educators.

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