Patient Capital Drives Change In Education

Editor’s note: Matthew Pittinsky is the CEO of Parchment.

In 2001, Arthur Levine, then president of Columbia University Teacher’s College, predicted that one day faculty members would become free agents, increasingly independent of their colleges and universities. “It is only a matter of time before we see the equivalent of an academic William Morris Agency,” Levine, now president of the Woodrow Wilson Foundation, wrote in The Wired Tower.

Fast forward to 2012. Hundreds of professors signed up to teach free Massive Open Online Courses (MOOCs), each of them reaching tens of thousands of students from around the world, more than they ever would in a lifetime of teaching students face-to-face in classrooms on their campuses. And this “overnight change” only took 11 years to begin to manifest.

In today’s tech-driven world, where the speed of product development is measured in quarters of a year, 11 years is an eternity—often longer than the lifespan of entire companies. As a result, the common complaint from education-technology startups and venture capitalists trying to help transform higher education is that the pace of change on campuses is way too slow.

In academia, the rapid disruption mentality of the high-tech world tends not to work very well. While there are big, systematic changes that technology is bringing to education, the way that change manifests itself is typically incremental: A leads to B, B to C and C to D. Rarely does A lead directly to D. This “radical incrementalist” model can be a more palatable alternative in the academic world, with its shared governance and traditional values.

In education, incrementalism takes at least 10 to15 years for radical potential to become scaling reality, even though the idea may have existed from the beginning. A second dimension of incrementalism is that entrepreneurs need to approach the market and their vision in a way that strips down the big idea to solve an immediate, concrete problem that is often a fraction of the desired end result: the A starting point.

As someone who was part of the first education technology boom in the late 1990s as a co-founder of Blackboard, I have watched over the last decade as radical predictions about change similar to Levine’s have turned to reality — importantly, slower than anticipated. In my current work at Parchment, the first white paper on electronic transcripts was written in 1997, and we’re now just seeing movement to digital transcripts and credentials.

While Levine predicted what he did, it took years of faculty using web course tools to support campus-based students, developing literacy in how to instruct online. It took years of experience with basic uses of e-learning for institutions to become comfortable with the medium. Their initial drivers were not global reach but classroom augmentation. As tools, practice and literacy evolved, some faculty began to flip the classroom and use classroom time differently. Others saw the potential of reach and began to rethink the centrality of physical classrooms altogether. While not literally a linear story, it’s also not an immaculate conception of an overnight phenomenon without foundation or context.

Change comes slowly to higher education for a reason. This part of the academic culture is backed by a certain logic. Our colleges and universities have outlasted a Civil War, a depression, and two World Wars much as they are today, more focused on educating students than making money. Meanwhile, companies have come and gone on the S&P 500, some in the blink of an eye. There are good reasons why developments in education transpire over years, not months.

Despite the constant comparison of how higher education should operate more like a business, for me, our colleges and universities are more like a church. They occupy a special role in society to prepare the individual both as a citizen and a worker and to improve our democracy and economy. It’s no coincidence that education and religion are equally slow to change, which for both is a highly complex, highly political and heavily nuanced process tied to the issue of value and organizational charter.

For this reason, education entrepreneurs should think differently about how they build companies that serve education. In 2012, education entrepreneur John Katzman argued the need for lean education startups (“one guy with a vision and a bunch of hard-working twenty-somethings”) to fatten up with a mix of people with backgrounds in business and education. His argument is a nice example of how not all best practices from consumer tech will carry over into ed tech.

Entities like the Bill & Melinda Gates Foundation and the Michael & Susan Dell Foundation are investing unprecedented amounts in education technology.

Likewise, there’s an increasing availability of venture capital from top-tier West Coast funds, along with funds in traditional edtech hubs such as Washington, D.C., New York and Boston. In 2013, venture capitalists invested $1.25 billion in education technology companies. Like in other industries, they invested with a time horizon for their return.

Will that return materialize? The answer will be driven by how patient the capital is and how willing entrepreneurs are to work over an extended timescale. Does the entrepreneur blame the education market for not jumping to the end vision, or did she break down the big idea into an on-ramp that bridges vision with where education is today? Colleges and universities most likely will never adopt innovative solutions to higher-education’s knotty problems on the timetable of Wall Street or Silicon Valley. Nor, necessarily, should they. And while I don’t advocate that we must always take baby steps, recent history shows there is virtue in that strategy, or at least planning for it.

There’s a lesson to learn from radical incrementalism, or perhaps a challenge to lay down. While many edtech entrepreneurs and investors, particularly those on the West Coast, are comfortable with the radical part, “incremental” is not their calling card. It’s not just about having a big idea or vision and expecting immediate results. It’s also about distilling down that big idea to first solve a pragmatic core problem that logically lays the foundation for success.

Big change does happen in education, it just takes longer. If the last tech boom in education taught us anything, it’s that patient capital, investing in companies that focus on small wins over time on their way to their ultimate vision, pays off in the end.