Education Week - September 18, 2013 - 18

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EDUCATION WEEK
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SEPTEMBER 18, 2013 www.edweek.org
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INDUSTRY & INNOVATION > Tracking business trends and emerging models in K-12
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From left: Stephanie Vidikan, the director of operations for 1776, and entrepreneurs Gary Hensley and Brian Christie make business calls in a collaborative workspace for
startup companies. The workspace is run by 1776, an organization that provides resources for startups with the support of companies like Pearson.
Kaplan, Pearson Mentoring Startups, Picking Up New Ideas
CONTINUED FROM PAGE 1
new ideas and business strategies,
and the potential to form
relationships with startups that
could lead to partnering with or
even buying them.
Some observers of the startup
space warn that the ties between
corporations and education startups
could prove unhealthy, if entrepreneurs
lose sight of their
original vision for improving
schools, or feel compelled at some
point to comply with the larger
company’s ambitions.
Even so, executives at Kaplan
and other education companies
see the potential to learn from the
creativity and nimble nature of
startups, while helping them get
on their feet.
A large company such as Ka-
plan tends to focus more on “organic”
innovations—improving
or refining products that are
already on the market, said Bernardo
Rodriguez, the chief digital
officer of Kaplan’s test-prep
group, who is helping guide the
startup program. Changing those
products can affect hundreds of
thousands of students, and millions
of dollars in revenue, he
said, making it “hard to build an
environment where motivation
can be channeled to produce internal
innovation.”
Working with startups reminds
Kaplan officials of the “the intensity
that is required to launch a
new product,” explained Mr. Rodriguez,
and “the mentality of making
a viable product, of pitching
your ideas, of, yes, I can do something
interesting and important.”
Referring to the entrepreneurs
at work around the corner from
his office, he said: “Those guys are
not afraid to make mistakes.”
Scouting Talent
Kaplan is not the only corporation
that has committed to nurturing
education startups. This year,
Pearson, the worldwide publisher
and provider of education products,
announced a partnership
with 1776, a Washington-based
organization that supports startups
in education and other areas.
Another big player in education
publishing, McGraw-Hill Education,
is planning to partner with
as-yet-unnamed university in
providing education startups with
financial support and mentoring,
Peter Cohen, president of the company’s
school education group, told
Education Week.
McGraw-Hill Education officials
hope to learn from startups’ fastpaced
work launching and refining
products—and possibly recruit
entrepreneurs they meet to work
for the company.
“The people who get involved in
these startups may be great,” said
Mr. Cohen. “We might identify
people who can join us.”
Each of the startups participating
in Kaplan’s accelerator
program were offered $20,000
from the company’s partner in
the project, Techstars, which received
a 6 percent equity stake in
the companies in return. In addition,
all 10 startups were offered
a $100,000 convertible note from
Kaplan, though company officials
say that does not obligate the entrepreneurs
to cater to Kaplan’s
wishes in any way. (The convertible
note is a loan that is either
to be repaid, or converted into an
equity stake in the startup when
the companies finish their next
round of fundraising.)
Ten startups were chosen to
participate from a group of 350
applicants for Kaplan’s program,
known as the Kaplan EdTech
Accelerator. Over the course of
three months, from this past
June through September, teams
of startups have worked out of
one of Kaplan’s facilities, a polished
office in the West Village in
Manhattan.
Techstars, an organization that
runs accelerator programs around
the world and is backed by more
than 75 venture capital firms, is a
key player in the program, having
been charged with managing its
day-to-day operations.
Don Burton, Techstars’ manag-
ing director, has worked out of
Kaplan’s office during the threemonth
period. He coordinates
much of the support that goes to
the startups, including arranging
small teams of mentors, who
serve as de-facto boards of advisers,
for each of the companies. He
also arranges on-the-fly mentorship
and advice for companies on
issues ranging from technological
design to acquiring customers to
ideas on how to sell specific products
in schools.
Kaplan assigned the teams of
entrepreneurs a corner of the office
that now bears a loft-like
design. Startup officials, some
dressed in slacks and sport coats,
others in jeans and T-shirts, work
alongside a line of tall windows in
small groups across an open work
space, occasionally ducking into
glass-enclosed rooms for private
conversations.
A basketball hoop is set up to
one side. A few paces away, the
startup space ends and an expanse
of cubicles begins, occupied
by Kaplan employees.
In addition to being given a
place to work, the companies
have access to many of Kaplan’s
resources, including some of the
company’s proprietary products.
There are many resources from
which to choose. Kaplan Inc.,
headquartered in Fort Lauderdale,
Fla., is part of the publicly
traded Washington Post Co. (The
newspaper bearing that name
was recently purchased by Amazon
founder Jeffrey Bezos and will
now be a separate entity.) Kaplan
provided test-prep services to
about 430,000 students and professionals
in 2012, and its forprofit
higher-education businesses
operate on about 70 campuses in
21 states. In the second quarter of
2013, Kaplan reported revenues
of $548 million, a 1 percent de-
Swikar Patel/Education Week

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Education Week - September 18, 2013

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