Education Market Ready for Take-Off

Education Market Ready for Take-Off
September 1, 1999



"A revolution is under way. Has anyone noticed?"

Mary Lee Fitzgerald

Former New Jersey State Commissioner of Education



After years of formative development and what now seem like relatively modest advances, the for-profit education industry has reached a point of critical mass. The industry is starting to take off and to accelerate, according to investment analyst G. William Bavin of Education Capital Markets in Washington, DC. Bavin addressed the Association of Educators in Private Practice at its EDVentures '99 Conference in Madison, Wisconsin, at the end of July.

The for-profit education industry’s growth is driven in part by an infusion of risk capital from the increasing number of Wall Street investors turning their attention to opportunities in the education sector, Bavin said. But another, even more powerful, force is beginning to bring to education the same kind of rapid and dramatic change that it has brought to a whole range of other industries: The Internet.

"The Internet will democratize education," predicted another EDVentures speaker, Michael T. Moe, director of global growth in Merrill Lynch's San Francisco office. Calling the Internet "the megatrend of all megatrends," Moe said it would increase access, improve quality, and reduce costs in education.

While Moe and Bavin sketched the big picture of the education industry's life-cycle to the more than 300 EDVentures participants, it was three other speakers in a conference break-out session called "Internet Educators" who communicated the excitement of working at the edge of the Internet frontier: Marti Angulo, president of E-Tutor of Park Ridge, Illinois; Patricia Baumhart, CEO of @cademy.net, based in Mountain View, California; and George Cigale, CEO of Tutor.com, Inc., based in New York City.

"We view the Internet as the way to change the face of education as we see it today," said Angulo. "It's a new way of educating."

Angulo's on-line tutoring service is just 18 months old but its catalog of lessons--350 and growing rapidly--already has attracted subscribers from Africa, Australia, Canada, China, and India as well as across the United States. She is pursuing accreditation for E-Tutor's programs and recently began offering a service to teachers that allows them to develop lesson plans on the Internet without having to know Hypertext Markup Language (HTML).

"The value is created in applying the technology, not in creating it," explained @cademy.net’s Baumhart. "A very simple model has the power to bring about revolutionary change in K-12 education.”

Baumhart's company currently offers individual courses over the Internet and has plans to offer a year's curriculum. She is seeking out the world's best teachers for @cademy.net and wants to be the first company to pay a high school teacher more than $1 million. Excellent teachers should be able to reach more than the 30-odd students in their class, explains Baumhart.

Angulo agrees. "A teacher can teach, not just 25 but 50, 75, 100, even 1,000 students," she said. One of her students lives on an island with no computer facilities. To access E-Tutor, he rows to the mainland to use the computer in the public library.

The aim of Cigale's Tutor.com is "to be the amazon.com of the education industry," the place where people of all ages come to find directions to every variety of instructional help--from off-line local tutoring assistance with algebra to a self-paced on-line instructional program on U.S. history. The idea is to be the marketing arm for providers of educational services.

"Education today is like the book industry three years ago--the Internet will change it," said Cigale.



Schools of the Future

“Where we're going, we don't need schools.”

That may sound like a paraphrase of Doc's comment about roads at the end of the first Back to the Future movie, but it's also Dennis Zuelke's vision of the future of education. Zuelke, professor of educational administration at Alabama's Jacksonville State University, is the author of Educators in Private Practice, a guidebook for entrepreneurs in the education industry.

"In the next century, people won't need schools as physical structures," said Zuelke while attending the EDVentures conference. "People won't go to schools . . . the schools will come to them in cyberspace."



The Fight Ahead

Technology may make a compelling case for change, but many speakers at the EDVentures conference emphasized that change in the education industry would not come without a fight or a price.

But whatever price we pay, said former Milwaukee Public Schools Superintendent Howard Fuller, "That's nothing compared to the price our children are paying now."

"We are still at the beginning of the struggle and we have to be ready to fight," said Fuller, who now heads the Center for the Transformation of Learning at Marquette University in Milwaukee. "Win-win strategies are not going to work because power is finite, and someone will have to give up some power so that other folks can get some."

"It's a painful process," agreed Paul Seibert of Charter Consultants from Belleville, Illinois, noting that rational arguments aren’t very effective tools against opponents reacting emotionally to a change that affects them. "Logic doesn't work in responding to objections that people raise to what you are doing."



A Failed System of Public Schools

Mary Lee Fitzgerald doesn't know if vouchers will produce excellent schools. She doesn't know if private enterprise will cut corners in education. But the former New Jersey State Commissioner of Education does know that children can't wait for another five-year plan to improve public schools.

"In too many places, public schools have outpriced themselves and people can't afford them any more," said Fitzgerald at the closing session of the EDVentures conference. "People are finally losing faith in our ability to deliver."

It's not a matter of whether parents are involved with their schools or not, added Fuller, but whether parents have any power to influence what happens to the teachers or the principals in schools where learning is not taking place. The solution, according to Fuller and Fitzgerald: a system centered on parental choice.