Bill Hansen, CEO of Building Hope, and Raphael Gang, Director of K12 Education at Stand Together Trust, joined me to discuss the launch of a pioneering microloan fund specifically designed for microschool founders. We explored the goals, mechanics, and early learnings from the pilot program, which offers low-interest startup loans to help microschool entrepreneurs navigate financial and facility challenges in the early stages. Our conversation highlighted the critical need for business fundamentals and sustainability within these innovative educational ventures, the vital role of technical assistance, and the importance of building scalable, sector-wide support for nontraditional school models.

Michael Horn

Welcome to the future of Education. I'm Michael Horn. You're joining the show where we're dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And today we're going to have a conversation with two leaders behind a relatively new micro loan program that is designed to support what I'll call the supply side of microschools. But we'll unpack that, I suspect, a little bit as we get in this conversation. Before we do that, let me actually introduce our two guests. We have none other than Bill Hanson. He's the president and CEO of Building Hope.

Bill, good to see you.

Bill Hansen

Good to see you, Michael. Thank you.

Michael Horn

Yeah, absolutely. And then we have Raphael Gang. Raphael is the director of K12 education at Stand Together Trust. Rafael, good to see you.

Raphael Gang

Thanks for having me.

Microschool Program Partnership

Michael Horn

It's great. Yeah, no, you bet. So let's dive in with the mechanics, basics, just so people know what we're talking about. As I understand it, this is the first of its kind fund for microschool founders. It launched with $675,000, I believe, in funding from Stand Together Trust with support from the Beth and Ravenel Curry Foundation, I think. Is that right? And then it's powered by Building Hope and it's essentially a low-interest loan program. And so I'd love to get the basics of this, like what are the loans for, how much are we talking, what's the structure of those loans, how many applicants did you get, how many did you give out, and so forth.

So maybe, Bill, why don't you lead us off and then Raphael, if anything to add, you can jump in on this.

Bill Hansen

Thank you, Michael, and just really appreciate the partnership with Raphael and with the Stand Together Trust. It's really been a pretty intense several months here getting this really, we're calling it a pilot or a demonstration program established to really help us learn a lot about this marketplace and the needs. And, you know, just with Building Hope's history in the public charter school movement, mostly, you know, the biggest barrier has always been both the financing and the facilities, and that is on steroids here with the microschool program. And so really the, you know, I really feel like we're in a learning process here to really, you know, help us validate those challenges that these entrepreneurs around the country are making and to really help solve the greatest needs that they have. And really the barriers to entry, which really have been, the logistics, the housing, if you will, and also just really the startup cost for them.

Raphael Gang

Yeah.

Michael Horn

And so let's talk about the loan itself. Raphael, why don't you jump in there? Yeah, yeah.

Raphael Gang

I mean, we were really excited. I mean, we spent two years looking for the right partner for this. So I would double down on Bill's, the appreciation for what Building Hope has done over the past six months or so, eight months, to build out the loan fund. And it's been a real process and you need a lot of trust and a lot of partnership to do something that's as ambitious and fast moving as this project has been. So, I mean, the loan fund, you know, we put out a very soft request to folks. We didn't do some big major advertising blitz. We went out through a network of partners that we talked to and we said, you know, who is looking for affordable capital, essentially? And we really were looking.

I think Bill makes a really good point there if we were looking to learn about the market as much as we were learning to help founders of microschools. We know that these microschools are out there. We are seeing through organizations like the national microschooling center and vela.org just tremendous growth in them. But we don't really have a grip on, well, what are their finances look like? What does their growth strategy look like? What are their needs? And so I was having a lot of conversations with folks where I'd say, hey, what do you need? And a lot of folks would come to us and say, I need capital. I need money. I need money to get started. Or I'm in my early days of my first few years of operating. I need capital.

Cash flow or ESA programs or voucher programs are coming online, but I need a little cash flow because they're on a delayed payment, things like that. So we really tried to structure the loan fund in a way where it acknowledged the reality of these folks that are on the ground and what their needs are. So we're not asking for immediate repayment of things. We went out and talked to those folks and we said, what's a loan? What's a timeline that makes sense and when should the payments happen? And Bill can talk more about the details of that, but we came in at 3% interest rate, which is a very generous interest rate, as anyone in the finance industry can tell you. But a lot of it was about like, well, we want to see who's out there and we want to learn about them. And so Bill and his team have done an amazing job of collecting that data and now using it to inform what we're doing. We're really excited.

I think we're on track to make about eight or nine loans by the end of the process. We'll probably still have a little bit of money left by the end of it, but I think we're in a really great place, to really get the money out the door. But, but as well, like really inform kind of where we go from here. Does that answer your question?

Michael Horn

Yeah, that does. So that. And you sort of teed up the next question, which is I think you got 53 applicants. So you're talking eight or nine folks will get loans.

Raphael Gang

Yep.

Michael Horn

What are they going to use the capital for? What are those repayment terms? How big are the loans? Like what, what order of magnitude are we talking about here? Bill, you want to take it?

Startup Loan Facilitation for Entrepreneurs

Bill Hansen

Sure. Well, the loans are, you know, probably going to be in the 25 to $50,000 range. And again, these are really startup costs that these individuals and entrepreneurs are needing to get through all of the regulatory processes, all of the onboarding of, of students and whatnot. So. And really the facilities is probably still the, I would say, the predominant need for it. And you know, I just really would also maybe just echo what Raphael was saying about the intersection of philanthropy and you know, we're a non profit organization, but we have, you know, three businesses that are, you know, we're the biggest financial advisor in the charter school business. We've got a nonprofit subordinated lending program, do a lot of work with the credit enhancement program for the Department of Education, the Small Business Administration, and really just trying to help navigate, you know, through these processes that they've probably never done before and you know, maybe just with their local banker and so, you know, trying to bring, you know, get the lowest cost loans available to them is really, I think one of the benefits of the partnership with philanthropy and a nonprofit organization involved in the lending business.

Raphael Gang

Yeah, I think we've got, you know, I think we had 258 application or interest forms. Interest forms. We had 100 folks start at the applications. We had 53 full applications that came through the process. And it looks like we'll get to about 8 to 10 loans distributed and they're going to be in that range that Bill talked about. We deliberately really said, let's keep the loan dollar amount low. These are microschools, they should be micro loans, so to speak. And we really felt like we didn't want to be a, we wanted to see how far we could stretch those dollars and really can that money be catalytic, especially at the earliest stages for folks.

But we saw that a lot of the challenges that are coming through with that were, were really about the business practices that founders were going through. There were challenges with facilities. Facilities are no doubt a real challenge that a lot of microschool founders deal with, especially at the front end of their process. But I think a lot of what we're seeing in the process has been the business fundamentals. And how do you help schools make sure that they have the right pricing strategy, make sure that their tuition is actually going to lead them to net income and that they are, they have good accounting practices. And what I think Bill and my team probably have said, we've said this to each other so many times, it's kind of hilarious at this point. But how much this reminds us of the early days of charter schools where there's so much energy and there's so many ideas and there's so many great people that are flowing into the the area. But the challenge of really having good business fundamentals, business practices, making sure that people are doing things the right way so that they are positioned to grow and positioned to scale and aren't taking on lots of credit card debt or taking out their 401ks and things like that, it's been a real learning curve around that.

Michael Horn

Well, so that actually is a question that I'm glad you, you just sort of alluded to that, Raphael, because something that I've observed is a lot of these school founders, microschool founders in some cases seem uninterested or uncomfortable with the idea of a business model and they're not necessarily thinking about sustainability. So I guess my curiosity plays into that, like how did you whittle from 53 applications to the eight or nine that will get it? What's the criteria you're using there? And I guess the second part of the question is why do loans instead of say, grants to these folks that you ultimately choose?

Raphael Gang

Yeah, Bill, I mean, you can talk about the rigor of your process. I think that's actually been one of the things that I think is the best thing about this product.

Bill Hansen

Yeah, number one, we're just very, very fortunate to have a terrific leader inside our organization, Allison Serafin, who is just, I can't even tell you the countless hours she spent. You know, I've actually lost Allison, who is our, she is our executive for all of our business development work. But she also happens to be probably one of the most detail oriented individuals I've ever worked with. And that's just been incredibly important as she's been pouring through these applications. But she also has the boots on the ground expertise of, you know, being in a school, serving on the state Board of Education in Nevada and others. And just really I think has the vision as well of understanding what the capacity building tools and the technical assistance needs are going to be of these schools and really what success can look like with these potential applicants. So even though we have our matrix and our different indicators of success, a lot of this is also just Allison's eyeball to eyeball contact with each of these organizations. And again, I just, I don't want to lose that and you know, what our diligence process has been about, but really just, you know, having that boots on the ground ability to understand, you know, what success, you know, can look like.

And really. And also I would just even say that it hasn't just been your typical banking approval process. I think the technical assistance that, you know, we've even been able to provide in schools, even those that, you know, maybe ended up on the cutting room floor, are still better coming through the process because of the learning along the way as well from what they need as entrepreneurs and small business leaders.

Raphael Gang

Yeah, I think Allison has done an incredible job of kind of, I would say, getting in the mud with the process while still holding, I think, a rigorous bar for what we think are credit worthy applicants. And I think it's that kind of clear as kind of approach where Allison has really adopted this approach. And Bill is, if anything, understating the number of hours when he says countless hours. But like, Allison spent so much time talking one on one with the founders, asking them about their models, getting into the weeds, learning about where, why is this on your balance sheet? Why is this in your budget? How are you structuring this? Why are you doing this? And so it benefits the loan fund overall because I think we now have a much more robust understanding of what the challenges are and what the needs are for these founders. And so we're better positioned as we move forward to provide even better technical assistance and things like that, that. But Allison has told me this repeatedly that there's many founders who ended up not getting loans through our process who at the end of that have said, thank you. Why hasn't anyone told me this till now? And I think that actually gets to your second question, Michael, which is we've really, I, you know, I speak as a member of philanthropy, so it's kind of like. But I think there's a way in which philanthropy can do itself no favors in situations like this, where grants are really great in certain forms of capital to help people start things, to grow things.

It's a great form of risk capital because obviously philanthropy doesn't expect the money back for the most part. But I think philanthropy can get into trouble when it is not thinking about how to create sustainability for the organizations it works with and how to encourage that really at every stage. And I would say, like, I've made this mistake in several partnerships that I've worked on and things like that, where I think we have a tendency to think the money is always going to keep being there. We don't need to have all the details worked out. We don't need to have the solid fundamentals of how is this school, how is this thing going to stand on its own feet at some point? And I think in all of the excitement around microschools and the excitement of, like, oh, look at this really cool environment. Look at this really great founder. Look at this really great community that they've built, I think we have, in certain situations, overlooked, like, well, do they have a viable budget?

Is the founder paying themselves a reasonable salary? You know, I don't think anybody gets into this to make millions of dollars.

Michael Horn

Sure, but it should be a sustainable thing you could do for several years.

Raphael Gang

Yeah, exactly. And so what we saw was, you know, a lot of founders doing great things. They had great families involved. Everybody's excited. And then you look at the business fundamentals of the budget, the cash flow, the reserves, the debt, all of those things. And it was really kind of heartbreaking, candidly, because we really felt like if someone had gotten to these folks earlier and someone had really talked to them and engaged with them and been really clear with them about, like, no, this is what it needs to look like. This is how the numbers need to add up.

This is how to do this. And so Allison has spent a lot of time and a lot of energy and a lot of emotional energy, I think, trying to be both this kind of firm, but firm support, I guess, to help founders through this process of understanding really what does sustainability look like for you? And is this actually going to help you. Is a loan which is, you know, just debt, basically, is that actually going to help you to get to a better place as an organization, or is that actually digging the hole deeper?

Michael Horn

Yeah, it's really interesting. And is this the right capital for you? I'm glad you guys are pushing on this and helping because this has been a big concern I've had with the space and sort of thinking of spaces. Bill, I want to bring you back in here because it's interesting to me that Building Hope has really been synonymous, I think it's fair to say, in the charter school space for a variety of school financing options, helping create custom facilities for charters, providing discounted services on and on. Right. And really just making it much easier to launch and then operate charters. So why move into the microschool space now and do this pilot like why that I won't say shift, but add on. Right. Of another sort of service that you all are providing in another sector.

Bill Hansen

Thanks Michael. I, you know, just came here a little over two years ago just really with agreement with our board that we really wanted to build on what made Building Hope special the previous 20 years. You know, we really helped Washington D.C. almost exclusively for the first 10 years of our existence. And you know, the low cost financing, the, you know, capacity building, the technical assistance, the construction side of things. And you know, and I really wanted to help us expand out, I think just the national. And again, I'll go back to, you know, former deputy Secretary of Education. I just really, you know, and I'm vice president of the State Board of Education of Virginia and just seeing the national landscape changing and also being a grandparent of 17 grandkids and going through Covid just looking for, you know, more choices, more opportunities, more just innovation in the sector.

Exploring Educational Opportunities and Innovation

Bill Hansen

And so I really worked with our board to look for some adjacent opportunities for us, whether it's in higher education with historically black colleges or the for-profit charter space or even other private schools. But you know, to me the microschool program, it's a little personal to, you know, I've got, you know, one of my daughters with five kids during, you know, Covid pulled her kids out of school, public school system and started homeschooling them. And you know, she was kind of led through a journey of, you know, cooperative schools and working with some religiously affiliated schools a couple days a week. But you know, really it was wonderful to see her entrepreneurial spirit kind of kick in, but also just the like minded, mostly mothers who you know, were trying to do the same thing. And you know, so I just am really grateful that you know, Building Hope, I feel like, you know, really the first 10 years, the second 10 years, also working with really important philanthropic leaders like the Albertson Foundation where I think we've revolutionized what's happened in Idaho and also in the state of Florida where we administer the School of Hope program there. Really just looking to, you know, take our capabilities and you know, large districts like D.C. large states, philanthropy, and just make a deeper impact across the board.

And so just I actually remember our first meeting, at a restaurant at National Airport. You know, and it just, you know, looking to, you know, these like minded folks that are really trying to change the landscape and to really, you know, help build opportunity for just, you know, and to really build upon the, the national landscape, that's just, I just think it's not going to turn around. I think, you know, we just have got to figure out how can we accelerate and amplify and, you know, the demand if it's out there and really bring, you know, different choices to, you know, families that have very different needs and very different approaches to, you know, how they want to educate their children.

Michael Horn

Well said, well said. So we've said multiple times, this is a pilot you're aiming to learn. You sort of dropped in some of those lessons along the way. But I want to more clearly ask the question, so I don't neglect that, of what are you learning? What are the big takeaways, lessons, anything that surprised you, uses of capital to something else. You know, you tell me what's jumped out. Raphael, why don't you kick us off?

Raphael Gang

Yeah, no, I mean, I think the big learnings have been that this business fundamentals question is really the core. And I think the same way it was the core question for the growth of charter schools. It's kind of the unsung story within the charter school sector is the work that folks like Building Hope did over the last 25 years. People don't talk about it, but it's like, yeah, that's how you build the new building. That's how you serve a thousand more kids here and 500 more kids here and all that kind of stuff. And it started, you know, people see the building and think that the building was the thing. It started with the business fundamentals being great. It started with families being there, but them having a really strong operating model and being clear about how they were going to make it work and how they were going to grow sustainably.

Promoting Sustainable Education Initiatives

Raphael Gang

And so I think that's the number one takeaway for me is we need to really think hard about how we encourage that sustainability on the front end. It's really hard once people are operating and if they're in debt or if they're in a bad lease or if they're in a bad situation around their finances, it's really hard to dig out of that, especially at the scale that folks are operating at. So I think we're really thinking long and hard about what does technical assistance look like in the future and also how do we encourage on a kind of more sector wide basis. And I think this is where thought leadership and some of the work that we're excited to do with Building Hope and the team comes in is how do we communicate what we're seeing? Like, this is what a good budget looks like, this is what a good net income looks like. This is what pricing and tuition models need to be. And there's people that have been doing this kind of work in charter schools and in private schools, right? You've got folks like, you know, Charter School Growth Fund and things like that. And you've also got folks like the Drexel Fund in the private school space that have done great work in both of these worlds around, like, how do you help people start strong? And I think what's really great about this is we now have data, we now have really strong data that tells us what does it look like to start strong and where we go from there. I think the other thing that I would say has been a big insight is that there's clearly demand.

Like people want this and people are excited about this. 250 interest forms, we had a hundred people on the webinar. We've gotten continued interest pretty much every week. We're getting people signing up and being like, when's it going to reopen? When's this going to happen? When's that? So I think we've found, you know, that was a question that I got internally is like, is anybody going to show up to this? Like, is this, you know, like, who's going to come to the party? And I was like, well, I'm not sure, but we're going to find out. And I feel like we had, we had a good party. We had a lot of people come to the party. And I think that feels really validating. And so the question is what? You know, how do we make that a great party where everybody leaves feeling great and feeling like they got what they, you know, they got some good food, they got some snacks, they're feeling bellies full, but they're not waking up the next day hungover, right? They're feeling good about where this thing is going to head.

Raphael Gang

And so I think that that feels really validating and good to kind of build the base of it. And I think the last thing I would say is that, you know, this project doesn't happen without the partners that we have. We had a bunch of partners that came together, the Curry Foundation, Building Hope, our team. But there's a lot of folks that were in this that were doing this work. You know, the Wildflower Schools foundation, they have been operating their own loan fund. We learned a tremendous amount from them about how they operate that fund and what is, you know, what does it look like? So we've been fortunate to kind of build on the backs of the work that Building Hope has done to date with charters and things like that. And so it's about learning lessons, but how do we really take those lessons and apply them appropriately to this very niche kind of group of people who, I think, for a long period of time, have essentially operated outside the needs of, like, actually getting capital.

Like, this is a very scrappy group of people. I mean, Bill's daughter included, right. Of like, you know, it's like, these are not people that call themselves entrepreneurs. They're not people that are like, I'm going to go out and build the next, you know, name your favorite school. Right. These are folks that were like, my kids were suffering during COVID and this is not working.

I need to build something better for them. And they didn't really realize it until after the fact. It's like, oh, there's like, 25 kids showing up at my house every day. Or, you know, we're doing something. Yeah. But to take that and that energy and turn it into a fundamentally sound business, I think that's the kind of head space that we're. You know, I think we're actually talking about really, like, change management. We're talking about changing people's identities of how they look at themselves.

Raphael Gang

Because a lot of the folks we're talking to, they're like, why would I need a loan? I'm not a. You know, I'm not a business. I'm not a. I'm not. I'm not one of those fancy people on Wall Street. I'm a mom who built something for my kids, and it just grew a little bit. And you're like, well, you got revenue in the hundreds of thousands of dollars.

You're looking like a business to me. So I think that's a big part of it is how do we help guide people through that process of something that's very different and make sure that they're ready for it. Right. We're not trying to set people up for failure. We're really trying to help people. But that's a big change for people to go through mentally and business wise.

Michael Horn

No, that makes sense. So let me ask a few lightning round questions as we start to wrap up here. And the first one would be, you both have mentioned other partners at the table, right? You mentioned Vela. You mentioned the National Microschooling Center. There's Wildflower. You mentioned. There's KaiPod. Right.

That will support entrepreneurs launching microschools. They're all doing different pieces of the puzzle. How does this vehicle fit in with all those different partners?

Raphael Gang

Yeah, I can go. I think we see it as an accelerant for everything that everyone else is doing. We see it as fuel on the fire. Right. Where we're adding a new perspective that hasn't really been at the table to date. Right. Wildflower has been doing it for their own folks. But we want to create something that really influences the sector and says, hey, this is what strong, sustainable microschools, or micro ventures, whatever they call themselves are.

Loan Partnership for Scalable Growth

Raphael Gang

And we chose this to be a loan, not a grant, because we know Vela is doing incredible work around that. And we wanted to do something that was really scalable and that we could grow. And that's why we were looking for a partner like Bill and the Building Hope team, because we knew that it was, you know, I might have my own kids and love, want to send them to a microschool, but I am not a finance expert. And we need, we need the expertise that these folks that the Building Hope team brings if we're going to really make a dent across the sector and make, you know, entrepreneurship available to so many more people.

Michael Horn

And I'm curious, Bill, from your perspective, like, another lightning round question of, like, who else should be at the table, you know, philanthropically? Like, what. What else do we need? What are the missing lanes that you're observing? You've seen lots of sectors, both in K12 and higher ed crest, and either make it or not. What. What other things should we be looking at?

Bill Hansen

It's both, you know, breadth and depth. I think as we learn, you know, it's gonna. We're gonna need to go deeper. You know, we're just, you know, one spoke in the, you know, the wheel of, even in the, you know, financial, operational and services side of the house, and I think philanthropy as well. And, you know, one thing we've learned too, I just think, and again, I really appreciate what Raphael said about, you know, just even the outreach to get this thing launched. You know, we did not run a national campaign.

We wanted to keep this manageable. We didn't want to tip over. We wanted to make sure, you know, that we were able to, you know, get a learning process in place. But, you know, but just a couple of things. You know, I don't think we had a viable applicant out of Texas or Florida, for example, but, you know, Virginia, which, you know, again, my home state is not a very positive charter school state. It's usually in, you know, the DRF category. And, but, you know, it's actually been at the lead here in terms of what we've approved. And I think that that's also going to be, you know, as we kind of dig into this, you know, I think we're going to see some things maybe geographically that, you know, will really lead us to different types of partners and, you know, where we are geographically and you know, possibly as well with, you know, I think there's, you know, just a strong infrastructure of, you know, women owned businesses, you know, leaders that I think that is a key to this sector.

And so I think, you know, there's going to be a lot that we're going to learn that might draw in, you know, those folks that, you know, maybe it's also maybe the SBA or, you know, some federal or state or other type of partners that could come into this. And, you know, just one other area too. I still feel like the regulatory beast out there of what these entrepreneurs have to overcome is an area as well where I think just getting some of that and, you know, Building Hope does that to some extent. But there's a lot of other regulatory and other challenges that are out there that I think could, you know, really attract some other partners to really help bring these and, you know, playbooks and whatnot to, you know, the entrepreneurs out there.

Michael Horn

Amen to that. Amen to that. Okay, last question, which probably just a one word answer, but you may both have a little bit more, which is you've done the pilot. Will there be another fund? Are we going to pony up for more?

Raphael Gang

Fingers crossed, yes.

Michael Horn

Fingers crossed, yes.

Raphael Gang

Yes. That is the goal. That is our goal that we want, we want to see that we want to make this even more available to more folks. And if anything, we want to go further on things like technical assistance, make it easier and faster for people to get feedback and be ready for capital.

Michael Horn

Terrific stuff. Terrific stuff, Bill.

Collaborative Growth: Foundational Years Ahead

Bill Hansen

Yeah, just the same, I just, you know, and again, I think getting the proof of, just to where, bringing other businesses and entrepreneurs, nonprofits, you know, to the table is going to be critical. So, I just, and again, I think the, hopefully the horse is out of the barn on this and, and just, again, if, how we can corral that and marshal the resources and the partnerships to really help us get where we all want to be in the next three to five years. And I do think the next three to five years are going to be really important in setting the foundation for this movement. And so just I agree. I should have just stopped the fingers crossed as well, but.

Michael Horn

No, but it's a critical time. I appreciate the role you both are playing, not just obviously with this fund, but throughout the whole ecosystem as we think about getting the structures in place so that this is not just sort of a small part of the offering, but it's a bigger part of the menu of choices that families have to make the progress that they need for their kids.

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Callie Riley of Cambiar Education, Ashley Beckner of Lemnis, and Matt Haldeman of DCDO join me to explore the evolving landscape of funding mechanisms for education organizations. Our conversation dove deep into the limitations of traditional nonprofit and for-profit funding pathways, as we highlighted how new, creative financing models can unlock greater impact, sustainability, and innovation. The guests shared insights from their respective organizations and discussed the need to expand the “menu” of capital options, especially for nonprofits navigating growth and scaling challenges. I see this as the beginning of a series of important conversations we need to be having—and hopefully we’ll see more of these folks discussing this in other venues over the next couple years.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn. You're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose, which we are not anywhere close to, sadly. But the folks that we're going to talk to today are dedicated to helping create that world. We're going to hear more about that. But I want to give a little bit more of an intro than I normally do to these conversations because we're going to be talking a lot about the mechanisms for funding education organizations, both for profit and nonprofit. And as I see it, those mechanisms have expanded in some creative ways over the last several years.

Exploring Nonprofit vs. For-Profit Paths

And yet, in my view, there are still too many limitations from the available funding vehicles that exist that sort of constrain or compel these organizations to act in certain ways that either might not be in their interest or frankly, the interest of the positive impact that they hope to ultimately have. I've written about this before (see here). If you subscribe to my substack, you've read it. But I'm also not the only one who feels that way. And our three guests today are all working to offer different forms of financing in the market to really achieve a variety of aims. And our purpose today is to start to unpack how enlarging the pie for these different vehicles and introducing these different types of funding models can help several different groups. One of those is existing nonprofits in the education space. A second would be founders or entrepreneurs who are starting an education organization.

And they feel like they have to debate between non profit on the one hand and for profit, and then feeling like if they go for the for profit route, that that necessarily implies that they're going to have to take VC money at some point. And then the third, of course, is funders themselves, folks looking to deploy capital and get some combination of perhaps market returns and, or impact, whether philanthropically or through some other vehicle. And our purpose in today's conversation is really to unpack at a high level the opportunities for each of these folks, why the work that my three guests are doing could be exciting, why the status quo perhaps is a little too limiting and, and understand if these visions, you know, if, if what they're painting is so exciting, why isn't it happening quicker? What are the barriers to really realizing them? And I will say all of us, all four of us in today's conversation, we hope that if you're tuning in, if you're listening and you get excited by any of this, or you have questions about any of this that you'll reach out so that we can continue and frankly deepen the conversation significantly. Because I think it's fair to say that we all believe that there are some really exciting organizations that exist today that are doing breakthrough work on their teams that would benefit from alternative capital sources or structures and that there's going to be new organizations to come that could benefit from these things as well. And some folks might be very happy also with the status quo. This is not a sort of anti, it's a how do we enlarge the pie conversation. So with that as a longer prelude than usual on the show, let me introduce our guests. We've got Callie Riley.

She's the managing director at Cambiar Education and nonprofit education venture studio that is focused on student success for all. Cambiar has a goal of enabling a life changing impact for 1 million of the most vulnerable youth through their efforts. They do this through both supporting entrepreneurs to develop, pilot and scale their bold ideas, as well as to directly run initiatives that they do that build entrepreneurship, critical partnerships and innovative communities. So, Callie, great to see you. Thanks for joining.

Callie Riley

Thanks for having me, Michael.

Michael Horn

Yeah, you bet. And then our second guest is Ashley Beckner. She's managing director at Lemnis, a public charity that was recently established following the sale of the majority of NWEA's assets to HMH. Lemnis envisions a future of the unlimited learner where every young person can thrive in a time of dramatic change. Certainly describes right now. And they invest in and partner with organizations that share a vision for this future. So Ashley, good to see you.

Ashley Beckner

Thanks Michael. Excited to be here.

Michael Horn

Yeah, no, I'm glad to have you as well. And then our third is Matt Haldeman. He's the founder of DCDO, which stands for Dot Com Dot Org. It's a mission-driven organization that invests exclusively in nonprofits. And DCDO recently partnered with Lumos capital to help 501c3s increase their impact by transitioning into a public benefit corporation or spinning out a separate for profit entity. So Matt, great to see you.

Matt Haldeman

Thanks, Michael. Looking forward to the conversation.

Michael Horn

Yeah. And hopefully you all feel that way at the end of it as well. So let's, let's dive in. I actually want, like I said, a bunch of words, but I'd love you to deepen what I just said and in the introductions of each of you and talk really about the models that you've set up or are in the process of setting up and really the mechanics of how they work, who they're for, and so forth. Why don't we go in order of how I just introduced you, Callie, Ashley, and then Matt.

Student Success Through Nonprofit Investment

Callie Riley

Thanks Michael. I'll try to make this as short as I possibly can without all of my normal slides. So Michael gave a great introduction overview of Cambiar and my portfolio at Cambiar is focused on enabling 20 million students to experience directly or indirectly nonprofit-developed, high-quality instructional materials leading to increased positive student outcomes, particularly at the margins. So we're doing this by investing in key nonprofit HQIM developers to demonstrate the impact and increase the scale of their products and services as well as strengthening the sustainability of their organizations overall because we believe they're critical to keeping the sea level of quality high in the curriculum ecosystem. So critical to this has been the development of our Impact First HQIM Accelerator Fund officially launched this year, which has a range of investment vehicles that we can stack to provide long-term, patient, cost-effective, flexible capital to support scaling and sustainability of the nonprofits we support and incentivize key behavior and business shifts. So these vehicles include that we are able to stack operating grants, which use more flexible catalytic dollars to build capacity for newer but essential business operations, exploratory efforts such as early R and D for new products, convertible grants—so used primarily to drive shorter-term revenue, profit growth like new product development, new strategies essential to high growth opportunities, core operational shifts in their business models but with near-term metrics to drive innovation on time delivery and budget efficiencies and then two vehicles to support longer-term plans and strategic initiatives that are essential to impact scale and sustainability. The first is low-interest term loans never above half the market rate with very favorable repayment terms used primarily to fund organizations within their risk adjusted debt capacity. And the second is a recoverable loan so used primarily to fund organizations beyond their debt capacity.

And again, we combine those together. We engage in a pretty intensive strategy —operational financial diligence—with organizations that meet our pipeline criteria. So nonprofit core HQIM is starting an ELA in science right now to assess their long term plans, corresponding to the need debt capacity to create that package that we believe will help them reach their long term goals. And I'd be remiss that I didn't mention, too, that as part of the way we think about our investment package, we're also providing support in the way of complementary research and evaluation investments for all those who we invest in so they can help them demonstrate their impact and efficacy of their products and services as well as technical assistance and capacity building for the duration of our multi year partnership.

Michael Horn

Awesome. Actually before Ashley, you get in just two quick follow-ups there.

I think it's interesting the research piece because that's a huge hole we always hear is right like entrepreneurs, they want to show the impact but they can't. So I'd love you just to quickly double click on what that looks like and then the second one is on the loans that you're offering. You said long-term planning. Long term. Right. Sustainability. Like what are the timelines of those loans typically?

Callie Riley

Yeah, so I'll take it from the loan. And so those are looking at five year loans but not with principal repayment until after that five year mark. And so I think that's critical when we talk about this idea of favorable terms too and below market rate. So right now we're pegging that at 3%. And then on research and evaluation we just think having a strong, incredible evidence base to demonstrate impact of products is so incredibly important and needed in the field. We're hearing more and more of that from systems leaders. And so we are about to actually contract with a common evaluation partner that will work with every single organization that we have in our portfolio to design those research studies hand in hand. We'll have intensive co design, there'll be multi year studies and also allow us to think about trends across the portfolio and what we're learning to share out with the field about what we're learning, what we see and hopefully to really galvanize additional funders to invest more in R and D in the long term.

Michael Horn

Fascinating. All right, Ashley, sorry to jump in there before you get your answer, but I'd love to hear what you all are doing.

Ashley Beckner

All good, all good. I liked hearing it as well. Well, as you mentioned in my intro, Lemnis is a public charity that invests in mission aligned organizations dedicated to supporting this future where every learner can thrive in a time of dramatic change. And our approach in general was formed out of our board and our leadership team's experience running this large-scale nonprofit and thinking about kind of the type of capital that would have been helpful to them over the years to expand their impact. So I lead our Lemnis Collective, which is a specific area of the organization that brings those mission aligned organizations, both for profits and nonprofits, wholly under the Lemnis umbrella through mergers and acquisitions. Our goal is really to provide patient capital, long term stability, operational and strategic support and really allow organizations to focus on their mission, growth, impact and innovation and just be kind of an alternative capital source for orgs that may not fit with or may not want something that, that you talked about up front. The more traditional sources of capital. We're generally looking for partners with between 10 and 100 million in annual revenue, I know that's a pretty wide range.

Nonprofit Growth and Community Impact

Ashley Beckner

And when we're talking about nonprofits, we're really talking about earned revenue and thinking about business models where they want to leverage our capital for investments in growth and R and D. Right. So we're really looking for sustainable impact that we can supercharge with growth and innovation capital. And then from an impact perspective, as we think about the future of the unlimited learner, our team and our board has put a ton of thought and just kind of what we believe the world needs for that future. And one of the key things that we keep coming back to is really an emphasis on belonging and community, really creating that foundational component of holistic sense of well being that learners can build from in order to thrive and then helping learners build kind of those durable skills that stick over the long term as we enter this, well, I don't know if we're entering, if we're in it, but this time of dramatic change.

Michael Horn

Yeah. Again, I'll Matt, before you jump in, just a couple of follow ups. Ashley. One—so the 10 million to 100 million, like just so people are clear, that means not that you fundraised that last year, but that you have like a recurring model that charges customers, in other words, and is bringing that in. Is that right?

Ashley Beckner

Correct? Correct. Recurring revenue. Yes.

Michael Horn

Okay. And then the second question is when you talk about belonging, community, durable skills, is that across the education ecosystem, is that like, like as opposed to HQIM, which is K12 focused, are you looking at a K12, higher ed, workforce, like where do you draw those boundaries?

Ashley Beckner

Yeah, thinking about it pretty expansively. So definitely across K12, higher ed and workforce, when we think about belonging and community and the kinds of experiences and opportunities that we want to support learners with, a lot of where we think we can add value there, starts more in adolescence. So we talk about learners ages 10 to 26. But we know that, you know, many companies and organizations who operate in K12 don't decide that their work starts at the age of 10. So we're really open across that spectrum.

Michael Horn

Perfect. All right, Matt, dive in. Your turn to talk about what you are up to.

Matt Haldeman

Great. So 20 years ago, I'm a classroom teacher in the Bronx and I'm teaching a 14 year old how to read and we're sitting side by side and we're reading Hop on Pop. And he takes the book and he slams it on the ground and he says, Mr. Haldeman, this is a book for babies. And I totally understood why this teenager didn't want to read Dr. Seuss, but it was the only book I had in my whole classroom library that was at his level. And two years ago, I was introduced to this amazing nonprofit organization called Story Shares that had a library of books to solve the problem. Basically beginning decodable readers, but with themes and protagonists that would appeal to older students.

And I fell in love with the organization. And the founder of this nonprofit had a million great ideas, but she needed capital to make them happen. And so at the end of 2023, we made a deal. I invested in the company and we transitioned to a public benefit corporation, a mission driven for profit. It was about 18 months ago, and today we're about 50 times larger than we were at that time. It's simultaneously probably the best investment I've ever made. And then the impact that we've had, I'm extraordinarily passionate about. And it was such a great experience that I recently partnered with Lumos Capital.

And if you don't know, Lumos, they're a well respected investment firm. And they focus on education, learning, and workforce development. And together we're looking for investment opportunities exclusively in the nonprofit sector. So we're in search of nonprofit organizations that need some unrestricted capital to dramatically scale their impact. So perhaps leadership wants to go after some new products or develop a new product suite. Perhaps they're looking for additional support with distribution, marketing, or to compete with for profit competitors. Whatever the opportunity, we're looking for those investment opportunities, and then our goal is to both invest and then support the organization as it scales its impact.

Defining Funding Model Challenges

Michael Horn

Very cool. Okay, super helpful. Let's dive in. We did a much longer prelude up front than I'm used to, but I think it was really valuable for folks to start to, like, envision what this can look like. But I want to get a little bit into the problem like you, you know, you're all taking slightly different approaches, right, to these questions of different sources of capital, different structures for organizations. And I'd love us to start to like, define what is the problem that in your mind we're trying to solve. I talked a little bit about limitations of existing funding models, but like, let's sharpen that. What barriers do those actually create? And what is the status quo as you all see it, and why is it important to start to change that? In specific, Matt, maybe you lead off on this and we'll work backwards.

Matt Haldeman

Sure, sure. So the way I think about the status quo is the following. I bet somewhere there's a non profit leadership team right now. And let's imagine they're gathered in front of a whiteboard and they know what they're doing is working. And they say, all right, what are our strategies to scale this, significantly scale this? So they get out the whiteboard and they write sources of capital on the top and they write two things. So number one, they write earned revenue, and number two, they write philanthropy and they're done. They're like, all right, those are the two levers we have to really, to really raise capital.

And I think those are two great options. But really, maybe there are 10 options. And included in that list should be debt, joint ventures, mergers, IP licenses, revenue sharing, partnerships, and transitioning to a public benefit corporate operation. For my ultimate goal is to see that list of levers grow from 2 to 7, 8, 9, 10, that kind of thing. And when you talk, you asked about limitations, and when I tell people what I do around non profit investment, they usually expect me to say something like, oh yeah, the for profit model is just better. It's more nimble, something like that. And let me say really unequivocally, it's not. I've seen great performing non profits and great performing for profits, and I've also seen low performing on both sides.

But there are trade offs to both and there are limitations to both. And let me just talk, I'll just name three limitations to the nonprofit model. So number one, unless they have huge amounts of cash in the bank, most non profits can't operate at a loss over multiple years. For example, if you're in a really crowded space and you're trying to offer uber competitive pricing to build out market share, that can be a challenge. So that's limitation number one. Limitation number two is that most of the time nonprofits can't raise large amounts. I'm talking about seven or eight figures of unrestricted capital to finance a pivot or enter a new market or something like that. And then the third limitation is that nonprofits by definition can't give employees a chance to be owners in their own organization.

So at the end of the day, that's what we're looking for. We're looking for non profits where one or more of those limitations is getting in the way of them scaling their own mission.

Michael Horn

Super interesting. And it occurs to me as you're going through those, at least the first two, Callie, you're also like tackling that. So maybe you jump in next and then Ashley come in after that.

Callie Riley

Yeah, I was going to say I feel like what Matt named is also part of what we're trying to solve for. So obviously we're starting with high quality instructional materials, but really we're thinking about nonprofit financial sustainability overall. So we believe that sustainability and scalability, at least in the HQIM industry, requires patient long term growth capital that nonprofits don't typically have access to as Matt named. And it makes competing at scale really challenging. And we see those challenges as coming in really about four forms. One is that growth capital there's nowhere limited access to growth capital or equity like investments to support scale. Typical growth capital has meaningful potential returns to offset risk. Long term patient capital is not readily available to fund the investments needed to successfully scale an HQIM.

The second is access to debt. We think debt is really important. Existing standard market debt instruments beyond working capital lines are just not an optimal fit for most nonprofits in HQIM or I would argue most of the education ecosystem because there's limited ability to generate returns on capital over a short term period. Standard payback periods are too short, market interest rates are too high. I mentioned how we're trying to peg our terms too. The third is around innovation. The ability to drive impact through innovation and timely reinvestment we see as muted like limiting many organizations ability to compete with for profit counterparts.

So that means resource allocation decisions are made without the benefit of long term planning. This one is really key is that we want them to be able to make great decisions with enough time. Right. And creating and scaling HQIM requires a long investment cycle infrastructure. We're talking several years and then finally is around philanthropy. So philanthropy has historically funded projects versus business plans and funding for projects that include innovative product development are absolutely critical. However it doesn't associate or cover the costs associated with scaling and building the infrastructure like sales, marketing, partnerships requires significant capital and time to operationalize and succeed. So I feel like Matt is, we're kind of overlapping here in terms of the problems we're trying to solve from slightly different vantage points.

Michael Horn

Yeah, super interesting. I could go deeper but let's like Ashley, I want to get your voice in this as well.

Ashley Beckner

Yeah, I agree with everything that has been said so far and we'll touch on nonprofits for a minute but since the other folks have shared also we'll dig more into what the challenges I see around the for profit business model as well.

Michael Horn

Yep.

Expanding Creative Funding Solutions

Ashley Beckner

So similar to other folks I don't think there's any like specific problem with the capital tools that exist today. It's more that it's not a universe that is expansive enough for the sector in which we operate. That requires just more creative thinking and in terms of how we fund. Michael, like you shared up top too. I've had more conversations than I can count with impact driven entrepreneurs who ask the question like, here's what I want to achieve. Should I be a non-profit or should I be a for-profit? And that essentially means should I raise grant funding or should I raise venture capital funding? And I think to the things that Callie just shared, right? If you're talking about philanthropic funding, there are some incredible philanthropic funders that write big checks and stay around for the long term. But that really is completely dependent on just the people that are there desiring to do that. There's no mechanism that makes term nature happen. On the flip side, venture, you know, there's, there's companies out there that have raised, you know, maybe a round or two from venture.

They've gotten to a certain point and just the nature of the education sector has driven the growth to stagnate. Certain things to happen that create a condition where they're no longer able to access that additional funding. And so they have options on the table. Yes, there's strategic acquisition, but maybe there's more innovation and growth that's possible there with an alternative capital source. And that's really who we want to be. We want to say that if there's still impact there, like we're willing to get behind it and see what's possible with the next phase following this kind of point of growth or inflection that these organizations are reaching.

Michael Horn

And it's interesting off that, like a couple of thoughts occur to me, but one of them, Ashley, is like there's an implication that like there's something untapped in what they're doing or that they could be doing that's apart from the growth question. But they can't access it because the limited growth and you might even say, hey, it's cool if you stay at the 40, $50 million revenue. But what we're really interested in is unlocking this new thing that you could be doing or something with R and D or something like that. Is that the right way to think about why they would get exciting to you?

Ashley Beckner

Exactly. I mean, I think we're thinking about impact and I don't think that impact only comes in the form of a billion dollar company. Right. Like, let's keep those smaller solutions alive in the places where they make sense. And we can do that. And unlike forms of cap, other forms of capital, our commitment isn't time bound.

Michael Horn

It's super interesting. And Callie, it seems to me like your answer to some of that is, well, we're giving the, for the nonprofits that want to stay as nonprofits, we're giving you an avenue to fruitfully do that. It's not that the for profit structure might be wrong for you, but if you go through the trade offs and you feel like no nonprofit's still where it's at, we're at least creating a vehicle that. Is that the right way to think about like the three of you almost as a menu?

Callie Riley

Yeah, for me, I mean, Michael, I think that's a really good observation and just like kind of stringing us together because we want them to be able to have the right capital to make those decisions and what's right for them ultimately in the long run too. And so we'd love for these nonprofits to stay nonprofit. We think they have incredible value. But if they need to move in a different direction eventually after we, you know, kind of end our very long term, multi year investment, that's up to them. But we want them to be able to make those decisions in the right way.

Michael Horn

And from positions of strength, I guess so

Callie Riley

100% yeah.

Michael Horn

Yeah. So let's talk about what this could start to enable then. And like, so that's the problem space we're living in. We started to allude to some of what this could unlock for these teams. Ashley, why don't you lead us off? Like what, where do you see this could go if we have these different menus on the table for organizations, what could it start to enable that perhaps is not being enabled right now?

Ashley Beckner

Yeah, I don't think we really know yet because the options haven't been there. So I'm excited to see what's possible with these new forms of capital coming to fruition. I think maybe some choices that have been made historically again where companies have either sold to a strategic or the choices that have been made inside nonprofits for how they get to their next step or haven't been made because they haven't had the capital to do it, that if we start to see new access to capital, I don't know that we know what's possible with that kind of shift.

Michael Horn

Matt, let's get you in here. What do you think this could enable? What's your view of it?

Matt Haldeman

Yeah, I think the really unfortunate thing is that, you know, whether it's business or politics or education, the best stuff doesn't always win. Like typically oftentimes it's this question of how much did you fundraise? And that's how we determine who the winners and losers are. Which means that there's all of this awesome under the radar stuff that kind of gets left by the wayside. Like I'll give you an example. I'm talking to a charter management organization and here's what happened. So a school leader noticed an issue in her school and worked with her team to design a solution within those four walls. It works so well that they spread it throughout the entire school network. Now they have this great battle tested idea.

They know it works and the question is how do we really expand it? How do we, how do we really broaden it? And I love what you said about menu. I really like that we did this as a panel. And one of the things, one of the things I live in fear of is that someone is going to hear about what I'm doing and saying that. I'm saying, well, you know, this is better than what Ashley and Callie are doing or better than traditional philanthropy or traditional venture capital. No, it's a menu. You get to decide what's right for you. But at the end of the day, it really is all about mission amplification. Lumos and I haven't really talked a lot about what we're doing publicly, but internally when we talk about what we're doing, we call it Project Echo.

And the idea is that you take something that works, that under the radar solution and it just kind of reverberates out and out now.

Michael Horn

Very cool. All right, Callie, get in there.

Innovative Nonprofit Financing Model

Callie Riley

Yeah. So I think Matt and Ashley have had great answers so far and I guess I'm just going to double down on the idea that like we're really hoping to continue and start this conversation or continue this conversation about what we do around the messy middle right between grants and traditional debt, especially around nonprofit financing. We're starting an HQIM, but we know that these are pervasive issues around any products and service focused organization that are in critical growth stages where they're building earned revenue, they're building new models that will lead them towards sustainability, but they're not there yet. And so the way that we're functioning is similar to an equity investor. We're investing in an organization's long term vision and plan and sustainability versus those specific projects with targeted outcomes. And so we're just excited about this idea that we're a fund that can provide layered, patient, flexible funding options that address current gaps in the capital markets and allow for that long term planning that we were speaking about earlier and to what Ashley was saying too. Ultimately with the fund, the way that our model is, we're willing to share in the risk with our investment organizations. And I think that's really necessary as we're exploring these innovative financing models is knowing that there is risk there.

But it's the exciting kind. Right. Where we're learning a lot along the way with these organizations about what's working, what do they need in order to really reach sustainability and scale of their products and services in their organizations overall.

Michael Horn

Yeah. And it strikes me on the high quality instructional material space that you've chosen in particular, there's been sort of, I don't want to say consensus, but like growing excitement around that space over the last call it five years and maybe a little bit longer, but without probably you all there and some other funders, it's not clear that the organizations would be, would, would be there to match sort of this burgeoning demand that we see for this space. That's sort of my outside perspective.

Callie Riley

Yeah, I mean I've been really lucky to be in a traditional philanthropic organization where HQIM was one of the big portfolios And I spent many years doing that. But we can see that there was something that was needed beyond. And I think there's a really key part here where it's, we ask a lot of times brilliant academic leaders with these wonderful ideas to become brilliant business leaders at the same time they're trying to grow the organizations without the necessary long term capital and other types of technical assistance and capacity building support. And so I'd like to challenge us all too to continue to think, and I think Ashley and Matt are doing this as well. But like, what does it look like when we think about comprehensive support? It's not just the funding. Right. It really is things like coaching, TA, access to other networks that I think the research evaluation work that I mentioned that make all these investments sing ultimately for the organizations we're supporting.

Michael Horn

Yeah. And I'm excited about what you'll learn from that also. Like, where are the limitations in our current understanding and how can we sharpen that as well as we forward? And it strikes me, Matt, like you've started to like answer some of those questions even in the Story Shares, right? Like in terms of like limitations of the existing structure and then like what you learn as you fund that organization, right, to have started to grow a little bit that may have been missing in the traditional landscape. It strikes me from the outside. Let me ask this question, which is as we start to wrap up this conversation, why hasn't this menu existed historically? Like why have we always defaulted into these couple, two, three categories that y' all named at the beginning? Like why isn't the invisible hand working, if you will, and why do you three need to be there to sort of create this? Or are there certain structural barriers that you all feel like you might be fighting against? I don't know who wants to take that first, but I'm really curious to learn on this one.

Ashley Beckner

I'm happy to. Yeah, yeah. I mean, I think there's a longer podcast about whether any part of the education sector really functions with an invisible hand. But setting that piece aside.

Some of it I think is inertia. And, and what we're accustomed to, right there are tools that have been brought into the sector by people who have brought their own experience into that tool from other sectors. And you know, we're coming from the education sector, but we're similarly bringing our experience to the tool that we want to deploy. And I just think in education that there is often a mismatch between long term impact goals and short term investor expectations, like the time horizons just don't match up. And so we're, we're just really emphasizing like thinking about the long term here and, and really thinking about the long game.

Michael Horn

I think that long game is a really important thing because I was reading something else the other day about like divergence, right, in life outcomes and test scores where they don't predict perfectly. And you're like, what's, what's going on there in the divergence? Short term versus long term indicators. We don't have all the things we would like to know. So super exciting. Matt, dive in on, on this. Why isn't it naturally happening?

Private Capital Barriers in Nonprofits

Matt Haldeman

Yeah, so if I think of my specific use case, right. Private capital investment in non profit organizations. If you think about barriers, you got to think about it on both sides. So you know, what is the barrier for non profit organizations that would be open to private capital investment? And then conversely, you know, why are investors who might be interested in investing nonprofits sort of hesitant? So let's talk about the first one. So in the last year I bet I've talked to hundreds of nonprofit leaders and the big issue is that they're worried they can't find investors who are really good stewards of their mission. So imagine a nonprofit founder probably spent decades on a particular mission. That founder doesn't see a penny of any sale or any exit. And so their big question is, you know, are you mission aligned to what we're doing right now? Loomis and I are, we're talking to a non profit organization and we are not the first organization to approach them about an investment.

But the other offers that they received, they just, they didn't have a problem with the valuation, but they did have a problem saying, hey, is this investor going to care as much about the mission as we do? Then on the other side, the reality is, and Ashley, I bet this resonates with you, the space just actually isn't that large. Right. So there are 2 million nonprofits in the U.S., sounds like a huge number. But then you're looking for nonprofits at a certain scale that have a healthy earned revenue percentage and that also are open to this sort of investment. And the space gets pretty narrow pretty quickly. And then the final barrier, which is true to both, is just complexity of the deal. Right.

A conversion from a nonprofit to a public benefit corporation requires substantially more legal and financial oversight in order to really do it properly.

Michael Horn

Yeah, and that's actually what you just said there also the supporting structures you bring to bear to help those nonprofits. I was thinking that with story shares, particularly in light of what Callie, you were saying, like what else can we bring to the table that would help these orgs? But I want your voice in this as well. Why isn't it happening naturally?

Callie Riley

Yeah. So I'm trying to figure out if I start with my agreement with Ashley or my agreement with Matt. So first I'm going to start with my agreement with Ashley, which is just we're in this for the long run, five plus years with the organizations we fund. So patience is key and it requires focusing on the long game. At the end of the day, that's not typically how a lot of grant making cycles work. You know, kind of long typically is like two to three years. Right. And so this is a very different type of situation that we're entering into with these organizations.

Second, it's just really hard work. And what we found when we were developing the fund was that there weren't clear models in the education nonprofit space that combined the various instrument vehicles that we were wanting to use with success based features to utilize. So we built our own. We keyed off of learnings and insights from other smart people in the for profit nonprofit financing space. We identified ways our funding could help mitigate challenges the growth stage nonprofit leaders are typically facing. But that took a long time to build that model and a ton of pressure testing too. To say is this going to work? And then finally deploying these type of stackable investments requires a lot more extensive diligence, especially in the finance side, and frequent ongoing progress monitoring to know how the organizations are progressing against their long term goals. And that's a lot of capacity that's needed.

Philanthropies typically may have capacity on their investments team, but may not actually be structured that way on their program teams. And so introducing something beyond and especially thinking about the kind of the combination of the vehicles is just really complex to do.

Michael Horn

Really interesting. All right, you guys have shed a bunch of light on this. I'm going to throw a curve ball as we just asked this last question, which is actually anything that you want to comment on or make sure we highlight like closing thoughts, sort of choose your own adventure or if in a next conversation so someone wants to take this farther, ask more questions, put more of these vehicles into action. What are, you know, you can tease something that we didn't talk about that you would love to talk about in a future conversation. Take it anywhere you want. Matt, you look least flummoxed by this, so I'm going to ask you to go first and then Callie or Ashley, you can go, you can go back to clean up, if you will.

Matt Haldeman

Sure. So the for profit space is littered with examples of successful pivots, right? Like Microsoft, YouTube, Yelp. These are all very different organizations than the day they were founded. My favorite example is Slack. If you don't know, that company was a video game company that came up with a great internal tool to communicate. The video game failed, but they had this amazing tool and they circulated it and that's now Slack. And here's my question. I can't think of, maybe other

People can, but why aren't there more stories of successful pivots in the nonprofit space? I find that really fascinating and, and a little concerning. Right. And, and that for me is sort of one of my hopes that what, what all three of us are doing, right? A little bit of capital, a little bit of support that allows a nonprofit leader to make a few mistakes, try a couple things, and really hone in on fantastic product market fit.

Michael Horn

That is a good tease. Who wants to go next?

Callie Riley

I'm happy to go next. A little bit more think time. So first of all, I'm just excited to say, like we're on track to finalize our first two investments and so more to come on that. But that's a big deal for us this year. And so while they're not public yet, I just wanted to share a couple of key learnings so far is that not surprisingly, there's a strong appetite for patient and flexible capital in the nonprofit space. And the key is that pre diligence, relationship building, diligence, risk identification, all those things should ultimately all lead to short term and long term metrics that align with the organization's overall long term vision and plan. And we've just learned that the metrics you land on to determine success and will monitor shouldn't feel like a surprise to the organization's leadership.

Boosting Nonprofit Growth and Sustainability

Callie Riley

At the end of the day, it should feel like business and behavioral changes that they also see as good and welcome pushes and driving them towards what we hope are really aspirational goals around demonstrating impact, increasing scale, increasing sustainability. And another thing that I think just came up earlier is that really strongly believe that providing early support to growing and scaling nonprofits, especially in building comprehensive, multi year integrated financial models, is huge. And I'm not sure that's done enough. This is just really important given that most organizations that are nonprofits are primarily relying on grants in the early years. But as earned revenue models, other things come online it gets more complex and it's just a different level of sophistication and planning that needs to happen. So I guess this is my push for any funders that are in our audience around capacity building. This is a really great place to start and a little bit of money can go a long way in setting them up for long term success. And then finally my plug, I guess.

Michael, love to continue this conversation with anybody. It's really great being here with Ashley and Matt and I think we just want to expand the tent of people who are really excited about this kind of work.

Michael Horn

Love it. Ashley, you get to have the final word.

Ashley Beckner

Yeah, great. Three things I'll hit. One, just want to reiterate what came up in this conversation around capacity or capital plus support. So capital alone isn't enough and really we need to bring a lot of support to the table. Two, I don't want people to listen to this and think like, isn't there already a robust set of actors that describe themselves as patient capital? What I would push on as we're talking about the long game is that the patient capital that exists today isn't patient enough for this sector and we need to figure out a way to get even more patient about what's possible while still emphasizing the importance of sustainable impact and then teasing. What I'd love to talk about in the future is just who else is in this messy middle today? I'm sure they're out there, we'd love to talk to them. And how do we bring more people into it because we all have three really exciting models and we're not going to get it done alone. Right.

Like we're going to need a lot more people around this table thinking about what's possible in this messy middle.

Michael Horn

I think that's an excellent couple points to end on. Right. Like having a broader ecosystem that you all can pair up with and braid funding and et cetera. Right. Will help strengthen the sets of options that we're talking about as opposed to one funder doing this thing and or sort of the status quo for a given organization. And the patience piece I think is really important as well because my observation is people love to talk about disruptive innovation. I love it as well. But then like their example is like the Apple iPhone or something like that as opposed to steel which took like 40 years or something like that for disruption to play out.

And I think we should be thinking in like, you know, many decades for education as well. These are not short term structural challenges, these are long term, embedded systems in the fabric of our communities that were there for good reasons at one time. And as they get rethought like that just takes a lot of work and a lot of time and a lot of learnings throughout. So huge thanks. A lot of appetite on my end to continue this conversation. Keep learning and pulling more folks in. But Ashley, Callie, Matt, thank you all for the work you're doing and for all of you tuning in.

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Jorge Elorza, the former mayor of Providence and now CEO of Democrats for Education Reform (DFER), joined me to talk about why it’s imperative in his view to support educational choices for families. Jorge talked about his own struggles as a high school student to becoming a law professor. He explained why he thinks that Democrats have lost their way on education reform, the role of governors and other executives in setting a bold education agenda, and the importance of innovations that empower families and bottoms-up solutions, such as education savings accounts and microschools—as well as how the concept of choice aligns with progressive values. The conversation was fascinating—and frankly the only downside to it was some Internet challenges that occurred during it. Despite those interruptions, I think you’ll enjoy the dialogue. I learned from it—and as always, you can read the transcript for anything that’s hard to hear.

Michael Horn:

Welcome to the Future of Education. I'm Michael Horn. And you're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose, which sadly today remains not the case. But we keep working toward it. And to help us think through that, I'm really excited, actually, for this episode because we have Jorge Alorza, who's the CEO of Democrats for Education Reform. When I got into the world of education, DFER was like it. It was something that we paid a lot of attention to, really excited about. And then Jorge, as you'll hear, wrote a series of pieces, actually, that have caught my attention with the ideas expressed in them and given interviews and so forth to that effect that I thought, hey, something interesting is happening here and important that I want to drill into and understand more. So, Jorge, huge thanks for joining me. Welcome.

Jorge Elorza:

Yeah, it's great to be on here. Thank you for having me.

Jorge’s Journey to the Work

Michael Horn:

Yeah, yeah, you bet. So as I started to allude there, there's a lot of substance that I want to get into. But before we go there, I actually want to start with the personal side of your story and namely your own journey and the path to becoming CEO of Democrats for Education Reform. Because I suspect that the path is not one that know from the outside. People would say, oh, yeah, that tracks. You know, law school professor, mayor of Providence, then CEO of dfer. Talk to us about how you see that journey and how it's made sense from your perspective and in your own personal story.

Jorge Elorza:

Thank you, Michael. So, yeah, if I can, of all places, let me start at the beginning. I'm the son of immigrants, and in my household, from my earliest memories, it was always education, education, education. And, you know, I'd love to say, Michael, that I was that kid that always listened to mom and did the right thing, but I was a bit of a dunce, barely graduated from high school. And, you know, one of the most pivotal moments in my life came my high school graduation. So I barely graduated. I found out I was graduating a week and a half before graduation day. And I'm sitting there, all my friends are celebrating with their families. They're going off to school. I had gotten rejected from everywhere that I applied to. My life was going nowhere. And I had one of those moments where I asked myself, what am I doing? You know, my parents had sacrificed so much. I had let sacrifice blow in vain. And I resolved that I was going to do what I could to turn things around. And it was education that turned my life around. I enrolled at community college. That led me. Then I got a scholarship that it got inner city kids into the state school. That's what got me to college. And then from there, I went to law school, and that set me on this track. So education has always been a core part of, like, who I am and what I believe in. And so I practiced for two years as an attorney, and then I became a law professor. I thought I was going to do that for the rest of my life. I was doing the publishing thing. I had gotten tenure, but there was always an itch to keep one foot in the real world. Right. In the world of doing.

Michael Horn:

Yeah.

Jorge Elorza:

And I was literally minding my business when, you know, the opportunity to run for mayor came up. Folks started approaching me, and at first I was not interested at all, and.

Michael Horn:

But then actually pause there for one second, like, why were they tapping you to run for mayor? Because, like, that doesn't just happen unless you're involved in the community and people see something in you. Right.

Jorge Elorza:

I think a lot of different things. You know, my. My background. I also happen to have a very similar profile to the person who was mayor before me. And so people made a connection. And when I started to see the impact you can have to, you know, move the needle in schools, that's when I got really excited. The interest of. Interested in jumping into the race. And so that's what I did. I jumped into the race. And to be honest with you, I had never been involved in politics, so I wasn't sure or I know what I was jumping into. But sometimes you got to shoot your shot, Trust that you'll figure it out as you go. And that's exactly what I did. I got elected, got reelected, and set out to work on a race, including trying to fix our schools here in Providence.

Michael Horn:

Wow. Wow. And then from there, you finished the time as mayor in 2023, I think it is. And, you know, how does the DFER opportunity come about?

Jorge Elorza:

Yeah. So, you know, I got to tell you that when I first became mayor, I can't say that I came into office waving the ed reform flag, because the truth is, I didn't even know what ed reform was. But, you know, my goal was to fix the traditional public schools where 90% of the kids studied. And over time, you know, I. I came to see just the challenges of reforming these large bureaucratic systems. And over time, I came to believe in and embrace alternatives to the traditional system. So that by the time I left office, I was fully waving the ed reform flag and, you know, calling for the entire district to be charterized here in Providence.

Michael Horn:

Wow.

Jorge Elorza:

And so, and so, you know, I transitioned to the mayor's office. I was term limited. And I remember someone sent me the job posting for DFER that I had never heard of. And I mentioned that to my wife who comes from the ed reform world. And when I told her Democrats for Education Reform, she says, what DFER? And her eyes lit out and she said, you have to look into that. You'll love it. And that started the process. I applied and here I am.

Democrats’ School Choice Imperative

Michael Horn:

Amazing. Amazing. All right, so you get there to, you become CEO. And it feels like to me, the landscape in which DFER was operating at the time you became CEO and it's cloud even felt like very different from say, 15 years earlier when my first book had been published, Disrupting Class. How would you describe the environment in which DFER was operating when you became CEO and sort of its place, if you will, in the ecosystem at that time?

Jorge Elorza:

Yeah, it was a different reality. So DFER was created to, of course, always help policymakers policy wise and politically. And so much of how we operated worked on the assumption that Democrats actually wanted to get something done. But when I came into office, I'm sorry, when I took this position, it had been 10 years since there had been any kind of executive Democratic leadership on education. And so in those intervening 10 years, with the exception of Polis, who, you know, I'm the biggest fan of, with the exception of Governor Polis, there was no executive leadership on education on the left. And so, you know, we had state chapter strategy and approach. And I give a lot of credit to the people who ran those chapters within their state houses. They found places of opportunity. But as everyone who does advocacy will tell you, even under the best of circumstances, it's hard to move good policy. But if the executive is not behind it, it's almost impossible to do meaningful change. And so as an organization, we've taken a step back and, you know, we've been engaging much more with executives. Our theory of change today is that executives are the most important policymakers. They are the ones that set the agenda. They provide the policy guidance, they provide the political cover. And we're working with gubernatorial candidates throughout the country, several sitting governors as well. And what we're trying to do is as much as possible, give them political cover where they need it, but also help them see the opportunities both political and policy wise of embracing a strong reform agenda.

Michael Horn:

Yeah, no, it's a really good point. It's the one I hadn't even thought about in terms of the vacuum that had sort of appeared in the Democrats. But you know, compared to 10 years ago. And Governor Polis is a very good example of someone who is still a stalwart, you know, incredible leader obviously on the issue and to trace back to his own professional background right in the space as well. Of course, in that case, I, I want to jump in then to where you've been leading the organization from a policy and, and sort of what do you put in place standpoint. And you've written a few things that I think have turned some heads and, and, and we'll link to one of them in the transcript in the show notes here. It was a piece on the DFER website titled “It's Time for the Left to Come to the School Choice Table.” And I confess as I read it, there were big sections where I felt like I was reading something that I had written before and like I was like sort of feeling a lot of synergy there. And then there were also some arguments around things that I just didn't know anything about before I read it, frankly, in terms of the history of progressives and some of those things with regards to choice. But I would love you, in your own words, to perhaps share the basic argument behind the piece and the thinking behind school choice and aligning Democrats with it more broadly.

This should not feel as though it's what the bad guys want or something that's foreign to our own principles. We stand for choice in so many other spheres. And the reason why I'm a Democrat is because I've always believed that we look out for the little guy. And I've always believed that if you trust the little guy, if you give families at the agency and the ability to make their own decisions, you know what will happen. We'll make good decisions. And so I think choice very much aligned with our fundamental values.

Jorge Elorza:

Absolutely. And before I jump into the piece, I think it's really important to take a step back and you know, this is my assessment of the world in which we live in today. I believe that we are living to a transitional moment of historic significance. And you know, many leading thinkers are sort of converging around the same point that this is a moment of transition. And Republicans have been a lot faster to react to this moment and perhaps have been flat footed maybe the 15 years though after this last election. This idea that I, you know, it's, you know, the, the logic and the assumption of yesterday, we can't assume that they are going to apply tomorrow is, is real. And so I, I truly do believe that tomorrow is going to look different than today. And while I really appreciate that there are organizations and individuals that are trying to preserve some critical aspects of our existing systems, I also believe that it's important for us to look around the bend and start building what comes next. I think that's really fundamental to everything that we're thinking and that we're working on. And so when it comes to choice, we have always told the party that they're out of step with where their base is on choice. And all of the polling data pulls us up. But like Ben Austin recently said, you don't need polling data. It's like it's so intuitively true, right? Of course it is. And what exists today, that never existed in the past was a political imperative for Democrats to approach education differently. So 10 years ago we had a 26 point advantage on education in terms of voter trust, Democrats over Republicans. Today there are a bunch of different polls on it, but we're underwater. It's not a winning issue for us. And so in this new reality, you know, the truth is that with, with, with voting groups that have drifted away from the party, I'm talking about working class, Black and Brown. This is yet another 80/20 issue that Democrats are on the wrong side of. So I believe that there is a political imperative that exists today around embracing forms of choice that just didn't exist in the past. We never paid a political price for it previously. So with all that said, you know, we're out to make the case that, you know, there's nothing to be scared about with choice. And I think it's really important for Dems, you know, forget what Donald Trump wants [...] Let's come up with our own proactive education agenda. And you know, when I think about choice, we're talking about empowering communities, empowering parents. There's nothing more progressive than that. You know, we're talking about bottom up innovation. This isn't just about the demand side of things where you enhance families purchasing power so they can send their child to a private school. It's also the supply side. We're seeing this in places that have well established ESA programs. These rich ecosystems of bottom-up, community-driven, startup-style innovation in the form of microschools, unbundled learning, you know, start to take hold. That's all exciting and those are all things that appeal to left of center sensibilities. And so this should, this should not feel as though it's what the bad guys want or something that's foreign to our own principles. We stand for choice in so many other spheres. And the reason why I'm a Democrat is because I've always believed that we look out for the little guy. And I've always believed that if you trust the little guy, if you give families at the agency and the ability to make their own decisions, you know what will happen. We'll make good decisions. And so I think choice very much aligned with our fundamental values. And I'm excited about, you know, continuing to make the case and connecting with others who feel the same.

Michael Horn:

Yeah, I mean, that notion of trust, agency, and then the ecosystem you're unleashing on the supply side, that, that all resonates with me. I want to come back to it in a moment. You mentioned the politics side of it, which I think is a really interesting point, and it cuts a number of ways. You talked about the, the changing poll numbers for Democrats. You talk about in the red states where they've passed education savings accounts laws that progressives actually, I think, arguably are taking more advantage of microschools than are the conservatives in, in, in, in many cases. Right. And they're really excited about it. You talk about, frankly, what, what I've felt is that in some ways, if Democrats don't embrace choice the way you've just articulated, it could be akin to the Southern strategy that Republicans had In the Nixon era that turned off black and brown voters for several decades. In some ways, like, it could be that sort of big mistake. I'm curious if you see that similarly, or am I overstating things perhaps there?

Today there are a bunch of different polls on it, but we're underwater. It's not a winning issue for us. And so in this new reality, you know, the truth is that with, with, with voting groups that have drifted away from the party, I'm talking about working class, Black and Brown. This is yet another 80/20 issue that Democrats are on the wrong side of. So I believe that there is a political imperative that exists today around embracing forms of choice that just didn't exist in the past.

Jorge Elorza:

So I do believe that Democrats have begun to pay a political price for being out of step with their own base on education policies. And that's something that we have to take seriously. The working class, while the working class, they relied disproportionately on government providing them options to grade schools. And so I mentioned my own family back, my family background, the time I remember. Education, education, education. If we're talking about these communities, these voters that are drifting away. No, they disproportionately care about education. You know, it's only, it's just smart politics to align, you know, to align our policies with what, with what they want. But it's not just political, it's also policy wise. It's hard to make the case that what we've been doing on education is delivering for families. Yeah, I say it all the time. Providence today, if you can believe this, to name Providence, only 2.4% of high school seniors at traditional public schools can do math at grade level, 2.4%. That's indefensible. Every Democrat should be outraged, yet we just don't see the sense of urgency around it. Providence, frankly, is no outlier. The same situation is repeated in city after state. And we just need a different approach. We need new ideas. We can't be afraid of them, particularly when, you know, in my opinion, there's nothing inherently conservative or Republican about choice. In fact, I think it's deeply progressive.

A Full Vision of Choice

Michael Horn:

Yeah. So let's get then into this where you just took it, which I think is right on the substance. Right. Which is, and you really do embrace a full vision of choice. In the article you listen to yes, charters, but education, savings accounts, microschools. And it seems to me it really fits nicely into an abundance agenda that's gaining some steam on the Democratic side at the moment. But also from an innovation perspective, it just seems to me like we're going to be unleashing forms of schooling and reaching students with all sorts of personalization and supports that we can't even imagine at this point. If we, if we continue to follow this down, how do you see it playing itself out and what, what's, you know, what are you most excited about I guess on that menu, if you will, of lots of choices starting to come down the, down the pipeline.

Jorge Elorza:

Yeah. What I'm most excited about is you know, the factory model of schooling, very top down, literally to standardize, not meant to meet the birth and individual needs of every child. And you know, it was designed to efficiently rank and sort and over the years we've just sort of accepted this year after year to the point that it's become unquestioned tradition. But education doesn't have to look that way. It can look very different. It can indeed be bottom up innovation. We don't have to wait for, you know, a bureaucrat and central plumbing to, to innovate and come up with a new idea. Let's open it up so that people can start new and different schools. So this microschool movement, and you're 100% right that most founders of microschools, they're, they're likely Democrats, they're likely, they're likely progressives. And you know, they're designed from the outset to meet particular needs, diverse needs of that community. So I love this idea of being bottom up also inside the classroom. It doesn't have to be one teacher and X number of kids, every child. We don't have to move them along in age based batches like we do on an assembly line. Let's try new approaches in the same way that, that Ezra Klein and Derek Thompson mentioned in their book, you know, in the later chapters they, they stress a great deal about how the left in general we have under an accelerating progress and the only way that you get good at innovation is by innovating and trying and by, and trying and by iterating. And so we've, you know, we have, we have inherited A very sort of stodgy, very rigid system that of course has stagnated. Has stagnated because that's how it was designed. And I'm just so excited about bringing a dynamism to it of innovation, of iteration and, you know, one that is designed from, not to rank and sort and about instruction, but to customize it and personalize it for every child. I can't think of anything more progressive than that.

Michael Horn:

Yeah, you're singing from my playbook when you talk through all this. And I think the iteration point you bring up is a really good point too, because the suppliers that are coming in today, that's not the end state. Right. They can keep getting better and spiraling up. And if we empower families to choose, they can keep pushing them to get better and better and meet their needs and help them make progress as well. I'm curious, like, so that bottoms up energy contrasts in some ways around what used to be the accountability conversation that was more top down. Right. And so I'm just sort of curious like about how you're thinking about accountability and regulations perhaps for different parts of the ecosystem, you know, ESAs and microschools say versus charters versus districts.

Fitting the Pieces Together

Michael Horn:

Because I, I know you're thinking a lot about outcomes and transparency as well as part of your agenda. It's not all innovation. And so like how does this all fit together in your mind? Or do different parts of the system get different types of outcome based regulations or. No. Or just help me learn about how you're thinking about that puzzle.

Jorge Elorza:

Yeah. So this is definitely a challenging space I think that we're all trying to sort through right now. So I think of it in a bifurcated way. I think of accountability with respect to traditional schools. And with traditional schools, accountability means a lot things. It means testing, means data systems, it means holding to the accountable holding students. It means a lot of different things. But when we mean education, I remind that we've been working with governors and gubernatorial candidates throughout the country. And what we stressed is what we'd like to see is just a sense of urgency, right. This idea that low performing schools have been allowed to exist without any push for meaningful reform for years and in some and some occasions for decades. That is unacceptable. And we think that there is a strong appetite, strong thirst among the electorate for someone to come in and just call a spade a spade and show that that sort of like moral indignancy that this is unacceptable and we have to do better. And you know, a lot flows from that. You hire accordingly. You, you know, put them to come up with solutions accordingly. But it really has to come down we to build that and the top source of where accountability for the traditional schools come from. So when it comes to innovative models, I think accountability and the more we sort of box people to various ideas approaches that and put a map and so I think that a really Republican state, frankly that's all slightly different. They're all, no one can say, you know, we have landed exact. But as we advise Democrats, I think it's really important that we look at this through the innovation lens and ask ourselves accountability is certainly important. Let's look at it and the impact that it will have in either stunting or liberating educators ability to innovate in the classroom. Because I think that the steps that are going to transform our traditional schools it comes through it's accountability. And so let's just be conscious that we don't inadvertently stand in the way of the innovations that will lead to the next educational breakthroughs.

Michael Horn:

Yeah, no, and, and in many ways I think to what your point is like true innovation which I define is only when you actually create value for someone. Like if it's just something new, doesn't create value. I don't count it as innovation. That's just stuff. Right. In many ways that actually introduces accountability because it puts that pressure on the system where know families will vote with their feet. I think if it, if it is or isn't serving them and to your point around trusting them, that's a big piece of it. I guess the last question as we start to wrap up here, I'd love you to. So you, you've laid out like a robust set of ideas around the ecosystem we ought to build. And then in the beginning you talked about the political side of it, the politics of, of empowering executives and helping them buy into it and be champions for this. So maybe connect the, the strands now, right. Like this innovation agenda. The executives and the governors throughout the states. How do you start to empower them to make this their vision, give them the air cover they need to start advancing this and, and hopefully frankly like get some ESA laws and some microschools going in some blue states and make it, you know, not just not toxic but like politically exciting to do it.

Jorge Elorza:

Yeah, yeah. So a lot of different ideas and thoughts there. The first is that, you know, we've been, you know, there's going to be 38 gubernatorial elections in the next 15 months. And so we've been reaching out to gubernatorial candidates, building relationships, getting to know them and what we're noticing is that there's a new generation of Democrats that are lining up to run for governor. And more and more we're seeing that they want to lead on education, literally don't know what to do. This is not enough on them. It's really, there's really a function of our party not prioritizing it or thinking deeply about it over the last 10 years. And so there's a void and as much as possible where we're trying to fill that void, we do the outreach. You got to establish trust, build relationships, all of that human stuff. And as you go, not only provide policy guidance and messaging guidance, but also as much as possible, help them see a world of opportunities that comes out of this. And I think that the real sort of transformational, exciting opportunities don't come at the, you know, this policy or that policy level. They come at the, at the systems level. Can we imagine a different system and how do we shape that system to, to advance our priorities? Last thing that I'll say is I think this is really key. Key. You know, we believe in public education. Public education is a, not a particular set of institutions. I think that too many people on the left confuse the two or confuse means for ends. Public schools are one of the means that will help to create an educated populace. There's just no evidence and no, you know, there's a credible case that can be made that you can only create an educated populace through this mechanism. You know, we should be open. This is an abundance approach, you know, outcomes, orientation to whatever means help us accomplish that, that goal of having an educated public. And more and more we, you know, we want not just governors and executives, but our party to see it that way. That you know, education is a goal that we can all. Public education is a goal that we all should all be behind. But the means and how we accomplish that goal, we should be open to whatever moves the needle for kids.

Michael Horn:

Amen. You have me so excited, I can't tell you. I would love to be helpful as you continue this forward. And I'll end with a quote that you had in your piece which was Americans are looking for something different. And yet our education policy has been dominated by establishment thinking. More money to do more of the same, top down mandates, centralized bureaucracy, and insider political alliances that disregard the interests of families, educators and communities. This has to change. I think those were really good words, Jorge. So appreciate the work that you're doing and the passion that you're bringing to it and, and just I, I hope you'll keep us posted as you continue to do the good work across the country.

Jorge Elorza:

Thank you, Michael. Appreciate you.

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Jessica Gelman, CEO of Kraft Analytics Group (KAGR), and Hillary Casson, CEO of UP Education Network, joined me to discuss their partnership designed to connect middle school students with real-world professional experiences. The conversation explores why early exposure to professional environments is crucial for student growth, details the logistics and structure behind successful school-company collaborations, and highlights the mutual benefits for both students and partner organizations.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn and you are joining the show where we're dedicated to creating a world in which all individuals can build their passions, fulfill their potential and live lives of purpose. And to help us think through that today, I'm delighted we've got two very special guests who do very interesting work in their day jobs and have come together in a very cool partnership that we'll get to talk about. We have Jessica Gelman, she's the CEO of Kraft Analytics Group, and Hillary Casson, who is the CEO of UP Education Network. Hillary, Jessica, great to see you. Thanks so much for being here.

Hillary Casson

Thanks for having us.

Jessica Gelman

Yeah, pumped to be here.

Michael Horn

Yeah, let's, well, let's start with a lightning round just to introduce you both to our audience, the organizations that you both lead. I don't know how many of my listeners will be familiar frankly with UP Education Network or the Kraft Analytics Group. So Hillary, Jessica, why don't you give us a bit about your respective organizations, what you all do so people really can get a sense of the context and a clear idea of the day to day mission of both. Jessica, why don't you jump in first?

KAGR: Data-Driven Sports Engagement

Jessica Gelman

Sure. So, KAGR, we work with sports organizations predominantly on helping them use data and technology to engage and understand their customers better. So at our heart, we're like a data warehouse. So integrating a bunch of different insights about who the customers are and helping with machine learning models and some AI and data integrations. And then we also do a bunch of consulting and some of our clients who the audience might be interested in include everyone from the NFL to the NCAA to NASCAR to, you know, the, I guess here in Massachusetts, the Patriots, obviously. And we spun out of Kraft Sports and Entertainment about nine years ago. So that's kind of the what we do. And it's obviously very data rich and STEM focused.

And I would also just say separately, but connected to this conference or to this discussion. I also co-founded and co chair the MIT Sloan Sports Analytics Conference.

Michael Horn

Very cool. Yeah, very cool. Which people love. Let me ask you this question before I let Hillary get in there. You just said the connection to the Patriots and Robert Kraft, obviously, but how did you get to be CEO of such an interesting organization and such a cool job?

Jessica Gelman

Sure. Well, I've been working with the Kraft family for 23 years. They created a role for me right out of Harvard Business School and I was running many parts of the Patriots business operations and we were using data to again, better engage Patriots and Revolution fans and then, in short, it was very analytically heavy. But I partnered with the Krafts on the creation of KAGR. The original concept was 11 years ago, and then we officially spun out nine years ago. So I think just like from a data perspective, maybe just to share, we touch today over 75 million sports fans across our data warehouses. So, again, the growth of the business and where we started nine years ago to where we are today is something that we're really proud of. And then I'll speak, of course, to the diversity within our leadership team and across the organization and why partnering with Hillary is something that's so important and near and dear to us.

Michael Horn

Well, perfect transition, Hillary. Take it away. Tell us about UP Education Network and your own journey there.

UP Education Network: Revitalizing Struggling Schools

Hillary Casson

Sure. UP Education Network is an organization that manages and runs schools and partnerships in partnership with districts. And we were founded essentially like a restart organization that partnered with districts to propel schools that had been stuck at some of the lowest achievement levels and percentile levels. And we've done that across the state in a number of different regions. And we are different in that we do partner with districts to prove that public school can and must work for every kid. And we're different in that we intentionally really serve communities that have been distanced from resources. Our student need level is a bit higher than your average district, school or charter school. And we commit on behalf of the districts, but even more so on behalf of the families and students, to really propel those schools so that they have an amazing school in their communities that sets kids up for a life of agency and purpose and freedom beyond the time that they're with us.

We started in 2010, and now we have two campuses in Dorchester and serve 1300 kids ages pre K to 8. And our schools, one thing I love about our two schools is that they're walking distance from each other. So we really have a huge impact on this community, in particular. I have, similar to Jess, have been kind of a lifer at up. I started, I moved just because I was so taken by the mission. I moved from Baltimore to help found one of our schools.

Michael Horn

Oh, wow.

Hillary Casson

And, yeah, I didn't know anybody up here, and I was like, I want to work there for that mission and purpose. But I've been here since, that was 11 years ago. And I was an assistant principal, then a principal, and then I was coaching the principals for the network. And now I'm in my second year as CEO.

Michael Horn

And you mentioned the student base is, you know, perhaps lower income, more diverse than a lot of the districts or Charters in the area just give us a sense of who those students are.

Hillary Casson

Sure. The first thing I'll say about our students is that they are just like amazing and so immensely capable and the communities that we work with are so asset rich and phenomenal. But from a demographic purposes, about 93% of our students are coded as high needs, according to state designations, compared to, you know, about a 70% average for charters/public. There's a little bit of variation there, but. And about 40% of our students are language learners, so actively working on building their English proficiency with even higher percentages having a first language other than English. And then most of our students are low income.

Michael Horn

Gotcha. Super helpful, yeah, super helpful I think to give us a sense of who you're serving. So in the last year, as I really understand it, like UP education network in existence for 15 years, but you have started to make a very big push to help students get far more experiences with companies in professional settings out in the real world, so to speak. So perhaps before we get into the specifics and what that looks like, just tell me about the why behind that push. Why did you conclude that this was going to be really important?

Preparing Students for Life

Hillary Casson

Sure, I think it was. First of all, it's been so fun and such a privilege. But in thinking about why do that, I really believe that in my position or in any educator's scope, is you're really required to think about how do I set this human being or this group of human beings up for success long term. I believe that the purpose of school is to prepare folks to have a life of agency and freedom and to choose their own path. And ideally that path allows them to, you know, get a living wage, you know, build a family if they choose to, etc. And so what I know to be true, both from life experience, as a person who grew up in a very rural area that had very limited access to opportunity and sight lines, and then also as an educator that we cannot stop preparing kids just at academics. And don't get me wrong, like academics are absolutely essential. Like if we don't at baseline prepare kids academically, we've failed.

And that is not the only thing that kids need to be successful. And I think you look at any person who has attained success and how I'm going to say that is that they're able to feed their family, make choices, have leisure time, things of that nature. There is more happening for them than just academic success. So just thought a lot about, like, what does it take to break down silos and build those skills that help folks long term. And to me, a lot of that is like providing kids sight lines. And so we were like, wow, we are in Boston. Like, what an amazingly asset rich area. Let's get kids exposure, experiences and all along the way help them feel really good about the process.

So that's kind of like the why at a macro level.

Michael Horn

Perfect. Well, let's get into the what before I bring Jessica in and how they started KAGR started to interface with this. What did you create for students? I know you started to create these partnerships with companies so that they would get that exposure, connection, awareness, sight lines. But what does it look like on the ground over the course of a year? What's that student's experience like?

Hillary Casson

Sure. And I have to shout out my colleague and CEO Mike Bauer, who is like the real powerhouse behind the work and made so much of what I'm going to talk about come to life. But in terms of what it looks like, we have essentially like three phases to our process. But I'll speak to the middle first, and that is the experience with the companies. And I very intentionally choose the word experience because Jess and KAGR and all of our other partner companies really do an experience with our kids. So at KAGR, our kids got a chance to look at fan profiles and think about how could they market to these different fans to get them into the arena more to see more games. And they really like problem solved and worked through it as a group and came up with promotional packages that they could then market to these specific fans. They're not sitting and hearing a panel or listening to a lecture.

Experiential Learning Through Company Partnerships

Hillary Casson

They are doing work that is reminiscent of what actually happens at these different companies. And that is a very intentional thing because not only is it more fun and more engaging, but they build a ton of knowledge about the places and they build so many skills that they may not even know they're building in the moment, such as ability to iterate, collaborate, communicate. But that's really a very intentional thing on our part to make sure that the experiences have those elements as well. And then before they go, they research a bit on, you know, who is KAGR, for example, and like, what is market segmentation. So they're not just like, whoa, I'm struck by these terms that I haven't heard before. We give them a little bit of an access point and then afterward they do a reflection on like, what did I learn? What did I like, what am I taking away from this experience and how that's looked this past year is that each homeroom is partnered with a company and has an in-depth experience like that. As we look to the future we're looking to a bit of increase for seventh grade to have two experiences in our eighth grade. We're hoping this year to have it be a multi touch point so that they're also get with one company so that they're able to really build relationships which we know is so critical for social capital.

So it's been so fun and so awesome but again our amazing partner companies have been critical and then Mike Bauer who's one of our staff people here and bringing that to life

Michael Horn

So it'll start to deepen and so forth. Jessica, let me turn to you and bring you in here because when Hillary up education Mike, they first reach out around this partnership idea. I'm super curious like your thoughts. Like I could imagine you saying sounds great in theory but how are we going to find time to have middle schoolers in the building? That sounds a little disruptive or I know exactly how to build this, let's get going, or maybe it's a little bit of A, a little bit of B. But I'm just sort of curious your reaction and then how it sort of played out.

Jessica Gelman

Well, I mean first I need to give full credit to the KAGR team that really led this initiative starting with Alex Freeband, Lissy Harris and Lauren Paquin. And there was others like Molly Murphy and people who dedicated their time. And I would say that our kind of giving back to the community is really focused on supporting people from historically underrepresented parts of the sports ecosystem. And I'll just like we believe very firmly that comfort with analytics and technology can be a great equalizer in supporting, you know, more, more of a meritocracy. So that's just like a starting point and I think even from like the perspective of me as a female leader of a technology and analytics company in sports, which is obviously multiple things that are, I was going to say.

Michael Horn

You're hitting a unicorn there,

Jessica Gelman

Very male dominated, but I, but I, but I think the, the, the differentiator or thing that has enabled our organization to have such impact and influence across sports is that we are helping people think differently and we are attracting into our organization people who care about this mission that Hillary and Mike are spearheading. And so it was more when you know Mike, this is the connection to Mike. So big kudos to him. He reached out to me. Now Mike was one of the student leads of the Sloan Conference. I think like a decade ago.

Michael Horn

No way.

Jessica Gelman

Yeah.

Michael Horn

Wow.

Jessica Gelman

So he reached out and obviously certainly didn't know all of the different things that we already do within the community. But the, but sometimes like this was not one that we would have known about as an example. And I think our relationship and knowing him honestly, I think it's the 20th anniversary of the Sloan conference this year and I think he may have been in like the fifth or sixth year, so like a long, long, long time ago. So to me, knowing him and his like views on the world and his care and what he's about and then knowing, you know, what our team and what we care about and the representation also that we have at KAGR, which is also different, like we do have a strong, you know, broader representation, I guess I would say. And I think that it's really important for young people to see people who look like them to and to be able to aspire. And then of course, yes, the context of sports and something that maybe they have or haven't experienced. And incrementally like our offices legitimately look at Gillette Stadium. These are things for middle school aged kids.

I just reflecting back to my own time many, many years ago and what things like that might have done. I never had the opportunity to have that experience. But the concept of see it, be it is really powerful. So I couldn't emphasize and want to support the mission of UP more. That said, it was our team that really was passionate about it and made it come to be. And I think the impact and awareness for everything that Hillary is leading is something that we really care about and want to continue to support.

Michael Horn

Well, so I want to dive deeper a little bit on this point because as Hillary and I know each other, something we've talked about is particularly as the use of AI grows and changes of nature of, work is going to become more unpredictable, rapid changing, et cetera. To me, the connection between school and career actually becomes more and more important than it even has been. Giving students real world experiences, connection. Hillary, you mentioned social capital with professionals like incredibly critical. I also think it's important for companies as you think about pipelines and so forth. But what I guess I've observed, Jessica and I love your take on this and then Hillary as well. It does seem to me that there's some friction in there for companies, as in like you have here and now, to deliver on, you know, projects for clients and things of that nature. Taking time out to have a student who might, you know, benefit a decade hence from, you know, is sort of a, it takes you a little bit off the pathway, if you will, in the immediate term.

Obviously it's a good long term mindset, but there is some friction there and I guess I'm just curious how do we have to reduce friction to create more of these partnerships? So it's not, you know, IP claims all the good ones, but more schools can have great partnerships with companies in the area. What does it take on behalf of the school and company to make these things possible? Jessica, why don't you dive in first about it and then Hillary, just jump right on in after.

Jessica Gelman

I mean I think one of the biggest hurdles is transportation and being able to get to the locations. And it was actually one of the biggest things that I thought about, worried about because they're based in Dorchester and we're in Foxborough and so that was something that I asked about immediately and they had a solve on there. They had thought it through already. And so I think once I knew that that big hurdle was crossed, my thinking and expectation is like, okay, they know what they're doing. This isn't going to be, we're going to just have to deliver the solution. There isn't going to be the incremental hand holding or helping them think through what I would call are the tactical operations of doing. And that's really important because as you're saying, time is of the essence. It always is.

One of the things I love about the 20 something generation that again in early 30s that was really spearheading it on our part, the millennials, if you will. This part of engagement is so important to them too personally and recognizing kind of the opportunities that they have had and wanting to affect and create change. So I think it's a combination of for UP education, finding the right type of organization. We're a small organization, you know, we're only 75 people. So undertaking something like this is a big, it's big and it is significant. But knowing that the partner that we're working with recognizes that, I mean honestly appreciation is important but also is going to take out some of the friction as you kind of alluded to on the very operational components. Like we don't want to feel like we need to be overthinking food and you know, all of those different types of elements.

Michael Horn

Sure. Hillary, I'd love your perspective on this about what schools can do to make this an easier yes for companies and maybe so we've just heard about the logistics. The other aspect that strikes me is like meaningful experiences that you alluded to, right, where you're doing work either that's actually helpful for the company or, you know, sort of simulating what one would do. But that can also be its own set of distractions. I could imagine for a company to like sit there creating stuff that middle schoolers are not going to be immediate contributors on all the time. So how do you think about that?

The Role of Education Partners

Hillary Casson

Yeah, it was a bit of trial and error at first, but what we kind of think about and have tried to lean into is the idea that it is our entire job to look ahead to the future and kind of and think about like, what do we need to do today to prepare kids for tomorrow. So, you know, us dedicating a bit of time and resource to this initiative felt really true and core to our mission. So that is kind of a thing that we can bring to companies and say like, hey, we would love to do this with you and we'll try to do as much of the work as we can to make this an easy hopefully yes for you all. And that to Jess's point includes like the logistics. Right. But also includes like, hey, we really know our kids and we really know the types of experiences that will be worthwhile for them and engaging for them. And so we have a team here at UP, spearheaded again by Mike, that helps to design the experiences and takes a real take, really takes the pen on that. We get ideas from the companies for the most part and then we'll create something that will iterate on with the companies.

We basically say like, let us do the lion's share of the work in creating an experience that both matches what the company's bread and butter is. But also we'll meet our kids where they are and hopefully result in an experience that makes everyone feel like this was really meaningful. But if another place or space were to try to scale this, I think you need a person or a team that's going to say, I will ensure that KAGR or whoever you're working with hopefully has a good experience, finds it easy to work with us. I'm responsive, I'm reaching out to them to make sure that, you know, we have everything we need. Everything smooth. And I think that team was really, really necessary for us. And part of the team was leadership at the network and then part of it were school folks. Having those school based champions was helpful as well.

But I have found that that helps decrease friction is like making it light as light as possible.

Michael Horn

Yeah. So last question for you both as we start to wrap up. If that's like the playbook for what schools need to be thinking about what makes a good employer or company for this. Right. Like, what's the other side of the bargain? Hillary, maybe you go first on this, and Jessica, you can wrap it up of like, I imagine not every company would be able to do what KAGR did to take in however many middle school students and give them an incredible experience over the course of the day.

Fostering a Caring Company Culture

Hillary Casson

Yeah, I think, I mean, I think the main crux of it is a culture and some sort of ethos that cares about this. And I think a lot of companies do have that and, and really run the spectrum in terms of types of work that they do. But if your company or organization has people that, like, care about doing good, I think that's a huge check right off, right off the bat. And then beyond that, I think it's folks that are willing to, you know, at any level. We've often found a real sweet spot at like, not the very, very junior people, but like, maybe that middle level that are able to give like a couple meetings and then, you know, work with our team. Hopefully not too cumbersome, but a squad of folks that are able to connect a few times and then the best case scenario is something, and Jess spoke about this, that kids can connect to in some way. I think we'd all be surprised at how much kids can connect to and grasp.

Like, I think some people would be like, oh, our company wouldn't be good for that because we're too XYZ often. I think we can make it. But the obvious and easy yeses are a place like KAGR where kids are like, wow. It has the wow factor when you walk in. I mean, who doesn't want to go to Gillette, right?

Michael Horn

Yeah.

Hillary Casson

Also, they do work that had kids. I'm like, oh, yeah, I've watched sports or I've thought about, like, what type of fan I am. I think that's the optimal partnership type. But I do think there's a. There are more folks that couldn't be a fit than can't be a fit.

Michael Horn

Jessica, I'd love your take on this because I'm hearing your company with 75 people, that touches 75 million. I think you said sports fans, like, that's all. That's a high leverage on individuals there that you're getting out. So, like, to have the capacity to bring in a bunch of middle schoolers and I imagine a longer run. Like, you know, we'd love to see these partnerships with high school students, et cetera, et cetera. Like what's the playbook on the company side to make this work?

Jessica Gelman

Yeah, I mean, listen, we've been doing programs like this. We do get requests from high schools. We do get requests from colleges. We host a program in the fall. So maybe this is like an indication of what organizations are ripe for it. We host an organization called. Or, sorry, an event called Koding with KAGR.

Empowering Women in Tech Community

Jessica Gelman

Coding is with a K, but it's a collaboration of data in the next generation. And we invite. Obviously, Boston and Massachusetts are rich with colleges, so we invite all the local women in analytics, women in tech, down to our offices. 75% of our executive team is women. And we host a series of case studies and Day in the Life with our engineers, our data science, and our consultants. And so my point here is that we are doing active outreach to the community. Middle school is certainly younger, but I think for the audience and the importance of reaching this audience, that's something that we really care about. And it was a unique opportunity for us to be able to kind of embrace and engage with a school that size, age, and desire to come down, because it can be.

Honestly, a lot of the lift is just the back and forth communication of timing and things like that. But I think a predisposition, an organization that has a predisposition for doing things like this, which, of course, we have.

Michael Horn

Very cool. I'm excited to share this conversation to my daughters because I think this is going to inspire them on a couple fronts. But look, I know this is like the beginning of a partnership that could go into a lot of really cool ways. And it sounds like there are plans to deepen the connections for the students and create even more experiences over the course of a year. I'm excited to see where it goes. I hope as it evolves, y' all will come back and tell us about it. And just huge thanks, Jessica and Hilary, for the work that you're doing.

Hillary Casson

Thank you.

Jessica Gelman

Thank you for highlighting this.

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Don Soifer, CEO and co-founder of the National Microschooling Center, joined me to discuss the Center’s latest comprehensive report on the evolution of American microschools. We explored how microschools are growing in size, serving a wider age range, and increasingly enrolling students with diverse needs. We also delved into differences between microschools in states with and without Education Savings Accounts (ESAs), the significance and challenges of accreditation, business models and funding, and the dynamic, adaptable nature of the microschool sector.

Thanks for reading The Future of Education! This post is public so feel free to share it.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn and you are joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And to help us think through how we get there today, I'm delighted that we have a repeat guest. We don't always have repeat guests on the show, but Don Soifer is someone who I hold in very high regard and so I'm just delighted to welcome him back. As a reminder, he's the CEO and co founder of the National Microschooling Center. He's been in and around the changes in innovation in education, several waves of them, for a few decades at this point.

And Don, I won't go through everything, but it's just, it's really good to see you, man. Thanks for joining.

Don Soifer

Thanks for having me. It's a real pleasure.

Microschools Evolving, Serving Older Students

Michael Horn

Yeah, no, and look, in May, you all released at the center your latest analysis of American microschools. It's a 40-page report, so we will not get into all of it today, but people should visit the National Microschooling Center, check it out, see the findings. But there's a lot in there that I wanted to learn more about personally and shed light on. And so I thought where we would start is this. And it seems from the report that the nature of microschools themselves are evolving. They're getting a bit bigger, it seems particularly, I think when you zoom out of the microschools that are really homeschooling centers, they're starting to serve older students as well, which I think is pretty notable as I think you, the stat was 84% of microschools serve kids age 5 to 11. But now 52% of the universe, if you will, of microschools that you surveyed are serving kids ages 15 to 18, which is a much higher population. And it seems like a big sea change because, you know, for a while you would hear, oh, microschools works great for elementary, middle school, but a lot of kids, you know, they want to go back to traditional high school because they want Friday night lights, college, whatever it is.

And so I would just love your commentary of like, what's changing across these dimensions that's maybe leading to this evolution in the size and the ages of who microschools are serving.

Don Soifer

Great. Well, thanks. So I think first of all, it's important that this is the biggest, deepest, widest research on the sector to date. So we interviewed 800 microschools in all 50 states. So hopefully this is the closest thing to a representative sampling of what's going on out there yet. And I think the other, the other point I think that's worth reiterating is that microschooling is not a new thing that somebody smart invented during the pandemic. Right. What we're doing is updated by a lot of what we now know about pedagogy and the way children learn and all sorts of great additions in this golden age of digital content that we work in.

But microschooling is something that's been going on for a very long time, right. Reporters often ask, and I say, I don't know, maybe the first microschool was maybe the book of judges, but that feels very western centric. And obviously when Slate Blackwoods came across the prairies on trains, one room schoolhouses were taking off. So for sure. So, so what is, what is, what's happening now as we move maybe from left to right on the adoption curve? In some communities, there are definitely places and we're out in the country all the time, and there are definitely some ecosystems that microschooling has gotten more common, more people are aware of it. The people that track things like terms in Google searches will tell you that there are more people in south Florida or some spots like Mississippi or Kansas or the greater Atlanta area where more people are aware of microschooling. We've been doing it for longer.

We see some shifts in who's participating because more people are aware of it. So there definitely is some evolution of the sector that we're seeing. And part of that comes from the fact that the kids we had in microschools, many of them did start during the pandemic, but they're getting older. And microschools, we've seen a trend in homeschooling for year that homeschooling may get a little bit more boring and standardized when kids get to high school because parents don't want to mess up. They want to make sure the kid has the opportunity to play in a NCAA Division 1 sport. And so they're going to sort of collapse, you know, high school is complicated.

It takes more confidence with the subject matter. And we generally see families, maybe, you know, this is the golden age of digital content, but families, when they get to high school might be more inclined to draw all of their content from one particular provider in the name of it being accredited and that somehow helping them with their future options. So high school is more complicated, for sure. But more and more microschools are getting into tackling it, and we're seeing some real evolution over there and it's some really inspiring models and some, some really, you know, they're really learning from each other and it's an evolution of the sector. I think it's a good example of one.

Serving Diverse Student Needs

Michael Horn

Well, so I, let's stay on this because I think the other thing that jumped out to me about these schools and who they are serving is that a lot of the students are former public school students. A lot of them are in the median income bracket, it looked like with nice distributions on the low income and higher income. But a lot are sort of squarely in the middle, at least self reported. It's pretty diverse. And then this, you had 74% of microschools of these 800 that you surveyed report serving children with neurodiversities, 46% with other special needs, 63% of students who came to them two or more grade levels, excuse me, two or more grade levels below their quote unquote age, and 50% who've experienced emotional trauma. So look, you were in the charter school world well before I was. But as you know, charter schools were often accused fairly or unfairly of not serving students with special needs. It seems that this, that charge can't even get lift off here from based on what you're learning anyway,

Don Soifer

Thanks. You touched on some of my very favorite findings. Microschools are more likely to serve kids from slightly below or significantly below the average income in their area than above. More kids come to microschooling from traditional district operated public schools than anywhere else. And coming from homeschooling is a somewhat distant second. So microschooling and we do very well toward the fragile end of the income spectrum. We do very well with families with a child with neurodiversities or other special needs. So microschools are not a school choice play. They're taking off in the blue and the purple states every bit as much as in the red states.

And there are some slight differences you see in trends there. But microschools are not about partitioning privilege. I mean when you read about pandemic pods in the New York media, you know, during the shutdowns, there was a real cause for concern. Are these things any good? Are they equitable? Are they what they are intended to be? Where we're really seeing as this movement takes hold and, and grows, that we're looking for kids that were not thriving in their prior schooling setting and the population in microschools and the very, you know, the, the beautiful diversification of the kinds of models that we're seeing in microschooling really gives every kid an opportunity to thrive. And the examples that you gave are some of my favorites.

Michael Horn

Well, so stand that, because I actually didn't realize that or I didn't pick it up from the report, which is that some of the trends might be different in the blue and purple states compared to the red. And I guess the reason I'd love you to just spin that out a little bit more is the red states tend to be where the education savings accounts have passed for the most part. Right. And we know that very progressive families actually take advantage of those and love them. So it's not really a political issue. But in terms of where the laws are and enabling some public funds to support microschooling, it's more in the red states, it seems to me. So how are the trends different? And I don't even know.

Would be different in terms of who they're enrolling or scope of the schools. What does that look like? That's different.

Challenges in ESA States

Don Soifer

Yeah. So first I should clarify that just because a state has an ESA doesn't mean that microschools are able to participate or that families can choose microschools. The details of policies matter. And a lot of the time those details get decided at the 11th hour as part of a compromise. And let's face it, school choice programs in this country and the broader schools of choice experience are much more traditional and larger. And the programs are really written for those schools because those are the largest stakeholders who are at the table when these conversations are happening. So when we look particularly at microschool trends in ESA states where families can choose microschools to participate, usually one of the hurdles, one of the major hurdles is accreditation. Like in Iowa, which has an ESA program.

But the limit on the available accreditation bodies is such that it's very difficult for, you know, an innovative small learning environment. Maybe something that's particularly innovative, maybe something that's a truly child centered learning model that would deny that they even have a curriculum. It's just too much of a challenge to get that approved for accreditation in Iowa. And there are good people working on that and they're making some progress and that's great. But when you look at the states, Arizona, Florida, Tennessee, to a, to a small and growing degree, what are the trends that are any different? I think that, Arkansas, I think that in a sense, a lot, some of those are going to be predictable. If a microschool or any entity is required to take the state standardized test to participate then that's a factor.

And we see that in ESA states microschools are more likely to have maybe more standardized curricula or the structure of the microschool is going will include more norm or criterion referenced assessments than other states. I will point out though that we have plenty of microschools that we heard from in the ESA states that do not choose to participate in the ESA program for various reasons, but including that the hoops that they felt like they would need to jump through for compliance with the program's requirements were just not something that they wanted to do and that they were able to serve the, you know, the communities that they wanted to serve without being part of the ESA program. So that's part of it too. But we do see trends that a lot of them are quite similar. Right. And we need to also accept that, let's face it, the, the cultural fabric of not every community is the same. And you don't need me to remind you that, you know, the culture of a community in Maricopa county in Arizona is probably different than what we're going to find in Fort Myers beach or the Gulf coast of Florida. Right, because Floridians, right, or Arizonans, just different folks.

And microschools really like nothing meaningful in education as you know, well, happens in a vacuum. And microschooling sectors evolve really in response to two major drivers, the local demand and interest in their community and also the frameworks in which they need to operate in their state. And those I think really explain the major differences we see, you know, along with many similarities in the trends in microschools in ESA states versus other states.

Michael Horn

That's interesting. So let's move to accreditation. That was something that was on my mind to ask. It seems like most of the schools in the sample are not accredited today, but interestingly enough, most of them would be interested in microschool friendly. And that's an important qualifier, microschool friendly accreditation. Why is that? Like, what's the underlying motivation for why they want the accreditation? Is it because they could, you know, get some of those ESA dollars if that's state requirement? And so they see the writing on the wall. It does seem like there's also a trend of more recent ESA states writing in these accreditation requirements or is it something else entirely?

Accreditation: Compliance and Value

Don Soifer

So microschool leaders tell us that they're interested in accreditation for various reasons and some of these are compliance with, you know, again, to be eligible for the ESA program interstate, it might be required. So, that is part of it for sure. But there are other reasons that leaders who, you know, most of the time, we know that microschool leaders are experienced educators in other sectors, most commonly licensed public school educators. So they may see value in an accreditation process that can add value, add to their program that they can learn from in this complicated world where, you know, families have dual custody and you might have one parent that's very interested in your microschool, but they have to sell it to other folks. So something that's convincing, that shows it's a valid third party accreditation is approval. A good housekeeping seal of approval is a value. And in other states we have, you know, regulatory pressure is such that Mississippi is a good example of a state that the Department of Children and Services that oversees child care programs tells you that they will not hassle you if you can show accreditation as an elementary or secondary school. And companies like, frankly, Google for Education is one that will only make their tools available to an accredited microschool, which is something that hopefully the market is going to fix.

But these are all sort of different reasons than just regulatory compliance.

Michael Horn

That's crazy. I didn't know that.

So Google literally, it's like a requirement because they want to give these tools away for free to schools and they're like, so if you're accredited, we know you're a school. Is that like the sort of simple minded idea?

Don Soifer

You know, and I don't think it's, it's a slight deliberately to, to microschooling. They just need to know who it is that they're working with.

Michael Horn

An easy way to just sort of check that box.

Don Soifer

I guess that's right. I mean, in so many places people don't want to get in the business of deciding if an entity is any good or not, so they just make a natural deferral to accreditation because it's sort of been the gatekeeper standard in this country for factory education for a long time.

Michael Horn

Interesting. All right, so I want to talk business model next for what you're learning around microschools. Median tuition, as I understand it from the report, is $6,500 in currently operating microschools. The average of the mean cost is about $8,100. These seem pretty affordable, Don. They're priced around the level of ESAs in many cases also. But I'm just sort of curious as like, is that a coincidence? Is it strategic? It does seem from your survey data though that I'll point out that a lot of folks are actually still paying for these schools out of pocket and not using ESA dollars. So, help us understand pricing and how maybe it is or isn't changing from past instantiations of the survey.

Don Soifer

Yeah, so obviously microschool founders want to have their seats full. And so many microschool founders are highly interested in serving the kids who need it the most. So I really don't know if I could name a single microschool that charges full freight of tuition to every single family that they serve. Most microschools are still on mostly a tuition based model. And again, we're starting to see some innovation. I mean our own microschool was a public private partnership where we got taxpayer dollars from a city's appropriation, you know, and operated in a library and rec centers that have government funding that can bring new resources into a microschool. And sometimes YMCAs and boys and girls clubs and community nonprofits will be partners in the microschool so that there are resources that are available that can help the founder not have to rely exclusively on families tuition because they don't want to be in the business of, you know, partitioning out privilege. They want to give these opportunities as broadly as, as they can.

But on the other hand, you know, microschools, I would say are in terms of the productivity of the sectors, the way that they are measured. Public education in this country has a relatively low rate of productivity, you know, which includes both how much you spend and how much you achieve by your own metrics where microschools tend to spend a lot less. You're right. The median cost to educate one child in a microschool is $6,500. And you know, there's so much that goes into that. Right. If you have more kids in your microschool in May than you did in September, the number of kids goes into the denominator. And it's hard to necessarily always track, but we always encourage microschools to keep track of that particular number.

Some microschools will not require everybody to be on a full time schedule. That some microschools, especially if you're serving families that follow the homeschool requirements in your state. And again, most of those, many of those families are not going to be traditional homeschool families. They're going to come from much more traditional learning settings like public, you know, district operated schools. But if you can give families those flexibilities that can, you know, then your tuition can be prorated. And we've seen, you know, a kid coming two days a week and the parent get renting an apartment closer to the microschool and what they save on gas lets them afford a third day a week in the microschool. That's not atypical for what's happening. So again it's a response to what's in the community, what's available in the community, what the resources are and you know, and being scrappy on both sides of the financial ledger so that this can be a good viable product that meets families needs but that's also affordable to the families is one of the ways we're seeing the sector evolve.

Sustainability Concerns

Michael Horn

I think for sure it's interesting and it's some, it touches on something I've long been concerned about as you know, which is the sustainability of these models. Like you know, will microschool be there in five, 10 years? And, and to be clear, some folks have, you know, have told me that for that to really happen we actually need to get certain schools up to maybe 50, 55 kids for it to really be sustainable. And it, and on that though, it seems like you have, you know, interesting data around founders taking salaries, that a quarter are not actually taking salaries but the average even counting for that is around $50,000. I'm curious though, and I don't know if you've done this analysis but if like you take out the centers serving homeschoolers from the data set, like you exclude that, does that change what you see at all? And, and the reason I ask like if I'm a center serving homeschoolers for some of them, my bias, and you could tell me I'm wrong, but is like sustainability over more than five years is actually not the goal like it, you know, they just maybe wanted to do it for a few years, maybe their own kids, personal mission, whatever and then they're going to like keep on moving. But maybe there's other schools that feel, you know, microschools that feel more like we're trying to create something sustainable here for the longer run. And my guess is that the founder's behavior might look different there in terms of salary - do I take it? Dollar amount, maybe number of kids they even serve and stuff like that. Do you see any difference along those lines?

Don Soifer

Yeah, I mean it's such a panoramic scope of things that come into play here. For sure you're right. More than a quarter of microschool founders don't take a tuition. It's very common in microschooling. More than between a third and a half of microschoolers, microschool leaders have kids of their own in their microschool and that's part of it too. If you look at microschooling as literally take moving schooling out of, you know, the, out of an industry that teaches in buildings that are on average 50 years old in this country and cost $50 million and what, what a, you know, as you, you know, you sort of mentioned, I was a charter school authorizer in some of the most high performing cities in the country. And there's something that you see in that sector I always refer to as the charter school half life phenomenon, where seven years in, if your founding families have moved on and if your founding leader has moved on, is that entity really the same quality as it was when it first started? In microschooling, we give a stump talk that says dynamism is the new sustainability, that if you're running a microschool and you do it for five years and your kids have moved on and are older now, and you've served kids and given them great options for five years, and microschool leaders are quite responsible in the way that if they were to close or move or start a new microschool or maybe they'll, you know, whatever it is that they do, get on with their, with their lives, then they're going to, you know, work with other microschools in their area to ensure that those kids have a trajectory that they can continue. But I think that we're seeing a model that dynamism and the opening and closing and maybe a microschool leader goes on to start a new microschool.

That's high school ages, their own kids get older or whatever reason, they get on with their lives. I think the human capital of this movement is coming from a more dynamic place than it is in the factory school model that evolved in the 1950s, where it's just a different kind of sustainability as a sector than we see in traditional public schooling.

Michael Horn

Gotcha. Okay, well, so then, last question as we wrap up here because, and again, folks should check out the report. There's a lot in there. And staying on this funding question, because a lot of schools in the report said that their biggest pain point is funding. And I guess I'm just curious, like, as you think about the biggest barrier or, or challenge for supply, the supply side of this, of, of this world, is it like funding to start up the school? Is it funding for ongoing operations? Like, what do they mean when they say the biggest pain point is funding? And how should we be thinking about solving that?

Don Soifer

Yeah, so it is both capital and operating revenue, and about a third of the microschools that we talked to in the study are pre launch microschools. So if you look at the sizes that we're talking about, I think on average we find it takes between 17 and $25,000 in startup costs to launch an independent microschool of about the average size that we see. So who can do that? Right. People can borrow it from family and friends, which is a self selecting group. We see experienced educators liquidating portions of the 401k and pay themselves back in year three. But we've seen some really interesting programs. I think what Building Hope and Stand Together are just standing up as a revolving loan fund specifically for microschools. I think that's going to really help if we can see that proliferate. Different versions of partnerships and seeing employers or community nonprofits getting involved because you know, occupancy costs, facilities are the single biggest ticket item in your microschool.

Sector Growth Factors

Don Soifer

So as we as, as these, you know, as, as interest grows, as the sector gets more momentum, I think we're going to see new vehicles take place that can sort of help with that. And once we solve the access to startup capital or solve it to some degree, as, you know, as school choice programs proliferate, that's a thing that helps too. Philanthropy is broadly starting to get more comfortable with microschooling and the better, you know, and this is the golden age of digital content. And some of the really cool AI models are quite pricey right now. Maybe one of the very best is a program operated by a fantastic set of microschools in the Austin area that can cost $10,000 a kid, which is out of the price range for most of the microschools in our sector. But I think the market will take care of that. So I think we are seeing a sector that is growing in response to a lot of different factors and the more growth we see in the sector, I think that a lot of these things are going to find solutions that are on their own or handed to them by an evolving marketplace.

Michael Horn

Well, you've given us a really cool snapshot, Don, of a dynamic market, as you said, dynamic sector characterized by dynamism. And you're part of that. So just huge. Thanks for joining us. And for all of you tuning in, check out the National Microschooling Center. Keep an eye out for the analysis reports that they're doing. If you're interested in getting involved in the sector, they've got great resources to help founders, to help operators, really not just like navigate the early innings, but navigate it all through the life cycle of a microschool.

So, Don, keep up the great work. Really, really appreciate you and thank you for joining me.

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Macke Raymond, the program director of Stanford’s Hoover Institution’s Program on U.S. K–12 Research and former director of CREDO, joined me to discuss the need for a new “operating system” in American public education. We spent time diving into the recommendations from the Hoover Institution’s recent report, “Ours to Solve Once and for All,” which calls for reimagining the roles of federal, state, and local actors to foster a more adaptive, innovative, and student-centered education system. According to Raymond, given the massive changes at the federal level since President Trump took office, now is the perfect time for this rethinking. According to the report, it’s vital we prioritize incentivizing educational mastery, minimizing rigid mandates, cultivating a dynamic, responsive education workforce, and offering safe learning environments, all of which should start from the grassroots up. Have a listen and let me know what you think in the comments.

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Michael Horn

Welcome to the Future of Education. I'm Michael Horn. And you're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And to help us think this through, today, I think we have a repeat guest, if I'm not mistaken, Macke Raymond. She's the program director for Hoover Institution's education work. She was the director of CREDO for many years at Stanford University, the Center for Research on Education Outcomes. And with the Hoover Institute Institution's Education Futures Council, together they put out this terrific report, “Ours to Solve Once and For All, Securing the Outcomes Our Students Need. “That's probably more introduction, Macke, than you need because you've done so much in the world of education.

But first, good to see you. Thanks for joining me.

Macke Raymond

Oh, it's wonderful to be here, Michael. Thanks for inviting me.

Accelerating Change in Education Systems

Michael Horn

Yeah. No. So you wrote this really provocative note to me that sort of. I had written this piece for my substack and Forbes about how disruption of schooling might finally be possible in the world of education savings accounts, because for the first time, families might feel like they're losing out if they aren't exercising their choice in sort of the savings accounts that come with it. So there's this sense of value that's been overlaid with certain states moving in this direction. And then you wrote me and said, well, not only that, but we've been arguing, right, for this new operating system, really, the foundational principles of how education operates in this country, and seen states as sort of the lever against that. But this I'll let you describe in a second. But these changes at the federal level maybe have actually accelerated the timeline over which the recommendations and the thought we had put into that report have become even more relevant quicker than we thought that they would.

So maybe you should lay out the premise because I probably just did a poor job and sort of give us the context for what the report was arguing for in terms of a quote, unquote, new operating system and why the current moment, in the current context perhaps is conducive to that.

Macke Raymond

Well, first, you did a beautiful job setting this up, so thank you. The clarity of your introduction is really helpful for all of this. So we've known for a long time that the current way that K12 public education operates in the United States isn't getting the job done for lots and lots of students. And we would also argue the entire system itself continues to not produce graduates and product that is actually internationally competitive. So we've known that for a long time. We also know that a lot of what we've tried to do to improve education has not worked. And based on some earlier work at the Hoover Institution, we dug into what was behind that. And one of the important conclusions there was that we have created a system that is phenomenally capable of resisting change.

It is intransigent in really, really important ways. And so this brought us to the question of what would it take to actually have a public education system—federal, state and local—that really was capable of adapting, was capable of innovating, was capable of disrupting where it was necessary in order to make sure that students were getting the kinds of academic and non academic preparation that would set them up for success. All, all the things that we want for our kids. How could we think about the system as itself as a lever for doing that? And so the Education Futures Council was brought together to sort of ponder that question. And the conclusion that the Futures Council members came to was that the way in which decisions were made and executed in K12 from the federal and state and local levels were actually a big, big deterrent to effective operation and effective impact on student learning. And that led to then, okay, what would be a better approach to thinking about what we call the operating system? So we're not calling for a different curriculum, we're not calling for a different staffing model. We're not talking about a longer school year or a different school model. We're really talking about how do the institutions themselves work on their own and work together.

And the Futures Council report, “Ours to Solve Once and For All,” posits that there is a possibility of reorganizing what happens at the state and federal level and at the local level in order to create a much better environment for creating conditions for positive learning for students. So that's the purpose of the report. We in a million years would never have expected what we've seen in the last six months. Our initial thinking after the publication of the report, which happened last October, before the election, we thought we were talking about a three to five year timeline of very carefully building a coalition of both advocates and policy leaders to basically try to enable some of these kinds of changes that the report called for. And then the inauguration happened. And within a very short period of time, it became clear that the field of play at the federal level is open for the kinds of disruption that might be possible in order to advance this more productive conversation about the institutional arrangements. You could think of that as a new federalism that we're advocating for. And the conditions have softened at the federal level to the point where this could actually be a constructive conversation.

Michael Horn

I want to dig into a bunch of those parts. Maybe first for the audience, let's lay out, like, as you all see it, what would be the pillars or commitments, I think is the way the report phrases it, of the new operating system. And what would the different actors, local, state, federal, what would be their responsibilities, if you will, in such a system? And maybe once we have that understanding, then I have so many questions for you. So let's start there.

Macke Raymond

We have a limited amount of time, Michael.

Michael Horn

Yeah, yeah, it's true, it's true. So we'll do our best. Yeah.

Macke Raymond

All right. So every single enterprise, whether it's private business, whether it's a social service agency, whatever, they have to have a few operating essentials in order to function. And we call for those as operating essentials for the new operating system. They involve being very clear about what the outcomes are that you want to achieve. And so the report is calling for a broader definition of student success and new measures in order to reflect whether or not we're making progress on those. Second part of that is a regular system of measuring how students are doing. Certainly coming out of the pandemic, we collectively as a nation, care a whole lot more about what students know and can do than we did before. A bad way to get that gift, but I think we can leverage that and move that forward.

And then after a measurement system, we have to be candid about the fact that there's a broad range of performance in the system in schools that we have to acknowledge. If we're committed to making sure that every single child gets the preparation for a life of opportunity, then we have to have accountability. It doesn't have to look exactly the way that it has for the last 25 years, but accountability definitely has to be part of the system. And finally, it sounds like a no-brainer, but we really have to create and assure that there are safe learning environments that are conducive to both instruction and learning. And that's not a trivial thing. So the current debate about cell phones in classrooms, the whole problem of school security, whether it's digital or physical, plays into that. We have to make a commitment that schools are environments in whatever way they actually roll forward.

Decentralized Education Policy Reform

Macke Raymond

They are environments that are safe and conducive to learning. So those are the operating pieces. The commitments are that we need to change the way in which we do business. And over very many years, like 40 now, 45 years, what's happened is that we have created a very strong top down directive process for setting education policy. And it doesn't make sense to us that that should be the case. We have huge variation across the country in terms of what local conditions look like and what learning environments look like across the country. And so having somebody who is from a very remote perspective choosing typically a one size fits all solution and then wondering why it doesn't work across all the settings that it's tried to be adopted to, and then blaming people on implementation infidelity doesn't make sense to us. So we're looking for a different approach to building capacity so that there can be a regular culture of adaptation and innovation towards student learning.

So not local people reinventing the education process, but that they are capable of understanding what new tools are available and putting those to good use. And if that's the place that we want local folks to be comfortable and proficient, then the rest of the system has to modify to make that happen. And so that suggests a different role where we're actually saying the learning environment is the top of the pyramid, not the bottom. So we're not top down, we're supporting up. And that means that the role of local agencies and state agencies and the federal agencies have to understand what they are good at and what they can provide. That would be a constructive contribution to this new approach. And that speaks to being a whole lot clearer about what does work and what doesn't in particular environments. Capturing that information, making that information available to local actors in a way that's really constructive and useful and practical.

It means that we want to know at a more continuous level how schools are doing and create incentives so that schools are facing conditions that align adult interests in getting better themselves with the improved outcomes that we want. And clearly this talks about a different attitude on the part of adults from the top to the bottom, that these are all now opportunities for really thinking differently about the professionalism of the work and how we cultivate and support that over the lifespan of individuals as educators and as other actors in the system.

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Rethinking Education for Advanced Manufacturing

Michael Horn

So let me try to make it like, present an example that feels very different from what we've had and help us fit this into the framework or not, I guess so at one level, let's say I'm in a particular region, advanced manufacturing is a big employment outcome that has different competencies and skills and knowledge base, Right, that are, that are important for students. And we could pick our flavor of Advanced manufacturing. But just stay with high level for a moment at the local level. I think what you're saying is like we would say these are the student outcomes that we want to see and we'd have a professional teaching force that reflects what it looks like to educate students to be able to do those things. And if I hear you right, the role of the state and even federal would be less like dictating did you hit a certain test that everyone has to hit? And more helping us have tools to measure, perhaps have tools to understand which jobs are in demand maybe and what and like research basis of therefore these are the skills taxonomy,

Someone might want to learn, you know, in demand fields or we see a shift in supply demand. Therefore your outcomes might want to change. And so it's more informed into that. Tell me like, start to edit that, where is that right and wrong?

Macke Raymond

So I think you're on the right track there, Michael. We think that there are really strong outcomes that we need to be unapologetic about, but I think we need to be a lot looser on means on the pathways to get there. And let's face it, even in today's landscape, there are schools, there are districts that are already doing well. There's no reason for us to start trying to shape their behavior. They know what they're doing and we should not have a heavy hand on that. We should say you're able to demonstrate that you're having strong learning outcomes. We should back off where the emphasis and the attention is necessary, and I think better placed is on helping those communities where the learning outcomes are not as strong as we would want them to be and that they want them to be and help them understand what the right combination of success elements could be for them.

Again, we're not expecting people to go and innovate on their own. We're not expecting people to on Sunday night build new curricula for their classes for the week. We think that there is enough good stuff out there from successful districts, from successful teachers, from the research that shows us what works. We just don't harness that in a way that makes it easy for folks on the ground in local communities, in local districts, coaching local school teams. We don't make it easy for them to say we need to do something different. Here are five things that we know work in communities like yours. Maybe you want to take a look at those. Like it's sort of like a most favored nation kind of approach here at the local level.

But the state and federal opportunity here is to build the capacity to bring those exemplars of success and set the cultural expectation that if you're not meeting the same ratchets in communities like yours are able to hit, then you've got work to do and let's get on it.

Collaboration in Education Support Systems

Michael Horn

So it's almost like the, it's not a good joke, but the thing that I often say, right is like you don't have doctors building vaccines in medicine, right? Like that's crazy. You have, you have a separate set of companies that are doing that then supplying the doctors, et cetera. And essentially what I think I hear you saying is like, yeah, look, there's textbook companies and assessment companies, but actually there's a lot more that goes into teaching and learning that federal and state can be using its resources, whether that's consultative, advisory, connecting or maybe even building alongside, like to help support efforts on the ground. And that might be your school district, it might be your micro school, it might be your charter school. Forget about the form. Its point is on the ground getting support from other players that are able to see across geography or patterns or things of that nature. Is that getting even closer then?

Macke Raymond

Yeah, Michael, I think you're really zeroing in on this. I mean, we know that there are tremendous forces of change happening across the country and we're not putting the right emphasis on preparing local districts for the kinds of changes, local schools for the kinds of change that they're going to face. And so in addition to moving away from a top down regulatory mandate approach, we also have, I think, much more value in the system that we can harvest that states, for example, could be operating the development of some of these knowledge bases. I mean, one of the things that I've talked about for years is something that I call the institutional commons, where states have the data to identify what the best 4th grade math teacher is in the state. Why don't they set up some kind of an incentive system so that that teacher is open to sharing their full set of resources and that that's packaged in a really easy way for some other 4th grade math teacher to go get. Why don't we harvest: here are great ways to set up community based learning opportunities. And here are 12 different models that have been successful around the country so other people can learn on what are the right processes.

But also here are some models that we could just flat out adopt?

Michael Horn

Right and just take rather than reinvent the wheel. Or we might say, gee, it needs modification because our population has these sets of resources or these, you know, future aspirations are different here for whatever reason or something like that.

Macke Raymond

That's right. That's not to say that there aren't a lot of new learning horizons that as a system we need. We know that there's a huge R and D function at the federal level for building new measures and metrics for assessing this broader set of outcomes that we want. It doesn't make sense to have 50 states doing that work themselves in parallel. It's a huge fixed cost to do that. So that's an obvious place where the scale and the scope of a federal initiative would make sense. But there are places at the state level that do make sense, like being able to say this works well here is something that states ought to be really interested in getting behind and I think with a little bit of encouragement and support in the way in which we establish the new federalism, that's going to be a very fruitful path forward for state agencies.

Michael Horn

Yeah, that's really interesting. And I imagine it could link in with workforce development agencies at the state level that's seeing data trends of hiring is actually increasing here therefore right in a local district's not going to necessarily have the time or capacity to absorb that themselves.

Macke Raymond

Yeah. I'd put one other thing on the table there and that is that we have across the country a number of really wonderful examples of almost every single piece of this new system that we're talking about. We don't need to start from scratch to create the conditions. We have positive examples of a relaxed regulatory environment. The charter school world shows us what that looks like. We have great opportunity to redefine what the outcomes are we want from kids from the portrait of the graduates and these new workforce development models that span high school and post secondary. So it's not like we have to go all the way back to zero. What we have to do is we have to be smart and coherent and intentional about setting the system in a direction that allows for these kinds of changes to occur in the system so it better serves students and families and communities.

Ed Reform: Accountability and Growth Trends

Michael Horn

A couple things that spurs for me and I'll try to take them in sequence, but I guess the first one is, and you can correct me if this is wrong because you are way more expert in measurement and tracking student learning than I will ever be. But the sort of the narrative I think of ed reform over the last, let's call it eight years maybe has been like, okay, student achievement grew during no Child Left behind era. There was a lot of friction in that accountability model. But we saw growth 2011, 2012, somewhere around there. It starts to taper and actually fall off even before the pandemic is the consensus around accountability weekends. But what I think the story doesn't tell is that actually a lot of that growth was also driven in the late 80s and then through the 90s, before the federal government sort of solidified some of this stuff through state action. And so I would love you to just reflect on like, sort of people who say, whoa, wait a second, if we decentralize too much, isn't that going to be that sort of led to some of the Common Core conversations, as I recall.

And I think I hear you saying that might not be the only way to look at it. And so I'd love you to just to sort of help us navigate that conversation around what's centralized versus decentralized.

Macke Raymond

We have relied on states for the most part, to define what the outcomes are that we want and the learning standards. And I think that that is an appropriate exercise at the state level. If you look at the learning standards across the states, and it's an ugly project to undertake, so I wouldn't recommend anybody who's sane to do that. The learning standards are pretty consistent. What you might argue is that we have piled on more and more learning standards that are making the whole thing chaotic. I would point to Indiana, where they went through a very unsexy process of being very, very intentional about reviewing what are the critical standards that we absolutely have to have. And what came out the other end was a series of very, very deliberate learning standards that were scaffolded beautifully from early to late public education that lent themselves to a much broader set of engagement with other learning experiences and tying into some of the workforce development stuff that's very top of mind in Indiana right now. We know that can happen, and we think that that's a right place for it to happen is at the state level.

Having said that, I think there's always a role at the federal level to advocate for and to protect student groups that we know from state level data are not getting a fair shake. I think there is a complete justification for protecting vulnerable populations with federal standards and an expectation then that we would measure and pay attention to that and potentially intervene with additional pressure if that has to happen from the feds. If in fact some student groups are not getting the same kind of shake. I mean, that was the origin of the civil rights activities to begin with. We have vulnerable populations of special ed. I would also say we're in an era now where students are differentially vulnerable in terms of their status as legitimate students that come from a variety of origins. But I can see that this would be an area of ongoing concern. So yes, I do think that there is a sort of a bottom line protection of individual students and their right to an education that has to be federal.

It's part of our sort of constitutional commitment and our democratic fabric that we believe everybody has opportunity and should be prepared equivalently. So I like all of that. I do think that there are lots and lots of cross state opportunities that exist. There are models for schools that are coming up both through the traditional district realm and through the charter school realm and charter management organizations that set the tone for potentially national models of schools and potentially national networks of schools that we don't think about today, but we ought to be open to because they can set such a high bar for student results that they ought to have some kind of a recognition that says these are exceptional schools. Exceptional schools ought to have additional privileges within states, their exceptional schools ought to have additional privileges and additional autonomies. But also these emerging national networks and constellations of schools, if they're stellar, then we should be able to allow local schools to affiliate with these networks and not stand in the way of that. And that doesn't mean you'd give up local control.

It's just that they have a membership option that says quality could come from outside the local area, it could come from a national federation of schools, and we should encourage that if it's really high quality.

Michael Horn

And so in terms of the federal role right now, it seems like I hear you saying, on the one hand, I'm just thinking about some of the tensions here. Like it seems like on the one hand they've said we want states to lead, so that's an opportunity. And maybe frankly, it's an opportunity for experimentation because we don't know exactly how this new operating system should look. But two, I also see like a bit of a potential retreat. I know it could be a reset, but it also could be a retreat on some of the research functions that the federal government's traditionally done. And so I'm curious, like how you're thinking about what's opportunity, what's vacuum, what's threat, what's, you know, how do we drive this forward in line with this vision right now?

Decentralizing Decisions

Macke Raymond

Well, so a sort of a rule of thumb that I have been using in my own thinking and in the conversations that I've been having is that decisions should be handed down to the lowest possible level where you have high quality and scope at the same time. And so with, with all the good intentions of lots of the federal programs that grew up over the years. There were a lot of things that were happening that didn't have to have a federal footprint on them, that actually could have been handled effectively at the state level. And so that part of the reset, I think, has some positive upside to it. The things that I think have to stay at the federal level are clearly the national assessments of what students know, because that's the truth, that's the light of truth across all these state systems. And we can't give that up. The second thing is I do think that there are a new set of federal priorities for research and development and I want to stay away from the R and D umbrella because that constitutes a different set of things. There's a role for federal involvement in R and D.

But here I'm really specifically thinking of undertaking specific programs of research on new measures, on new assessments, on emerging practices in light of AI and all of these tectonic changes. There are things that the federal agency has line of sight on that also scale best at the federal level. And so I do have a sort of a wish list under my blotter on my desk about what that might look like. But I also think then that continuing the attention on vulnerable populations and using this moment to instead of be mandate focused and regulatory focused, use this moment to cultivate a kind of capacity building at the state level, is a phenomenal moment that I really hope we don't miss. And I really am anxious to see that that becomes part of the ongoing commitment to public education that we have as a nation and that it has a strong presence at a national federal level.

Michael Horn

As we start to wrap up here, let's stay on that vulnerable student population piece because one of the things, as you know, I'm super intrigued by these education savings account states, it shifts accountability in my mind to the parents, frankly, themselves, but a real concern, and I grant it is like in a world where we are thinking more deeply about high quality instructional materials, coherent sets of background knowledge right across discipline to turn people into really good readers and things of that nature, if someone's experience specifically from a low income background becomes more fragmented, maybe they lose some of that connective tissue. How would the federal role be to really be using its scale to sort of spotlight that, find trends that you might not be aware of and help local actors, I mean, even down to an individual student. Or is that overreach? Or is it more like identifying trends and building capacity? Like how does that all shake out? So we maybe use the benefits of choice, but don't lose some of the negatives that can come from incoherence.

Charter Schools: Challenges and Incentives

Macke Raymond

Frankly, this is a moment that actually happened in the charter school world. As networks of charter organizations formed into charter management organizations and communities had larger shares of their students enrolled in both charter schools and charter management organization schools. We faced some of that, that there was an incentive on the part of new entrants to really zero in on what their sweet spot was and be careful about what the protecting the brand became important. I'm not saying that charter schools shed students because I don't think that happened. Our data never showed that that was the case. But there was always the incentive that there were students that were going to be very difficult to serve and that the expectation and the incentives were set up to keep those in the public sector, in the district public schools. I worry that as we proliferate the number of choice paths that we have, that we're seeing, we have the potential for seeing something similar and that if we have different standards of performance across all of these models, that we are in fact inadvertently going to be creating tiering of outcomes. And it's not clear to me that putting parents as the final arbiters of quality is going to be as successful and productive as many of the choice advocates think, unless we can tie that to very clear understanding of what the outcomes are that students have to have in order to be successful and real transparency about how these individual models are delivering on that.

So I see accountability evolving to stratified accountability. That's very clear about what the channel is that students are pursuing for their education.

Michael Horn

And so just staying with that for a moment, I'm just trying to think how practically that looks. In some sense it's like an asset based view of the world of like maybe, maybe a local community concludes this branch of mathematics is not important. We don't think for our future, fine. But it's going to be reflected in that you're not showing mastery of that. And then someone might flag that and say, hey, just want to make sure you're aware you're not preparing your students for fields that take advantage of this branch of mathematics. And maybe that's an intentional choice, but. But we want to make sure it's transparent.

Empowering Parental Choice in Education

Macke Raymond

Certainly transparent, but where there are lots of choice vehicles, you could imagine that a district would say, you know, collectively we don't really need physics, let's just say. But it turns out that somebody really wants physics for themselves or for their child, then the ESA piece can kick in there and say, no, no, no. You know what? I'm going to customize this with an ESA because I really want physics for my child. The problem is a lot of parents don't know what they really want for their child in that level of specificity. And I think that's a state function to make sure that parents are actively informed and can easily exercise their wishes for their kids and transact in a larger choice environment in a way that's productive for their kids.

Michael Horn

So in some ways that's what like Amy Guidera was doing in Virginia, I think around reading of making it super clear to parents, hey, just want to be clear. This is where your kid is at from a reading level perspective. This is the curriculum. We think that. I can't remember how far she went, but I think it went fairly detailed into this may be why the gaps are there. So that parents built a level of information that they wouldn't have otherwise had and they didn't have to go seek it. I think that's the other important part of it, if I remember.

Macke Raymond

Yeah, you're right about that. A related example, Michael, is that underperforming schools and districts in Louisiana were given a menu of high quality instructional curricula and material that they could choose from. Right. They still had the power of choice, but they couldn't stay in a position of inferior production. And so I see that as part of the sort of new accountability work that I think is a natural part of the new federalism, helping states develop that kind of capacity, that kind of information, and making sure that that connection to students and their future is a solid one for everyone involved.

Michael Horn

Really helpful. Okay, final thoughts. Things that we ought to keep an eye on as this ball continues to move. I'd love your thinking along that.

Embracing Change in Education

Macke Raymond

Well, I'm gonna end with throwing you a rose. That it's probably a very old rose at this point because it goes all the way back to disrupting class. That the models of disruption that you called for before were so in the context of the system that existed at that time and the environment were so radical. But guess what? The world has grown into your scenario. And so I just want to say I think this is an era of phenomenal change. And the question is whether we let the change happen at us and to us or whether we grab onto it and make that change work for us. And so want to thank you for all the years of talking about the fact that this is a natural process and that we should get there. And now that we're here, really hope that we can work together across both political spectrum and across geographic boundaries to really create the system that best serves our kids with that kind of approach.

Michael Horn

Well, the best thinking being done in that system is from the work that you've done. So huge thank you for coming here and talking about it, but for putting out the report. For those that don't know, if you just Google Hoover Institution and Ours to Solve Once and For All, you will get that PDF report. But there's also a really cool on The Education Future Council.com site where you can get the report as well. There's also a video around it, an AI generated podcast. There's a lot of resources that we have just scratched the surface of, so check all of those out for sure. What else should they follow?

Macke Raymond

Well, I think the best thing they can do is just follow along, paying attention to what the public debate is and be ready to jump in because their voice is going to be extremely important.

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On this episode, Ulric Shannon, Executive Director of the Surge Institute in Chicago, and Kyla Mathews, principal of Epic Academy High School, join me to talk about the controversial issue of banning smartphones in schools. While acknowledging the negative impact of excessive phone use, both guests argue against blanket bans and instead emphasize the importance of teaching responsible use and engaging students in setting digital norms. They discuss how cell phones can serve educational and social-emotional purposes when integrated thoughtfully, highlight the real-world challenges of device access in classrooms, and stress the importance of fostering trust with students and parents.

Michael Horn

Welcome to the Future of Education. I am Michael Horn and you're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And as we figure out how to do that, we do so right now against a bleak set of statistics, if you will. We have a mental health crisis among teens. We have rampant disengagement and chronic absenteeism for many high schools. And social media, which is often accessed through smartphones, has been a leading suspect in the cause of this. And the result from all that is that states and many districts are banning smartphones in schools in a variety of ways right now across the nation.

Nuanced Phone Policy in Education

Now, I'll put my cards on the table. I've been arguing for a more nuanced position rather than a blanket ban from on high, where educators have the power to ban phones in their classrooms when it makes sense, but they also have the power to use them when it will advance an educational or engagement purpose. But it does feel at the moment like there's a tide against any nuanced positions in this country in general, I will say. And yet we have a couple educators joining us today who I'm thrilled to get their perspective because they have also found a nuanced way through this conversation that I'm really excited and eager to learn from. So first we have Ulric Shannon. He's the executive director of the Surge Institute in the Chicago region. Surge is an organization dedicated to cultivating black, brown and Latino leaders to transform education. And then we have Kyla Mathews, who is a principal of Epic Academy High School, which is a charter school in Chicago focusing on college going for its graduates.

And Kyla is a Surge fellow at the moment. So, Ulric, Kyla, great to see you both. Thanks so much for joining me.

Kyla Mathews

Thank you for having us.

Ulric Shannon

Yeah, thank you so much for having us, Michael.

Michael Horn

Yeah, you bet. I'm excited to learn from you on this topic, but let's, let's get right into it, right? 21 states, I think at latest count, I believe, have passed laws restricting regulating cell phone usage in schools. We have the author, John Haidt, who's on the warpath with his best selling book advocating for a lot of these laws and so forth. Kyla, you run a school that's one to one device school. And as I understand it, you have been arguing that these folks have it wrong, that a blanket ban doesn't make sense. So at a high level for right now, help us understand why that's been your position.

Kyla Mathews As a Principal of Epic and a former assistant principal of a large urban school and a parent of a generation Alpha student. People can't think that a broad brush of no cell phones is like the way to go. But what we're learning is that the children that we service right now have not ever not had a phone in their hand. And so being mindful of your audience, being mindful of who you service, you have to be clear about that. And so that's why it's not the right way to go to ban the cell phones without any clear communication expectations and a buffer or filler to replace something that's a part of people's lives.

Michael Horn

So I want to dig into that and a little, a little bit more. But Ulric, maybe lay out your perspective first because you're working, as I understand it, not just with Kyla, but with lots of school leaders in Chicago. What do you see? Because I'm hearing that a lot of educators are really loving these bans. Once they're in place, they're saying, thank God someone else made the decision for me. In effect, what are you seeing on the ground?

Ulric Shannon

Yeah, I think there's a number of things that are at play here. I think districts are under a lot of pressure, right, to improve academic outcomes. And so they see that as phone bans as a quick fix to that. Right. Like we need to have like deeper conversations around that and actually engage students in that 1. 2 I would say that schools, at the school level, they're responding to a growing concerns related to classroom distractions, cyber bullying and student mental health, as you talked to earlier. And we have to admit that the pandemic accelerated that. Right.

The use of technology. Now educators are actually seeing how constant student interaction or phone usage can actually undermine their attention and their community connection, which is also important inside the classroom. So I think if we look at different levels within the education system and the structure, I think people are just quickly responding because there is some urgency around the preparedness for our young people to go off into the world, whether it's academically prepared, socially prepared, and a number of other things. And, you know, cell phones can sometimes feel like a little bit of a distraction, maybe a lot of distraction, and the root of a lot of just, you know, teenage or young people issues because they have so much access to each other. So I think it's just a quick response to a greater outcome, some good intentions, but maybe some poor outcomes.

Michael Horn

Well, so, so stay on that because. So I think what I'm hearing, Kyla, right from you is phones like they're with the kids. Whether we like it or not, they are the tableau. Ulric, you're saying, if I'm hearing correctly, like, so there's sort of a snap reaction, we'll just take them away and somehow solve the problem. I think a lot of educators are saying it does solve the problem, like, you know, behavior seems better in their schools and classrooms and things like that. So help me understand like why this might not actually be the right answer. And Ulric, maybe start with you, like why, why is it just that a snap reaction rather than maybe attacking the root cause of what's going on?

Student Involvement in Phone Usage

Ulric Shannon

I think we have to recognize that. I mean, I think Kyla spoke to her earlier, like they had phones in their hands since they were born, right? And phones can actually be a lifeline for students navigating complex identities and social environments. And so it can be kind of a coping tool for students. But like I said earlier, we must understand the why behind the behavior and not just try to control it. And we know that research says that excess usage of phones and social media can actually increase anxiety or in comparison to disengagement. But I think if we can actually bring in students into that process, it doesn't have to be all or nothing. They can actually co-design some of those norms with students. Maybe it's creating a tech-free zone or structure breaks, informing some digital literacy courses that can actually support healthy usage and boundaries of cell phones.

I think there is certainly things that we can do, but I think maybe some of the capacity issues within buildings make that a little bit of a challenge when you may not have all the bodies and resources inside of your school to actually tend to those needs and a loving and and caring way that you would like to have inside of your schools.

Michael Horn

Well, so Kyla, let me go to you there, like what are you doing, right, to reset this? What's a better way forward in your view?

Cell Phones in Education Debate

Kyla Mathews

I [agree with] everything Ulric just said because we have to be clear whether the cell phone is a distraction or not. And we also have to understand from a youth's perspective that if I release my cell phone to you, am I trusting you as a person, as my teacher? And then secondly, what are you going to replace with my level of entertainment if we want to bring in the social media part? But I have an antidote to this discussion because a number of my staff members who do not have cell phone issues, they just realize that they can capitalize on their age gap or the non existent age gap, like they're Very accepting that cell phones do exist, but I'm going to teach you how to use it responsibly. Even being really specific in a history class the other day, last month, part of an evaluation, part of my popping in a teacher was clear with students about why Twitter is not a good source for information and it created a healthy debate with students. So, now we're not arguing about the phone and being distracted by the content or my teacher isn't accepting of the way I receive information which actually bringing it into the conversation and having a debate about why primary sources are still the way to go.

Michael Horn

So in that case, Kyla. Right. Like it's sort of an entry point into a broader conversation, it seems like. So, so, so part of the job is like, is that part of the answer that teachers, I mean it feels like we asked teachers to do a ton of stuff today. Do they have another responsibility on, on, on their, sort of on their desks, if you will, or is there, you know, is this part of something bigger?

Kyla Mathews

Yeah, the hurdle, I think and, and just talking with teachers, talking with students, I think two challenges come up for us. One, because I do think I'm a teacher of teachers, so I say to us one is that you don't want to be in a power struggle with students about their personal items. So it's not about the physical phone. Right. But for some students and families it is about the physical possession. And so you want to make sure that trust exists, that this is not about the phone. This is about. At our school we prioritize XYZ over phones in classrooms.

Right. So we're clear about the academic expectations, but also we want to promote face-to-face interactions and socializations in the academic setting. Post-pandemic, everything was, you know, we're virtual right now. And so we want to understand that we are trying to get back to this human side of education that makes this industry extremely different than other industries. So if the phone is a distraction, just naming those things with families, they understand that why better than oh yeah, we're just a no cell phone campus. It's zero tolerance. That doesn't help families make decisions for their children. And then secondly, kids want to know that if you take away my entertainment, will this lesson be of my benefit? Whether it's interesting, whether I get something cognitively, they just want to know what is the exchange rate.

And I think us as educators, we have to be clear about what, what I have to offer you, what we are going to engage in in the next 50 minutes or 35, because you can have a brain break and then we'll pop back into our lesson. But there's a level of bartering that has to happen because you acknowledge that the cell phone is not going anywhere. What I have to offer you with this primary source may or may not be. It may be the better option in obtaining information. And this face to face interaction that we're having at school is definitely the way to go, especially between 8 and 3. Please and thank you.

Michael Horn

Well, so stay on that because I think there's like two things that you're sort of arguing there. Right? Number one, so we can take away the cell phone during school hours through a ban, but like kids are still using them at night, you know. Ulric, you were mentioning like a lot of the bullying and stuff like that that's happening off school hours. Right. And so like we're sort of band aiding a few hours, but maybe not addressing the larger things. And you know, does homework get done if they still have smartphones but haven't figured out how to use them responsibly, et cetera. And then I think the second thing I hear you saying is, you know, reality is what reality is, we're in a world where there's a lot of instantaneous gratification. And so we've got to figure out how to be more engaging and worthwhile for them to make that exchange willingly.

I guess maybe full stop for both of you is like, is that, is, is that the right starting point for the argument? Am I, am I understanding correctly on both sides? Ulric, why don't you jump in first?

Ulric Shannon

Yeah, yeah. I mean, I think both of those ones are absolutely correct. I think one, we can't ask or expect young people to do things that the adults cannot do. And so we have to recognize how we play in those classrooms or buildings as well. So they see us on our phones all day, they feel like a double standard. Right. And it's probably not a much different challenge from what parents have to go through at home to get a cell phone or an iPad away. Right? We give it to cope, right.

They need a little bit of quiet time, maybe we need a little bit of quiet time. We give them an iPad, we give them a phone, they can go about their business. But when it's time to punish, taking away that phone is a little bit of a challenge. And so I think Kyla's absolutely right. When we think about like this daily power struggle, it's not for me just about taking away from teaching time. It's also damaging relationships. And we Know that that is a critical piece to get any type of whether your lessons are extremely engaging or are less engaging. If I have a trusting or real authentic relationship with my educator, with my teacher, with my leaders, I'm going to be in that classroom.

I'm going to be in full attention. Right? Because I'm knowing that it's like your lesson was intentional and I like you. Right. But I also think there's this piece where a lot of schools love to have events that say, like, we're going to have parenting training. One as I think that is a little bit disrespectful to parents because it's like, are we already putting ourselves on a pedestal that we know more than you? And it could be around cell phones, it could be around anything. But what I do that in the space of schools is that teachers need more than just rules. They need the training, they need the support, they need the leadership that centers trust. And so if we're not providing them with some common training, some common language and common actions, then if one class was doing it but the other five are not, you're never going to get the type of culture that you would want in your building, regardless if you're banning all cell phones or not.

So you can't, like, while you can ban the cell phones, you can't necessarily ban or change the behavior. It just pushes it underground. So I think those two points are absolutely right. And I just think we need to elevate the space of our collective learning, maybe in some unlearning to really be able to support our young people in classrooms when it comes to cell phones, which is, I think, a very small thing and the grander thing that our young people need.

Michael Horn

Well, so curious off that. And Kyla, let me come to you on this question, right? Because the Twitter example you gave earlier, I bet some people listening who are for the blanket bans will say, well, you could have had that conversation anyway with phones banned. So I think the natural question then is like, are you finding use cases where you're actually using the phones in classrooms themselves to engage in educational purpose? Like, what do phones do well that maybe traditional technologies or books do not do well? Is that part of the conversation too, or no?

Kyla Mathews

Yeah, I think the biggest piece that we are discussing at my school and in all the years I've been an administrator has been around like discussing the cell phone piece. It's like this healthy balance of using phones responsibly. There is an algorithm of your searches and social media will give you what you've been looking for. Right. So if a teacher is very clear on students on how to search and use the Internet to search for information, the algorithm will perpetuate more and more information. So that's one way that has been healthy in a ninth grade English class. But again, to my point, teachers are committing to bringing students closer with something that they value, but also teaching them how to use it responsibly and then countering that with, you know, hardcover texts at the same time. So there's like a healthy balance.

Fostering Community and Responsible Technology

Kyla Mathews

And then the other piece that, to Ulric's point about teaching parents about their students is also bringing parents in that we are partnering with you around just a bigger, a bigger issue with students detaching from community, detaching from primary sources because of an individualized device. And so that's why the broadband is not the way to go. Bring people in closer about why the importance of other ways to get information is just as valid. And we can also be responsible with this phone. What we've learned too on the bullying side is that you got to teach kids how we do school. And if we prioritize academics and our community as a collective, like how we want to exist at school, teach that and normalize it, students will acquiesce. They won't have, first of all, there'll be less bullying issues, but there also be less instances where students will pull out their phone as instead of going to get a trusted adult. And so that's what I've been able to do in these last three years as principal of Epic is raise a culture of we are all responsible for one another.

Even for example, in my announcements in the morning, I ended with take care of yourself and one another. I get that from the nightly news. But that's what's being said to adults, so why not say it to children, right? So we just have to be mindful of that healthy balance with devices we but then also being very, very clear about what we want to accept in our school.

Michael Horn

Go ahead, Ulric. It looked like you were ready to get in there.

Ulric Shannon

No, no, no. I think I was just asking.

Michael Horn

No worries.

Ulric Shannon

I was asking myself, what are we actually teaching to do? Right? If cell phones are not going anywhere and technology is just moving faster and faster. And so to Kyla's point, you just have to find ways to integrate that into your everyday work in the classroom as well, whether that's projects and polls or digital portfolios. I think there's a number of ways to integrate that because the technology is not going anywhere. And if we remove that from students, we're just pushing them back even further because they will have to use cell phone or some other, you know, innovative device of the future. A teleportation device. It could be at one point, right, but if our young people are not comfortable with using it, they're just gonna be light years behind at the rate in which our world is moving in the next 20, 30 years.

Debate: Phones vs. School Devices

Michael Horn

So, that's a good departure point I think for the next question that I'm curious about, which is like a lot of folks will say, well you know, like Epic is a, is a one to one device school. There's laptops, right? Some places have Chromebooks everywhere or tablets or whatever else. Why not ban the phones? Because those are the personal devices. Hearing what you just said, Kyla, right, About, you know, personal property is a conversation. But you know, but it gets rid of the social media. Like we can do the polls and the engagement and the lookup like on tablets and laptops and stuff like that. Ulric, what do you see around that? Like are there specific cases where like actually the phone is just like the right device to do the educational thing we want to do? What are those use cases look like?

Ulric Shannon

Absolutely. I don't know when the. I always ask a lot of people, when was the last time you actually been into a school and been into a classroom? And a lot of people have not been in a very, very, very long time. So they're speaking from a far distance. But I think that these things. Have you ever seen a group of 12 year old try to get a Chromebook out and everyone is not charged and they're not working and we're trying to plug them up and we're trying to find the one that works and we're trying to get them to log in. We have lost 30 minutes of instructional time trying to do that. When I could just say pull out your phones.

I can guarantee you the phone is charged. I can guarantee you it is always charged. And they can jump on the same website just as fast. They can scan a QR code. They know how to do so many things so fast. There could be a TikTok class or a Snapchat class or group for the class where they're able to get information super duper quick. Utilize a Kahoot to collect data in real time from their students. Like do you understand the assignment? Yes or no.

And that allows the teacher some real time data. Definitely just using your phone as opposed to asking a group of kids to find that Laptop. And I can guarantee it in a lot of schools, the screens are broken, they're not charged, all the things I've listed before. But I've seen that in classrooms where teachers and students are comfortable utilizing their phone, they know the purpose and the intent. And if you do that with such routine as a previous third grade teacher, they will do that even when you're not there. They will know when, how and what to use their cell phones for if it's routine. But if it's not, then that's going to be a challenge.

Michael Horn

Kyla, you were smiling there. I want to hear your take.

Kyla Mathews

Yes, again, I oversay everything Ulric just said. That question about have you been in the classroom? Is so valid. The other piece I would add to, though, is the safety component. So back to the power struggle. Many schools, there's a perception about many schools. And we are also evaluating on how well our students feel safe at schools. With the University of Chicago's five Essential Survey, there's direct questions about school safety. And if parents question the safety of their neighborhood, their school, the cell phone definitely cannot get taken because that is my access to my child.

Right. And so that normally is the discussion, that's normally the argument of parents, I need to be able to get to my student, to my child. And so when you build relationships with families, with the community, with students, and understanding that we are safe here, all of us are, that kind of comes off the table when it's time to talk about cell phones. But I did want to raise that as a talking point for the next level conversation. That'll be an argument for sure, the safety concern.

Michael Horn

Well, the safety one, I think is a big deal because chronic absenteeism that we're seeing, it's for multiple reasons, right. Some of it has been disengagement because they're not sure the purpose, but some of it is around safety and things of that nature. So, and I think the argument has been that phones are actually increasing the chronic absenteeism because they're increasing the disengagement. But I think I hear you saying there actually may be the key to increase engagement or at least increase.

You know, my sort of sense that my kid will be okay or that I can reach them when they're in school. So help me understand what that looks like. Like, are you finding that phones actually, rather than increase disengagement, are actually increasing engagement?

Phones: Balancing Access and Safety

Kyla Mathews

Yeah. So phones, again, to your point, just being a broad brush or just an easy thing to blame is the issue. Right. But when it comes to the safety piece, I know post pandemic like immediately transitioning back to schools, families were worried because we all were trying to figure out how to re engage. And the way to my student is I can call them directly. When I was in class, when I was in school a couple years ago, you would have to call the main office or the secretary would have to call into the classroom. But now with that immediate access to your child, especially in the high school level, parents want that autonomy at the same time. So we have to honor that in some sort of spaces.

Right? But if parents, again, trust the learning community, students understand that the bartering between my phone, my cell phone usage and the engagement of your lesson, then it becomes less of a debate and therefore you won't have to be so drastic, as in all being all campuses.

Michael Horn

Last question as we wrap up here, and I'd love you both to sort of take a stab at this one, which is someone told me, you know, Michael, you're just sort of crazy here because, like, we would never have allowed fax machines and telephones on people's desks, you know, when we were, when we all were in school, not to date me, but. Right. And so, like, that's the equivalent of what when that phone is there. And so you just mentioned that the parent can reach out directly to the kid on the one hand, see the benefit, on the other hand, wow, that means anyone can. They can be connecting with lots of folks. And that argument is really would you have had a fax machine sitting on someone's desk back in the day? How do you think about that conversation? What would you tell that individual to sort of reset their mind around that?

Kyla Mathews

Well, as a principal, my biggest thing and what I tell my staff is that my job is to set the conditions so you can do your job the best way you can. And so if you need a fax machine on your desk, we'll get you a fax machine on your desk. And I also have phones in each classroom so that we don't have to go to the teacher's lounge to call families. Right. For any reason. So I say all this to say is that if we are going to make the learning environment conducive for this generation of students, to your point that technology is not getting weaker, it's getting stronger. Why don't we learn how to empower ourselves and students on how to be responsible with all devices while we have them in our care? That's my plight..

Michael Horn

Ulric, your take.

Ulric Shannon

I love that. Kyla. I think we're certainly aligned here. Our job is not to make school harder, not for the adults in the building and not for students. And so our job every single day is not just a third grade teacher, but also a special education teacher. Every student has individual needs just like every adult. And so, yes, if you need this inside the building, you need this support in order to make your learning experience much more enjoyable and you feel much more successful, you're growing in confidence. Then if that is the fax machine, if it is any other, a major copy machine, whatever it is that you may need.

Student Thrives with Computer Accommodation

Ulric Shannon

And I'll close with this story, I have one student who folks told me it's going to be a real, real challenge to get him in the building, to get him to pay attention, to do anything. And this student who is probably now out of college, the only thing he wanted to do was use the computer to do his work because he was so caught up on his pencil penmanship that he would just erase and erase and erase like every day, all day. And this was a student who ended up with all A's in my classroom, even with the IEP, one of the highest performing students in my classroom. And it's because teachers just wanted to make it so much more of a challenge and say, well, he needs to learn how to write well. You know, doctors have terrible penmanship, but they're your doctor, right, and you're okay. And if he just needs this computer the same way that some child just may need a cell phone just to feel a little bit more comfortable to do that work there, why not provide them with the resources they need if there's no need to do the fight, if the grades and the performance and expectations are being met, why pick that as your battle?

Michael Horn

Good way to, good place to end it. I think the individualized support for each student so that they can succeed, which is the goal. Kyla Matthews, Ulric Shannon, thank you so much for joining us. Really appreciate the insights and the wisdom from on the ground. And for all you tuning in, we'll be back next time on the Future of Education.

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Tyler Thigpen, CEO and head of school at the Forest School and Acton Academy, joined me again to discuss the powerful impact that my mentor, Clay Christensen, and his theories of innovation had on Tyler’s practical approach to education leadership and innovation. We dove into topics such as identifying and developing capable leaders, designing for sustainability, integrating around a Job to Be Done, and shaping organizational culture through problem-solving.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn. You're joining the show where we're dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. Today we've got a repeat guest, that happens every once in a while, but generally not like this close in proximity to each other. But we've got Tyler Thigpen back. He's the CEO, head of School of the Forest School and Acton Academy. He teaches at the University of Pennsylvania's Graduate School of Education.

We talked a lot last time about how he's the CEO of the Institute for Self Directed Learning in his book about that topic, the Playbook for Self Directed Learning. Tyler, did I miss anything? Good to see you. How are you?

Tyler Thigpen

You didn't miss anything. Great to see you. I'm doing really well and happy to be chatting about this topic today.

Lessons from Clayton Christensen

Michael Horn

Yeah. And so I wanted to bring Tyler back because I thought the conversation we had was fantastic. And literally, like a few weeks after we had recorded that, he came out with this piece on LinkedIn titled 8 Game Changing Business Lessons I Learned from Clayton Christensen. And of course, as you all know, Clayton Christensen was my mentor. The ideas he learned literally changed my life and how I view the world. And Tyler, I guess I, like, I hadn't internalized that you had had some similar experiences taking Clay's class when you were in the EDLD program, I think at the Ed School at Harvard. And so I just thought, well, for starters, like, what. What moved you to write the piece? And maybe macro level, talk about the impact that that Clay had with you or when you got to interact with him and sort of that moment in your life

Tyler Thigpen

Totally. And my experience with Clayton, you said, changed my life. And even though I didn't get as much time with him as I think you probably did, I would say the same thing. Just an incredible experience. The first time I led a school, Michael, was back in 2011, and I had read the Innovator's DNA and was very compelled by that. And then my team and I started an innovation diploma for high schoolers. Really centered around some of the characteristics, you know, the questioning, the networking, the experimentation, you know, highlighted there in Innovator's DNA. But I didn't know Clayton. It wasn't until I went to my doctoral program that I heard about this legendary course called Building and Sustaining a Successful Enterprise, which I know you know very well.

And I got lucky enough to get him in class and really just rolled up my sleeves and tried to take from it as much as possible. And it really that was 10 years ago, and it's been, you know, my work as a CEO since that time. How many times I have, you know, thought back and reflected and looked at notes and reread theories and tried to apply things. It's just remarkable. It's really almost more than any other business framework that I've come up with. And so that's really what inspired me to write the piece.

I was at a dinner with one of your colleagues, Thomas Arnett, and was sharing some of the same story with him, and I realized I haven't really synthesized my own reflections and thinking. And so I'll put it in a LinkedIn article. And I did, and it was so helpful. And I actually teach it to my leaders as well on my team, and we continue to benefit.

Michael Horn

Very cool. Very cool. And I think you got a lot of feedback on that article. So maybe we'll start not David Letterman style completely, but at the bottom, number eight, and then we'll work backwards number eight. You had identifying and developing capable leaders. And I'd love to know what that means to you, because, like, I think a lot of people would say, well, like, everyone's looking for leaders. You talk to a venture capitalist, they invest in, you know, entrepreneurs. Right? Like, what does that mean? And how did Clay help you around that? Or what's the problem that it helped you solve for?

Tyler Thigpen

Absolutely, Michael. And again, I welcome your feedback on any of this because, yeah

Michael Horn

But I'm super curious what this one meant.

Rethinking Leadership and Hiring

Tyler Thigpen

Yeah, I mean, this was one of the most provoking ideas that I encountered with Chloe. I actually disagreed with him at first. I was given leadership opportunities at a very young age, professionally, like 21. I had a boss that just really believed in me. And so I had this bias around leadership that's like, as long as you have a few certain qualities, you can do anything, you know? But Clayton's very provoking point was to think through, okay, for the roles that you have for your organization, for it to really, you know, grow and execute and learn at a high level. What are the kinds of experiences that this individual is going to have to face? What are the kinds of experiences, therefore, that we would then look for in their previous life, you know, leading up to that point, whether in their personal or professional life, that would have given them the sorts of experiences to be able to navigate them once they approach this new task. And so it really impacted my hiring, honestly, Michael, I just started to really think meaningfully about the competencies required for Each one of our different roles at the school and then backwards design from that and then in our interview questions and interview performance tasks, start looking for team members who had done those kinds of or similar experiences, you know, in the past.

And, and really, honestly nobody, because we're our school and our organization is, you know, trying to build something that's new and innovative. So it's not like anybody's really gone to a school for exactly the roles that we have. So if anything, you know, doing this process with folks as they, as they apply for us is. It helps see where they are going to be ready to hit the ground running and then where they may need some support, you know, early on. So that's been key for us for hiring for the last number of years.

Michael Horn

And for those who are interested, I think he calls it the Right Stuff Theory. Right. The schools of experience, if I'm remembering, and it's from Morgan McCall's work, High Flyers Developing the Next Generation of Leaders. And I think we may have had a similar, like, sort of disagreement with it initially. Actually, it'll be interesting to compare notes on this. My recollection was like, when Clay introduced this theory to our class, my pushback was like, well, if you're always looking for someone who's had experience, like, you never actually bring someone up into the next rung because, like, you're looking for, like, it's a truism in some ways. How do you develop? And I guess the nuanced understanding I developed over time of it was like, actually it's the opposite, right? Like the argument is, you know, you're looking for a CEO of a startup venture or something like that.

You don't go to the CEO of a Fortune 500 company to fill that because their experiences are actually in large environments of how to get stuff done and things like that. And you'd be better off finding someone who maybe hasn't had the C level job, but had the experience of navigating and operating in a similar small environment and getting, you know, learning how to pull resources and get experiences done. And now you're giving them sort of that next ladder, if you will, on, their progression. And, and so in some ways I, I started to think of it as like, actually it's more pro development than I thought. It's just you have to sort of understand experience and like, context in a deeper way than maybe I had. How does that resonate with you?

Tyler Thigpen

It totally resonates. And I, I think too, he helped me see that if you, I mean, yeah, there's a good chance that if you've got someone who succeeded in an environment, they're going to succeed in another environment. But that's just what it is. It's a chance, you know, it's a bit riskier. Whereas if you need someone to deliver on the promise of this new role in this context, then there's going to be a greater likelihood for success if you look for that level of alignment. So you use the word nuance that. I totally agree. It's a bit more nuanced approach.

Michael Horn

Yeah. Okay, so let's go to the seventh one then. You had, you had understanding business models and designing for sustainability, which is interesting because like his class, as you said, legendary class. Building and sustaining successful enterprise. World's worst name for a course ever. But Clay was like consumed with sustainable success, right? Not flash in the pan. Success was like super core to who he was. So, so how did, how did this, how does this manifest and what you do day to day?

Strategic Growth Planning Variations

Tyler Thigpen

Well, and this one, I don't know if in your mind this one is closely connected to the discovery driven planning. For me it sort of is. But basically the way this impacted me was when I was outside of this context, it was like, okay, when designing the performa for our organization, that five year projections, you know, having multiple different versions, all of which are sustainable, but you know, one would be a fast growth, one would be moderate growth, one would be slow growth. And it included all the resources and, you know, processes, priorities, and we'll get to that in a minute, I think. But it essentially there were a few markers that I sort of said, like, it's got to make this amount of profit, this percentage of profit, you know, year after year. Otherwise that tells us, you know, this is probably not a sustainable business model. There are a few key restraints that need to be considered. Like if we're getting this kind of funding for a short period of time, that really shouldn't be a part of the annual operations funding sort of thing.

It just needs to be sustainable. And so I would tell my parents and my team of our schools early on, I would say we're building something that hopefully is going to live hundreds of years beyond us. And so allowing those constraints to help with decision making both around growth and staffing and what we would purchase and then continually looking at that for, from a budgeting standpoint, you know, every month has just been crucial, you know, and I do think like the sector in which I'm trying to lead at the moment, you know, micro schools and education, you know, institutes, there are some great examples of some incredible ideas out there, but it's not exactly sustainable and it's just very, very hard. But it requires a level of, he helped me, you know, really up my game in terms of the discipline to like make sure that this, this has a long term plan for it.

Michael Horn

Yeah. So it's interesting hearing you say that and I'm going to change my plan of how I ask you questions in a moment because of the way you just went into that one. But my observation on the micro school sector specifically is that far too many educators come into this with noble intentions. They start something and they basically they do the opposite of designing for sustainability. They say, I'm not going to take a salary for two years or whatever else and then we'll figure out what happens to the school afterwards. So like it's almost like a, I want to break out, I want to do this noble thing of creating this purpose driven, tight, community for learners and I'm sort of not going to worry about the sustainability question.

Supply Challenges and Strategic Planning

Michael Horn

And, my big fear is like the supply is going to keep slipping if, if we have that mindset, that actually not thinking like a business is doing a disservice to those communities that they stand up. And, and so it, I hadn't linked it to the Discovery Driven planning until you just said it, but I think it's right like the big thing that I tell people that I think Discovery Driven planning is different from Lean Startup or some of those things out there which, which are sort of derivative off Discovery Driven planning is Lean Startup has a little bit of like a, throw lots of stuff at the wall and see what sticks. Discovery Driven planning is like okay, no, no, let's start with what's the end in mind. Like you know, Stephen Covey. Right. Like begin with the end and then like okay, what has to be true and what are the key assumptions in the model that we need to be thinking about now? Because otherwise it's, it's game over.

Right. And, and I think we're not having enough thought on the supply side at the moment in this space is my observation at least. I'm curious how that resonates for you.

Tyler Thigpen

It does. The, for, you know, I heard it said a few years ago, like how an organization starts is kind of like really hard to get out of, you know, over, over time. And I've seen that in this sector as well where you know, maybe the cost of tuition, for example, Isn't priced right. And folks kind of get locked in to that and then it ends up not being, you know, sustainable. Whereas discovery driven planning just. It invited me to say, okay, you know, here's the goal and the priority and here are the assumptions baked into what I think is actually going to happen. And then let me put in place these milestones to, to pressure test and double check those assumptions and see if they're true. And I did this.

And then by the way, often, sometimes they were, but most of the time they were not. And so like having to pivot, right? I mean, one of the. Our school is diverse by design, like economically, you know, racially, age, religion, gender. And I made a few early goals around that and made some assumptions around how that was going to happen. And sure enough, you know, three, six and nine months in, realized this is not working out. And so the pivots that we made there early on were so beneficial and so crucial. And had I not known about this process, I would have just kind of been doing that lean startup, you throw stuff on the wall and see what works versus being a bit more methodical about it, you know, and seeing what the market is demanding and what is actually potentially sustainable for the long term. So, that's kind of been our process.

Tyler Thigpen

I mean, even, even when we started the school, Michael, you know, I sort of, I was, I, I think it's going to be this much, this much demand for the environment. And it ended up, you know, after looking at the first milestone, it was way more, you know, so that some of the pivots were like positive pivots, you know.

Michael Horn

Yeah, yeah.

Tyler Thigpen

And then some were like, oh gosh, we've gotta, you know, invest, we've gotta add more resources, you know, or we've got to change some processes in order to, you know, arrive at this priority that we have. But, but, but pivots is really what it led us to. And pivots that were crucial.

Michael Horn

Yeah, and it's interesting cause that's number five for you. And so that's what this is. What I realized is like, we actually probably should back up to number two on your list because two through seven really build off each other. So two, you have the assessing capabilities, resources, processes, priorities, which really became, I think over time, the business model framework. Those of us of a certain vintage think of them as separate, but I think for most people, sort of it melds into itself. But talk about this RPP as it's affectionately known, or when I was there, it was RPV it was resources, processes, values back in the day. So these things evolve. Right, but talk about what this is and how it was useful to you.

Simplifying Alignment with Logic Models

Tyler Thigpen

Well, the way I make sense of it, I had done a little study on logic models in the past, and this just was almost a simpler, more, an easier way entry point in for me and my leadership team to help think through alignment in order to achieve our mission and our priorities being that last P. And then so based on those priorities, what are you the processes that we need to have in place, and then what are all the resources that need to go to it and even within our organization. So our organization has three separate components, and then each component has different projects. I use RPP at both the organizational level as well as the departmental level. And it helps me figure out teams. It helps me figure out, you know, policies, procedures, processes, and systems that need to be put in place, that need to outlive all of us in order to bring some of these goals to life. So an example would be we just did a micro school accelerator for leaders across the U.S. independent and public schools, and we just stood it up out of nowhere. And I used RPP to do that. It was like, okay, well, what would be the goal for the size team that we;re, cohort that we're inviting to this? What are therefore the processes? And then what are the resources from our organization that we can pull together to pull that thing off? You know, we. Our online school is another example. We're pivoting to. To be responsive to what we understand, you know, demand and parent feedback to be. And again, using RPP to do that and making staffing changes and making processes changes.

And now we have three online offerings instead of one. You know, as, as an example. And even after school, I mean, what's interesting is now that our nonprofit has land and has facilities, it's like all of a sudden our resources have kind of gone out the roof. And so that actually thinking about RPP made me think, oh, you know, are there other priorities that we ought to consider because of this new resource that maybe is underutilized in some ways. So, like, we're actually thinking about after school now, which we've never thought about before, but we have this great place, you know, this great resource that's just not being used in the afternoons and on the weekends.

Michael Horn

Yeah.

Tyler Thigpen

So now what's the team and what's the process? And RPP is, you know, it's big for me there too.

Michael Horn

Super interesting. And then I guess it translates into the business model and sustainability Right. Because what do you need to bring in revenue wise to make that, to actually be effectively leveraging that resource that is underutilized to your point, that. But you have in your control. The other piece that comes out of RPP directly and it's in your piece as the number three is shaping organizational culture through new challenges. I love this theory as well. It's Edgar Schein from MIT who sort of originally documented all this work. And then in my telling, really processes and priorities are where culture really manifests right in an organization.

But I would love to hear how you, how this has been helpful to you?

Tyler Thigpen

Michael, this was also very provoking for me. I used to think before this experience with Clayton, I used to think that, you know, if I hired the right people who were like a culture fit and if I was charismatic enough to sort of, you know, broadcast that kind of culture and celebrate the things that we wanted to cultivate, that would be enough. But Clayton's theory was so provoking, you know, based off Shine, as you're mentioning, was like, actually if you introduce a problem to the group, then that's going to have a very formative, you know, impact on the group. And so I remember the first time I led a school, we, I did this. We created basically an unschooling experience. And our staff had never done anything like that. And kids had a ton of choice and voice in what they were doing. And all of a sudden our entire team was confronted with this, you know, experience of children having decision making power where they previously did.

Transformative Feedback and Empowerment

Tyler Thigpen

And it completely shifted the culture. You know, in my current context, you know, my staff, a lot of my staff that I had hired had never done, you know, feedback, sort of 360 feedback with one another before joining my team. And so I introduced a new problem which was like two by two by two feedback, you know, where, okay, before, you know, you come to me at the end of the year to give me feedback and receive feedback, like, go talk to two other teammates, you know, and give them feedback and receive feedback. And then, and that was just a major, you know, culture shifter for us. We have another, again, some of my educators had come from environments that were more teacher centric, where learners had a lot of control. And so one of the problems that we introduced to the environment was, okay, there's gonna, we're gonna create an entire day for the learners where they make the rules, they sign their name to the rules. We have it at a campfire.

You know, it's this problem that our entire Team staff are experiencing, and all of a sudden it's shifting their hearts and minds to like, oh, the, this is really the learner school, you know, more than anything else. So now as a leader, I mean, I still think about hiring culture fits and, and, you know, really celebrating things I want to cultivate. But now it's like, what problems does our team need to be introduced to, what challenges, you know, and that'll form us?

Michael Horn

It's interesting when you, when you bring that up. I write about this a lot. And it takes like three paragraphs out of a chapter, right? To be like, find a problem, put a team around it. Then, you know, if it works, have them repeat. If it doesn't, try different processes, et cetera. Sounds so simple in theory. And, and yet it's actually really freaking complicated if you think about that, right? To just do what you did. Okay, we're gonna have a day where the kids are making the rules.

What do we start to build out of that? What problems does that introduce? Right? What does that mean for us as teachers? What are our roles? Okay, how do we actually now start to codify what we've done that has worked? Right. And repeat it over and over again? Like, these are not actually, they sound easy, but they're actually really freaking hard in reality. Yes?

Tyler Thigpen

Yes. Amen. And, and what I found helpful to sustain the complexity of it was stand up meetings with my team every day, basically little scrums, you know, like, literally.

Michael Horn

What did we just learn? What are we going to keep doing? What are we going to stop doing, sort of stuff.

Tyler Thigpen

Exactly. And, and how's everybody doing? You know, we have, you know, and just checking in and, and iterating in the moment. That brought a lot of camaraderie too.

Michael Horn

Yeah, I can imagine. All right, so number four, you had integrating around a job to be done. This is one of my favorites. But why didn't you give the basic notion of what it means to integrate around a job to be done?

Aligning Education with Jobs to Be Done Theory

Tyler Thigpen

Yeah. My understanding, traditional marketing endeavors, look, try to sector out and section out different users in the marketplace and then speak to them versus jobs to be done theory, which sort of says, like, okay, you know, we humans have some goals in our lives and we are hiring different things in order to achieve those goals. And from a very human centered, empathetic, design thinking standpoint, you know, what, what are those jobs that we, you know, are hiring others to do for us? And in my context, it's parents and caregivers, they're hiring schools or they're Hiring, you know, learning communities to do certain jobs for them. And there's some great research out, you know, by your team and others around the jobs to be done specifically related to alternative schools and that are sort of non traditional. And, you know, we took that feedback, in addition to the feedback we were hearing from our own community, and we said, okay, this is typically what we understand now. Parents, caregivers, in our context, are hiring folks like myself and my team in order to do. And so we looked at that, we talked about it, we discussed it, and then we sort of said, okay, does this align with the processes, you know, that we have in place? And also, is this what we're celebrating and reporting back on? And so we actually aligned, Michael, our report cards and our progress reports on this.

Michael Horn

So, like, that's interesting.

Tyler Thigpen

Yeah, jobs to be done, you know, for alternative schools. One of them is, for example, when I disagree with decisions at my child's school and I'm feeling unheard, help me find an alternative that will honor my perspective and my values. You know, so us understanding a family's perspective and values and then reporting back instances where we see their children, you know, living those out in our context was a part of the report card. You know, another one is when my child is unhappy, unsafe, or struggling at school, help me find an environment where they can regain their love for learning. So one of the first things our report card talks about is, are they loving learning right now? You know, and what are they loving learning specifically? And so I think and that it seems like that resonated. We got great feedback on our revised report cards as a result of that.

Michael Horn

Well, it's interesting, just thinking out loud, two things. One, to swim with you, which is the outcomes, right are defined by the job and the circumstance and so reporting against that, super interesting. And sort of helps front and center, like, how should we evaluate whether we were successful or not? Let's do it relative, right, to why they came here. I think it's really brilliant. The second thing is I.

I also think what gets very interesting for an organization is when people with multiple jobs to be done are coming to you and they're actually in conflict with each other at some stage. Right. So the one that I'll use is sometimes, like, okay, I'm not solving for academics. You have it here, right? Like social, emotional learning, super important to me. Sort of that balanced educational experience, whole child, whatever you want to call it. And then that first one might be around the perspective and values. And you can imagine sometimes those swim against each other. Right.

And so one of the things that I say is helping. You know, when you should fire a customer and tell them, like, hey, this is what you're optimizing for, and we are not optimized for that. So rather than like, have this song and dance about how we can serve you, let's have an honest conversation and help you find a better spot where you can make progress. And it's actually better for your school culture because you don't have someone that's like, sort of pushing against the grain. It allows you to better double down, if you will, on the resources, processes, priorities you're optimized around. You're also helping that family do better for them given their goals. Right. You're not asking them to somehow swim against the outcomes that matter to them.

And I think one of the challenges that I observed that I think micro schools could really help traditional districts with is like, we're trying to pack these families in and say, like, your kid should do, like, be striving for the exact same thing as this kid. And, like, that's just plainly not true. Micro schools can maybe allow us to create a broader community, but not have us all swimming in the exact same direction, if you will, when an appropriate, you know, a different goal is appropriate for a given kid, if that makes sense.

Tyler Thigpen

It totally makes sense and resonates. And. And it's scary when you start saying no to a family, you know, at the beginning when you're trying to prove out, you know, the business model.

Michael Horn

Sure. You just want to attract anyone at that stage. Right?

Tyler Thigpen

Totally. Yeah. That's the temptation. Right. But. But we actually have on our website, I don't have it memorized, but we have a page on our website and it's close to admissions that does just what you said, Michael, which is like, this school is for X, Y and Z sorts of families. If you are A, B and C sorts of families, love you, see you, you know, you probably want to go, you know, somewhere, somewhere else. And then what's interesting is I've tried to get even better as a leader at introducing people to our environment with that.

So when they're going through the application interview process, I've identified what are, like, the eight or nine most common struggles that parents have. And I'll. I'll lead with that. I'll be like, hey, awesome, just know that you're signing up for these struggles. Like, I, as a dad, I'm struggling with everybody's struggle. It's just a part of who we are. But we want those struggles, you know.

Michael Horn

Yeah.

Tyler Thigpen

Why? We want those struggles. And, and you're right. If they get into it, because sometimes they get into it and not really appreciate it, then there's a couple. I mean, we could sort of fire the customer, if you will, or, you know, and this may be connects.

Michael Horn

Like on the front end, you're trying to make sure that they don't make a mistake.

Tyler Thigpen

Right.

Michael Horn

Which is better?

Tyler Thigpen

Yeah, ideally for sure, but they still can get through. And then, and then I think another option though is helping them outsource that, you know, that need that they're trying to hire it for.

Michael Horn

So that one is interesting. Right. Also because I think I love the way you grounded in the struggling circumstances. Right. That they're experiencing. I also think, incidentally, that's the best way to market like anything is to like ground yourself in someone's reality. And, and then they can be like, oh, that's what I need. Right.

And something you just said there, I think is, is a good point, which is the advice I often give people when they're trying to pick a school is I say, like, what are you solving in your family already for your kid? And what, like, what is a school going to solve for you that you can't or don't have the desire Right to solve for your. For. For your kid? Um, and it's a way to help them realize, oh, like, you know, school is doing this lane for me, but like, you know, after school sports is doing this one for me. And then like, I do this with my kid. Right.

And, and I don't need it to do every single thing for me. Which I think is where you're going with that.

Preparing Children for Independence

Tyler Thigpen

It is. And the, the older I get and longer I've been in this work too, like inviting parents and caregivers to consider, you know, their, when their children are 18 and they quote, unquote, launch, you know, in a traditional sense from their home, you know, what do they want to be true to them? What sort of qualities, competencies do they want them to have and exhibit? And then where are they getting practice at those things from the youngest ages, appreciating that really no single learning environment is going to be able to meet the expectations that they have for their children. But if parents and caregivers were to fully shoulder the responsibility for making sure that their learners, you know, their, their children get the practice in some environment, you know, putting the puzzle pieces together, if you will, you know, it's sort of. Which, which puzzle pieces do you want to you know, choose for that and allow us to help you think through it and, and, and, and ways in which we can add value, but also just be honest about the ways in which we're not gonna, you know, we're not gonna add value. And I think that, like you said, I think that's helpful too. Yeah.

Michael Horn

And it sets expectations. Right. And, and, and it sets culture, I think, for a community. I'll just say one other thing and then I'll go to your number one reason as we start to wrap up here, which was the other thing that I've learned through Job Moves is helping people make trade offs is really important and it's not settling. Right. I'm not settling for all my kid's not going to have access to this. It's like, okay, my top priority for the school is this, I'm willing to trade off on this. And then you being like, okay, and you can get that elsewhere.

Right. Or you can get it not now, but in a couple years that will become a thing. Right. And sort of realizing that trade offs are things you make so you can, you can get the thing you most value or most prioritizing at a given point in time and seeing it as like a value creation step for a family as opposed to a. I can't get that. Geez, what, what, what, what good is this school if it doesn't do everything for me?

Tyler Thigpen

That's powerful, Michael. And I think in the micro, the schooling context too, for parents and caregivers, it's, it's so relevant because there's just so much that could potentially be learned and so much that we parents kind of project on learners, you know, as something that's being crucial. You know, what immediately comes to mind is math learning. You know, I mean, there's such an interesting debate about, you know, right now, what math conceptually, procedurally needs to be learned before graduating from school and for what reasons. And the safe default, you know, sometimes fear based posture that parents, caregivers take is like, well, do what I did, you know.

Michael Horn

Yeah, yeah, Algebra, calculus, that's the way. Yeah, yeah.

Tyler Thigpen

And I'm like, do you know how to do those problems right now? And are you using them in your life? And you know, but, but talking about the trade offs is, is exactly, I think, the right way forward. Because if we do, I mean, listen, if we want to do deep, deep math learning, we can, we can facilitate that, but just realize it's going to take a lot of time and it's probably going to take this amount of time and we're going to lose, you know, real world learning or collaboration or, you know, self awareness or whatever it is that, you know, whatever else we care about.

Michael Horn

No, I love that. And for those who think, sorry, this is going to be a plug off the topic. But for those who think that, oh, I learned to think critically through algebra, there are plenty of ways to think critically about the world. And I'm not sure the way we have traditionally taught algebra, we're actually building a transferable skill around critical thinking. So little plug there. You probably don't disagree with me. Number one, you have this notion of humility over ego. You pull from Jim Collins to introduce the idea.

But maybe talk about how Clay brought this home to you and how it's manifested in your work.

Ego-Free Role Model

Tyler Thigpen

Well, I just. He's probably in my top three humans on the planet that was a role model for this. And I just saw him respond kindly in, in class at a, you know, sort of high stakes environment, the Harvard Business School. And I saw, you know, learners give challenging, pointed questions and I watched him, you know, respond with questions with a non anxious presence, with a kind tone. And then at the end, you know, the very last day of class, he talked about, he was like, you know, my, my wife and I strive and my children strive to be known for our kindness, you know, and you can't go wrong. And I was like, oh, well, that makes a lot of sense because I experienced him that way and I just. Because he's come up with these theories that really live outside of himself and he's just been very observant about the world and which. That is just the definition of ego free.

You know, it's not about him and what he's trying to grow for his own kingdom. It's about observing what is happening in the world and how can we serve others and what works along that journey of serving others. I think for me, you know, right now we're ending up our year. And I've just met with all my leadership team. They've all given me feedback about my leadership, you know, and I just summarized it before this call actually like the pluses and minuses and I just need to take myself. I mean, I need to keep myself in it so I can grow. But like, it's like, hey, Tyler, as a leader, these are the ways in which I need to grow. These are how people are experiencing, experiencing me on my team.

Growth Through Humble Leadership

Tyler Thigpen

And, and I can really, I stand to grow from this. And I think that's important for organizational leadership because we just don't learn as quickly if we keep our ego in it, if we're not humble, if we're not willing to see the failure and learn from the failure and learn exactly why from the failure. In fact, I even on this point, Michael, I revised our exit survey this year for our families because I was like, I really want to understand even more deeply when families leave, like, why are they leaving? You know, it's not about me or my teammates. Like, they have some goals. I want to understand what those goals are, and those are outside of myself, you know, so it's not about me or, you know, so. So that he was very impactful and helpful for me in that.

Michael Horn

That's really cool. And I always think it's like a really good role model because he loved to be wrong, because it meant he learned something. And that was part of that humility, I think. And I always felt. I don't. I mean, you went through the class once, I got to go through it three times, you know, once as a student, then twice working for him. And I always felt badly because he, people didn't get to see how the theories changed or evolved.

And I'd be like, all right, man, he got serious pushback on this last year and look at what he's changed now this year. Because even though he sort of debated, asked the questions, et cetera, he actually was like, oh, wow, this is not quite right. Let's evolve it. And I always thought that was such a cool example that unfortunately the students didn't always get to see because it was something that was happening over time. And as a student, you're there for a moment and then you're graduated into the world. But I had the same experience as you.

Tyler Thigpen

That's cool. I didn't know. I could imagine that that was the case, but I didn't know that. And to see it from your vantage point would be really fascinating. And I mean, he to me, what you're saying is he sort of did his own discovery driven planning process on his own theories.

Michael Horn

Good way to put it.

Tyler Thigpen

Yeah.

Michael Horn

And he used his class. Right. As a way to like, he loved it when he got pushed back. I think sometimes the criticism I would hear of him is some students would say, well, he's so wed to the way he's done it. And I was like, but because he's asking questions and to defend it, because that's how he's going to realize, oh, wow, there's a flaw here. Let's or there's an anomaly or whatever it is, let's sharpen it even further from what I just learned, which I always thought was really cool. That humility to learn from anyone he interacted with.

Tyler Thigpen

So cool.

Michael Horn

Yeah. Tyler, huge thanks for coming on sharing some of these insights and frankly, like for those running schools, I think there's a ton to learn from here. Not just the micro school community but everyone who's running schools top to bottom. There's a lot of lessons here I think. So hugely appreciate what you continue to do as you've wrapped up your traditional academic year for a little bit. Just, just huge thanks to you and the community you've built.

Tyler Thigpen

You're welcome. And thank you for the conversation and for all the work that you and your team do to advance these. Super, super helpful for all of us.

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Dave McCool, founder and CEO of Muzzy Lane, joined me to discuss the role and potential of AI in creating dynamic, role-play simulations for online learning. Dave shared the journey of Muzzy Lane, from its early days developing history games for schools to its current focus on enabling educators to easily build their own customizable, auto-graded simulations across more than 100 higher-education course areas. Our conversation highlights how recent advances in AI have transformed the process of authoring simulations. It’s now much faster, more accessible, and more engaging for both instructors and learners.

I highly recommend you don’t just read or listen to our conversation; watch it because Dave gave a live demo of the use of AI to create simulations. Show don’t tell, as the saying goes.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn and you are joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential and live lives of purpose. And to help us think through that, today we have a special guest, Dave McCool. He's the founder and currently the CEO at Muzzy Lane, which basically creates dynamic role play simulations in a variety of fields. We're going to learn a lot more about it, but simulations have been an area that I've been very interested in for a long time in the world of digital, online learning and so forth for its ability to frankly create more real world, real life learning experiences for individuals. Dave, welcome. So good to see you and thanks for joining us.

Dave McCool

Thanks for having me here today, Michael.

Michael Horn

Yeah, so let's dive in maybe, because I think simulations have taken almost like a, you know, level up, if you will, from video game land. Right. With AI over the past few years. But let's go back a little bit further than that. Just the founding of Muzzy Lane. What was the big idea behind it? How's the company evolved? Who are sort of, you know, who do you serve right now? Where are these simulations and where are they hitting learners at the moment?

Dave McCool

Perfect. Yeah. So the big idea is a great place to start. So I'm a software engineer by background and so when we started Muzzy Lane in early 2000s, we had an interest in games and simulations, looked kind of at the landscape and saw education. More digital transformation was happening in education and just felt as a software engineer is like, this is a great place for games and simulations. It's a great place for deeper, more complex interactive software that can really get at better learning experiences and better assessment experiences. So that was really the big idea. 2002 was a very different time than today.

So, you know, we went through a lot of iterations trying to find the right formula. You know, the first half of the company's life was really, we created and released history games into high schools and colleges called Making History. People who use them, love them. Not as many people use them as we had hoped in education at the time, but that series lives on in the commercial space on Steam, so it's still available today. Did a lot of work with publishers. Really kind of most of our work's been in higher ed over the course of the company's Life. A little K12 and a little workforce. But I think for us the big turning point for us was 2014 and 15, the Gates foundation, they gave us a research grant because they'd made a lot of investments in games and simulations for learning and hadn't been getting the results they were hoping for.

So they wanted us to study the market, which was interesting for us as sort of startup software people, to do a research project.

Michael Horn

Yeah, I was about to say, how did that, how did that land for y' all?

Dave McCool

It was good. We. It was a period. A colleague of mine, Connor Ryan, came in and was running the company at the time while I was running the tech transformation we were undergoing. So he had a good experience that we didn't with that. And so we. It was a really great experience.

We produced a 40-page report which is still available on our website.

Michael Horn

What did you learn? Like, what were the headlines from that report?

Dave McCool

I still remember the headlines today. And it was because they were, they were humbling really for us. It was high awareness of games and simulations among instructors and administrators in university, especially online. But all sorts of logistical challenges with what they were being offered. Things were generally too big, too inflexible. Don't disrupt my course became the thing we heard most commonly. We see the value in what you're doing. I'm not rebuilding my whole course around.

Michael Horn

You, but I wanted to fit in as a module as opposed to. To I have to rethink 10 of the 13 weeks or whatever.

Dave McCool

Right. So it still has to be a scale that fits with my course that fits with my learning objectives, like time. Like I don't have enough time to spend on that particular part of my courses that this game is going to require for me. And they wanted to control the content. They didn't want to have to go back to a developer constantly to get changes made and updates made. And then kind of the basic ones were it has to run any device in a browser, on a phone, including had to integrate to the LMS, which meant LTI integration. And it had to meet WCAG 2.0 AA Accessibility Now 2.2, which again, these were not things people. We came kind of from the serious games and the games for learning side and we were kind of like, oh, games are great and you're going to adjust to get those benefits.

So anyway, we were doing a tech transition at the time anyway, that's when the authoring tools came out and we said, let's just go all the way down to we're going to start putting these tools in the hands of our partners, teach them how to use them, make it as easy as possible. And that's really been the business ever since.

Michael Horn

Super. And so what higher ed programs specifically? Like, when you're talking about the simulations, where have you found the most traction? Are we talking like nursing and it's almost VR like, or are we talking negotiations? Like, there's a pretty big range of what these can look like. Where, where have you found the most traction?

Dave McCool

Yeah, I think so. We, when we thought about the tools, we thought about how to help people build their own simulations for learning, we thought a lot about ROI, because when you were building specific games, like we built for principles of Marketing, we built for intro Spanish, we built for operations management, but you're building one big product for one course area and it's hard to make that money back. It's hard to make that work financially. So what we wanted to do is build templates that were as broadly applicable as possible. So we wanted to make content forms that you could then fill in with what you needed for your course area and hopefully those would travel pretty broadly. So we're in over 100 course areas in higher ed. Business is probably the number one by usage overall. But a lot of nursing, a lot of medical fields like medical assisting, a lot of the humanities as well.

So we're in language learning, we're in sociology, psychology, crisis counseling, social work, all those kinds of places. And the role play format of the multiples that we have really has become the most popular one just because it does travel really well and it really fits a lot of what people try to do.

Adapting Games for Education

Michael Horn

And so the, and it sounds like the secret became, okay, we're going to give up our adherence to what a serious game needs to look like or what the ideal version of it is. I'm sort of reminded of the Greg Toppo book, I think the game believes in you, right, where he sort of said there's this clash of like these very big learning goals that serious game designers have as they enter the education space. And like, these are not your words, but these are his, as I recall them, was like, you know, sometimes schools can be a little more transactional in the knowledge and skills that they're trying to get across to students. And so, you know, you may lose sort of the organic nature, right of a game or simulation when put into the container of a class. But it sounds like you were able to take the market's message, make that change and, and give more power to educators to create these role plays. Am I understanding that correctly?

Dave McCool

Yeah, you are. And it's funny because you're I'm. I'm flashing back to all those. Yeah, yeah, and Kurt squire and Jane McGonagall and like all the people who initially sort of had this movement. And a lot of the challenges were created by this clash of cultures between what is a game for a lot of people? Game is voluntary. It has to be fun. What is learning? Some people learning is very different from that.

We're trying to figure out how to fit into the learning environment, push them. Like, we didn't want them to just not change anything because that's not helpful, but. But not impose criteria that are incompatible with what their goals were.

Michael Horn

So talk to us then about, you know, how that's evolved in terms of the product and how do educators create simulations fit for their course now? How do you help them? What, what, what do those authoring tools look like? It seems like a lot of variables and still could be a lot of work if not done well.

Dave McCool

Which is a very good point. So, yeah, so from fall of 2015 was when the platform came out until a couple of years ago, it was a pretty, just sort of a steady, steady workflow for us. It's like, how do we keep making these tools better? We did do custom tools for some people, partners, you know, for example, Western governors early on was, hey, we want to do a pandemic simulation for our masters in healthcare administration, where you run a trauma center during a pandemic. Ironic. That was 2015.

Michael Horn

I was gonna say that turned out to be prescient, sadly.

Dave McCool

But yeah, yeah, but really mostly just finding, you know, great fielding input from customers. How can we make this better? How can make the learner experience more engaging? How do we give you more flexibility to meet your goals? I think for us a big thing is auto assessment was always a big requirement from the market for us. So the tension for us was always, how engaging can I make this and still auto grade the experience? Because a lot of times you're working with online universities, they don't have the ability to grade open response type things. So that was sort of the challenge. And I think that was really just steadily grew and got up to about a million students a year being served. So it was nice. Again, like I said, mostly in higher ed. And then two years ago, really AI, it came out before that, but we were not sure what to do until about two years ago.

And that's really been the newest phase, which has really been. That's been pretty exciting.

AI: More than Just a Chatbot

Michael Horn

All right, so let's talk about that enabler in terms of like, what does AI allow you to do that you couldn't do before? Allow the people that you're working with, your clients, customers to do that they couldn't do before.

Dave McCool

So two really big things. So when we first, when ChatGPT sort of burst onto the scene, all of us, I think, like everybody else were like, oh, wow, this is really, really great, or it's going to make it so that no one needs what we do anymore. We weren't sure which. And the first few, first year or so of looking at it, we thought, well, everything felt like a chatbot, right? Everything sort of felt like, where do we put a chatbot? And we were like, well, we could put it into a smart chat, a roleplay sim, or we could put it in the corner and you could ask it when you got confused, but nothing felt quite right. And I think what, what really struck us a couple years ago, maybe more, 18 months, was instead of thinking about AI as a chatbot that we could put somewhere, we thought about AI as a resource that we could use. So what's AI? It's a big knowledge base of maybe all the world's data, I'm not sure that you can ask questions of and get responses. And we said, well, how could we, starting from roleplay, simulation, what we do, how could that make what we do better? And we really came out with two use cases that we immediately dove in on.

One is we said, what if we could teach it how to make simulations in our format and then provide that to our customers? So, you know, we and everyone else is already using ChatGPT to brainstorm scenarios and stuff. And you're doing a lot of copying and pasting from your chatbot into your tool, whatever tool you're making your content in. We said, let's move, remove that step. Let's just teach it directly how to make our stuff. We're AWS hosted, so we are able to integrate it directly into the platform. And just say, you just start talking to it and you say, I want to build a scenario. Here are my learning objectives, or here's some source material to start from. Walk me through a process that gets me to a fully testable scenario.

So that was one and that's the market has loved that.

Michael Horn

Yeah, I would imagine. I want to come back to that in a moment. Keep going.

Enhancing Learner Experience with AI

Dave McCool

Yeah. The first full version of that came out over Christmas, over the holiday of 2024. And the other was how do we make the learner experience better with this tool? And that was a little more challenging at first and then we finally just said what's the simplest thing we can do? It's like, well we have a, the roleplay simulation has a variety of question types. The usual suspects, multiple choice, fill in the blank, categorize. We said, what if we had an open response question type where instead of using multiple choice in a scenario you've analyzed data, you're talking to a coworker, they ask you a question and you just have to answer. And then what we can do is then use the AI as sort of like a fuzzy logic natural language processor back end to say hey. Michael asked David this, David said this back.

Here's the rubric here. The learning objectives we're tracking. Give me what Michael says back to David, grade David's response against the rubric and give me a rationale for the grading. And so that came out at the same time and that's been really cool too because now you can be much more authentic. Like one of our university partners said, I saw your journey before. It's really interesting. But it was sort of selected response. I saw open response and I said I'll do that changes everything because now it's a constructed response.

Now I, in a scalable auto assessed way can respond in my own words. I can, you know, put my mental model out there and you can, you can, you know, grade that well.

Michael Horn

And it's interesting on that second one. In some ways that also brings it more to the serious games origins and that there's something more authentic I would think about it that's possible. Maybe I'm making the wrong leap there.

Dave McCool

But no, I think that's what we talk about. It's more engaging and it's more authentic. And one thing we did along the way is also we added text to speech and speech to text so that you could actually speak your response. You don't have to type it anymore.

Michael Horn

Yeah. So I want to come back to the first one, but one more question. Can you use AI also like, or maybe this is a couple years off to start building, you know, graphics or like, you know, things that are more immersive or engaging simulations as well and maybe make, you know, there's this been this world of virtual reality that's been five years away for 20 years now. But maybe it becomes more possible because the authoring of these environments really goes down in terms of cost and time. What's your take on that?

Dave McCool

I completely agree. We in the authoring era have really backed off from VR, AR and 3D work which we had done in Our previous custom days, partly because our guardrails were authorable by non technical subject matter experts and accessibility. So those were so kept in that, in that box. We're now doing a really good job of generating with AI all the stuff in that box. What's about to come out from us next is generating images. So there's a lot of images and multimedia in our things today. Building those. And then our next thing is to look at, okay, can we build a 3D scene in, in AI, can we rig 3D characters? Can we create characters that can walk around and interact with each other? So I think that's next.

But that's like we've tried to be really disciplined about staying in like here's what we do really well. 3D and VR definitely has a place. The cost of production and the complexities of deployment mean there are places that's not well suited. So we sort of so far staying where we are.

Michael Horn

No, that makes sense. And so then this ties back into the number one use case around enabling the authoring right to explode in some ways along your guidelines. And I assume that's something I want to let you elaborate on a little bit because I assume anyone can create a simulation, but to do it in line with instructional goals, learning design, not overloading the learner, accessibility, et cetera. I assume there's a bunch of guardrails you all have created over time or rules by which content is created that you know, you don't want a faculty member or if it's at Western Governors, right. Like a centralized instructional designer to have to deal with all that complexity. You almost want the AI to just hard code that in some sense.

Designing for Balance and Structure

Dave McCool

Yeah. It's funny, most of our programming on that part of the product in the last year has been prompt engineering and system file work. And you know what we realized immediately we do not want, we didn't just want to put an AI interface in front of our users like you said and ask them to try to make this. It would not, that would not have gone well. And I think what we constantly, the balance we're trying to find is between how much to let the AI go versus how much to keep it structured. Because like, especially with universities who've reacted really positively to this, a big part of it is they can get the thing they need out of this easily and quickly. And before they could either spend a lot of time and money to get the thing they needed or they could get the thing they didn't really need quickly.

So it's trying to find that middle ground of like, give me your learning objectives, give me your goals, give me your activity purpose. Like is it a formative assessment? Is it a homework assignment? And then I'll guide you through this sort of, we call them playbooks, this playbook process of saying here, here are the steps to get to something usable and here are the ways in which you can kind of vary along the way.

Michael Horn

Last question on this, because you've talked a few times about using it for instruction, but also the assessment inherent in a simulation. Are all the simulations that your customers, universities creating, do they have both of those goals or some, you know, inherently assessment based and some are inherently instructional? Maybe formative assessment based? Like what, how does that work? How are simulations used? Maybe talk a little bit about the use cases of simulations within different courses in terms of their instructional versus assessment purposes. And can, can an assessment, or excuse me, can a simulation serve both?

Dave McCool

Yeah, to answer the last one first, yes, it can serve both. And I think for our entire company history, the challenge has been like, when are we teaching? When are we assessing? Like games? You know, the big picture promise of games for education is that they instruct and teach at the same time. But that isn't always easy to put into an environment that has other stuff happening. So our customers who do all those things, you know, McGraw Hill is a big partner, they do a lot of homework assignment work. So you know, it's a graded homework assignment, but it's not really an assessment in that sense. We have partners who use them as formative assessments, as checks for understanding. So like, you know, the end of each section or module, you might, you might take one that they're using to figure out if you've moved on and you understand or not. And then I think to the other extreme, we've got Education Design Lab, which is a partner in the durable skills space, is using it actually as summative capstone assessment to award credentials.

Michael Horn

Oh, that's interesting. And to show durable skills. It's because if you're, I'm going to make this up a little bit. But perseverance or something like that is one thing. If you can show it in a, you know, a self assessment which is extremely unreliable, but if you can actually exhibit that behavior in a situation where you suffer a setback in a simulation, maybe you can exhibit growth over time on that. Is that, is that sort of, or.

Dave McCool

You know, critical thinking is a good example that's easy to explain to people. You know, you, you, you role play someone in a job who's analyzing data, working with co workers and trying to apply critical thinking techniques to solve problems. Like you're, you're presenting these challenges. You're the produce manager at the grocery store. They want to put a kiosk in your section. Should you do it or not? You have to analyze data, interact with stakeholders and then there are skills, you're exhibiting things like distinguishing facts from opinions, providing thoughtful analysis, identifying core issues.

Michael Horn

So yeah, and so within different subjects, I mean you could in some ways simulations, particularly with the scalability now of AI, I imagine could actually uplevel the quality of assessments trying to get at these things from the multiple choice sort of short answer land to something much more immersive, context based, etc.

Dave McCool

Yeah, yeah, because we've got, I think we've got kind of the uncanny divide right now between how good can an auto graded assessment be or how authentic versus how authentic can a human administered assessment be? There's a big gap there today and we're always been on the side of the auto created, pushing it towards the human. And I think AI really helps you move that bar quite a bit.

Michael Horn

That's really interesting. All right, I know you're able to actually show maybe something, but I would love to show our audience some of what this looks like on the ground so that they can really feel what these simulations are.

Dave McCool

So my plan here is to do sort of the cooking show version of demoing where I'll show you the first few steps in the process of building something and then I'll jump to something that was built with that same process worked all the way through. I'm in our tool right now. This is an activity. So footwear impressions that I created earlier today, I'll go into the editor. So what I'm going to do here is basically this is the use case of creating a simulation, homework assignment simulation from a lesson plan. Okay, so in this case I had previously uploaded one of our favorite lesson plans of late, which is this Texas,, so the Texas CTE standards has a course called Forensic Science and there's a lesson called Footwear Impression. So doing footwear impression and analysis is part of doing Forensic Science.

So I've uploaded that lesson plan previously to the call starting. I can come here and I can say this will be a homework assignment. And then what we have is this eight currently this playbook called Create Activity and it's an eight step process. You can see them on screen right now. You could start at step four if you already had learning objectives and you didn't need those extracted from source material. So some people come there. But let's just sort of start. We'll go,

Step one and what we do at each step is we pre populate the prompt which then is combined with all the system text work we've done under the hood to get back the result for this step. So in this case it's going to analyze that document and suggest the learning objectives that my activity should have. And people do have the ability to sort of edit and play around with these as they go along.

Michael Horn

It's the cooking show thing. I'm supposed to say something witty here.

Dave McCool

Right.

Michael Horn

And pops up with the. Yeah.

Structuring Unstructured Data

Dave McCool

And I think what's interesting about this is, you know, someone said at ASU + GSV last week or a week before. This idea of AI helps take unstructured data and structure it. And this has been kind of an amazing realization for us as we've gone through this process is that you, you talk to the AI in natural language and then it does sort of software program things. And so it makes sort of the trying different things, experimenting getting to your goal a lot easier because you don't have to. There's no. You just try it. Right. So I can say, all right.

So there's what it suggested. Evidence, classification, characteristic analysis. So there are the ellos it suggested. If I go to step two. Okay, gradient learning objectives, let's say so.

Michael Horn

You can carve out an exception.

Dave McCool

I can say sometimes it'll suggest something that doesn't work well in the simulation format, accept evidence, documentation. So I say go. So it will go through those, it's going to add those to my activity. So we can say agree. All right, there it is. If I pop over here to the objectives. There they are.

Michael Horn

Oh wow.

Dave McCool

So like this already would have been a lot more work in time for someone one of our customers existing. And then what we do is we go to step three.

Michael Horn

In some ways this makes it way more self-serve. You all are doing probably less on the back end to help them through.

Dave McCool

Yeah, one of the realizations that hit us last year when, when people started actually using this in our customer setting. Actually now some of those activities are live to students was we realized that they never had to learn the tool. They never left this page. They just worked through these steps, played the activity, maybe made some changes which you can do here as well and then they were done.

Michael Horn

So does that lower cost increase output? Yes, yes, yes.

Dave McCool

Yeah, it's lower cost, it's faster output. I think the most important thing that we've noticed is it takes it from not possible to possible. Like we always say, better, stronger, faster. But we're really in not possible to possible.

Michael Horn

And so that's interesting because you had mentioned non consumption to me when we were trading notes about this. It's almost like people who would never have ventured into this space all of a sudden, hey, I can do something and get it, get it up and running.

Dave McCool

Yeah. I mean we have thousands of universities using our product indirectly through partners who've built for them. But it was always, it was always more challenging to get universities, except say if you're Western governors to take on that task themselves. They are building lots of courses. But they always felt the simulation hurdle was a little too high. And this has really changed that for them. So I ran step three, which was basically to create a story and some characters. So if we go over here and look, we'll see now we have characters that have been created.

So Dr. Maya Rodriguez. And then we get these personalities which are really cool because this is how the AI knows how to, how to speak in this character's voice. And I could edit these if I wanted to, but I just won't. Sure. For time.

Michael Horn

Sure. Yeah.

Dave McCool

Now just do one more step before I jump over to the other side. So now this is kind of the build out a story. So I could say build up the story, blah blah blah. I want to modify that. I'll just let it go. And then, you know, five would be create all the materials, create all the data that's going to support this story so that I can ask you challenging questions. Six would be create the questions. Seven is create the activity feedback.

And eight would be create the intro screen. And now we have a full activity.

Michael Horn

Here. It's generating right now. And so we're gonna. And then you're gonna jump into that activity now.

Dave McCool

Jump into that. The one that I built earlier. Yeah.

Michael Horn

Perfect.

Dave McCool

So we can see this. So city crime labs, unusually busy, string of high end home burglaries. That's everyone on edge.

Michael Horn

Early premise. Yep.

Dave McCool

Right. So there you go. So that's the story. So let's pop up one that was already made and see what the student would see.

Michael Horn

I'm just imagining Carmen San Diego back in the day could have been created in, in five minutes. Yeah.

Dave McCool

It's crazy. Yeah. I mean, so you saw that like I just did half the process in about five minutes. It probably would take another five to the other four steps. Yeah, this one I added a few images to. So I Added another maybe five or ten minutes after that process. But in this one, I told it I want it to be in an art museum. So here we go.

There's a priceless Botticelli sketch has vanished. Your expertise is needed. Here's what you're going to do. Here's your role. I'll come in, set my character.

Michael Horn

Yep.

Dave McCool

Here are the people I'm going to work with.

Michael Horn

Wow.

Dave McCool

Alarm at the museum. Pricessles Botticelli has been vanished. I come up with Dr. Rodriguez to see what's going on. Okay. So we come in.

Michael Horn

And so this could be also the speech. It could be a variety of modalities to interact with it as the learner.

Dave McCool

Yes. Yep, yep. So, yeah, they can voice or not voice. Authors have that choice. And we have as well. I'll turn it off for just a second. Sure. Yeah.

AI as Time-Saving Collaborator

Dave McCool

So. So this data you're seeing on the right here, all AI generated. Created the whole story, created all this data for you, all this dialogue. So I think two things about that. One is that it saves a tremendous amount of time versus an instructional designer or subject matter expert having to do all that, but also provides a collaborator. And, you know, we all work better when we have someone to talk to about the thing we're working on. This actually works pretty well as someone to talk to when you're working on this, which is interesting. Not something we had really thought of beforehand.

I'll just show you what the open response.

Michael Horn

Yeah, let's see it. It's interesting. While we're waiting to come up, I think of all the times I've seen stuff like this that has been super engaging because of the storyline, but how custom and expensive it's felt.

Dave McCool

Yeah. I mean, just a use case here is like, if you really love this pedagogical experience, one of the use cases in the AI is you can say, move this to an auto body shop, move this to a mall, for example, and it can do that. But let's see here. Let's say I think blood seems like a good thing. I might say I think the bloody footprints will be the most useful because they might show us the perpetrator's blood. That was my thought, actually. That's what I thought the right answer might have been when I did this the first time. It turns out it's not.

Michael Horn

I was going to say, are you. What's your criminal forensics background? Interesting. Okay, Right.

Dave McCool

So what's interesting is. So that what Maya just said there was completely generated off of what I said.

Michael Horn

Yep.

Dave McCool

And then the grade, which I got, which I think I got, oh, I got zero out of four. I didn't do very well at all. But then here's the kind of like, hey, here's why you got the score you got. So I think it's really important that learners understand that and also that they can challenge it. So when this is delivered as part of an LMS assignment, there's a challenge opportunity for them to say back to the teacher and the author, hey, I think I should have got...

Michael Horn

This is how I was thinking about it and blah, blah, blah.

Dave McCool

Yep, here's what I was thinking and here's why that should be good. Yeah, so that's, that's the basic experience. You know, you can see over here we've got score categories that are being tracked. There's a feedback screen at the end which gives them a bunch of feedback which we're now generating with AI. But again, just trying to keep making it easier to create these very sort of targeted, authentic experiences for learners.

Reimagining Online Course Engagement

Michael Horn

I'm just blown away. It's interesting. I remember the first online course I ever had the chance to take was I'm going to date myself, 20 some odd years ago when I was, you know, enrolling in HBS. And I don't know if you guys actually helped create it, but it was a stats class and it was all simulation based and I'm just imagining like I thought, geez, if everything could be like this, it'd be amazing. But the other thing that occurs to me is you can also vary the format through this much more easily as well so that you keep it a little bit unexpected, you keep me on my toes. I don't, you know, one of the problems sometimes I think with online courses is yes, it's at my pace and path, but it becomes a little monotonous and predictable perhaps and I sort of the thrill of novelty wears off. There's that opportunity, I would think with this as well, to sort of vary what my interactions are like and learning experiences are like.

Dave McCool

Yes, absolutely. And I think the whole idea is agency. It's really putting you in an active role, not a passive role. Like you are that person. People are asking you questions, you need to react to them. You need to analyze that information and try to decide what the right course of action is as opposed to just consuming the information.

Michael Horn

All right, so as we wrap up here, what should we keep an eye on for in this space? If you put that Gates foundation funded researcher view back on. So not just Muzzy Lane, but just the world of simulations in general, where do you think this goes? Now with AI over the next five-ten years?.

Dave McCool

I think you touched on it earlier. I think more broadening the applicability of these across more areas. There are places like say HVac Training which really need a physical environment. They need 3D stuff. So pushing those AI boundaries to build those 3D assets for you. But I think simulation in my view really should be part of any real online learning experience. And I'll sort of make just a little plug for our AI principles because everyone has to have AI principles. For us it's three, it's to get learners thinking more, not less.

And you could see from that open response I had to think harder than if I had a multiple choice there. To increase academic and contegrity, don't decrease it. And I think again those active learning experiences are harder to cheat on. And third is we're really focused on making the online component of blended learning better, not replacing the in person instructional part of online learning of learning. So I think what we'll see is more complex, more interesting interactions, more subject applicability and just generally just more whether it's us or anyone else. Like there should be simulations as part of every learning experience. They are a great, cost effective way for you to practice, makes you better prepared for assessments, better prepared for in person apprenticeships and internships and all those things. So that's what we'd like to see.

Michael Horn

Beautiful. Hey Dave, thank you so much for joining us. We'll check in with you in a few years to see how that is bearing fruit. But really appreciate the work you all continue to do.

Dave McCool

Great. Thanks Michael.

The Future of Education is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Jeff Livingston, founder and CEO of EdSolutions, joined me to explore the rapidly evolving core curriculum market. The conversation traces how the once-static, “big three” publisher-dominated landscape has fractured because of shifting state adoption cycles, politics, digitalization, and the emergence of new competitors. Jeff explained how the dynamics have shifted from national dominance to regional markets, with digital tools enabling customization and lowering barriers for new entrants. The discussion also covered the impact of organizations like EdReports, new forms of patient capital, and the increasing importance of quality over pure scale or distribution.

Michael Horn

You are joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And to help us think through that today, I am delighted. One of the folks that I've known for many years in the education space who I think is smarter about the curriculum market in all facets of that word than anyone I know is Jeff Livingston. He is the CEO and founder of EdSolutions. Jeff, you've had a long history in that curriculum world, and then now you keep tabs on it and give the market state for everyone and help them think about it. I'm just delighted you're here. It's good to see you, buddy.

Early 2000s Textbook Market Dynamics

Jeff Livingston

Thank you so much. Michael, you know that I am a longtime fan of yours and of this show. Delighted that I get to be on it with you to talk about one of my favorite topics, which is how much the curriculum market is changing. You and I first started talking about it. It's, you know, it's finally changing.

Michael Horn

It's finally changing. That's a good intro, right? Because, like, if we're going to actually help unleash student achievement potential and so forth, what they learn, the content they're receiving is important, it turns out. And as you and I know, like, I think when we first met, it was a GSV, if I'm recalling correctly, you were at McGraw Hill at the time, and I had published Disrupting Class from McGraw Hill, and you were like, this is still a static market, but we see these pathways. And yet the refrain I was always getting was, okay, yeah, there's a lot of noise in the supplemental space, et cetera, et cetera, but core curriculum, basal curriculum, right? Like, the Big Three doesn't change, will not change. And it's changing. But maybe give us, like, the history a little bit, like, who are the big three? Where are they now? Because that's changed a little bit as well.

Jeff Livingston

Let's not name when that was, when we first started having these conversations, but a while ago, say, early in the century, the big three, which, to be honest, Michael was four in those days. But we're fundamentally talking about Pearson, McGraw Hill, and Houghton Mifflin Harcourt. I say there were four because Houghton Mifflin and Harcourt were separate companies at that point, but they dominated all of core curriculum market all over the country. Because what drove that market even more in those days was, was big, large cycle, state adoptions in Texas and Florida and California. So you had to get on the list. You had to make sure once you got on the list you had sort of the marketing and distribution might to compete and only the giant companies, publishers really did in that market. And you know, let's, let, let's talk about the sort of economics of that market, right? When there were four players, you built your program to get 25%. If you got your 25%, everybody got a bonus.

If you got 35%, everybody got a lake house. Right? That's the way this world was. Plus big states like Texas would tell you years in advance how much they were going to buy, what they were going to make their decisions on. You could plan to finance your product development like clockwork. There were big players. Every once in a while a small player might emerge and do a little something and then one of the big ones would buy it. That's the way it worked in those days. And that concentration was reflected in the marketplace.

What's also interesting in those days, Michael, is that there wasn't a lot of really good information about what was actually in the market. The education market was unusual in that way. So at any given point in the early 2000s, at least two, sometimes three different programs were credibly saved. We have the market leading math or, or ela.

Michael Horn

Well, and Jeff, quickly help us understand, like when they're making those claims are they sell like elementary, middle, high school, all of it combined. Like how are they cutting these things?

Skewed Statistics

Jeff Livingston

So you could, you cut it to make yourself look the best. And all the information was self-reported to organizations like the Association of Educational Publishers or AEP, the association of American Publishers Education Division. So you just sliced it the way you wanted to and you could simultaneously be telling the technical truth and you could be directly contradicting somebody else who was telling the technical truth. So you just knew that the big ones, the big companies dominated in one or another kind of. Now what's also important is that the market is such that if you were one of the big publishers and you stumbled and got significantly less than your 25%, suddenly there are three, right? You couldn't make the big investments and not get.

Michael Horn

And that's because of the way scale economics work. Large fixed costs of publishing books and guides.

Jeff Livingston

Guides and so forth, salesforces, all of that. If you made the bet and didn't get your share, you were in trouble. And if you got significantly less than your share, you were really in trouble. Hence there's a company called Houghton Mifflin Harcourt and not a company called Harcourt Houghton Mifflin. Right. It's just, you know, they stumbled and you just couldn't stumble in that world. But what's fascinating is that today it's really, really difficult.

Michael Horn

So let's fast forward into today. Like what? Maybe let's start with those, the three remaining and talk. Because obviously Pearson had a change there as well. Talk about what's changed among those three, and then let's talk about how the entrants have sort of maybe made those changes.

Jeff Livingston

First, let's talk about a change in that market structure. The adoption calendar was sacrosanct. You knew that everybody in Texas was buying math at the same time. You had a sense of how much money they were going to have to spend. It was sacrosanct. In recent years, Florida stopped a math adoption in the middle and started over. California should be in the second year of its math adoption, but it's barely started. That certainty is gone.

And because that certainty is gone, the certainty of financing these big investments is harder.

Michael Horn

What killed that certainty?

Jeff Livingston

The big states and some of the small states fail to understand where their power came from. It came from a combination of having everybody buy at the same time and the certainty. So if California was definitely going to buy in, you know, 2023, everybody could plan for that. When it definitely became kind of maybe then you couldn't plan anymore.

Michael Horn

Yeah. And was that because of politics?

Jeff Livingston

Politics. The politics. The changes in what is considered high quality curriculum, all of that changed such that even the big states are not as certain as they used to be. The process is not as geared towards people who have big lobbying forces, big sales forces and maximum balance sheets. It's not as geared towards them anymore such that now there are some people who. When you and I first started talking about this, nobody would have mentioned that. Now you have to mention. So I think in terms of math, because it's kind of a math cycle.

Texas is doing a math adoption. California is starting one. Florida is going to be doing intervention math here really soon. So I'm thinking in terms of math and. Let's do that. So the first time you and I had this conversation, long, long, long ago.

Michael Horn

My hair was a little darker back then. Yeah.

Jeff Livingston

Yeah. Nobody said Zearn. Nobody said Amplify. Nobody considered Curriculum Associates a major player in those days when I had hair and yours was darker. Right. It could be in those days, but now you can't really talk about the math market without talking about players like that.

Michael Horn

Yeah. So we got Zearn, Curriculum Associates, Amplify. I guess you'd have Great Minds in that list.

Evolving Regional Math Education Markets

Jeff Livingston

Probably Great Minds with Eureka Math, Illustrative Mathematics, lots of places that you just would not have, would have not entered this conversation 15 years ago that you can't have the conversation without now. And I think that's important to think about. Here's the other thing that's happened in this market, and this is, let's call this more a deep cut, Michael. It used to be a national market, now it's a regional market. So by that I mean that the leading math program in the west might barely make the list in the Midwest. And only the south really has the level of concentration that we used to see in those places. And that's because they have more of these state adoptions. And if you win big in a state adoption, you have a lot of market share for a long time.

But HMH Go Math, in addition to EdSolutions, I'm a proud founder of the Center for Education Market Dynamics. I don't run the Center for Education Market Dynamics, but I did help to get it going. And they have some of the best data right now. They did a really important study at the end of last year, 2024, which I think is the most up to date data on this, that said HMH's Go Math had the highest market share in the west last year. It was number two in the south, but number five in the west in the Midwest. Right. And was this that weird? You know, and what, what's happened is that regional dominance has replaced national dominance in this market. Right.

And where you are has a lot more to say today about what programs you have access to than it used to. Because what happened in the old days is you built a program for California or Texas or occasionally Florida, and then you modified it a little bit for everybody else and that was good enough. There's no. That is not how it works necessarily anymore.

Michael Horn

And is that because of the standards. I guess there's a couple things at play, but the standards have fragmented across these states. Politics makes something that's palatable one place not palatable another place. Digital changes the economics of this. What, what all the, all those things.

Jeff Livingston

But my gut tells me that that last one is most important.

Michael Horn

Okay, right, let's dive into it.

Jeff Livingston

So even way back when it made sense to do a South Carolina social studies book, right? Because South Carolina was an adoption state, you can aggregate enough, you could figure out how to make those economics work. An LA County Social Studies book today would be less expensive than a South Carolina Social Studies book was 15 years old, right? And around mathematics or around ELA, you can be a lot more specific as to what you were serving without having to get lots new printing presses and hire new people there. And this is even before anybody has figured out what generative AI is going to do.

Michael Horn

Right? And dramatically lower the cost of content creation.

Embracing Generative AI for Cost-Cutting

Jeff Livingston

It has to. Now I have, you know, I have been leaning into generative AI. I have been asking all the smartest content creators I know to show me how they're using AI to drive down cost for a couple of years. And I still haven't had anybody who I trust as a curriculum developer at scale show me exactly what they've done. But I'm starting to see it now. I've had, you know, people who work out of garages in Palo Alto show me what they have done. I'm like, okay, call me when you built a reading program, right? But there is no question to me that when I was publishing the kinds of things that we would outsource to India, some of those things can be outsourced to generative AI for even less than we outsourced them to India. And with more and more programs, more and more digital, I don't have to print new things if I do something specialized.

So everything is cheaper. So what that means now is that a not for profit company like Zearn can be competitive in every single way in the supplemental meth market with a McGraw Hill or an HMH in terms of putting product out there. Now, HMH and McGraw Hill still have an advantage in terms of distribution and salesforce, but not in building the program. It's not nearly what it used to be. And that means that people have more choices and they begin to make different choices.

Michael Horn

So I want to stay on this one now because that's interesting to me that obviously digital means more customization. One of the things that you said is that these players, I think they all started as in the supplemental market. They're starting to gain steam in the core curriculum market as well. There's some changes there. That means in terms of purchasing behavior, in terms of the importance, I suppose of salesforces and, and go to market and stuff like that. How has that side of it changed to let these folks in?

Jeff Livingston

What's interesting is if we had had this conversation three years ago, the overall nature of it would have been the same, but the intensity would have been different. Right, Because ESSER happened when suddenly there was all this money for lots of districts to try new things, especially digital things. That got a lot of things started that didn't happen before. EdReports has emerged in core curriculum like math and ELA as the clear signal of quality. I say all the time to my friends at EdReports, it used to be my job to persecute the Christians, as it were, that it was my job to make sure for a while that EdReports was not the standard. But you know, the fourth time a big city superintendent said to me, we're only buying EdReports Green, the battle was over. I was a convert, you know, called me Saul of Tarsus, you know, immediately I'm a comfort. And EdReports has raised the quality, set the standard.

But it's also made it clear since that other people can meet it too, right? And I think that. But the money in response to COVID allowed for more curricular experimentation, allowed for more small companies to last longer so then they could get to the point that they could compete with the big. There's also a new kind of capital in the market. I think it's important to talk about a really kind of patient capital that is impact oriented. You know, you and I both have friends at places like the Emerson Collective and like A Street, which are for-profit oriented in this kind of investment, but really dedicated to a set of impact principles as well and extremely patient.

Michael Horn

And that's an important piece. Right? They don't have 10-year funds that's much more evergreen will support you. Even Curriculum Associates before they went the PE route, the owner, right, Rob Waldron, famously had the 30-year contract.

Jeff Livingston:

Exactly, exactly. And that is a different thing because what used to happen is say 15 years ago, you and I wanted to start a big publisher. We might convince somebody to fund us such that we could compete one good time in one good market. But if we stumbled, we were done. Nobody ever heard of us again. Amplify can stumble in California and still live in Florida because they've got some of this patient capital there. And great minds can stumble and still live. Those are new things, right? You don't have to get it right completely the first time in order to be a real player.

Shift in Publishing Capital Dynamics

Jeff Livingston

If you've got the kind of patient capital that can keep you in the game, and that is something that's not, that wasn't there before. Plus one more thing. If we had had this conversation 15 years ago, all of the big publishers were independent, were independent companies, public companies. Today none of them is. They're all private equity owned. And so they have responsibilities to pay back the loans that were taken out to buy them, that restrict their area of movement too. So you've got upstarts with patient capital and traditional dominant players with less patient capital. And, the result is finally the dominance that used to be experienced by those big players is, is, I mean, nearly gone as dominance, but certainly under threat.

Michael Horn

Well, so maybe let's stay there for a moment, which is if you look at HMH, McGraw Hill, Pearson, I guess Sage. Right.

Jeff Livingston

Savvas.

Michael Horn

Yeah, Savvas.

Michael Horn

Wow, I just messed that up. We'll leave my mistake in. And so, you got those big three, right? Where like what are we talking about in terms of market share for those players? What do you, you know, forecast for their, for their prospects?

Jeff Livingston

So, you know, it's hard to answer that question because we're in the middle of a big math swing and anything I say today.

Michael Horn

could be totally different in a year. Yeah. Okay.

Jeff Livingston

I think the way to think about it is, remember I told you that it's more regional now than it used to be. It used to be a national kind of a thing. Only in the south in math, in core math, does any one program have 20% or more. Right, right. Only in the south is anybody even that big. So the field is much bigger that one in the south as I recall at this point is Envision Math. Houghton Mifflin's Envision Math is slightly above 20%. And the last things that I have seen from the center for Education Market Dynamics, nowhere else is it even that high.

The dominant market player is between 15 and 20 in every other region, whereas 15 years ago there were three above 20. One of them might have been above 30 in the world. So they just don't dominate the market anymore.

Patient Capital's Role in EdTech Disruption

Michael Horn

One of the questions I'm curious about is all the ones with patient capital that you named. I think maybe one exception, but I think most of them started in the supplemental market, built up a good book of business on top, and then they had the revenue plus patient capital, could invest some in creating a full core curriculum. Is that the story? Is this a disruption story in terms of like we met the EdReports bar and now we're lower cost with digital, like what's the value prop and what's the story?

Jeff Livingston

So I don't see people necessarily competing on cost yet so much as competing on quality. What the Amplify’s and the Great Minds of the world say is our math program is better than the big publishers programs. And here's why. And here's what EdReports said about ours. You can read what EdReports said about theirs. And here's what EdReports didn't say that we also think is important. And obviously the big publishers can make that argument too. But now everybody can really gain access to that.

Now eventually somebody's going to do it on price, too. But that's not what I'm seeing in the market yet. It's not price. It is who's got the best math and for who. Right? So someone is going to say, we are better for Spanish dominant immigrants in California than these other guys. Here's why. And if they beat that architect successfully, they're gonna win.

Michael Horn

Right? I know there's a lot of criticism building of EdReports of. It talks about the alignment, but maybe not the research or. Or that sort of segmentation that you just did there.

Jeff Livingston

EdReports is a revolution that has been good for this market, there's no question. But the claims they make are very, very carefully calibrated. Right. This is what we're measuring for. You can read the long form, you can see it. Out in the real world. People in the market assume that it says more than it does. Right.

I have had conversations with big city superintendents when I say things to them like, so how do you know that your core reading or math program are culturally relevant enough for your students and teachers? Oh, EdReports Green. And I'm thinking, I promise you nothing.

Michael Horn

That ain't saying what you think it said.

Jeff Livingston

That's not what they said. They're not making that claim. So the market is evolving in that way, and other measures of quality will emerge. EdReports is kind of table stakes. It's about stakes standards. It's about the quality of the underlying curriculum. And it has done a great many things. It's also begun to layer on some ELA supports and some other things, too.

But it has established the foundation that there are definitions of quality that can be defended, that can be measured, that can be put out in the world. And I think that is a great thing. That has been a leveling function for this market. Right. All before when I was at McGraw Hill, I could say, We're McGraw Hill. We've been doing this for 150 years. We know how to do this. Trust us and only us. Now people are saying, don't just trust them.

You can trust us, too. Look at what EdReports said.

Michael Horn [

And there's a third party in the market that helps it.

Jeff Livingston

That's right. That does help a lot.

Michael Horn

All right, so let me ask you this question as we start to wrap up here. I could go on for a while picking your brain, because I'm learning a lot.

Jeff Livingston

You know I could go on talking, so.

Michael Horn

I know, I know you can. But let me ask this question. As you play it forward, as you look at the market right now, what do you think the makeup of it might be? I mean, I get it, it's dangerous, but let's talk more generalities. Five, ten years, something like that, maybe. Like, are certain players going to drop out of this market?

Jeff Livingston

What I think, I think that there are too many big core curriculum providers in the world for this market to sustain long term. Not all of them are going to survive the next five years. What is revolutionary is that I think some of the ones that might go away might be some of the big publishers. The combination of the big publishers having impatient capital in the form of private equity and so many of the upstarts having patient capital means that you don't automatically say that a newer arrival like Amplify isn't going to survive, but an older company like McGraw Hill is. There's no reason to say those things. This is going to be a good old fashioned capitalist slugfest and we'll see who emerges. But I gotta say this. If you're one of the traditional ones and you don't emerge as top two in California or Texas or Florida, I think it's hard to see you're surviving as a big player now.

It is, it's really big stakes and the capital is impatient. Right? They're not gonna, they're not gonna give you more money to do that. They have a limited view of when you need to start working. And so I think this is an exciting time for the market there. Now I don't know who's going to stumble, but I think somebody's gonna stumble. And I think this is going to be a fascinating time for the market. Now I will say this too. When I was at McGraw Hill, there was a joke going around.

Future of Publishing and Education

Jeff Livingston

How do you announce that you are going to retire soon? You let somebody call you a publisher in public. So I hear my friends at the traditional of publishers, content creators, learning companies, whatever the euphemism of the moment is saying, Jeff, we're not in that business anymore either. That's not what we do either. HMH of today is not HMH of 15 years ago. McGraw Hill of today is not McGraw Hill of 15 years ago. And Savvas of today isn't even called what Pearson was called 15 years ago. So the old model is gone, new models are emerging. What label is going to be on the dominant models? That is what I think is going to change that more and more digital, more and more specialized, more and more coherent, more and more focused on more and more individual students and student populations needs.

I think that is what's going to dominate and it's an exciting time for me because I think the curriculum is getting better for the kids. We're getting better options and the game is being played for the right stakes. Who is going to do better for the kids? Not who has the biggest marketing budget, who has the biggest salesforce, who has the best lobbyist.

Michael Horn

Well, so that's promising. I want to actually ask you one more question because you went there. Something that I am seeing and I'm curious if you are, is of course there's a big and you would know more than me. So let me say that there's a big move to the high quality instructional materials content, making sure that there's coherence across the curriculum. Right. So what you're doing in social studies reinforces English Right.

Like more of this stuff. All well to the good. I'm a big fan of it and it seems like part of that HQIM, if you will, high quality instructional material market. There's a little bit of this push against the personalization that is possible in the sense of we're all going to be lockstep scripts for teachers. We're all doing this and I see it in some classrooms that have adopted digital curriculum. And I'm curious, like your take on that. Do you see that? Is that. Is that just a part of this? It's not the whole thing.

We're going to blow past this because. Because I'm really worried about it. I'll say that, like I, I feel like you got some whole class people who, I get it like it. We weren't really personalizing before. People weren't changing instructional models, gave it a bad name and the quality wasn't that great. But if you get the quality better and coherence to your point, like, you know, Jeff, if I can adapt for your background knowledge and you know where you're coming from and to get the point across, I'd be an idiot not to do that based on the learning sciences.

Jeff Livingston

Michael, I understand the fear, but the combination of the technologies and the higher quality means that a whole lot of things are going to be tried and we're going to know what works. Now, this podcast is not about how we're going to know what works, but.

Michael Horn

A big question at the moment. Yeah. As we're recording it, we have no.

Jeff Livingston

Idea who used to track what works.

Michael Horn

As we're recording it. We have no idea.

Adapting Education for Diverse Students

Jeff Livingston

Yeah, right. But a lot of things are going to be tried. Some teachers are going to try to individualize for 28 kids. Some teachers are going to try to, as much as possible, keep the whole class together and moving, and we're going to see what works. I'm excited about it, and I'm excited about it in large part because students who look like me were rarely the ones who were considered the norm and had things tailored to. And now students who look like me or students who speak the language that is spoken in my home at least half the time have a shot at being the focus in some places, and we'll see if that works better. I think it will work better.

Michael Horn

Well, that. That's exciting. Right? Because the economics have changed where you can make money targeting. Targeting. Wrong word. But marketing to, like, creating products for.

Jeff Livingston

That's exactly right. Here's though, here's the other side of that, and this is kind of a little bit going into the AI portion and we can have that conversation another time. There are engineers who, in education technology, are building for themselves and their kids, and they liked learning but hated school and found their teachers an impediment. And some of those engineers are trying to engineer out the humans who kept them away from their experience. They were weird when they were in school, and they're still weird. Most people are not trying to engineer out the humans in their education. So we're going to do too much.

Michael Horn

and then that'll be a thing also.

Jeff Livingston

Yeah, right. We're going to do too much of that and pull back. I don't need every problem set in algebra 1 to know that I grew up Black and Baptist in South Carolina. I do not need that every single time. In fact, I need to be a part of a community that I feel a part of and I feel seen in. But I want to know what other kids are learning too, and I want to do that. It'll take us a moment to get to that point because people are really focused on just giving Jeff what he wants all the time, every day, just that, and then everything will be great. I don't think that's.

That's true. That's the other social construct, you know, better than anybody else. People want that, and the programs will reflect it, the choices districts make will reflect it. And ultimately what works best for kids will reflect it too. So I am glad that we have disrupted the old system that was much more monolithic, that 1,000 flowers are blooming and that we're not. We don't know that the roses are going to win this race. I think those are good things because this uniquely American mixture of competition and pedagogy in the education space, you know, you go anywhere else in the world and there's a national curriculum, there's not much competition. I actually like this unique American competition and what it can do.

Emerging Math Education Innovations

Jeff Livingston

And we're going to see over the next few years, especially in math, we're going to see it do its thing and we're going to have very different conversations. We're going to say, did you see Jeff and Bubba's Algebra 1 program come out of nowhere and take 10% in Florida? What are they doing? And that is going to be a beautiful thing for the market as the market is finally in a place to absorb it and help kids. As long as we don't burn the house down in the meantime, I think we're going to be very happy about the choices that are emerging.

Michael Horn

That's why you are the man. Jeff Livingston, founder, CEO of ED Solutions, thank you so much for joining us and shedding light on a market that is at last changing in a dynamic way. Really appreciate and all you tuning in. We'll be back. Next time on the Future of Education.

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