Why Are There No Large Market Cap Companies Globally in Edtech?

Goldman Sachs, in a note this week, via India Dispatch: There are various reasons that explains this: (i) A large part of the global education spend goes towards formal education (schools, colleges and universities), which are typically either run by governments or are not-for-profit institutions;

(ii) It is difficult to replicate education quality at scale in our view, since most teachers would have a different pedagogy, and thus standardization is harder to achieve vs that in other internet categories;

(iii) Education is fragmented - it includes various fields (schools, undergrad courses, medicine, engg, management, etc.), each with their own curriculum, and the same being vastly different across countries globally; this makes scalability difficult beyond a few certain specializations and regions.

Additionally, we believe the ability for online education to capture a sizable value share of supplemental education is limited since the perceived value of offline, including that from community, in-person engagement and doubt solving, rigour, etc., is typically higher.

However, we note that before China's double reduction policy in 2021, TAL and EDU had market caps of up to US$50 bn; these companies were mostly domestic focused and on the K-12 tutoring segment, which has large volumes. Similarly in India, Byju's reached a peak valuation of US$20 bn+ (link; again, focused on K-12), before issues around governance etc. impacted the business.

Because nobody likes returns in the far future

[Mr. Dollar Ton]

Especially not from "human capital".

The people are there to be squeezed dry quickly.

The faster and drier, the better.

High Costs

[Luthair]

Software is profitable because once its made copying is virtually free; students need access to teachers not a digital lesson plan.

There's also ...

[cascadingstylesheet]

... nothing terribly unique about "edtech".

Videos. Text. Forms. Reporting. Not too difficult to just use generic parts to assemble a whole.

Ed tech kills itself

[rayzat]

I've architected a lot of backend HW for Ed Tech companies but have never really been involved on the SW side, but I have seen the same story play out dozens of times in the past 20 years. Some SW comes out, learning assistance, management, or whatever and they make so much profit. But, they hit these walls either because they complement an existing system, run into another competitor, or just run out of mindshare. Then they either acquire or get acquired to fill the gap and load up heavily on debt. They have or are acquiring massive free cash flow which can easily finance the debt. They do the acquire be acquired thing a couple times then they hit a bump, then someone else steals the air out of the room, and instantly the free cashflow stops and the debt crushes them. Then some other company comes in doing the same thing, thinking they're the most innovative company around and it's really the Xth spin of the wheel and a matter of time before the acquire be acquired to bankruptcy cycle starts again.

Benesse monopolizing EdTech in Japan

[Anonymous Coward]

You don't want a company like Benesse in your country because it only drives up the costs for education while it lowers the quality for public education.

Edtech is too limited

[gweihir]

At this time, good teaching either comes with a good teacher (so no need for edtech) or a learner that can learn self-directed (not many of those around, but still no need for edtech).

Re:

[jacks smirking reven]

I agree this is the answer, teaching is a skill and a very human-centric one. All the tech in the world can't matter if you don't have that foundation of good teachers with good curricula in place.

Re:

[tlhIngan]

Or you have a monopoly.

College Board is doing quite well actually. They only reason they don't have a "market cap" is because they are a non-profit that owns many luxury hotels and other things because they're making money hand over fist.

The problem is they realized that profits in education are considered "bad". How often have you heard about well paid teachers in well funded schools that have money to do anything and everything? Outside of private schools, it basically never happens.

Meanwhile, there is m

Enshitification strikes

[gtall]

Companies these days are engaged in enshitification of their products. The company starts out with grand schemes, attracts investment, delivers products, saturates their market, etc. And then the invested money wants better returns. So companies, being run by MBAs, turn to what they know: resize the product down so that it costs less to produce figuring customers won't notice and/or customers are already enthralled with their product. Customers get disillusioned, company investors double down on enchitification, morale in the company drops, etc. Also, their clientele tends to age out, and so their clientele must be constantly replenished. That does not easily fit on Excel spreadsheets so MBAs never see the issue. The end is inevitable. The parent company, which bought out the ed company to make it their sprog company and ready to rake in the profit they were making when the ed. company slapped on the lipstick to make themselves pretty for their suitor, knifes the sprog to stop the bleeding.

Don't care if I'm modded down for this...

[Pollux]

...but why is this headlining on Slashdot?

1) The entire "news" blurb is rooted in a single Substack comment from "Manish Singh", who appears to work for "India Dispatch", which, despite the name's suggestion that it's a news publisher, is as best as I can tell, an independent commentary blog not associated with any major news publication. [indiadispatch.com]

2) There are no credited sources of reference from his written piece. He claims his information is from "Goldman Sachs", but Googling sentences from his "quoted material" turn up nothing on Google or Bing except for his posting and other websites that link to it. The only place in what he writes that says "link" is not clickable, as what is posted is not hyperlinked plaintext, but rather a .JPG copy & paste of the supposed Goldman Sachs quote.

3) Given today's age of AI slop, the fact that this "Goldman Sachs" article is posted as a .JPG makes me all that more suspicious that this information was taken from ChatGPT instead of an actual article, especially given that the article reads like ChatGPT.

I would hope that Slashdot editors would do some more due diligence in the future to verify information provided in story submissions before posting content like this to its homepage.

Thank God.

[kertaamo]

Thank God our education is not run by some huge corporation like MS or Meta.
Can't we just have schools and teachers, universities and profs, like we had in the my day. A system that obviously worked really well, it educate the people who built the world we now live in.

Because "EdTech" is not a word

[gurps_npc]

Similarly, there are no large companies involved in MonkeySlaves, ChocolateHelicopters, or ShoeRestaurants.

EdTech is a made up word by someone trying to convince people that this niche business is somehow more than it is.

Is there an education industry? Yes. Do they use technology? Yes. But the market is small.

Here are large sectors:
Petroleum
Transportation
Agricultural
Telecom
Internet
Software
Hardware

Notice how they are all single words? Because their industry is large enough that one word is used to descr

Cheating

[buzz_mccool]

There are no large market capitalization companies in education technology because nobody has solved the problem of how to remotely proctor tests and exams.

Re:

[kwelch007]

Sure they have. Don't offer remote exams or tests.

All that said, I never really understood the point of exams and tests that weren't at least open-book. In real life I use resources for almost everything I do at work, even if I've done the task a few times before. I never understood how rote memorization was particularly useful relative to the skill of being able to research and find solutions to previous unencountered problems.

For one, profits

[whitroth]

Which translates to ever-increasing costs to the purchasers, to benefit the company's ROI.

For another, people want to be more involved with their own kids' education. And companies want to treat users - the kids being educated - as a spherical human of uniform density.

because...

[groobly]

Because EdTech doesn't actually solve any problems, or relieve any pain points.

EdTech is hard and the people are harder

[Somervillain]

EdTech is hard. It's hard to measure success, so it's just a bunch of assholes with theories and whoever can argue it most persuasively wins. It's also largely funded by textbooks, which give a lot of profit for little effort. Some profession puts a fuckton of work into a book once...then they keep reprinting with minor updates for some OBSCENE prices while maintaining high end real estate in the best cities in the world to employ some of the most clueless morons you've ever met.

I used to be one of the those clueless morons. It was a huge recession, I was very young, and I moved to a new city and they offered me a job. I loved my team, so stayed, but hated every non-engineer I had to deal with. They were insufferable, especially the SMEs...the English Lit ones were obnoxious in stereotypical ways, but even the math ones were just as pretentious...and FUCKING clueless. I asked one how to solve a problem and she was clueless how to start. She was faking it, just like everyone else.

However, while working there, the vision was disjointed, projects started and stopped on whim. No one knew who was paying the bills or if our stuff actually helped. From what I could tell, it was just some extra questions college students got as a "benefit" with purchase of their textbook, but when testing my software, I tried it with some courses I took in college and it seemed anything but helpful.

OK, so maybe I just worked at a bad place. Then look at Duolingo...it's horribly ineffective. It frequently repeats words in exercises, has constant errors and I am taking Spanish, probably the 2nd most popular language on the platform, literally the language of the founder. And...it's, by far, the most popular learning software platform in history. It gets consistently good reviews...yet use it for awhile and anyone can see dozens of obvious flaws...like word match exercises that FREQUENTLY repeat words on the same screen...that you've consistently already gotten right.

Education...a great idea, but terrible execution....eLearning doesn't really work very well. There are obvious issues on pretty much every platform I've seen, but here's the bigger issue. If I made the PERFECT learning platform, how could we prove it? It's VERY difficult to measure outcomes. It's VERY difficult to evaluate how much you've learned...and when you do learn, was it from the platform?...did you learn it elsewhere? ...did you just guess really well?

Re:

[parityshrimp]

I still feel like books are an amazing educational technology. Whenever I want to learn something new, my first preference is to get a good book on the topic. I appreciate books so very much.

So maybe newfangled ed tech stuff is hard because they're competing with one of the greatest inventions of the human race.