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Fred Wilson Conversation
32 segments available
Investor Fred Wilson talks about opportunities for education startups as part of the EdStartup MOOC.
Segments Timeline
Fred Wilson's Journey into Venture Capital
Fred Wilson shares his background and journey into venture capital, detailing his education at MIT and the University of Pennsylvania. He reflects on his early career at a venture capital firm, where he learned from experienced investors, and how he later founded Flatiron Partners to invest in internet companies during the rise of the commercial internet.
"all right we're on the air well welcome everyone to another week of Ed startup 101 glad to have you all with us for today's conversation with Fred Wilson um want to make sure that everyone remembers t..."
The Rise of Flatiron Partners
Wilson discusses the founding of Flatiron Partners and the investment strategies that led to significant investments in internet companies. He highlights the challenges and successes of investing during the internet boom, including the lessons learned from both successful and failed ventures.
"I'm a venture capitalist I've been uh doing Venture Capital as a career for now 25 years I've worked in three Venture Capital firms the first uh Venture Capital firm that I went to work for I joined w..."
Transition to Union Square Ventures
After winding down Flatiron Partners, Fred Wilson explains the transition to founding Union Square Ventures with his partner Brad Burnham. He elaborates on their investment thesis and the focus on internet business models, emphasizing the importance of learning from past experiences in the venture capital landscape.
"in about five years between 1996 and 2001 and uh made a lot of money lost a lot of money backed a bunch of stupid ideas backed a lot of smart ideas and um and in the process learned a lot about what U..."
Investing in Online Education Startups
Wilson addresses the role of investors in online education startups, discussing companies like Codecademy, Duolingo, and Coursera. He explains the challenges these startups face with freemium models and the importance of scaling to achieve profitability, drawing parallels with successful tech companies.
"have uh two other early stage Partners here andyan Albert and uh an administrative partner John butrick who also helps us make some more later stage Investments and uh uh we um uh are you know active ..."
The Investor's Role in Freemium Models
In this segment, Fred Wilson elaborates on how investors can support freemium business models in education startups. He discusses the necessity of funding during the initial years of negative cash flow and the importance of patience in allowing these companies to grow and develop sustainable revenue streams.
"really well to to one of the questions that was asked so one of one of the first questions you know has to do with uh companies like cod Academy and Oto and dualingo and corsera and um and you have in..."
Lessons from Successful Tech Companies
Wilson shares insights on how successful tech companies like Twitter and Google navigated their early stages without immediate profitability. He emphasizes the need for venture capital to support education startups in achieving scale and developing effective business models over time.
"of uh funding the the negative cash flow the burn rate is a term that we use in the startup World it it takes Capital to be able to fund these businesses through uh three or four or five years of nega..."
The Future of Coursera and Business Models
Fred Wilson discusses the evolving business model of Coursera, comparing it to open-source companies like WordPress. He highlights the importance of having a flexible approach to monetization and the role of venture capital in helping these companies reach the necessary scale for profitability.
"there's lots of I think analogies that we can look at if you look at something like corsera that reminds me a lot of Wordpress and that um WordPress is obviously available for free uh to be used um as..."
Building Sustainable Business Models
In this concluding segment, Wilson reflects on the importance of developing sustainable business models for education startups. He shares anecdotes from his experiences with various companies and emphasizes the need for a strategic approach to monetization as these startups grow.
"the scale that it needs to be able to make that model work and uh so that's how I think about it and you know I think what we can do in addition to providing capital in the Venture Capital industry is..."
Evaluating Investment Opportunities
Fred Wilson discusses the process of evaluating potential investments in education startups, emphasizing the importance of a strong management team and the ability to generate sustainable revenue. He reflects on the initial confidence in various startups and how their attractiveness evolved over time.
"preference for any of these and we had a conversation about it and there were certainly some that they liked better than others and um over the court but we all had confidence that any one of them cou..."
The Story of MongoDB and MapQuest
Wilson shares an anecdote about MongoDB's role in the relaunch of MapQuest, illustrating the importance of backend technology in successful online services. He highlights how a commercial relationship with MongoDB became essential for AOL after the service's launch, showcasing the potential for education platforms like Coursera to adopt similar models.
"looks a lot like an open- Source software company um and you know I love to tell the story we have a portfolio company um called uh tenen which makes a uh a nosql database called mongod DV and I remem..."
Coursera's Business Model Speculation
In this segment, Wilson speculates on Coursera's potential business model, suggesting that universities could leverage the platform to create their own online courses. He discusses the possibility of universities forming commercial relationships with Coursera, similar to open-source models seen in other industries.
"company because you we can't have a we can't have the entire map quest service live on the internet without you know a commercial relationship with the people who provide um the back end and so obviou..."
The Future of Online Learning Platforms
Wilson advises university administrations to support multiple online learning platforms rather than standardizing on one. He believes this approach will foster competition and innovation, allowing faculty to choose the best tools for their teaching needs while maintaining a consistent user experience across platforms.
"know why there's a whole lot I don't I don't feel like there's a whole lot of mystery around that in my mind anyway interesting I I mean some of the conversation in in our community has uh kind of spe..."
Encouraging Innovation in Education
Fred Wilson argues against exclusivity in educational technology, suggesting that universities should embrace a variety of tools to encourage innovation. He compares this to the blogging landscape, where multiple platforms coexist, allowing for diverse educational experiences.
"environments um and that they shouldn't standardize on any one provider because I think that uh we'll see a number of business models emerge um there'll be some open- Source business models there'll b..."
The Role of Startups in Education Technology
Wilson emphasizes the need for startups to provide user-friendly, cloud-based solutions that can be easily adopted by faculty and students without heavy IT support. He highlights the trend of users bringing their own tools into educational environments, which can lead to a more dynamic and competitive market.
"hyper competitive market and so my advice to the university presidents and their administrations is that they should support multiple tools and let their professors and faculty members use any number ..."
The Shift Towards User-Driven Tools
In this segment, Wilson discusses the emergence of user-driven tools in education, citing examples like Edmodo. He explains how teachers and students can easily adopt these platforms, fostering a more engaging learning environment that doesn't rely on traditional IT support.
"that people are thinking about you know business models and maybe getting concerned about uh business models but I think that's also opportunity for entrepreneurs to come in and compete on that basis ..."
Empowering Faculty with Cloud Solutions
Fred Wilson discusses the importance of providing cloud-based solutions for educational institutions. He emphasizes that startups should create tools that faculty and students can adopt independently, without heavy IT support, to foster a diverse ecosystem of educational tools. This approach aligns with the growing trend of enterprise software that users can easily integrate into their workflows.
"because the reason that universities double down on a single system is because the office of it on on campus only has so many people and can only support uh you know so many services being offered so ..."
The Rise of Edmodo in K-12 Education
Wilson highlights Edmodo as a successful learning distribution system in K-12 education. He explains how teachers and students easily adopt the platform, likening its user experience to Facebook. With millions of active users, Edmodo's free and user-friendly nature allows it to thrive without traditional IT support, demonstrating the power of grassroots adoption in educational technology.
"things like Dropbox and you know Google mail and Google Drive and and Yammer and you know it's a whole host Skype and Google Hangouts and and a whole host of services users are bringing these into the..."
Navigating Institutional Relationships
In this segment, Wilson addresses the challenges Edmodo faces with school districts wanting to standardize on their platform. He discusses the tension between maintaining a grassroots approach and the pressure to enter exclusive agreements with educational institutions. This reflects the broader struggle for edtech companies to balance user adoption with institutional demands.
"organizations but but just like the tenen story I told about Map Quest um Edmodo gets emails and phone calls all the time from school district superintendents and principals and folks in in the variou..."
Investor Concerns in EdTech Sales Cycles
Wilson shares insights into the investor perspective on edtech sales cycles, particularly the risks associated with selling to school districts. He explains how lengthy sales processes can hinder growth and emphasizes the preference for companies with a bottoms-up selling approach that focuses on direct consumer engagement rather than top-down institutional sales.
"um you know it's just a new mindset that that I think entrepreneurs need to have which is um make it simple make it easy don't make it get involved in the decision-making process and this thing can ge..."
The Challenge of Long Adoption Cycles
In this segment, Wilson compares the lengthy adoption cycles in education to the aging process of premium bourbon. He illustrates how the slow pace of institutional sales can be detrimental to startups, emphasizing the need for patience and a viable business model that can sustain operations while waiting for adoption.
"very difficult to you know you look at the the greatest cost uh in building an Enterprise software company is not building the product it's not supporting the product it's building and supporting a Sa..."
The Importance of Direct-to-Learner Models
Wilson advocates for a direct-to-learner business model in edtech, arguing that serving learners directly can lead to eventual institutional adoption. He stresses that focusing on learner outcomes and engagement is crucial for success, as institutions will recognize effective tools that enhance learning.
"these this friend who's from Kentucky and um he's a um he's an offici a of great Kentucky bourbons and um he particularly likes this Kentucky bourbon called papy something or other I forget the the fu..."
Investing in Outcomes Over Aesthetics
In this concluding segment, Wilson discusses the importance of focusing on educational outcomes rather than just product aesthetics. He encourages startups to demonstrate tangible learning improvements to their users, which can lead to broader acceptance and integration into educational institutions. This approach aligns with his investment philosophy of prioritizing learner success.
"would be something that was a direct to Consumer as opposed to selling through a district or selling through a school or selling through a state office in one of the conversations we had a few weeks a..."
Creating Real-World Learning Environments
Wilson praises Codecademy's initiative to create after-school programming clubs in schools lacking computer science classes. He explains how this approach connects students to real-world environments, which can significantly improve completion rates and learning outcomes.
"familiar with I mean are any of the startups in your portfolio or other startups that you you've heard about as you talk to people are there companies that instead of just focing focusing on making a ..."
Balancing Churn and Value in Education Tech
Fred Wilson discusses the balance between high churn rates in free online education tools and the value they provide to those who succeed. He argues that even with a high drop-off rate, producing competent software engineers can be a worthwhile outcome.
"a job writing software for one of our portfolio companies is very very small so the outcomes um if you measure it that way uh you know as a percentage of the number of people people coming into the sy..."
The Importance of Accountability in Learning
Wilson reflects on the role of accountability in education, noting that structured environments with teachers and schedules lead to higher completion rates compared to fully online courses. He emphasizes the need for motivation and self-discipline in online learning.
"the funnel and don't take any of these percentages as fact like I'm sure the co Academy people are flipping out you know right now because I'm not using the right numbers but but you know I think that..."
Embracing Criticism for Growth
In this segment, Wilson addresses criticism of his firm's research on online education. He acknowledges the validity of the feedback and discusses how constructive criticism can lead to meaningful dialogue and improvement in their understanding of the education sector.
"know at a at a you know a in orders of magnitude higher than a entirely online thing and the people who who really the only people who really succeed in an online only type of situation are these high..."
The Value of Open Dialogue in Education
Wilson shares his perspective on the benefits of being open and transparent in discussions about education. He highlights how engaging with critics can lead to valuable insights and enhance the firm's approach to investing in education startups.
"who owns a restaurant and and he says you know uh his best customers are the people that they somehow messed up with and then they made it right and those people are now his best customers and you kno..."
The Power of Blogging and Community Engagement
Fred Wilson discusses his blogging journey, emphasizing its role in fostering community engagement and lifelong learning. He reflects on the reciprocal nature of sharing knowledge and how it enriches both his understanding and that of his audience.
"you know we you know are trying to defend ourselves or anything look you know we're we're new to this world we haven't been studying it for a decade or two decades and we're trying to be smart and tho..."
What Investors Look for in EdTech Startups
In this segment, Wilson outlines what he seeks in education technology startups. He emphasizes the importance of having a tangible product that demonstrates value, which is crucial for attracting investment in the competitive EdTech landscape.
"have it you know and I wake up in the morning and I try to post before 7 in the morning because then you know I wake up the family walk the dog at least today I walk the dog normally my wife walks the..."
Ripe Opportunities in EdTech
Fred discusses current opportunities in the education technology sector, highlighting areas like credentialing, accreditation, and peer-to-peer learning. He emphasizes the need for accessible learning tools and the potential for crowdsourced educational content.
"video uh so a social streaming video service neither those were new ideas and neither of those were UniQue Ideas there were literally hundreds of entrepreneurs who chased those very same ideas long be..."
Empowering Community Learning
Fred Wilson talks about the vision of community-driven education, where every individual can contribute as a teacher. He mentions platforms like Skillshare and the potential for crowdsourced content creation in education, emphasizing the value of diverse expertise.
"solved um another area is peer-to-peer uh and there's there's a bunch of people doing this already I mean at some level Wikipedia is this um uh but you know trying to uh you know leverage webscale uh ..."
Encouragement for Aspiring Entrepreneurs
In his closing remarks, Fred encourages aspiring entrepreneurs in the education space to pursue their passions and bring their ideas to market. He reflects on the effectiveness of tools like Google Hangouts for interactive learning and teaching at scale.
"produce this kind of content and there's some there's some great stuff out there um in terms of like uh uh you know that that take this sort of crowdsourced peer produce model um you know in the uh yo..."