Tuesday, January 31, 2017

Is EdTech Bust?

EdTech was one of the fancy terms that took hold in the last decade. It succeeded 'e-Learning', which started the journey around the time of 'e-Commerce', but failed to get a second life in the Web 2.0 world. The reason for e-Learning's failure and e-Commerce's resilience is perhaps instructive: Despite the bold claims, there were no Amazon or eBay of e-Learning.

EdTech gave a new lease of life to the idea of technology-delivered learning. EdTech stuck, and terms like mLearning did not go anywhere, partly because of its scope - it embraced everything - and partly because of fashion, and its more successful cousin, FinTech. However, the question now is whether EdTech would be able to succeed like FinTech, whose impact is genuinely visible (as is e-Commerce's), or would it have the same fate as e-Learning, an unmourned passing away?

Technology Industry and its investors are adept at making up terms and cooking up market sizes. The reason they make up terms because they have taken the marketer's advice - when you can not be first in a category, create a new category - to heart. The race to become first and novel drive them often to invent the most nuanced of the differences, and then claim it to be the world-changing differentiators. But, in most cases, even that is difficult - and there, they fall back on purely marketing invention of terms: A new name means a new me, right?

However, a name is not enough by itself, and here, the Market Size comes in. Once one has invented a new term, then they make up a market size. It is not meant to be a wilful deception - the market size calculations are based on reasoned assumptions about the future, and these 'reasons' are usually assumptions in themselves - but these are usually meaningless unless one is ready to accept all the assumptions that come with a claim of 'market size'. Except the savviest and those playing against the markets, investors and entrepreneurs love to accept market size data as published - dismissing all the questioning as 'too academic' - and hardly anyone ever looks beyond the headline figures and into the assumptions. 

It is not to say that the market size predictions do not vary. A simple Google search right at this moment tells me that the Global EdTech market size will be $93.76 Billion by one estimate, and $252 billion by another estimate. Of course, the difference comes from what means by EdTech (what does it include - technology, data, content, services etc) and what assumptions one is making about growth globally (student numbers, expansion of self-learning, institutional growth, government spending etc). But there is a lot still goes unsaid - like why one assumes what one is assuming. And, in this, remains the problem - as investors herd into one fashionable thing after the other, till the next thing comes along.

To understand EdTech therefore, it is better to start with its cousin, FinTech, The global growth of FinTech has a lot to do with the global movement of money, particularly payments, and at the same time, all the clever inventions around the regulatory systems of different nations. Besides, FinTech is aimed at markets of privately owned institutions, which are competing with one another, and also have a big scope of turning non-consumers into consumers, the so-called financial inclusion opportunities. And, finally, FinTech's growth is also driven by a change across the sector, both in response to the shock of the 2008 Financial Crisis and because of the changes in habits driven by technologies, like e-Commerce and mobile communication.

It is a good starting point because this shows the key challenges of EdTech. First, Education travels less well than money across the border.Second, instead of a crisis, Education worldwide is going through an expansion, usually backed by strong demand, and this is a disincentive for change. Third, the customers of EdTech are usually tradition-bound schools and colleges which are usually locally defined and competitive only in a narrow sense of the term. Fourth, the educational inclusion agenda is yet to have a funding model attached to it and global education remains perennially underfunded. The commercial gains of Financial Inclusion are direct, as people turn into consumers for the organised sector; such gains for educational inclusion is at best indirect, and could even be disruptive for established players. And, finally, the habit-forming technologies in Education are usually not counted as EdTech - think Skype, Google and YouTube - and they do undermine, rather than bolster, the companies trying to create business models specifically for EdTech.

The last point, which may seem obvious, should also illustrate the problem of labelling. It also presents a parallel to the narrative of e-Learning, which failed to get anywhere even when digital media exploded and mobiles took over the world. The problem of e-Learning, and now the problem of EdTech, is that this assumes, somewhat, that Education, its process and format, would remain the same, and would only get augmented by technology. This may be a definitional point - this is why one may not label Google or Skype as EdTech - but this is why e-Learning failed to match to match the success of e-Commerce, and conversations in EdTech lacks the world-changing aspirations of building an alternative currency, or letting people without bank accounts to save a part of their earning, or making car ownership redundant.

This is why most EdTech is just a clever tool or a nicer content. The trouble is - the rhetoric of other sectors have been borrowed, and often, one meets people with one tool that claims to solve all problems. Like market size projections such a pitch is simple, and utterly misguided. And, like all those new labels and market size projections, this ensures a bubble, the creation and invariable bust of unreasonable expectations.

So, yes, EdTech is bust. The investors are already cautious, and the next global economic wobble will make EdTech companies tank completely. One can be certain that a new label, and more market size projections, are in the works. It is time to get into the new boat, as the flood is coming.




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