Jan 10, 2019 · 42m · a16z
What's Next for Education Startups
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this a16z hallway discussion, partners Lee Jin and Darcy Coolican explore how edtech startups are transforming education by unbundling traditional higher degrees, pioneering Income Share Agreements, and building innovative K-12 and early childhood platforms.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 3.3 Guest teaching 3.2 Guest disagreement 0.5 The host pushing back 0.1
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 31:38 Li Jin challenges the consensus on ISAs
Li Jin directly dissents from the prevailing optimism around Income Share Agreements, noting that ISAs can pit an institution's financial drive to maximize income against a student's desire for mission-aligned work.
Hardest push from the host ▶ 11:23 Frank probes the vulnerability of tier-two and tier-three schoolsFrank Chen pushes the panel to move beyond elite brand-name institutions like Harvard and Stanford to specifically address the economic threat facing lower-tier universities.
Biggest teaching moment ▶ 2:30 Li Jin highlights the student vs president survey discrepancyLi Jin educates the host by citing empirical data from UCLA and Pew Research showing that 80% of students attend college to get a job while only 50% of university presidents see job placement as the primary goal.
The host holds their own ▶ 27:35 Frank cites real-world tech hiring criteria over accreditationFrank Chen asserts his own expertise in venture startups, explaining how tech employers actively ignore formal accreditation in favor of GitHub repositories, Dribbble portfolios, and public proof of work.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Unbundling Education and the Shift Toward ROI-Driven Learning | 4 | 3 | 1 | 0 | Frank Chen opens the discussion on unbundling higher education, citing data about declining enrollments in liberal arts majors. Li Jin details survey data showing a major disconnect between students and university presidents regarding the purpose of college. | |
| Alternative Learning Pathways and Lifelong Education | 2 | 3 | 0 | 0 | Frank Chen guides the conversation toward alternative learning pathways. Li Jin and D'Arcy Coolican educate on computer science labor shortages, shorter program timelines, and how Income Share Agreements (ISAs) incentivize focused career training. | |
| Unbundling Professional Networks and Brand Signaling | 3 | 2 | 0 | 0 | D'Arcy Coolican outlines how professional networks and brand signaling are being unbundled by organizations like Y Combinator and co-working spaces. Frank Chen builds on this by adding specific examples like LinkedIn and cohort bonding. | |
| Vulnerability of Lower-Tier Universities and Bottom-Up Innovation | 3 | 4 | 1 | 1 | Frank Chen asks what happens to tier-two and tier-three universities. Li Jin references Clayton Christensen's disruption prediction and explains how brand exclusivity protects top-tier institutions, while D'Arcy points to bottom-up innovation serving non-consumers. | |
| Global Student Mobility and the Unbundling of Business Schools | 4 | 3 | 0 | 0 | Frank Chen brings up international student mobility and calculates the financial tradeoffs of a $100k/year MBA versus modular nanodegrees. Li Jin points out that even elite business schools like Harvard and Stanford are experiencing application drops. | |
| Early Childhood Innovation and the Wonderschool Model | 4 | 3 | 0 | 0 | D'Arcy Coolican explains Wonderschool's in-home early childhood education model. Frank Chen shares a detailed personal anecdote analyzing how offloading administrative tasks empowers teachers to focus entirely on instruction. | |
| Outschool, Delocalized Instruction, and Unbundling K-12 | 3 | 3 | 0 | 0 | The panel discusses Outschool's delocalized instruction model. Li Jin and D'Arcy detail how niche interest-based courses aggregate global demand, and Frank adds commentary on matching visual and experiential learning styles. | |
| The Evolution of Accreditation, Quality Signals, and Regulatory Moats | 5 | 3 | 0 | 0 | Frank Chen demonstrates direct domain knowledge regarding startup hiring practices that bypass traditional degrees in favor of GitHub repos and Dribbble portfolios. Li Jin and D'Arcy explain regulatory moats like federal aid and 529 plans. | |
| Lightning Round: Coding Bootcamps, ISAs, and Liberal Arts | 2 | 4 | 3 | 0 | During the lightning round, Li Jin introduces a nuanced counter-narrative against ISAs, citing MissionU to show how ISAs can align institutional profit motives against student values. D'Arcy and Li also discuss liberal arts as high-value consumer goods. | |
| Novel Monetization Models and Expanding Bootcamp Verticals | 3 | 4 | 0 | 0 | Guests outline novel monetization models including stealth gaming cosmetics and university alumni LTV capture. Li Jin and D'Arcy map out labor shortages across nursing, physical therapy, and sales development reps. |
Statements from this episode (23)
Jin: 80% of UCLA students say college is for getting a job
“I think UCLA ran a survey a few years ago, surveying their students as to, like, what is the purpose of college for you? And 80% of them said to get a job.”
Jin: Only 50% of university presidents say college is for job placement
“And I think that same question was posed to university presidents by Pew Research, and I think only 50% of them said that the purpose, the main purpose, was to get a job.”
Coolican: Education startups are shifting toward ROI-driven technical skills
“So I think that's one part of it is that people are seeing that trend towards more kind of ROI driven education, and they're focusing much more on, you know, What can we give you that's ROI driven? So can we teach you to code? Can we teach you marketing? Can w…”
Jin: Alternative education programs are shifting from tuition to ISAs
“So in the past few years, the nature that these programs are monetizing has really shifted from upfront tuition payment, which has been the traditional higher ed business model to now more and more programs are offering income share agreements or ISAs.”
Jin: ISAs force education providers to shorten programs and focus on employability
“And the result of that business model is that The programs themselves then are changing to sort of drive that positive outcome for everyone. So the programs are getting shorter because they're incentivized to get that payback sooner. They're incentivized to ac…”
Coolican: Y Combinator replaces higher education's professional networking role
“You're seeing things like, you know, YC, which is incredibly valuable as a networking place. And people talk about YC as kind of like startup graduate school, right? And, you know, you're seeing places like that have Add an incredible amount of value providing…”
Coolican: Brand signaling will be higher education's last unbundled domino
“I think the hardest one is that That brand signaling piece. I think that will be the last kind of, the last domino to fall. Just cause I think there's a ton of strength in kind of traditional education around that signaling piece.”
Jin: Lower-tier colleges are prime targets for edtech disruption
“I think brand is a huge piece of what's protecting traditional institutions from being disrupted. And I think brand is very closely coupled with exclusivity. So at the lower levels where the brand is less strong, I think that is a prime target for disruption a…”
Coolican: Edtech innovation will start with non-consumers before moving up-market
“I think, you know, and I don't know if this is always true, but I think probably you will see the innovation come from the bottom up, and you will see the innovation come where right now the alternative is like non-consumption, right? So it won't necessarily b…”
Coolican: International demand for North American skill training will drop
“I think, as we're talking about, I think the skills part will probably start to fall off as it becomes easier and easier to kind of develop these skills elsewhere.”
Jin: Top business schools like Harvard and Stanford face declining MBA applications
“The number of applications is shrinking across the board, and the institutions that historically were thought of as immune to this, so Harvard Stanford, GSB, Wharton, the top, top business schools, They're now experiencing this, too, where they're seeing year …”
Coolican: Wonderschool's Airbnb model unlocks preschool supply by eliminating real estate costs
“They've taken the kind of real estate line item you know, and softened that because it is in home. They've made it so that it's closer to the children and the families that they're actually serving because it is in home. So they've kind of restructured the bus…”
Jin: Outschool builds curriculum bottom-up from parent and student requests
“And instead of taking the top-down approach of they decide what the class should be and what the curriculum is, it's instead of A bottoms up motion where they actually collect the request from parents and from students and send that along to the teachers who h…”
Coolican: Lambda School succeeds by combining ISAs, coding instruction, and job placement
“Lambda School is one that seems to be doing great on that and, you know, it's taking, The ISA, the code, the skills, you know, and then lining them up with a job at the end, and it's, you know, found this really great niche in a market by delivering a very spe…”
Jin: Academic accreditation will erode as a quality signal for employers
“But I think with the internet and now with all of these programs and like the availability of reviews and the availability of like various assessments and other measurements of a student's competency and mastery of a subject, I think the era of accreditation i…”
Coolican: Edtech innovation will happen outside the US first due to regulations
“I think it's also one of the reasons, you know, that I personally believe that the kind of innovation will happen from the, like, outside in. You know, it will happen kind of outside the US first, where these kind of regulatory moats are not as strong you know…”
Jin: Coding bootcamps have not yet produced large venture capital exits
“To date, there haven't been large outcomes in this space, so we're keeping tabs on it, but wondering if there can be a large exit or a large outcome here.”
Jin: Liberal arts degrees function as high-cost luxury consumer products
“Liberal arts education, and things that perhaps aren't as practically useful. But I think they are somewhat luxury goods, like they're very expensive products that some people want to pay a premium for, and maybe they're not completely useful, but like there's…”
Jin: Traditional alumni donation models are Income Share Agreements on steroids
“I think of that business model as like income share on steroids, where instead of just monetizing for this fixed window for the student's life when they first get out of school, you're actually potentially capturing the upside as they grow their income through…”
Coolican: Rapid skill erosion and labor shortages drive coding bootcamp success
“That's why I think coding has found this product market fit around the coding bootcamp. You know, it's got both of those. It's got both your skills erode really, really quickly, or like the domain skills erode really, really quickly, plus there's a huge shorta…”
Coolican: The non-signaling value of North American education is vastly overstated
“I do believe that the at least in the United States and Canada, the value of education beyond signaling is overvalued and overstated.”