Upgrading School with a Startup Mentality
Upgrading School with a Startup Mentality
AltSchool offers a compelling case study of a company pursuing a double bottom line: delivering an updated and optimized education, and turning a profit.
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23 Jun 2015   Christian Camerota

It used to be that you risked detention for disrupting an elementary school classroom. Nowadays, disrupting the entire school system can earn you millions of dollars in startup funding.

Consider AltSchool, the brainchild of entrepreneur Max Ventilla (a founding member of Google+), who was inspired to launch his own network of schools because he believed typical elementary education was not preparing students adequately for the future. Instead, Ventilla created “micro-schools,” each with 80 to 150 K-8 students, and with a focus on reducing costs, enhancing educational impact and flexibility, prioritizing customer satisfaction, and using technology to gather classroom data to create continuous improvement and personalization.

In short, Ventilla is combining the mission of delivering high-quality, modernized education with an eventual goal of profitability. And so far, it is working. He has already established four schools in San Francisco, with 115 employees (including 45 engineers) continually working to build and improve AltSchool’s infrastructure and grow the business. As a testament to the strength of his idea, the company recently received $100 million in its latest round of funding, which it will use to open four more schools in the fall of 2015— in Brooklyn and Palo Alto, along with two more in San Francisco.

Harvard Business School senior lecturer John Kim (MBA 1993) became interested in AltSchool after its launch in 2013 and recently finished a case study on it with research associates Kyla Wilkes and Christine S. An. Though the company is still in its infancy, Kim believes it offers a compelling example of how startup principles could be transformative for a U.S. educational system often weighed down by administrative and infrastructure costs.

“RIGHT NOW, THERE'S MORE PERSONALIZATION IN THE MUSIC YOU LISTEN TO THROUGH...PANDORA AND SPOTIFY THAN THE AVERAGE SCHOOL SYSTEM PROVIDES FOR ITS STUDENTS.”

“It’s interesting to see Ventilla applying entrepreneurial concepts often associated with technology startups to the field of education,” Kim said in a recent interview. “He is employing rapid prototyping strategies with lots of feedback loops, measuring and using data to make changes, while looking for ways to reduce costs without sacrificing customer experience or results. If he is successful at employing these types of principles to education, he could potentially influence the direction of more traditional public schools as well.”

Kim points out that school systems typically devote up to 85 percent of their budgets to personnel. This creates heavy managerial burdens and difficulties in aligning staffing to meet the needs of students and parents. AltSchool’s micro-school strategy alleviates those staffing and other infrastructure burdens, allowing schools to free up teachers to focus on teaching. Personalized learning is also becoming increasingly important, and AltSchool’s technological capabilities allow students to develop at their own pace, with like-minded peers, and highly personalize what and how they’re learning.

“In other areas of our lives, we expect and demand incredible personalization,” Kim said. “But right now, there’s more personalization in the music you listen to through applications like Pandora and Spotify than the average school system provides for its students. While schools typically segment educational needs by age, gender, socioeconomic status, or an annual test, AltSchool aims to use technology to dramatically increase the personalization of the educational experience and hence improve outcomes.”

AltSchool is organized as a B Corporation, a relatively new certification that identifies for-profit companies that have met “rigorous standards of social and environmental performance, accountability, and transparency.” At present, there are only 1,281 B corps in the world, spread across 41 countries and 121 industries, although those numbers have increased 25 percent or more in the past year. The designation is an important one for AltSchool, since it credentials their pursuit of both a social mission and real profits. That dual mission, in turn, accounts in large part for how the company was able to raise $100 million in May, through both venture capitalists (like Founders Fund and Andreessen Horowitz) expecting a monetary return and philanthropists (such as Facebook founder Mark Zuckerberg and his wife Priscilla Chan) hoping for a social one.

“THERE IS A GREATER WILLINGNESS TO BACK FIRMS THAT WANT TO MAKE A DIFFERENCE IN SOCIETY AND DO IT PROFITABLY.”

“There are more and more companies seeking this kind of double bottom line,” says Kim. “AltSchool is a prominent example of the significant venture money now available from investors and philanthropists who are willing to fund innovative ideas and entrepreneurs in the education sector. There is a greater willingness to back firms that want to make a difference in society and do it profitably.”

Kim, who teaches the second-year elective course Entrepreneurship in Education Reform, also believes entrepreneurship can have a significant impact on educational practices and structures.

“As a graduate of HBS and having spent the past 25 years in this space, I think the fundamental lessons and concepts our students learn here can have a tremendous impact on the structure and practice of education,” he said. “One of my goals is to see if we can get more Harvard MBAs to take jobs in education, since the leadership and managerial skills we teach are so essential to improving the performance of our school systems.”


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