This sounds pretty interesting. I'm a bit confused by your business model though. It sounds like you aren't selling to schools but instead you are charging developers of education applications.
Who pays the the developers? Is the school expected to pay the developers?
Schools have been buying applications since long before Clever. These are usually (but not always) gaint contracts across multiple schools or districts. after they are signed it can take months or sometimes full schoolyears to get the app provisioned and set up. This has to happen every time data changes as well. With clever it takes minutes.
They charge companies like ours (Poll Everywhere) to push/pull instructor/student data into our app. Schools pay us for our product. Its super valuable because our developers can focus on building high-value features specific to our app and not boring LMS integration details.
I was thinking a similar thing... what kind of apps would I develop?
Sick day trackers, maybe some kind of grade statistics apps... there's a lot of value in these kinds of apps, but i'm not sure there's enough to support the infrastructure needed to sell things to thousands of different schools.
I built a student tracker/analytics app for use by parents (and students) which integrates with school systems, but I tend to agree that you could not charge parents enough to pay for the Clever integration costs.
The only way I think this will pan out for Clever is if they can somehow become the gatekeeper into the schools, whereby enterprise'ish edtech software companies are required to pay-to-play, such as an AppStore model. What I don't understand is why the existing back-office edtech software companies are allowing them to do so. They should be charging Clever significant integration/certification fees. Its done in other markets.
I may be entirely off the mark, but reading about this gives me pause as I think of all of the 3rd parties that invested in other platforms (Twitter), only to be cut-off later. Why would I hitch my ride to this wagon?
Clever act like they are doing this out of the kindness of their hearts. They aren't.
They act like this is "free" for schools. It isn't. Because the costs of Clever and LearnSprout get sent right back to the school in the form of higher fees for the other apps they buy. Oh, and instead of paying one price for Clever, they are going to pay that price over and over and over.
Clever is just another "Vertically Integrated Network" right out of 1999. Their customers are largely going to be VC-funded startups who want to show that they have "solved" this issue by paying the Clever tax. Since most of those VC-funded startups are going to be offering free-services themselves, Clever is really just a giant hoover vacuum for VC funds.
It's a 1999 business model and it will likely lead to the same resolution in the end.
Interesting comparison, but I think you might be missing a couple things:
1. Data integration is incredibly costly for edtech vendors - it's a massive engineering & support distraction, and it slows down sales and customer onboarding. Vendors tell us paying for Clever is worth it - just for the internal cost savings.
2. While seed-level edtech companies without revenue may get more attention on hackernews, there's a significant number of companies in various niches of education earning great revenues selling to schools and districts. Those are the folks adopting Clever & driving our growth (not "free to teacher" apps).
> ...there's a significant number of companies in various niches of education earning great revenues selling to schools and districts.
The spending trends in the K-12 space are not positive[1], and while I'm sure there are companies in "various niches of education" with respectable revenue, the bankruptcies of companies like Cengage Learning[2] and School Specialty[3] are hard to ignore.
There's a strong argument to be made that education as a market, particularly K-12 education, is in secular decline.
When your market is part of a larger market that is in secular decline, the secular trend eventually tends to dominate any local trends that are present in the sub-market.
That's why companies attempting to get a piece of a growing pie are generally easier to build and more likely to be successful than companies attempting to get a bigger piece of a shrinking pie.
I'll put aside a host of successful companies over the last 14 years that have been quite successful pursuing similar businesses.
Instead I'll challenge your assumption that the (enormous) efficiency gains you get from Clever result in higher prices for anyone. This is only true if the integration was otherwise free for the people selling products to schools.
It's not. It's actually incredibly expensive to perform these integrations on an ad-hoc basis. I'd bet this solution ends up cheaper for everyone.
I guess you could argue the downside of there being fewer programmer jobs available since people are having to do less work. That's a bummer I guess.
Despite the negative parent, wouldn't you agree that the cost of integration has to be absorbed by somebody? In this case, the application vendors have to pass the cost to the schools (plus a margin).
[edit]
The question is whether the schools will be better off having one party in control? That's usually not a recipe for cost containment.
Despite the negative parent, wouldn't you agree that the cost of integration has to be absorbed by somebody?
That's the point I'm making. Of course the integration has a cost. I believe that it simply costs a whole lot more of if everyone does that integration themselves. I can pay Clever a monthly fee or I can pay several developers to go out and learn how to do it at $100k a pop. Even if Clever is charging me $10k/month I'm still coming out pretty far ahead.
Not to mention the cost of ongoing maintenance every time something changes at an individual school.
tldr; you can spread the cost of integrating one time out among a bunch of companies, or each company can do it themselves. One of those is (by far) not only more efficient, but very likely much cheaper as well.
It IS incredibly expensive to perform these integrations on an ad hoc basis. That's the advantage of having a standard.
I personally find this entire thread extremely interesting, and enjo's comment gets to the heart of it. <Reader alert - I work for SIF>
Now here's my source of confusion. We are an non-profit standards organization with an open standard (written and approved by our members) that can be used without cost by all K-12 end users and vendors (members or not), and with no IP agreement to sign. True there is an optional product certification program, but that involves only a nominal fee to cover our costs. The SIF Certification program was created to support our end users who often demand products undergo SIF certification to ensure they will seamlessly interoperate (ideally out of the box - but there are a LOT of reasons including optional data elements, why things are often not that simple). The Clever folks know what I’m talking about ... or they will soon.
In earlier SIF releases, when the infrastructure was basically home grown, several integrators wrote what we call “agents” which allowed vendors (including vendors of SIS, Library, Transportation and more recently Assessment and LMS related systems) to essentially enable their applications run in SIF interoperability Zones without changing a line of code. For example some agents use internal application database triggers to detect data changes the application publishes. There are several free open source SIF Agent toolkits available today for SIF 2 and we expect the same for SIF 3 where the fact that the infrastructure is now based on REST will make things a lot easier.
So we finally reach my question. Some very smart people have invested $10 million dollars in Clever, but the stated business model seems (in SIF terms) to be to:
• Create and establish an API to retrieve data from SIS applications and
• Sell SIS vendors the agent software to allow them to utilize that API.
If that’s essentially correct (and if not, I would ask a Clever representative to correct me) than given our own experiences I just don’t understand how such a strategy can be effectively monetized to provide an acceptable return on such a large initial investment. And I’m particularly interested, because if I knew how to do that, I’d try and get my employers to do that too! :-)
You have to understand how schools get money, and how they spend money. As consumers, we have flexibility in how we can spend our money. Schools often do not have this flexibility. I'll provide an example of a scenario that I know intimately.
Schools buy educational content for classrooms and media labs. Increasingly, this content is electronic, but historically, schools are used to buying piles of dead trees covered in ink (physical books). Because of this historical precident, schools get their money in the form of large-dollar-amount, single-use budget allocations. Let me decode that. Someone in an administrative office notifies the person who will actually buy the materials and says something like, "You have $1.2 million dollars to spend by August. The checks must be issued by that date or the funds disappear."
So now the buyer is sitting on $1.2 million to spend by a specific date. Let's say I just built an ebook platform that allows students to log in to a website where I display non-fiction content, along with some reading comprehension questions. When I develop my pricing models, I have to make sure that they fit with the way the buyer spends their money. In the consumer space, we'd do something like:
All plans include access to over 900 titles!
$9.95/mo for up to 10 students
$19.95/mo for up to 25 students
$49.95/mo for up to 100 students
$99.99/mo for up to 500 students
More than 500 students? Call for custom pricing.
The buyer ignores your product completely. Why? Because they can't spend $100/month. The check has to be written by August, then the money goes away. The buyer is also used to buying physical books, so they're averse to the idea that they should pay monthly for something, even if it is much, MUCH cheaper. Remember, they don't know what their budgets will be next year, so "a bird in the hand" rules over value.
Instead, what often happens is that the publisher charges a one-time fee of $100,000 for 2,500 students, then agrees to keep the content accessible for as long as the school wants. The publisher takes on the risk associated with hosting the content, and is well compensated.
The school doesn't want to pay an API middleman, they want to buy content. Clever is very well situated, and publishers (and schools) are going to be very happy they exist.
Who pays the the developers? Is the school expected to pay the developers?