This week EdSurge posted an article titled "Why EdTech Companies Fold". EdSurge does a great job of supporting the educational technology ecosystem - this article sheds light on something that is very serious. The less we talk about it, the more rampant it is.

The stories of TaughtIt, MommaZoo and Geddit are sobering. Their failures are sad from beginning to end. For the sake of brevity, I will focus this post only educational technology and will only make this general comment on our modern entrepreneurial bubble. It has become "cool" to be an entrepreneur, but I can tell you, true entrepreneurs don't think there is anything "cool" about it. We are driven and obsessed with our products, no one wants to be an entrepreneur, we just end up that way because our minds can't work any other way.


I have been quite vocal about #EdTech "startups" being pushed towards the expectation of high growth in a short time period. This is not only unrealistic, but often can be the kiss of death.

Anyone who knows anything about education knows that there is no magical solution to getting adopted by schools. It takes years and years of hard work, hustle, and gaining a reputation that teachers, parents, admin and students all buy into. More so than ANY other industry.

Yet time and time again, we hear stories of venture backed education companies shutting their doors because they failed grow the way they "needed" to. This is one of the reasons why who the ENTREPRENEUR chooses to be part of their extended team is so incredibly important when it comes to education.

The EdSurge article fails to mention one very important element - the entrepreneurs behind the companies that failed had made big mistakes at the onset. I have seen countless education companies come out with grand plans and fail in spectacular form - recently, TutorSpree comes to mind.

Before I break this down in more depth, I want to make it crystal clear that this is not a knock on any entrepreneur who has failed in education - I too may (one day) fail in my ventures - but rather an attempt to highlight the mistakes that companies continue to make.

Here are the 3 reasons why educational technology companies get KILLED.

1- Lack of Education Market Knowledge

We all went to school. We all know the struggles of the student. This is the easy part - if that was all that was required, someone smarter or more connected than you who studied finance or some other business related degree would do what you are doing. To be successful in the education domain you need to understand AT LEAST 2 sides of the education trinity - with a strong advantage to someone who understands all three.

Student (Parents & Families) - these are the people we are ultimately trying to help. They may not be the ones paying, but they are the ones who need to benefit from what you are offering. Think of them as a flower blossoming.

Teachers (Admin & Staff) - these are the people who need to actually teach. If you can't have them behind your product, you are in big trouble. Teachers have their hands tied in a lot of cases, but are the front lines to the children. Think of them as the roots stuck in the ground.

Policy Makers (Bureaucrats & Elected Officials) - these are the people who decide what can and cannot be in the school system. They also formulate policy and work hard for reelection. They operate in a very unique manner and ultimately have a lot of control and power over what is in the schools. Think of them as the soil.

Where does your product fit in? The product is represented by the nutrients that need to get to the flower.

As an EdTech entrepreneur, if you fail to have experience with at least two of these domains, find a different industry; one that you have more experience with. Conversely if you do have strong understanding of all three, you are very likely to succeed if you execute points 2 and 3 properly.

2- Lack of Business Expertise

Perhaps the title here is misleading, it should read "Lack of Education Business Expertise" but seeing as you have chosen to go into the education field, I feel that if you chose the wrong industry, that shows poor business sense and by extension means you lack business expertise in general.

In order to build a successful EdTech company you need to know in what ways the education and child care industry different from other industries. You also need to know in what way it is similar. This is where your company ecosystem and leadership is so crucial. The CEO of the company needs to know whose advice is relevant and who whose is misleading. As with any industry, there is a certain intuition that is necessary to execute - in education it is incredibly crucial to be aligned with individuals (mentors, advisors, board members, investors, etc) who see your vision and understand what it will ACTUALLY take to get there.

Nothing will be more toxic and kill childcare/education companies quicker than having the wrong partners involved, especially in the early stages.

It has started to become the norm for "startups" to be fortunate enough to get access to venture investors, and when an offer is made... take it.

A true entrepreneur should know and decide who gets a taste of their product. If

they are truly as obsessed with their company as they need to be in order to be successful, you should be doing twice as much due-diligence on the investor as they are doing on your company. As an EdTech entrepreneur, if you don't know the names of your investors' children you are doing something incredibly wrong. And yes - they have children. If they don't, don't expect them to understand the intricacies of dealing with kids and schools.

Too often entrepreneurs are quick to take money, form partnerships or appoint board members out of ease or even desperation. Back in January I published an article about Why I Always Choose The Hard Way - often the best people for your company are the hardest to get a meeting with or to convince to join you. Don't let that discourage you. If you want to be successful in education you need to have the expertise to stick-handle these situations and make them work for you. Unfortunately the lack of this business expertise and understanding causes irreversible damage to the company.

3- Lack of Patience

When I hear an education company is folding after a year or two because they didn't have the traction they needed I know instantly that they are in the wrong industry. Education moves at a glacial speed. Everyone involved in your company needs to understand that.

Countless EdTech companies pitch their ambitious projections to investors every day. I've done this myself - but I know deep down inside that these numbers are garbage. They look nice on paper, and sure you might be able to hit them, but if you wanted to be more accurate, you would show zeros for the first 36 months.

If you start an education technology company you are committing to at least 4 full years before you can even begin to gauge your success. If anyone tells you that you need to "fail fast" or pivot because you need to find the right market fit, RUN. Run as fast as you can. Get those people away from you and your business. Worried about the opportunity cost of your time spent - again wrong industry.

Here is my breakdown for the first four years of tech and non-tech education businesses lives:

The first year of your business represents the honeymoon phase. Things are always great because your friends and family will love to talk about the fact someone they know is trying to make a difference in the lives of children. Any data you have from this year is useless.

The second year is the most difficult. This is the year when that ecosystem that was created in year one is so important. It is also the year most EdTech companies are executed. Don't expect to see growth numbers like you did the first 12 months - that will have fizzled. You'll be lucky if you can just maintain the same revenue and users. This shouldn't scare you though - this is the most important year in the history of your business. This will be the first time people truly buy into your product.

The third year you start to make an impact. People have just begun to buy into your product or service - now you need to have these people champion you. There is even a chance you might make some money *hooray*!

The fourth year is the explosion. If you survive this long - you will have outlasted hundreds of companies that have come and go. Trust me, this is the year when your company will start to actually get traction. This will also be the time when your company is worth something. Personally I think involving VC's before this point is careless. Unless they have a very profound understanding that they should not expect to see great number until then - you are likely introducing venom to your business.

Ultimately each business is slightly different, but if you look at the founders of the most successful EdTech businesses, they tend to have three common traits; exceptional patience, tremendous foresight in business of education, and a profound understanding of the school system.


Philip Cutler is the Founder & CEO of GradeSlam. He is also the the Executive Director of Laurus Summer Camp and City Councillor in Westmount, QC.