From K-12 sales to Product-led Growth 📈 Transcend Newsletter #65

How edtech startups can scale selling to schools

Hi there! Alberto here, joining from Madrid this week.

The Transcend Newsletter explores the intersection of the future of education and the future work, and the founders building it around the world.

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Last day to apply June 25 → https://bit.ly/Apply-to-TF11

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From K-12 sales to Product-led Growth

Selling anything to K-12 schools is really difficult.

Take this quote from Larry Berger’s 2007 piece on K-12 Entrepreneurship:

*At a recent presentation we made to Stanford Business School students interested in education, a student provided what was almost the right diagnosis of the industry:

”From the complexity of the district decision-making process you just described, it seems that in education, no one is in charge.”

Our wistful reply: “If only that were the problem. But the situation is much worse: In education, everyone is in charge.”

Larry is the founder and CEO of Amplify, one of the largest providers of K-12 content and assessments for schools, and his 15-year-old piece still rings true today.

The main factor in the long school sale process is its complexity, given the number of stakeholders involved for any given product: students, teachers, school principals, district administrators (or other regional administrators, if outside of the US), consultants, superintendents, regional decision-makers, central/federal education authorities…

This makes the sales cycle incredibly difficult to navigate.

The top-down sales era

With an impossibly long sales process, the K-12 startup ecosystem became all about building massive sales teams that would sell to administrators, the ultimate decision-makers. It was the only way to survive!

Graham Forman is the founder of Edovate Capital, and he led sales for some of those leading edtech startups back in the day. He describes how the K-12 space was all about selling large contracts to school districts to compensate for expensive technology investments – this was the “top down sales” era.

The top-down sales era created products for administrators (the buyer), not teachers and students (the end users). Who you sell to determines what you build.

Graham recognized it wasn’t a great process: “This process got the job done, but frankly, it was a slog”.

But things were about to change.

The Product-Led Growth transition

As the cost of building tech apps came down drastically in the 2010s, a new model emerged in K-12 startups: Product-led Growth (PLG).

PLG is all about **building tools for teachers and students first,** not just school administrators. If students and teachers love the tool, they persuade school administrators to jump onboard.

Edtech giants like ClassDojo, Newsela or Nearpod all were founded around the same time, and were known for flipping the model to focus on end-users first, instead of administrators (the buyers). Here’s how Graham describes it:

Let’s take a look at one of those PLG leaders: Nearpod, a platform for interactive K-12 content that helps educators manage all their tools in one place.

• In 2011, its website provided an overview of the tool but spoke directly to the school administrator. Its main call to action (CTA) was to learn more about its pilot program, which was the first step in the sales process: give us a call if you are an school/district administrator, and we’ll demo the product.

• Today, the page speaks much more directly to the teacher: “We believe teaching is the most important job in the world”. There are 3 separate CTAs for each persona: the student (login code), the teacher (free signup), and the administrator (learn more).

It’s not just Nearpod – PLG is the norm today across all edtech products.

Consider the most used K-12 tools today, according the Edtech Apps Survey of 2022. 45% of the most used tools in L-12 are PLG edtech startups, like Clever, Kahoot or Quizziz.

How do edtech startups get to compete with Big Tech giants like Google or Microsoft? It’s through effective PLG that is viral and daily. That’s what makes companies like Clever, Kahoot, and Quizziz stand right next to trillion-dollar corporations.

PLG is not an option anymore – it’s a necessity for scale!

Getting started with PLG for your startup

2023 is a great year to start building a Product-led growth edtech startup.

In this tough market to raise capital, product-market fit matters more than ever, and PLG helps you get to product-market fit faster: it helps founders with no prior connections to schools or districts build tools that teachers love, build traction, and grow.

So, how can you implement a successful PLG strategy for your K-12 startup?

Let’s go to Graham for advice – he spoke to an audience of 100+ founders who registered for our discussion last month, and here is his advice on how to get started:

1. Experiment daily until you find PMF

Graham recommends founders only spend capital on customer acquisition once they know they can retain users at a high rate. To get to that point, founders need to experiment and talk to users daily! Experiment with different versions of the product until you know you have a painkiller, rather than a vitamin. To measure this, you can use resources like the PMF Survey.

2. It’s all about onboarding

Onboarding experiences that are free and delightful lead to great PLG startups. Sometimes it’s worth delaying user signup or monetization to make sure there is a clear magic moment, like Duolingo does.

3. Fencing: Freemium vs free trial

Fencing is defining the stage of the customer journey when you monetize your product. Freemium and free trials are the most used avenues to get there:

• freemium is best if onboarding is frictionless, and very easy to figure out for the user on their own.

• free trial is best if your users need more hands-on onboarding.

Once you determine the right fencing mechanism, you can play around with pricing strategies (the key players are moving towards pricing based on usage too).

4. Use the right metrics

Use Graham’s piece on K-12 PLG Metrics to set the right metrics to measure your PLG success. Two key indicators are quality signups (user growth among your power user persona with the highest usage) and retention (even if you are not yet monetizing, it’s important to show how many of your users keep coming back).

5. Learn from market leaders

45% of the most popular tools used in schools are Edtech companies with PLG – here is a list of 15 leading K-12 brands who have successfully implemented PLG, their features, pricing and valuations.

K-12 Leaders in Product-Led Growth

The future of PLG

Edtech is inevitably moving towards product-led models, across sectors and regions. As companies scale beyond the $10M revenue threshold, a hybrid approach to grow is needed (some product-led growth, some top down-sales), but PLG is the best way to go for early-stage founders finding product-market fit.

And there are many great opportunities K-12 founders to pursue using PLG, as Graham reflected in our session together:

There's still so many opportunities where incumbents are vulnerable to someone who figures out how to serve an end user really well: create a wedge into an institution through an elegant, frictionless user experience that does a really valuable job or task for the end user.

If you're a top-down business, and you're not thinking about that, your flank is exposed to somebody who can come along and figure out how to do that really well.

If you are building one of these startups, we want to hear from you!

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The Roundup ☀️

• For Edtech & Future of Work founders: Transcend Fellowship applications are now open! Apply here.

• How a Transcend Fellow, built an AI tutor that passed one of the toughest exams in the world. Read full article here.

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