We wrote this Business Plan in 2018. The market landscape and our strategy have evolved since then. For the latest, please email us at firstname.lastname@example.org.
Table of Contents
- Executive Summary
- Company Description
- Product Description: Tiro
- Target Customer Description
- The Future of Real & Open
- Company Description
- Advisory Board
- Legal Structure
- Humanist-Enterprise Model
- Management Perspective & Structure
- Market Research
- Industry Description
- Market Outlook & Projections
- Market Size
- Competitor Analysis
- Direct Competitor Analysis
- Indirect Competitor Analysis
- Real & Open’s Advantages
- Window of Opportunity
- Barriers to Entry
- Service Line
- Product & Services
- Intellectual Property
- Growth Strategy
- Growth Indicators
- Customer Description
- Communication with Customers
- U.S. Market Size
- State & Regional Market Size
- Revenue Projections
- First-Year Expenses
- References Cited
Real & Open d/b/a Tiro (R & O) is a Benefit Corporation that, through its core product, Tiro, seeks to empower teachers, students, and communities to take control of the standardized testing industry. Currently, Tiro is a web-based tool to create, deploy, and analyze tests to better focus learning and evaluate the quality of assessments. Along with Tiro, we have developed a series of professional development courses to support teacher education.
We are a socially-oriented organization, democratizing access to knowledge and power. We are looking to cultivate a new culture, one in which students enjoy rich learning experiences through informed, responsible, and innovative assessment practices. We want everyone to have the knowledge and power to decide how much emphasis testing receives in students’ and teachers’ lives. As a team of educators, technologists, and psychometricians, our success will be measured by how we empower people through our personalized support and suite of tools.
Product Description: Tiro
Tiro is a web-based tool to create, deploy, and analyze tests to better focus classroom education and evaluate the quality of classroom assessments. Tiro empowers everyday educators by democratizing the sciences and tools used by large-scale, high-stakes testing companies. In providing a simple analogy for perspective, Tiro leverages the most attractive features of Survey Monkey and Google Analytics in a single tool designed for education and assessment. Tiro makes assessment development, deployment and analysis available to the average person in the same way that Survey Monkey supported large-scale survey development and deployment and Google Analytics provided data for businesses to make valid decisions.
Target Customer Description
Real & Open distinguishes between “users” and “customers.” In the education sphere, often the users (e.g., students, parents, teachers) of the services and products do not directly purchase services and/or products. Nonetheless, they are viewed as the target consumers of the services and/or products. R & O defines customers, those who purchase the services or products, as those decision-makers at the administrative levels of K-12 institutions, postsecondary institutions, licensing agencies, credentialing programs, and corporate training. Immediately, R & O will be targeting teachers, students, and decision makers in K-12 and postsecondary institutions.
The Future of Real & Open
The company has a series of short- and long-term goals. In the short-term (1-5 years), Real & Open seeks to develop Tiro and build a community of teacher-evangelists. We will use Tiro to target the validation of small-scale assessments in low-stakes contexts (e.g., K-12, postsecondary classrooms). In the long-term (5-10 years), Real & Open seeks to push beyond current services and products to develop new offerings which provide validation for large scale, high-stakes assessment contexts (e.g., certification, licensing, etc.).
To establish Real & Open as a force in the fight against social injustice and inequity in education by democratizing information through providing pedagogical principles of assessment, and leveraging broad, flexible, data-driven assessment products aimed at promoting social responsibility and community participation as requisite components for developing validation arguments for low-stakes, classroom-based assessments, and high-stakes, large-scale assessments.
- Brian Alan Carroll
- Ed.D. Candidate in Educational Measurement in Applied Linguistics (Columbia University)
- Ed.M. in Second Language Assessment (Columbia University)
- Community Language Project Assessment Fellow (Columbia University)
- Teachers College Technology Fellow (Columbia University)
- 7+ years Program Management Experience
- 13+ years Classroom Teaching Experience
- Elliott Goodman
- Ed.M. in Educational Assessment for English Language Learners (Columbia University)
- Lead Teacher at a high school in the Los Angeles Unified School District
- Department Chair at a high school in the Los Angeles Unified School District
- 11+ years teaching in public & private schools
- 2 years of edtech experience
- Patrick McCarthy
- Lead Investor from our Wefunder.com campaign
- Jared Cohen
- Former VP Community Experience and Product, General Counsel at Teachers Pay Teachers
- Phillip Goodman
- Director of Microsoft’s Carbon Removal Portfolio
- Dr. ZhaoHong Han
- Chair, Department of Arts & Humanities, Teachers College, Columbia University
- Dr. David Moguel
- Professor of Education at California State University, Northridge
- Dr. James Purpura
- Professor Emeritus of Second Language Assessment, Teachers College, Columbia University
Real & Open is a Benefit Corporation incorporated in the State of New York.
Entering a “post-capitalist” era, new approaches to business and business management are beginning to find footing (Pirson & Lawrence, 2010). The humanistic management approach has been identified by researchers as assisting in the pursuit of several innate drives leading to a meaningful professional and personal life (Tyler, 2000; Diener & Seligman, 2004; Cremer & Blader, 2005). Mele (2003, 2016) defines the humanistic management approach as, “a management that emphasizes the human condition and is oriented to the development of human virtue, in all its forms, to its fullest extent.” While this perspective is largely viewed in terms of a model for designing management structures within an organization, these notions can inform and guide perspectives on the essential purposes for generating value and wealth, and the ways in which this value and wealth can be shared internally within and amongst the organization members, and externally, with society at large (Pirson & Lawrence, 2010).
While the guiding business philosophy for Real & Open is driven by the need to support the achievement of higher-order, self-actualization, and social needs, these aims can only be supported by the generation of capital. Many companies in the edtech market utilize a freemium or enterprise business model; therefore, R & O will offer services and products which cross these two approaches. On the one hand, a freemium model offers services and products on a scale of increasing cost dependent on increasing levels of access to certain features; on the other hand, the enterprise model offers services and products at increasing cost depending on the total number of users accessing the products and features. Initially, R & O will pursue the enterprise model, but as the list of services, products, and product features grows, R & O will begin to incorporate elements of the freemium model.
The humanist perspective can be used to shape both the underlying philosophy for the generation and sharing of value and wealth, and as a model for designing governance and management structures of an organization. Mele and Gonzalez-Canton (2014) propose that people have a wide-range of motivations, rather than simple pursuit of self-interest, and maximization of individual utility; they are motivated and driven by: their emotions, their sense of freedom, their personality and character which is shaped by moral traits, their capacity for learning, relationability and sociability of their context, an intentional interaction with the natural environment, their openness to transcendence, their capacity for moral discernment, and a deep tendency to personal growth, human flourishing and happiness (as cited in Mele, 2014, p. 41).
The concept that providing governance and structure oriented toward pursuing humanistic, social, and environmental benefit through attending to the person as a whole has recently become a prominent talking-point in North America, in large-part due to the relative success of these notions in practice in European businesses and markets (Defourny & Nyssens, 2008; Heras-Saizarbitoria, 2014; Paranque & Wilmott, 2014; Storey, Basterrtxea, & Salaman, 2014). In early 2019, several US senators introduced and sponsored the “Workplace Democracy Act” in the US congress (Legislative Package, 2019). Much of the language in this legislation directly focuses on the companies who support workers are whole people are more successful along several indicators of employee happiness and success. These philosophical concepts of governance and structure tend to fall into several broad overlapping, and interrelated terminological categories: democratic workplace, worker cooperative, or employee owned business.
These philosophies support a broad notion of governance and direction but do very little to support day-to-day communication, knowledge sharing, and decision-making. The Holacratic method is a practical application which encapsulates the philosophical notions of a democratic workplace, yet ameliorates the detrimental aspects of these notions identified in the academic literature (Robertson, 2007; van de Kamp, 2014, Wuisman & Mannan, 2016). This approach, often utilized in software and web-based companies, provides a practical framework for day-to-day governance. Holacracy is a flexible hierarchical governance structure that maximizes communication and the dispersion of knowledge, providing a humane and democratic workplace, by empowering employees throughout all levels of the company. An additional advantage of this governance model is related to the methods of decision-making, whereby decisions are made in relation to the achievement of the collective goals and aims of the company.
R & O will recognize certain integral aspects of the Holacratic governance and structure model, in particular in regard to the distribution of knowledge and the day-today decision making; however, R & O will also draw upon aspects of the democratic workplace, in particular in decisions made regarding the sharing of value and wealth generated by R & O.
R & O will enter the edtech and educational measurement market in order to address the gap between small-scale classroom-based assessment applications (e.g., GoFormative, Kahoot!, Learnosity, Duolingo) and large-scale testing services (e.g., Pearson, College Board, Educational Testing Services). These two markets are confronted with similar problems, yet neither have addressed the underlying issues. Small-scale classroom based assessment applications provide high-level design and user-interface, yet lack statistical expertise associated with educational measurement and psychometrics to validate classroom instruments used in day-to-day teaching and learning practices. On the other hand, large scale testing services, by-and-large, primarily focus their statistical expertise in validating high-stakes summative assessments (e.g., SAT, ACT, GRE, LSAT, GMAT), rather than designing a broad validation framework accessible to classroom teachers. Our company will provide a series of broad, and flexible, web-based assessment design platforms and applications enabling assessment validation through statistical modeling.
Market Outlook & Projections
Since 2014, the edtech market, broadly defined, has achieved a compound annual growth rate of nearly 9%, and is expected to grow to $43 billion by 2019 (Technavio, 2016). The US edtech market is comprised of three primary segments. The K-12 market, which comprises nearly 46% of the total market, spends over $8.3 billion on edtech services and products annually (Wan, 2018). Postsecondary four-year institutions, comprising nearly 54% of the market, spent over $6.6 billion in 2015 (Technavio, 2016; Forbes, 2017). The global market for all digital services in education is projected to be worth $130 billion by 2025 (Frost & Sullivan, 2016).
In the US in 2018, there were 1,500 edtech decision-makers (i.e., those responsible for procuring edtech services and products) at the school-district level, 3,500 at the post-secondary level, and 1,500 at 2-year post-secondary level (Australian Trade and Investment Commission, 2018). The current edtech market is comprised of 1,500 companies, and approximately 150,000 applications (Technavio, 2016). In 2016, the market for educational applications was comprised of: 40% pre-primary education, 39% primary and secondary education, and 21% post-secondary.
Direct Competitor Analysis
The primary strength of the companies in the educational measurement application market is their considerable budgets, which supports their ability to create and market products with high-level design features and exceptional user interface, lending themselves to ease of operation, and high initial impact and interest. However, these products tend to be over-reliant upon design features and operational appeal, but with time and overuse, students become bored with the applications quickly. This inevitably leads to a second apparent weakness: these products are marketed to appeal to students, as a method for raising student engagement; in doing so, the features become simplistic, and lacking the trustworthiness and credibility essential for the validation of the reliability of small-scale assessments. This over-reliance on unsophisticated features, focused on appealing to students, seems to be a result of a lack of fundamental, basic understanding of psychometric and the educational measurement industry. Finally, these companies have little innate understanding of the psychological and motivational aspects of their customers and the market. As a gatekeeper, assessment is often used as a tool for cutting society into classifications and selecting from these segments for the allocation of resources. As such, the guiding philosophy of a company in this segment of the market should be oriented toward social responsibility. This lack of perspective leads these companies to view education and assessment with purely profit driven motivations, creating a philosophical gap between the product and the consumers.
In conclusion, while these companies have an immediate and initial appeal due to design and user interface, over time this interest diminishes because these features are purely superficial. These products also do not utilize contemporary theoretical frameworks in cognitive science or statistics, which are the underlying foundation of the assessment industry utilized for validating tests. Knowledge of these concepts is essential to efficiently respond to market needs calling for performance and portfolio assessments, and methods for validating the reliability of small-scale assessments. Finally, there is an enormous philosophical gap between their products and their customers. R & O expects these products to exhibit limited sustainability and growth over the short- and long-term.
Indirect Competitor Analysis
Products in this category are viewed as potential competitors; however, their services are not directly related to classroom-based assessment. These products fall into three categories: applications used for in-class polling or exit-tickets, learning-management systems (LMS) with assessment tools embedded within the application, or survey building tools utilized in marketing research. The LMS’s could be seen as being more directly in competition with R&O, but the assessment components are under-developed, and these companies dedicate more focus to developing their broader framework and features. The survey builders are also not seen as direct competitors because they are not intended to be used in education, but rather have been leveraged by educators due to the lack of suitable alternative products / services in this market.
The U.S. Department of Education, Office of Educational Technology lists the development of educational technologies addressing issues with assessment in its top five list of needs (US Department of Education, 2015). This fact alone indicates the need for more companies such as R & O in the edtech assessment market; however, in addition to the broad need for great assessment technologies, R & O has identified several gaps and advantages.
First, nearly all of the services and products in this segment of the market exhibit little knowledge of the science of learning or statistics of educational measurement. Due to the lack of deep understanding of the scientific and mathematical principles underlying education and educational measurement, direct competitors have little understanding of the directions the assessment industry is heading. This indicates several strengths of R & O against the relative weaknesses that these competitors share. Specifically, these companies struggle to go beyond simple right / wrong question formats to offer a more granule perspective of student knowledge; therefore, these companies are unable to adapt and adjust to emerging market needs in a relatively quick, and principled manner. R & O has this depth of understanding and knowledge in the fields of education sciences and statistical concepts of educational measurement, which enables them to quickly identify and adapt to these emerging market needs in a principled way, especially as it relates to performance assessment, portfolio assessment. Secondly, these companies are unable to provide methods for classroom teachers to validate the reliability of the assessments they utilize with their students, and providing metrics of validity for small-scale assessments. R & O’s core product immediately addresses this need.
Window of Opportunity
While the window of opportunity in the edtech assessment platform market may not be
closing in the near future, there is a certain degree of urgency to achieve the short-term
goals outlined in the Executive Summary. The long-term goals set forth in the Executive
Summary are only achievable with the accomplishment of the short-term goals. The
urgency to achieve the long-term goals is driven by the need to be leaders in developing
ethical assessment applications that fit with 21st century expectations of education
(e.g., augmented reality, virtual reality, brain-computer interface, natural language
processing for e-rating). Current assessment platforms and applications in this market
have no overt plans to address this gap, and enormous institutions such as Pearson
and ETS respond extremely slowly to trends in education.
Barriers to Entry
Despite the apparent gaps in the edtech assessment platform market, there are several barriers to entry in this market. A major barrier to overcome is the lack of technology in schools. The direct and indirect competitors in this market have performed wonderfully despite this limitation. Research indicates that an enormous gap between needs and access to technology, and limited teacher training to use these technologies. Additionally, access to the K-12 market is especially difficult. Education is a difficult market to penetrate because of the amount of regulations, and bureaucracy. This may in large-part be due to the reluctance of teachers to adopt and incorporate new procedures and processes into their day-to-day instruction and classroom management. Finally, in K-12 and postsecondary institutions, there is a long piloting and testing process, which can last from 6 months to 2 years to pilot a new platform or application. In other words, there is a long delay between initial interest and a receiving a formal contract.
Another set of obstacles is attributed to R & O’s late entry to the market, and a lack of monetary resources to be competitive. It will be difficult to overcome the ‘headstart’ that the direct and indirect competitors have, with the most recent company being founded in 2013-14. This head start enables competitors to leverage their brand in broader markets, and further solidify their brand in smaller markets. The direct and indirect competitors in this market report receiving nearly a $1 million in their initial seed rounds and are currently operating with no less than $2 million in reported annual revenue. With such limited budget it may be difficult to gain initial traction.
Product & Services
This is the first product line offered by R & O. Tiro provides formative information on summative assessments. The analytics generated by the test-data can indicate the students that are masters /developers of specific learning objectives; on the other hand, analytics can also serve as summative measures of the acquisition of learning objectives and the stability of the tests. The formative data can be used to formulate inferences about student learning, and directions for future instruction. The summative data can be used to formulate inferences about ultimate acquisition of learning objectives, and also the ways in which testing procedures can be improved. There will be a series of additions, and expansions of Tiro in the early stages of the R & O market growth.
A major component of the mission driving R & O is to educate teachers, students, parents, and education institutions about the underlying theoretical and practical notions of assessment. These services are viewed as providing both a marketing platform for the web-based applications offered by R & O, and as a method for teaching the principles of assessment in professional development workshops and courses.
Intellectual Property Rights
All R & O names and logos will be trademarked and formally copyrighted by early 2023. We are working with lawyers specializing in intellectual property to investigate design patenting for Tiro as an assessment and data display method.
The initial growth strategy will be two-fold. First, as the market research indicates the New York state, the northeast region of the US, and California have the greatest number of schools for K-12 and post-secondary, and also have the highest expenditures per student annually. R & O plans to target the education institutions in these regions with campaigns at post-secondary institutions focusing on teacher training, and post-secondary institutions focusing on education administration credentialing programs. R & O has access to, and verbal agreements with, departments, teachers, and students at Teachers College, Columbia University and New York University for testing and using current assessment services and products. There will also be an effort to continue to participate in conferences, lectures, EdCamps, and workshops to perform the methodological and practical aspects of Tiro. This will be accompanied with the publication of a print / e-book “Classroom-based Assessment Validation & Tiro”. These two approaches will humanize both the assessment and technological products of R & O. Once the presence of R & O has been established in these two states, we will expand to regional marketing, targeting US Northeast coast, and the Southern Atlantic coast. According to the research, these two markets have the largest number of K-12 and post-secondary schools, with the highest expenditures annually per student. The strategy for growth and development may change from region to region; therefore, before expanding to the regional level, current and potential growth strategies will be evaluated.
As indicated previously, the number of total users doesn’t necessary symbolize revenue or profit, because the end user often doesn’t purchase the product. Therefore, ultimately, the measurement of revenue growth will be indicated in the number of students covered under contracts. Secondary indicators of growth and traction for R & O will be the number of students and teachers registered on the platform. Additionally, a main focus of our mission is teaching teachers better assessment practices, therefore, we will also use the test validation analytics (e.g., decreases in standard error of measurement (SEM) range, and increase in phi lambda at .7 (Φ(λ =.70)) to indicate whether teachers exhibit increasing knowledge of test design and test development principles. As knowledge increases, validation statistics should exhibit change, decrease in SEM range, increase in Φ(λ).
Target Customer Description
As noted in the Executive Summary, the edtech market is very interesting because the end users (i.e., teachers, parents, students) are not the people who directly purchase the services and/or products. There are three primary groups that R & O plans to target immediately as customers: teachers, school districts, and post-secondary institutions. All statistics in the following section were accessed at the Institute of Education Sciences, National Center for Education Statistics (2019).
the US K-12 teacher population is nearly 3.4 million teachers, and comprised of over 75% women. The mean age of US teachers is 42.4 years, with 54% aged 30-49 years. The greatest concentrations of K-12 teachers are located in the southern US (680,200 – 20.1%),= north-east coast (647,400 – 19.12%), and the Midwest (629,100 – 18.58%). Teachers tend to be White (81.9%) with Hispanic (7.8%) and Black (6.8%) minorities. The average annual salary for public school teachers in 2015-2016 was a little over $58,000, and for private school teachers in 2011-2012 was slightly over $46,000. Teachers tend to be socially-oriented, but apprehensive and resistant to implementing new methods, procedures, and / or software. This resistance makes teachers a difficult customer to win over, but once software and applications have demonstrated their trustworthiness and validity in addressing need they can be won over, at which point they tend to be extremely loyal. However, given that teachers’ salaries are notoriously low, they will be difficult to enlist as first-time customers.
In fall of 2016, there was a total US public school enrollment of nearly 50 million students. In 2015-2016, these public institutions received 46% of their revenue from the state, 46% from local funds, and about 8% came from federal funding. California had a total revenue of nearly $65 million in 2017, New York was the next highest with nearly $64 million, and Texas was third highest with nearly $59 million. For context, the states with the lowest revenues were North and South Dakota at slightly less than $1.5 million. Public schools in the District of Columbia, New York, and Alaska spent $21,000 – $25,000 per student /year. The next highest per-student expenditures was in Idaho, Utah and Indiana, $6,000 – $7,000 per student/year. Expenditures per student tend to exhibit an increase of 2.5%-2.8% annually (Rankings of States, 2018).
In 2017, there 16.8 million students enrolled in undergraduate, degree-granting postsecondary institutions. This number indicates an increase of nearly 27% since 2000. In 2017, 10.4 million students were full-time, and 6.4 million were part-time undergraduate students. From 2017-2028, full-time enrollment is projected to increase by 2%, and part-time by 5%. Interestingly, the greatest increases in undergraduate enrollment from 2000-2017 have occurred at private for-profit institutions (109%), then at private non-profit (27%) and public institutions (24%). Finally, in fall of 2017 10.8 million students were enrolled in 4-year institutions, whereas 5.9 million were enrolled in 2-year institutions, which is projected to increase to 6.1 million students by 2028 (3%) (Undergraduate Enrollment, 2019). Private for profit and 2-year institutions tend to be focused on career-oriented programs at the certificate and associate’s degree levels, which require certification and licensing. In 2016-2017, postsecondary institutions spent a total of $584 billion, with public institutions spending $372 billion, private non-profits spending $197 billion, and private for-profit spending $15 billion. While the largest expenses across these three categories (i.e., public, private non-profit, private for-profit) of schools was for instruction, the second highest expense was for a combined category of student services, academic support, and institutional support, ranging from 53%-65% respectively. Also in 2016-2017, total expenses per full-time-equivalent student was $45 thousand per student at public universities, nearly $59 thousand at private non-profit universities, and $16.5 thousand at private for-profit universities. For the combined category of student services, academic support, and institutional support these institutions spent $12.7, $18.5, and $4.2 thousand respectively (Postsecondary Institution Expenses, 2019).
In fall of 2017, the total number of faculty in degree granting post-secondary institutions was 1.5 million. This population of post-secondary faculty can be further delineated into three categories: public (971,000), private nonprofit (486,000), and private for-profit (86,200). This category of customer also includes instructors at 2-year colleges supporting associate degree programs, and certification and licensing programs (371,200). The full-time post-secondary faculty are comprised of 41% White-male, 35% White-female, 6% Asian male, 5% Asian-female, and 3% of each: Black-male, Black-female, Hispanic-male, and Hispanic-female. Faculty salaries can vary widely across five levels of titles: lecturer, instructor, assistant professor, associate professor, professor. The average salary was $86,700, with lecturers earning $60,700 and professors earning $122,000. Salaries are generally higher for male faculty ($94,000) than for female faculty ($78,000). Additionally, salaries can vary depending on the type of institution: full-time faculty at public institutions ($83,200), private nonprofit ($95,000), and private for-profit ($56,200) (Characteristics of Post-secondary Faculty, 2019). Faculty in post-secondary institutions are less predictable in their likelihood to adapt to and integrate new technologies, applications, or platforms into their day-to-day classroom processes. This tends to cut across both the age groups and field of study. For example, a professor close to retirement, working in humanities would typically be less likely to incorporate a new technology into their day-to-day classroom, whereas the similar professor in the sciences or mathematics may potentially be more willing to incorporate a new application in their day-to-day practices. Finally, associated with this fact, it may be difficult to convince this population to be early adopters as they will not usually adopt new technologies until licenses and contracts for these technologies are purchased by the institution.
Communication with Customers
Our main selling point is our customer communication. R & O will communicate with customers directly through in-person marketing campaigns, professional development workshops, and vendor exhibits. R & O will also use other forms of direct communication with parents (e.g., email, phone, etc). Customers will also communicate with tech support and pedagogical support through 24hr online chat, email, and phone.
The US K-12 edtech market contains approximately 3,500 institution decision-makers (e.g., school-boards, superintendents, etc), 3.4 million classroom teachers, and 50 million students. While estimates of annual spending per student vary, a conservative estimate ranges from $6,000 – $25,000, which takes into consideration not only public school systems, but also charter and private schools.
The US post secondary edtech market contains approximately 15,000 institution decision-makers (e.g., institution presidents, heads of procurement, etc), 673, 200 teachers / adjuncts / instructors / professors, and 16.8 million students, with an average annual spending per student of nearly $44,000.
State & Regional Market Size
When the US K-12 edtech markets are further segmented by state and region, there are 4,800 K-12 institutions in the state of New York, and 16,000 in the entire northeast region (i.e., DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT). New York state has nearly 241,400 teachers, and 2.8 million students; whereas, the northeast region has nearly 650,000 teachers, and 8.0 million students. Finally, New York spends an annual average of $24,000 per student. When expenditures for students are averaged over the ten states in the region, annual expenditures per students decrease to about $17,000.
Market research indicates that the post secondary edtech market contains 298 institutions in the state of New York, and nearly 900 in the entire northeast region. New York state has nearly 32,000 teachers / adjuncts / instructors / professors, and 1.3 million students; whereas, the northeast region has nearly 112,000 teachers, and 3.7 million students. Finally, New York spends an annual average of $14,000 per student, and the northeast region spends and annual average of $15,000.
Given the size of the market, annual growth rates, estimated annual revenue of the web-sites / applications / platforms in this segment of the edtech market, R & O expects to generate $2- $4 million in annual revenue based on state and regional sales within 2-3 years.
This would roughly require enterprise contracts covering 66,700-133,400 students in K-12, or enterprise contracts with higher-ed institutions covering 40,000 – 80,000 students. These sales numbers are based on the average amount spent on instruction for a single student in New York state and the northeast region.
Taking into consideration the projected expenses against projected revenue, R & O expects to return initial investments (approximate range $625-$750k) plus 20% within 4-5 years of product hitting the market.
First year expenses are projected for three main categories: salaries and benefits, marketing, and additional operating expenses (e.g., office, supplies, utilities, etc). The largest proportion of these projected expenses is dedicated to salaries and benefits ($395 -$510k). Due to R & O’s blended marketing and customer support approach, the projected proportion of expenses dedicated to marketing is somewhat high; however, justified based on marketing plan and potential return on investment.
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