In 2012, education technology firms attracted $1.1 billion from venture capitalists, angel investors, corporations, and private equity—an order of magnitude more than the industry was pulling in 2002. Startups Coursera and Udacity, which offer high-quality online college courses to the masses, have each received more than $20 million from investors. Big corporations are buying their way into the industry.
When this kind of money flowed into tech companies in other sectors of the economy, we saw radical improvements in everyday transactions, as well as some dramatic booms and busts. Think Amazon instead of the mall, iTunes instead of the record shop, Expedia instead of a travel agent. But also think Pets.com and Full Tilt Poker, where intense competition and bad politics squelched what looked like good bets. There has been a flowering of good ideas in online education, like hybrid learning, in which kids still head off to school every morning but receive the bulk of their instruction from an infinitely patient piece of software instead of a harried, overworked teacher. Yet education, particularly K–12, has remained mostly immune to the improving and empowering forces of the Internet, leaving millions of kids stuck in offline backwaters for six hours a day.
Long-standing rules requiring that students sit in desks looking at a teacher for a certain number of hours a day—so-called seat time and line of sight requirements—could kill online learning in the cradle. Requirements for specific teacher-student ratios are tough to translate in a world where a single school day might have a student chatting with a friendly avatar online, getting tech support from an in-person teacher’s aide, and emailing with a subject-specific tutor, all while having her tests graded by a team of data-center workers in India.
In states where online education has made headway, often via laws that make room for charter schools, local and state teachers unions have filed lawsuits and pushed legislation to place strict caps on charter school enrollment, close virtual schools altogether, and—in a rather spectacular display of purposeful obtuseness about how the Internet works—to limit enrollment to students who live in the district in which the online school is based.
The National Education Association spent $24 million in the 2012 political campaign cycle and another $6 million on lobbying that year. Virtually all of that money went to Democrats, who are well aware the NEA is not welcoming online education companies with open arms. (Exact wording from the NEA’s website: “There also should be an absolute prohibition against the granting of charters for the purpose of home-schooling, including online charter schools that seek to provide home-schooling over the Internet.”)
Truly amazing new products have transformative power. And competing with free isn’t impossible. But online education entrepreneurs looking to break into the K–12 market will have to do much more to come up with a product that’s a little better than what’s already out there. They have to come up with something truly new and mind-blowing, because to survive they’re going to have to short-circuit, bypass, or rewire the entire education bureaucracy. Good luck with that.
Despite doubling funding in the past 20 years, public education is failing. But not to worry, teacher's unions are ensuring bad teachers are retained and reform is impossible.