Silicon Valley was supposed to disrupt education, but economics is getting in the way. “Personalized learning” hasn’t been able to turn a profit, even with multimillion dollar susidies from celebrity CEOs.
The promise was huge. That well-known racial gap in learning was going to be bridged through individual lesson plans and progress reports.
Max Ventilla sold investors on a promise to build modern, technology-infused schools that would revolutionize education. The former Google executive convinced Mark Zuckerberg and prominent venture capitalists to commit $175 million to his startup, AltSchool. The company built at least nine grade schools in California and New York, some equipped with ceiling-mounted video cameras, an abundance of computers, custom apps, robots and 3D printers.
But five years after opening, the for-profit venture has yet to solve a basic business equation. Despite charging about $30,000 for tuition, AltSchool’s losses are piling up as it spends at a pace of about $40 million per year. The San Francisco company is now scaling back its ambitions for opening elementary schools around the U.S. and will instead close at least one location. In an interview, Ventilla said it’s all part of the plan. The startup is shifting its focus to selling technology to other schools, a business which has struggled to date but that he said has a more promising future.
Venture investors spent $2.35 billion on education-technology startups globally last year, according to research firm CB Insights. But companies haven’t come up with a formula students will embrace or that can be deployed efficiently and profitably. The hype around online education has largely dissipated as dropout rates skyrocketed. Coursera Inc., backed by more than $200 million, cut staff last week and shook up the executive ranks, technology website Recode reported.
AltSchool’s pitch to investors was somewhat old-school. Ventilla wanted to build physical classrooms with first-rate teachers and complement them with “personalized” learning technology, so educators can tailor lessons for each child. At Google, Ventilla was in charge of an effort linking a user’s search history, emails, Maps usage and YouTube viewing habits into a single profile. He envisioned a similar approach to elementary schools.
With ample financial backing, including a $40 million round in May, AltSchool leased space in some of the country’s most expensive neighborhoods, hired experienced educators and recruited coders to build software for tracking classwork, evaluating students, ordering supplies, requesting IT support and communicating with parents. Ventilla had plans to expand in cities around the nation and license the technology. “We’ve literally built an operating system for a 21st century school system,” he said in 2015.
Inside the company, there was a struggle between the logistical demands of opening and operating schools, and the challenges of building technology that could be sold to educators across the U.S., said a former employee, who asked not to be identified because the discussions were private. Both initiatives are expensive. The software side won, and the company began shrinking the team in charge of school operations last year by cutting employees and not filling jobs after people leave. School sites in San Francisco were also consolidated, and plans for a Chicago location were called off.
Although the company touts the magic of its technology, two parents said their children benefited more from the extensive attention of talented teachers and small class sizes. There are multiple instructors per class, and the school places a premium on interdisciplinary projects, like building a model house that can withstand different weather—a task that incorporates current events, science, engineering and budgeting.
New Yorker’s in depth look at Altschools from a year and a half ago described the program when optimism was still high. An enterprising reporter went into the classroom to observe and found that tech in the classroom is a mixed bag of benefits and drawbacks.
The silver bullet that’s going to turn every kid into a genius remains elusive.