And One Platform to Rule Them All

Last month we wrote about the ascendancy of the Learning Experience Platform (LXP) as a new type of mediating technology for corporate training content and the resulting tension between content companies such as LinkedIn and SkillSoft who are incorporating popular LXP features into their own offerings, and independent players such as Degreed that aim to sit above the content layer. This tension between intermediating platforms and actual curriculum content is universal in the digital age and exists in every area of the education market. Ultimately buyers really do care more about content. But content is ephemeral and can become dated or stale and buyers’ tastes can change, whereas independently adopted platforms offer the potential for longer customer relationships and greater lifetime value.

While LXP technology may be its latest manifestation, this question of whether content or platform better owns the customer’s share of mind and wallet began at least 20 years ago with the advent of Learning Management System (LMS) technology in the corporate training market but is more recent to traditional education markets. In higher education, the content-agnostic LMS (led by Blackboard) had a 10+ year head start on most digital content, and in the K-12 space, where the LMS is only one of dozens of approaches to platform technology, the outcome of this competition between platform and content remains unresolved.

Traditionally basal textbook publishers were accustomed to “owning” a subject matter in a given district or state for a period of years. However today the market for curriculum content is becoming increasingly fragmented and far less easily dominated, with schools and districts migrating away from traditional textbooks and toward a range of supplemental and largely digital materials. (We addressed this topic more fully in March.) And as curriculum content becomes more digital, a variety of providers jockey for position as the primary layer of classroom interface while at the same time large content players work to add functionality so that they might retain their hold on the classroom and provide all-in-one alternatives for educators.

One of the emerging leaders in new forms of digital content is Francisco Partners-backed Renaissance Learning which has been aggressively acquisitive in adding a range of content offerings around its leading assessment platform. Though they are not alone in pursuing a strategy of aggregating content in an effort to take wallet share, they took a significant step toward adding platform technology to their portfolio in February with their $650 million acquisition of Nearpod, an interactive classroom instructional platform. Through this acquisition, Renaissance seems to be signaling an intention to create an all-inclusive ed-tech ecosystem designed to leverage its selling effort but at the same time, potentially crowd out the need for other providers.

Even as Renaissance may be signaling a move into the platform layer, others are stitching together alternative platform-centric, content-agnostic models. Last month Kahoot!, a global provider that allows educators to gamify all types of content, acquired Clever for $435-$500 million (depending on performance) or approximately 10x estimated forward revenue. Clever is arguably one of the most successful content-agnostic platforms in the K-12 market, with support for 89,000 schools in 65% of school districts and more than 50% of U.S. students, including 20+ million students every month. Its superior position is the result of very “affordable” pricing and savvy go-to-market strategy – it charges developers to participate in the platform while schools’ benefit, ostensibly for free. The company facilitates single sign-on across a wide range of applications, solving what may be teachers’ biggest pain point given the diversity of applications they are being asked to access. Clever is partnered with 600 application developers, including most of the U.S. content providers as well as Google Classroom.

The race for the winning model in the K-12 classroom environment – i.e., content-centric (e.g., Renaissance, Cambium Learning) or content-agnostic (e.g., Kahoot!-Clever) – is fully on, even as back-office combinations as exemplified by PowerSchool and Frontline Education have a commanding lead in the administrative platform sprint (Tyton Partners represented Accelify Solutions in its 2019 sale to Frontline). With other platform contestants looming and robust prize money (i.e., federal stimulus dollars) available, we expect a dynamic stretch in the K-12 ecosystem.