Audience members asked the panelists what else it would take to create a healthy [entrepreneurial capital] market. Panelists noted that K-12 public education is an enormous, fragmented, market, where ventures often take longer to mature than in other sectors. Kaplan pointed out that more effective capital markets exist in sectors where the demand is aggregated, such as in pre-K or postsecondary education. In these markets, money follows the consumer and 'you can start to build bigger, better, more professionally-run schools' that, in turn, open up access to more capital from interested investors who see the potential of these models. Conversely, K-12 education is subject to local control, which prevents aggregated demand, explained Shelton. Kaplan added that this construct leaves few incentives to invest in K-12. 'In investing, he reminded the audience, 'there are no extra points for degrees of difficulty.'This pattern raises the question: is there a way to aggregate demand in the K-12 space? Shelton poisted that one way to go about this is to segment K-12 education into separate service markets, but that concept is undermined by the fact that vey little is known about what truly works. As a result, individual entrepreneurs and companies often are prone to building systems and structures that are highly tailored to the immediate needs of their organization and their student population. 'People legitimately believe that this little thing that they're going to do is going to make the difference,' Shelton explained. 'Even if it is not getting funded, people would rather cobble together their own customizable system, perfectly matched to their specific needs.' Cole suspected that this focus on specific details may be the result of competition among this relatively small group of entrepreneurs. 'In so many cases these leaders are seeing each other as competitors,' she said. 'Because there are scarce resources and they're going after many of the same funding sources, they can't figure out how to collaborate.'This problem may be particularly acute among nonprofit education ventures, which do not experience the same level of competition imposed on for-profits by the market. 'In nonprofits, we don't measure each investment against results,' explained Shelton. Cole pointed out that this allows nonprofits to continue securing grants and to stay afloat even when their results are poor, which deters them from seeking mergers or alternatives business models. Kaplan noted that this is a sharp departure from for-profit space where, in his words, 'if someone knew a cheaper better way to do something, they would grab it.' The nonprofit market also fails to reward the most effective ventures. 'There's a fundamental disconnect between performance and access to capital,' Shelton explained, which means that, 'even a high-performing venture is not ensured that it will receive sufficient dollars in the current market.' What the market needs, Shelton suggested, is general agreement on the metrics and definitions of success, especially student achievement metrics and organization efficiency.
Tuesday, July 07, 2009
Connecting the Dots: Standardized Testing and the Charter Chain Movement
There's a huge push for standards, innovation/entrepreneurship, charter school chains, and taking ideas "to scale." These ideas are tightly connected. To see how they're connected, take a peek at the NewSchools Venture Fund's 2008 annual summit (the entire thing is worth reading; Michelle Rhee and New Leaders for New Schools are both given awards). My bolds:
Shelton is now sitting in Duncan's Office of Innovation and Improvement, which is the "nimble, entrepreneurial arm of the U.S. Department of Education" created under President George W. Bush. Shelton's experience in education began as the co-founder and CEO of LearnNow, a for-profit charter chain that managed to be sold to Edison just before Edison's Philadelphia debacle (and the ensuing stock collapse, the Florida public employee pension fund's purchase of the stock, and Jeb Bush tomfoolery). NewSchools Venture Fund was one of LearnNow's biggest supporters, and NSVF walked away from the deal with a cool million in profits (they managed to sell their stock for a net gain around the time of the aforementioned Edison turmoil). From there, Shelton hops on at Edison, works for NSVF as their East Coast leader, jumps over to the Gates Foundation, and now lands in Duncan's DOE. I suppose we should look at what this guy said in the past - he is, after all, a public employee who just happens to be sitting on the $650 million "Race to the Top" fund. The other two panelists certainly give us some insight into how education entrepreneurs think as well.
You'll also notice Shelton's comments on local control of education, which he claims gets in the way of "aggregated demand." In other words, the corporate charter school movement has a more difficult time orchestrating their hostile takeover of public education with pesky local control and democratic forms of control over education. Mayoral control, minimizing the role of school boards, and allowing for more authorizers of charter schools (as described here by the National Alliance for Public Charter Schools in a report arguing for the deregulation of charter school authorizers. Notice the number of Education Sector contributors; NewSchools Venture Fund's former CEO and current board member sits on the Ed Sector board) would sure make it easier for these innovators and edupreneurs.
Shelton reveals how the standards movement is connected to the charter chain movement when describing the role of test scores: "What the market needs, Shelton suggested, is general agreement on the metrics and definitions of success, especially student achievement metrics and organization efficiency." National standards, like the ones currently being created by Achieve, the College Board, ACT, and the Gates Foundation, would sure make it easy to spread curriculum and materials to the wave of ill-prepared teachers in the various charter chains.
Shelton repeats an iteration of the privatization movement, this time targeting only part of the school system rather than the entire school (Shelton probably learned this during his experiences through LearnNow and Edison): "Shelton poisted that one way to go about this is to segment K-12 education into separate service markets, but that concept is undermined by the fact that vey little is known about what truly works." In other words, we have no idea what works - but we have the backing of various philanthrocapitalists willing to fund our experimentation on urban youth.
For all the talk of competition (between students within a school, schools within a district, and states within the nation), one presenter brings up how bad competition can be for these start-up companies. They're competing for the same resources and just cannot figure out how to work together. Education entrepreneurs consistently gripe about the lack of competition in education, but once they get their foot in the door they start whining about competition: "'Because there are scarce resources and they're going after many of the same funding sources, they can't figure out how to collaborate.'" It seems to me that if this competition for scarce resources makes it difficult for edupreneurs to collaborate (which the presenter notes is a negative), why would we want schools, students, and communities competing against each other? Collaboration is not only a highly desired ability in many areas (personal relationships, work settings, etc), it's an absolute necessity if we're going to deal with global climate change, war, poverty, etc. But we're told we need to compete. Why? Because China and India are pumping out hundreds of thousands of engineers that will be capable of threatening our reign over the rest of the globe (Bracey debunks the numbers here).
The privatization becomes a little more opaque, this time under a President who ran on a platform promising for transparency and a shift away from the policies of the Bush Jr. years. But hey - dontcha think a Palin Presidency would be a hell of a lot worse?
Posted by Ken Libby at 3:25 PM