Earlier this week, Union Square Ventures announced that it was leading a Series A investment in an online education marketplace targeted at K-12 students. The platform is called Outschool, and you can think of it as a form of homeschooling.
Today, there about 55 million K-12 students in the US, with around 9% enrolled in private schools. Charter schooling is on the rise (somewhere around 3 million students), but so is homeschooling (similarly around 2.5 million students). Data here.
Homeschooling, at least in the US, largely started within religious groups. But that is starting to change and it is becoming more widely adopted. USV has made a bet that this trend will continue.
If you look at Outschool's model, you'll see that it shares a lot of similarities with other successful internet marketplaces. It is direct-to-consumer (the internet has a way of getting rid of intermediaries). The courses are significantly cheaper than traditional classroom schooling ($10-15 per course). And the supply-side of the marketplace (the teachers) is far more open and accessible to non-traditional participants.
USV gives the example of a human rights lawyer who is teaching on the platform and now earning more than $10,000 per month in additional income. I've never enjoyed online classes, but now that we have reliable video chat, maybe that starts to change.
In any event, where my mind goes with all of this is the impact on our built environment. We are heading toward more flexible spaces and we are doing a lot more from home.
Albert Wenger of Union Square Ventures recently gave a talk at the 2017 Blockstack Summit about “Decentralization and the Knowledge Age.”
He starts by talking about motivation and coordination.
The state, he argues, is good at coordination, but not so good at motivation. The market, on the other hand, is good at motivation, but not so good at coordination. Money and self-interest are powerful incentives.
He then talks about how networks have improved the market, the firm, and the state. When the cost of sharing information drops, everything gets better.
But there are downsides to networks. For one, they form monopolies. Consider Facebook in social. Google in search. Amazon in ecommerce.
They also create environments ripe for censorship and “algorithmic abuse.” Everything you see in your feeds is optimized to make you respond and/or feel a certain way. The line between delivering you relevant content and deliberate manipulation is perhaps a fine one.
So what’s the solution? Decentralized blockchain networks are one exciting possibility. But they also have their own limits and drawbacks. Albert touches on those in his talk.
The video is about 24 minutes. If you can’t see it below, click here.
[youtube https://www.youtube.com/watch?v=LgQT874KHuw?rel=0&w=560&h=315]
Albert Wenger recently penned an interesting post about the “R” word.
It’s about health insurance and why redistribution is a toxic word in U.S. politics, but also why much of what we do as a society – from public roads to insurance – is actually about redistribution. What I like about the post is that he cuts through a lot of the noise and gets right at the crux of things.
Here’s part of his conclusion:
So what should you take away from this? There always is some element of redistribution to insurance – at a minimum ex post and generally also ex ante. The “why should I (usually some healthy person) pay for x (usually some payment for someone from a different demographic)” objection to health insurance is about redistribution. We should acknowledge this openly and not pretend that it is otherwise, because then we can move forward and say “you should, because that is your contribution to how our society works.”
The point of his post, which he reiterates in the comment section, is that “insurance is a commons more than it is a market.” Too much individual choice – for instance, rich people opting out because they don’t need it – actually weakens the system.
But you should really read his entire post. It’s good.
Photo by Jamie Street on Unsplash