Are you K12 edtech startup that has a commercial software product you’re looking to sell to schools? We’re looking for startups like ourselves that are past the idea stage, even past the MVP stage, and now at that less scary, but not any easier “we’ve got enough money and some growing momentum to the point where we’re not worried about going under any moment, but we need to get more school sales in the next 12-24 months” stage. If you fit that mold, please read on. Or if you know anyone that does, please send this along.
They say in the startup world you should try “experiments.” Not like mad scientist experiments, but experiments where you see if something works or it doesn’t when it comes to your business or your product. In fact, when we did our edtech accelerator they were big on experiments that could be done really quickly – things that could even be quantified by a simple “Yes/No.” Consider this one of those experiments.
We talk a lot about sales at 7 Generation Games – because, well, people buying your product is how you get money. We previously experimented with hiring a full-time sales guy, but that experiment didn’t go the way we would have liked. We got some good data, a better understanding of what we need to do with our product, sense of the marketplace challenges, etc., but we ultimately didn’t get a lot of sales. And as a result, we no longer have a full-time sales guy.
However, we did come away with a few key takeaways (none of which were shocking, but are insightful nonetheless):
– School sales take a lot longer than you expect. We understood that selling to schools wasn’t going to be as easy as “Hey, buy our stuff!” and they’d just hand us checks. We had a couple instances where that actually kind of happened, but that was FAR from the norm. We predicted it would take us a year to start seeing some progress. The reality is it’s going to be more like two or maybe even three years – because schools are incredibly bureaucratic, and the bigger the district, the more red tape there is to cut through, the more points of contact that have to be made and the more decision makers you have to get to buy in.
– It takes time and money for people to know who you are – two luxuries most startups don’t have. This is one of those edtech founders’ conundrums: In short, it takes time for people in purchasing positions at schools to know who you are, learn about your product and eventually decide – after multiple points of contact – to purchase your product. Of course, in order to get schools to know who you are, you need to have someone basically making calls, attending events and getting the word out every day, year around. Which takes one of two things most startups don’t have: 1. Money to pay a qualified full-time sales person (realizing from the previous point, that you’re probably not going to bring in sales revenue for 24 months or more); or 2. Founders’ time (which takes away from the million other also important things founders needed to be doing and to which you likely can’t dedicate your efforts full-time). In short, you need someone to be making sales so that you have money, but you need money to pay someone to make sales.
– Schools often want companies that can offer more than a single product. The closer to one-stop shopping you can make it the better. Bigger is better, meaning the more products a sales person can offer a school, the more likely the school is engage in purchasing. The problem is most startups don’t offer a wide range of products. Case in point, we don’t make games that go from TK to Grade 2 or from Grades 9-12, yet in a number of districts, purchasing is made collectively, usually under the K12 umbrella (maybe divided by elementary and secondary). If you can’t offer options — even if they’re not the exact same option – for everyone, you’ll likely get passed over for someone who can. Score 0 for the “little guy.”
– There’s not a one-size fits all approach. There are thousands of school districts in the country, and there seem to be no two districts where school selling/buying is an identical process. In some districts, decisions are made at a district level. In other districts, they’re made at the school level. In many districts, you get conflicting information as to how decisions are made. You need to contact the “Director of Curriculum Instruction.” Or an “Assistant Superintendent.” Or a “Chief Information Officer.” Or the school principal. Or the teacher, but only if it’s below a certain price point. Or Person X if you’re selling content related to books, but Person Y if you’re selling digital content. Or Person A if you’re calling on Tuesdays, but Person B if you’re calling on an odd day of the month.
– Educational purchasing isn’t a “zero-sum game.” In other words, just because a district purchased a math software doesn’t mean that is the only math software they’ll buy. Look at your phone. Do you only have a single app? Or on your bookshelves, do you only have one book? No. And neither do schools. There’s so much talk around startups about “who are your competitors?” but the reality is – just because maybe another company doing something kind of like what you’re doing, it doesn’t mean both products can’t exist. (Just look at Uber and Lyft.)
– Once you’re in, you’re in. The renewal rate for school sales is over 90% meaning once a school system picks up your product, you can almost immediately consider them a lifetime customer. OK, that’s an oversimplification, but it does highlight that the biggest challenge when it comes to school sales is getting that first sale. It also means it’s going to be hard for new products to get picked up because basically schools are just going to keep using what they use.
None of these takeaways favor startups. That’s why the edtech space is littered with abandoned GitHub accounts and cheap tchotchkes bearing the logos of once promising companies.
This is coupled with the fact that education – while an important industry – isn’t one that investors, especially at the VC level, are falling all over themselves to back. Yes, there are investors who want to make impact investments that will benefit social good – but a lot just want to make a lot of money relatively quickly. Edtech, by nature of the school buying cycle alone (and compounded by more than that), isn’t a way to make a quick buck. So if you were planning on VC capital coming in to fund your product and an entire sales team until you get to breakeven, you might want to have a Plan B.
At 7 Generation Games, we decided wallowing in despair wasn’t one of the choices we wanted to go with, so we’re sending out a call to see if there are other likeminded, similar stage K12 edtech companies might be interested in joining together to form a “edtech sales collective” of sorts. It’s largely in the idea stage – but we think this could be incredibly beneficial to the right eight to 12 total companies. Right now, we’re looking primarily for partners on the content side (because the buyers of say a new LMS usually aren’t going to be the same folks selecting the math or language arts software).
Any company participating would have to commit cash – none of the money would go to the collective — but founders with a commercial product should realize that in order to get a quality sales person, you have to offer a base salary plus commission. That said, it would be at a fraction of the cost of hiring a full-time sales person that you could not otherwise afford. All collective members will have the opportunity to be involved in the sales hiring process.
As one startup building out a single product line tackling a specific grade range and content, we can’t offer everything that Pearson or the Houghton Mifflin or Scholastic can. But we know we have a really awesome product. Maybe you do as well. And if that’s the case, let’s talk about how we can get our really awesome products into schools and make some really awesome money.
If you’re interested and want more information, please email us at info@7generationgames.com.