Panel: Education Disrupted | Macquarie Group
As we spend today exploring digital society, education is undeniably one of the most important aspects of that society. From Covid turning into a virtual environment, the changing skill needs of employers around the world are seeking to close the gap in global education. The world has continued to see changing demands and disruption in the learning sector, and technology has facilitated a step change there. Today we have the distinct pleasure of being joined by a panel of leading disruptors in what's, you know, forecast to be a $10 trillion dollar industry in the next decade. I'm Sam Shah, Global Head of Software and Services at Macquarie Capital. And today I'm joined by Simon Allen, CEO McGraw Hill Education; Marnix Broer, co founder and CEO StuDocu; Frank Britt, CEO Penn Foster; and Alex Burke, Ceo of Education Perfect. If you have any questions for Simon, Marnix,
Frank or Alex, please add them to the Q and A box at the bottom of the player. Welcome to you all. You know, as we start off, you know, Simon obviously, an important few weeks in the history of McGraw Hill, you know, the company has got such a rich history with over 130 years, uh, you know, in the making, in some respects, and quite a few dramatic changes over that time. Perhaps you can put the latest developments in the context and how the dramatic change, you know, has impacted the industry over the last few years, and maybe specifically McGraw Hill. Yeah, yeah, happy to Sam and thank you for inviting me. I'm looking forward to joining the panelists here, I would say from McGraw Hill we're at that lovely intersection of great content and brilliant technology and where the two combine to make sure that we're providing students and teachers the absolute best materials that they can possibly receive to help them through the education journey. Now for us, as you say, we've got a rich
history 130 plus years and many people think of us as a textbook publisher, which is fine. But of course our business has significantly transformed since those days and now, well over half of our business, in fact, just about three quarters of our business is now digitally delivered. And the reason is that it's a more elegant way. It's a more inclusive way of improving education from both the student perspective and their outcomes, how well they do. But it's also very, very helpful for the teachers because they've got far more far much more flexibility in the way they assess the students the way they can intervene if problems may arise. And for us, to your question, you know, the last few years have been very changeable, particularly the last year, but it's actually been a decade in the making. This transformation
towards digital delivery of education has really been at least a decade or more, but it's been the last couple of years that we've really seen it accelerate because students and teachers are now very, very aware of the benefits of technology as you and I have talked about a lot recently within higher education in the US, we're looking at over 80%, it's about 82% of students now receive their material digitally and they receive it often through inclusive access, which is that it makes it available at the lowest possible price point. And it means it's accessible for all students. So we're really, really bullish about how the future will continue to grow digitally. We're absolutely committed to providing the
best quality content and the platforms McGraw Hill Connect or McGraw Hill Aleks to make sure that we give students everything they need to give them the best chances of success. That's great. That's great, Simon and maybe maybe turning to to Marnix really quickly, you know, obviously McGraw with 130 year history, you know, you're sort of in the first decade, um you know, since the company's inception and so being the youngest company on this panel and on the virtual stage today, you know, when you look at sort of the disruptive factors and the impetus, for founding StuDocu, you know, what were those and what have you seen in the market in terms of, you know, evolution through the company's young history. Yeah, well, for us, what we know is especially in 2013, I was studying myself, I saw that there was something missing where students could easily share knowledge with each other. And to be more precise, there was both on the end of purely documents, like study guides, summaries, lecture notes, these kind of things, um and also in answering each other's questions, which students have a lot and they actually help each other a lot outside of the classrooms, let's say.
That's where we actually started solving this issue by tackling the first problem, where it was easy to find your study resources and share those with the others. Because in the in the days I was preparing for my exams, it took me literally a few days to get all the knowledge I needed before I could really start studying for my, for my exams. That's why we we launched this platform where students can easily go to, they share their own documents, but they can of course also start using the others , which have been shared previously by other students. Now a few years later we're also busy with the second problem, let's say. So we're now focusing more and more on the community part. We're not only sharing the knowledge but actually also asking each other questions and getting the answers to it is sort of the new features that we offer. Aside from that if you're really in a lot of struggle, which help, which happens a lot as
well, you could, for example, also easily find a tutor who can help you out and back in my days, let's say, I mean it's not that long ago but still I am graduated by now, but at that moment when I needed help from a tutor, I really had to sort of post a note somewhere in the library. Like can somebody help me out with some mathematics where for us it's now much easier to connect these students given that they're all at one platform. Interesting. Thank you. Maybe turning to Frank quickly, you know, as we think about
disruption in, you know, for Penn Foster, that's really sort of disruption, not even in the broader context, but in, you know, kind of the workforce context and the up-skilling context and you know, given what Penn Foster does in terms of its ability to to enable students to flexibly access education, to fit in with lifestyle, to fit in with budget, to fit in with, you know, career aspirations. You know, we're at such an interesting inflection point in the global economy in terms of, in terms of upskilling what are you seeing is the growing areas that need in the economy and, you know, how its Penn Foster, you know, impacting that? But as you know, Sam we're among the largest middle skilled focused job platforms in the country. We serve about 300,000 working adults a year at the jobs that we are focused on. We refer to them as across the color
spectrum. Which is, there are green jobs. There are great jobs. There are pink jobs. Pink jobs being healthcare, green jobs being environmental. And what were preoccupied with is helping about half the US workforce. About 80 million working adults who are not aspiring to four year degrees. Make sure that they can sustain employment success over the years ahead.
And so we're preoccupied with what are those jobs of the present and the future that are emerging. What's interesting is you think about what a job is. If you sort of atomize it. It's really just a collection of skills and what's interesting about it, if you get a time lapsed photography view is that there are jobs that are still called the same things where the anatomy of those jobs has changed because the skills have changed. And in some cases there's inventions of new jobs. And so it's, it's actually a complicated question to figure out when is a new job a new job and when is an old job refreshed, and what are the requirements to help a person stay relevant in that career path? The second observation we would make beyond trying to help people maintain the right kind of employment for their success is that one of the challenges of being particularly middle skilled workforce in contrast to higher ed and particularly like elite MBA programs. If you go to Harvard Business School, the signal to noise ratio is perfect because there's like 15 jobs you'll get, you have unlimited demand. It's almost like you're deciding what to do
because you have a perfect line of sight to what your options are. If you get deeper into the workforce system, the signal and the noise changed a lot and this gets a lot noisy with a lot less signal. So we're trying to do is to help people navigate that noise because the system itself is set up in a very siloed, fragmented way. The support systems are fragmented, the data pools are fragmented across the workforce world and alike. And we're trying to connect
for the consumer, the learner, the full architecture of what their needs are. So we acquired recently the largest discovery platform in the United States, which were now connecting to the largest workforce development platform. And then you don't have to be a strategist to figure out the third leg of the stool will be connecting that to the predictive elements of employment.
So this idea is emerging as the primary partner for helping people sustain and renew their career success, which is bigger than just up skilling. It's the full continuum of the journey of career management, we think there's a massive unmet need in the market for that, and consumers are hungry for those types of solutions that connect and we have a lot of work ahead, but that's what we're trying to do, build that community of middle skilled workers to give them the economic mobility that they pursue in whatever geography and whatever occupational area that they perceived to be the best for their lives and for their families. Great, fascinating you know, I think kind of move to Alex for a second, you know, what's interesting is obviously, you know, many of the aspects of what, you know Simon, Marnix, uh you know, Frank address is, is sort of the higher education, you know, continuing education, you know, realm education perfect obviously, you know, had so similar types of impacts from a technology disruption perspective, but in, you know, in the, you know, in the K- 12 realm and particularly in, you know, in and in Asia, you know, as you talk about virtual learning, the shift toward that in that part of the world, do you see the demand dynamics, changing there, how do you approach it? How is education perfect? You know, been able to kind of make such a, such a deep impact, I guess. You know, firstly the, the profile of digital
tech within classroom has clearly been accelerated due to covid and schools being disrupted. I think what we've seen is that firstly, a lot of schools actually weren't ready when, when Covid hit. And a lot of those schools are, the reality is some teachers haven't even used a zoom call before and we're trying to get used to a lot of digital tools. So it's very clear that there early on their digital transformation journey. And there was also quite a, quite a mixed match for equitable access. So there was a lot of what we saw was a lot of schools didn't have 1 to 1 devices and there were students as well, they didn't even have broadband at home. And I've heard stories of that all over the world. So there was a big, big access
difference in in terms of how we responded and how we've worked. It's important for us that we're solving, you know, points of pain, meeting user needs within teachers in classroom. And I think for us it's it's a change management piece, really, it's a a hand holding of teachers to get them used to the digital tools and demonstrate the value of how data can help with differentiated learning and how through auto marking, it can save them time and just really hand hold them through the process of using tech within the classroom. You know, and maybe open it up to all of you. Um you know, clearly at this Tech Summit, we're focused on using technology, you know, not just even even in the developed world, but also, as a tool or a mode for upgrading skills or opportunity sets within the developing world in low and middle income countries. And it's an acute,
you know, issue or sensitivity because, you know, with as many as half of 10 year olds, you know, not being able to read age appropriate text. You know, if if all of you or some of you had a view, I mean what more in your opinion can we be doing? You know, either individually or through our companies or collectively to address the global education gap? Yeah. Sam I would say that just to echo Alex's point, you know studies we did across the US, barely 37% of students actually had daily access to digital devices in K-12. That's incredibly low. That's very very sad. That creates the problem right there,
of inequity and that's what we've got to make sure that we shift thankfully now post pandemic, that number is now about 73% but it still has a long way to go to really improve. And I think to your point when you look at 10 year olds, it doesn't really matter what the age is. I think part of the problem has been that we've been quite obsessed of reading grade levels or creating material that is aligned to a certain age or grade level. Whereas we're more interested now and we
should be more interested now in assessing the student performance and understanding regardless of their age and making sure that we can then provide age appropriate material, particularly in reading and math to really help them close the gap that may be there. And as Sam, as you know, we created something at McGraw Hill Rise, it's called, that really helped teachers understand what is the gap, the covid gap as it was referred to a few months ago. And we found that it was 6 to 12 months of problematic reading regression, math regression in how they were trying to learn. And the biggest thing you have to do is understand
what is that gap? How at what level are they? So the ability for us to create intervention tools to to assess where students are. At that point, we can go forward, create the right materials delivered in the right way to close the gap as quickly as possible. The age is less important, but the level of attainment is what's key and that's where technology gives us a huge advantage. One of the biggest challenges, I think, is that, you know, with the current system, it's very hard to have a real time view really of what's happening. And I think that's the massive opportunity for technology in that if you could give teachers that data first mindset by giving them, you know, true data around how a student's progressing, student's engagement, then you can intervene and help them with those pathways.
And I think that's the sort of true power of a sort of ended classroom environment really. You know, the combination of then technology helping and aiding a teacher interact with their students and push them into the right direction to help. They're great. That's extremely helpful. And maybe, you know, Marnix and Frank for you before we open it up
to the audience, questions looking forward, what technologies would you say most excite you as you look at the future of education? Yeah, I think in our case, in our case, thank you I think in our case we are excited about the core innovations that are happening in education. However, we think there's two central adjacencies that I think we'll drive even greater alpha. We are as you know, Sam, one of our financial sponsors is one of the largest hedge funds in the world. And the reason we agreed that they would be good partners is because their history, of course, is to use data machine learning and the like to drive alpha in financial markets. And we believe that there are significant operating to apply those same principles to human capital in the same way they've done it for financial capital. And I think the notion that education is going to self invent the ability to drive outside insights on uh consumer learners in and of themselves, I think is an incomplete view. I think you're going to have to
find best of breed industries that are masters of using data to drive outside outcomes and you need to inculcate that into the education sector. And so a) we believe that non traditional providers like hedge funds can actually be quite helpful to driving better student outcomes. The second framing that we view is that the blurring of the distinction between Edtech and job tech, if you look in the last five years, Sam as you know, the majority of the funding in the combining of Edtech and job tech sectors has actually been in job tech; it's like 90% of the total funding. And so we think that the innovations that are ahead have to do with predictive employment. If you sort of put your five years from today hat on a minute you might say, wouldn't you want to enroll in a program that you have a super high correlation to outcome of employment with certainty and in order to make that claim and then to have it play out, you need to have a very sophisticated view on the whole question of discovery learning and then placement. And so we think there's a lot of innovation in the application of data as it relates to matching to employment, particularly again in the middle skills where the signal to noise is a lot noisier than if you go to Harvard business school where it's almost perfect and we think there's a lot of opportunities to bring new types of technologies from within and outside the sector to help make employment predictability a natural complement and extension of all the innovation that has to happen within the core of learning itself.
In terms of my most exciting technologies from the last two years, I think if we have to seek for positive notes of the whole pandemic, I would say that it's super nice to see that educators were actually pushed to start using technologies because education was far behind where when it comes to adoption of technologies in work, let's say, any company was way further ahead than education was. But Covid pushed everybody to from day to day suddenly to switch all to online services. A lot of new technologies have been developed in the meantime. But there were already quite some very nice technology being produced but simply not really used yet. Now with this push, you can actually see finally some um yeah,
better, better. You say that it's more like suddenly they also start adapting to new technologies and you can see education improved there. Of course, there's a lot to do still. But I mean it's also very impressive how fast they picked it up actually and that education could continue. Right now in terms of the technology I'm looking forward to is actually examination tools because right now that's still pretty difficult to have everybody in one classroom taking exams. Also taking exams in general is also very old fashioned and haven't
changed for the last 2000 years or perhaps even more. So, let's see what happens there. And I think that many companies are now busy solving this issue as well and hopefully educators can adapt to it quickly. You know what, let me just add, if I may Marnix I think you're exactly right. And what's interesting is, to your point, the number of
faculty and students that have been forced online and to learn remotely, the great thing is that from what we can tell, they don't want to go back once they've been forced in and they understand the benefits and the value and they can see how it works and get the flexibility it provides, the desire to go back to a traditional classroom or print out or whatever it may be, that's gone. Once they've made the switch, they've accustomed to it, they've really seen the benefits, it's now downhill from here on. It's very encouraging. I think that's great to hear. And so perhaps they needed to push in a way and yes we needed that. Yeah, no, absolutely, absolutely. Well in the, you know, a few minutes we have left, we do have some questions from the audience, that I think are quite compelling, and I'll open it up to all of you. The first being, obviously large cap tech, in terms of Google, Microsoft, etc, Salesforce moving ever so closely, you know, into the ed sector, in their own way.
What role do you see those players, taking in both K-12 and higher ed and continuing ed in the next decade? I think they can be extremely helpful in connecting the teachers with the students. They do an awesome job with stuff like, I mean Zoom as well, of course the Google Meets, but also the collaboration within documents, the presentations, raising hands, raising questions, doing polls, connecting students in breakout rooms to give some extra lessons. Perhaps some tutors who can stay online. There's many things to explore there, but I think especially in connecting people from different places in the room. Yeah, I agree. I mean, I think, you know, in the K-12 space Google Microsoft are in dominant. So it's either a Google users. Every school uses Google or they use Microsoft.
I think when they play to their strengths, there's huge value, huge value to schools and for us and businesses like ourselves. It's important to think about that technology ecosystem and think about how you integrate and play really well and create a really nice experience, a nice seamless experience from say Google Classroom to then to our product that's actually in in classroom. And the businesses that can really make that seamless experience are the ones that are gonna and to do do really well in the future. I think another lens on this, which is more of a capitalist view than a student-centric view, and I think to myself as a student first: There is an interesting arbitrage opportunity between public and private markets. If you look at the health care sector globally it's
about $12 trillion, and about 60% of that market is public. If you look at education broadly, it's $6 trillion but it's less than a trillion dollars public. So my point is that in the education sector, it's an under penetrated category relative to public market access. And so there's an opportunity to arbitrage that if you will, unrealize public market value and that's obviously not lost on some of the big players like Microsoft and Google and I think they are uniquely positioned as a logical adjacency to come in and capture some of that market cap that is not currently available because the education sector being, if you will, under penetrated in the public category itself, that's also why you see the catalytic effects of SPACS and things like that because you know, you look at the multiples on some of these companies, whether the Coursera of Jag or guys like that, they're they're good companies, but they also have benefited from scarcity and the public market investors need portfolio and they need index fund investment and they're just literally not enough assets to invest in. And so I think that the Googles of the world and the Microsoft and the Linkedins want to arbitrage part of that, and that's another reason beyond all the student impact, social reasons that I think you'll see them take an even more aggressive posture relative to Edtech.
Yes, Sam, the only thing I just add, I think they've been great enablers, you know, Microsoft and Google have been in the education space for many, many years and they've been great enablers throughout K-12, higher education, graduate school, um we have a lot of respect for how they operate within the sector, the choices they decide to make on what they do from a content perspective, how they think about delivering, how they think about engaging with the students directly or the institutions where they have tended to focus in some cases, that's going to be interesting to track and to watch, but that they've been, they've been a very good additive to the whole process of education because of what they've enabled. And you all touched on it a little bit in in the last few minutes we have here, you know, so much of what we're talking about, you know, in a technology context is also impact and obviously no larger part of society that's impactful then education as being players in the private sector beyond just obviously, the capital, and Frankie touched on it a little bit, in just impact on society, you know, what would be the one suggestion that each of you would have on the experience the private sector can play in terms of making an impact? I think one issue we haven't talked about is actually the home situation of the students right now. I mean, I'm not sure of course how long it will take until we're actually back in the classrooms physically. Uh, with back to classrooms, let's say. But in the
meantime, students have to stay at home work studying from there and some have a spare room where they can have the quietness and the space to actually focus on the studies, where some actually live in a much smaller house, perhaps with four other brothers and sisters not having that time to actually concentrate on the, on the study field. So perhaps the private sector with a lot of space, large office is probably empty, etcetera. Can actually offer some space to work at safe distance and help these kids study and have the room to actually concentrate on their studies.
I think that consumers are frequently discerning regarding the value systems of the enterprises they want to partner with as learners. And I think that we all have a very important role in terms of diversity, equity, inclusion, and social justice. And I think that our institution and I think many others have to look a lot more like the people we serve and have to have a different kind of engagement with that population.
There are there are millions of people who have insufficient voice that are underrepresented and need advocacy. And I think that this, you know, this idea like it's everyone's on the outside looking in is an interesting dynamic because actually, most people feel they're on the outside. So the majority of the outsider rather than the majority being the insider. And I think education institutions in particular have a unique opportunity and role to do what they can democratize opportunity and to uh, elevate people who don't have the same privilege a lot of us have had. And I think that the companies that do best at that will A) do well for the
world and B) I think they'll just be better organizations, they'll attract better people, they'll attract more progressive investors. And I think ultimately, if we all align around that idea of diversity and equity inclusion earnestly, I think we can have an outsized catalytic effect on making sure that the world's a fair better and, and often more competitive place. Yeah, I'd agree with Frank. I think, you know, the equitable access point is definitely a gap and it's definitely somewhere, you know, something that the private sector can really help support. The other thing, I think that that is changing is that, you know, curriculums are changing the future of work, I think there's more the private sector could do at grassroots level. And I saw schools change and how learning changes, there are opportunities for the for those sort of organizations to really add value and help help that sort of grassroots system improve people's opportunities going forward. Absolutely
Well, thank you all for the time, you know, I would just close by saying, you know, as we look forward and you know, as what you heard today, each of these companies is forging the path forward and what education will look like over the next decade. And what's most unique about them is that despite where they are in their life cycles and scales that they've achieved, they're still finding ways to innovate each and every day. And so thank you again. Simon Alex, Frank, Marnix, and appreciate your interest and appreciate the audience interest as well. Thank you so much. Thank you, Sam. No problem. Thanks.