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Dec 02

EdNet Insight International Face Time: ePals’ Miles Gilburne on China and Beyond, Part I

International Face Time: ePals’ Miles Gilburne on China and Beyond, Part I

Nelson B. Heller, President, HellerResults — Friday, December 02, 2011

Education publishers have always had an interest in international markets. Now cloud computing; rising affluence in countries like Brazil, China, and India; mobile learning platforms; and a host of other market drivers are accelerating the globalization of education, creating new opportunities and threats. At September’s EdNET Conference, I spoke about this in my View From the Catbird Seat presentation, “Over There: Rockets and Giants.” In this article and others to follow, we’ll look at what’s changing about the international markets and how some savvy firms are responding.

Miles Gilburne, CEO of ePals Inc., has a long track record of building value from the transformation of publishing markets by digital media and collaborative online platforms (he calls this “solving old media’s problems”). Gilburne, a former senior executive and board member atAOL and, subsequently, AOL/Time Warner board member for five years, is also a managing member of ZG Ventures, a private investment firm based in Washington, D.C., which he founded, that invests in small, high-tech companies. If you’ve been following ePals lately, you know it’s making a transition to a far more substantial international profile with recently announced deals involving China and Germany . In today’s article, Gilburne shares insights about why the international markets are becoming much more attractive and how to assess whether your own business is right for them.

[Author’s Note: For this column I make a point of being neutral about individual companies and to get several perspectives so as not to give the appearance of favoring anyone. Nonetheless, this article focuses on a single firm. I confess to being impressed with ePals’ domestic and international ventures but have spotlighted it in this and the next article because there’s much to learn from their experience, thoughtfully shared by Gilburne. I’m happy to hear about your own company’s—or others’—experience for future articles.]

The Back Story

In the early 1990s, Gilburne, a media attorney and early stage venture capitalist, collaborated in building NaviSoft, Inc., an Internet software development company, subsequently purchased by America Online in November 1994. Moving to AOL, he reported to CEO Steve Caseand ran corporate development and strategy. A key figure in the AOL/Time Warner merger, he became a board member of the merged entity for five years before stepping down. Gilburne’s wife, Nina Zolt, is the Co-Founder and Chief Learning Officer at ePals Inc. She has extensive experience as an entertainment lawyer, digital media executive, and designer of digital learning products. Her work in education has focused on improving learning opportunities for all students in a digital age. Zolt’s interests are in genre-based learning communities, low-touch high-yield assessment strategies, critical thinking and problem solving, and Common Core implementation. She createdIn2Books, now ePals’ flagship Common Core eMentoring program, in 1998. In2Books started as a non-profit to serve under-resourced populations and spun its technology out as a for-profit that merged with ePals in 2007. ePals’ other products include the ePals Global Community™; SchoolMail®365; and LearningSpace®. The firm serves approximately 700,000 educators and reaches millions of teachers, students, and parents in approximately 200 countries and territories. Just this past August, to fund higher capital requirements and engineering talent for an enhanced software platform and globalization initiative, ePals went public on the Toronto Stock Exchange, raising $23 million. Gilburne took over as CEO of ePals in connection with the public offering.

Why International Education Markets Are Becoming More Viable

I asked Gilburne why international markets are becoming more attractive for education ventures. “Some of this is generic,” he said. “International markets are maturing in almost every industry. They’re where the people and the money are, so why would education be any different? But international markets have some unique characteristics with respect to education. Virtually every country now connects education with national competitiveness, and students everywhere see it as essential for a successful career.” All of the factors mentioned earlier are accelerating the globalization of education. “We’ve the same trends in the U.S., but international markets can often be easier,” he said, because for some, “they’re not as balkanized as our district-based institutions; cloud computing is more of a factor than in the U.S. since there’s less enterprise infrastructure to replace, some countries are investing more in education than we are, and home (consumer) markets can be much bigger. For example, in China, the importance of English language skills in general and more specifically in connection with qualifying for higher education in the U.S., uneven public education in parts of the country and, as a result of its one child policy, an intense focus by grandparents and parents on the educational success of that child, leads to real money being spent from the home on kids’ education.”

[This situation is true for India and Korea as well. According to an analysis by Edumetrix, in India, 50% of students go to private schools for K-12. This has created an extremely active for-profit market for K-12 that is basically a consumer market. In Korea, one venture investment firm puts the test-prep/cramming industry at $15 billion per year. A student’s chances of entering a top university are often determined by his parents’ ability to pay for after-school tutoring. The best test-prep schools charge more than $1,000 a month per subject (versus the average annual income of $16,000). Eight of every 10 students from elementary school through high school take after-school classes from private tutors or at “cram” (test-prep) schools, online or offline. Offline cram school courses cost up to five times as much as their online counterparts. Megastudy, one of Korea’s largest online firms, reports that 2.8 million students, including half of all college-bound high school seniors, are “members.”]

Gilburne continued, “At AOL we aimed for global interaction, both to replicate the U.S. business model and to add value by growing the community of users. We created an integrated ecosystem, putting platform with community and content. The same logic applies to ePals—and some countries are more willing to look at large-scale platform-based educational innovation than we are. In fact, scalability is critical, and web-based services make national programs feasible that would have been unthinkable a few short years ago.”

Can Your Business Fly Internationally?

Gilburne, whose ZG Ventures has about 20 firms in its investment portfolio, has his own filter for determining which domestic businesses make sense as international opportunities. “You have to have a ‘theory of the case,’ an argument about your value proposition that makes international a good bet,” he said. Pointing to ePals as an example, he ticked off the following:

* “ePals’ long suit is ‘policy management,’ also called ‘role-based communications security policy,’ which offers the capability to easily manage each user’s access to functionality according to the school’s policy code, from students whose access to groups and communication privileges is limited, to educators, parents, and mentors whose privileges are broader, up to administrators with the broadest privileges. For reasons ranging from safety to government regulation, policy management is key for school use of communication products in every country we’re in. To further enhance this value proposition, just last month we announced that our LearningSpace® 2.0social learning platform provides embedded access to third-party applications—starting with Microsoft Office Web Apps and Google Docs. Enabled by ePals’ innovative SchoolSafe functionality, schools and districts gain the ability to extend LearningSpace 2.0’s enterprise-grade platform by incorporating leading applications and productivity tools of choice within a safe, school-controlled, K-12 appropriate environment.”

* “Our products provide platforms that aren’t culture-specific. They provide utility even without curricula, supplying a lightweight approach to implementation. The platforms are very adaptable, provide an easy path for capturing early adopters, and offer an attractive vehicle for connecting home and school. Every year teachers will do more and more of this as the ‘digital wave’ expands around teachers, students, and parents. Though we don’t offer curricula in the traditional sense, our newest global community platform will have lots of new content and activities that will excite and motivate students and be pedagogically useful to teachers (e.g., collaborative, authentic learning experiences, such as language learning with native speakers around the world and global journalism with news desks manned by students, etc.). Activities like these fight the criticism that ‘plain vanilla’ platforms die in schools for want of understanding what they’re good for . The activities can represent a spectrum of structure from teachers self-organizing around great content to more structured activities adapted to the needs of teachers, parents, and students. The Common Core standards adopted by 44 states in the U.S .focus on the separation of skills, such as critical thinking, writing, and verbal communication from specific content around which those skills are taught. Collaborative, project-based learning aligns particularly well with the Common Core standards, which are the most logical standards for an international education company to focus on since they’re content and therefore culture independent. Countries will always differ on content taught in their schools. But all countries will want their students to master critical skills.”

* “ePals’ global community of students and educators provides a unique differentiator responsive to national priorities for language learning and cross-cultural experience. Students in Peoria, Illinois, studying Mandarin can be connected with students in China studying English. Language instructors covet these native language communities for their students, allowing them to practice the foreign language in the context of authentic, collaborative projects. This universal appeal lets us hedge our bets around the world with geographic diversification. What’s more, the platforms offer local, national, and global capabilities for home and school use, making ePals an attractive ‘higher value chain’ partner in each country.”

* “Design factors are important. We’ve been in classrooms for ten years and understand what teachers want and can make into useful learning experiences. We know when our network lights up; our metrics point to what’s working and isn’t. We’ve learned how to make implementation easy too—our SchoolMail365 integrates automatically with the district’s SIS. Now that everything is moving into the cloud—including internationally—the fact that ePals is architected to work on any cloud stack as an SaaS offering, making it a true VAR platform, is, I believe, unique in this space. And our platforms make possible a ‘low touch’ collection of efficacy data essential to formative assessment and personalized learning. Our architecture and value added to the K-12 cloud also help us in international markets since we can partner with companies such as with Microsoft and Dell, who are both investors in ePals and are already selling products into international education markets. Being able to attract partners like these, as well as others such as National Geographic and International Baccalaureate, with multi-national footprints is another big plus for moving into international markets.”

OK, Now What Do I Do?

If you’ve filtered your own circumstances against Gilburne’s “theory of the case” rubric as illustrated by ePals, your next steps are to identify the international markets that seem most hospitable to products like yours, understand the special challenges of doing business in them and, for those that also pass the P&L pro forma test, find local partners and create your detailed business plan. All of these are the subject of next month’s News From the HellerResults Group article as we wrap up with more of Miles Gilburne’s wisdom. In the meantime, let me hear about your own international wisdom.

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Dr. Nelson Heller is president of The HellerResults Group, a global strategic consultancy serving business and non-profits seeking growth opportunities in the education market. He is the founder of The Heller Reports newsletters and EdNET: The Educational Networking Conference, both started in 1989.  The EdNET News Alert, successor to The Heller Reports publications and now published by MDR, reaches over 31,000 education executives worldwide every week, and features a regular column from The HellerResults Group each month.  You can learn more about Nelson and his industry leadership at The HellerResults Group.  If you need strategic insight; business partners; international connections; stronger boards; keynoters; or entrepreneurial savvy, and want the insight of 30 years at the business and technology crossroads of the education market, you can reach Nelson at 858-720-1914, by email atnelson@hellerresults.com, and on twitter @NelsonHeller.