As a 3x VP of Sales for companies selling to schools and districts, I made a ton of mistakes but also learned a few things along the way. Now, as an impact investor supporting K12 entrepreneurs, I speak with many founders who are building businesses that sell to schools and districts and they struggle to get their distribution to scale. There’s no doubt that selling to schools and districts is challenging. Those entrepreneurs who can figure out how to scale distribution have a major competitive advantage. Here are a few observations (there are always more) about why it’s difficult and what entrepreneurs can do about it.
4 Observations on Why it’s Difficult
- Pedagogical solutions are hard to scale. I applaud entrepreneurs who want to improve teaching and learning. So many of these entrepreneurs are former teachers and administrators and they have important insights on how to improve learning experiences. Their work is very valuable and advances the field. The challenge with startups that tackle pedagogy is that introducing new approaches often requires a change in practice for students and/or teachers and mass market change is typically a long, slow process. To build a business at scale, you need to be able to “Cross the Chasm,” as Geoffrey Moore argued, and go beyond early adopters to the majority of customers. When lots of change management is required to reach a mass market, adoption will require lots of heavy lifting and time.
- Systematic issues make it challenging for schools to add new things. State and federal compliance requirements are significant hurdles that limit the ability of schools and districts to invest in research and development and experiment with new things. Now, I know that schools and districts try new things, but how much more could they try if they didn’t have the compliance requirements?
- Discretionary budgets are relatively small. On average, schools and districts spend more than $12K per year per student. The vast majority of this funding goes to personnel, facilities, and transportation. In fact, about 80% of the budget goes to salaries and benefits alone. On average, districts spend about $400 per student on technology (according to ASCD), which is just around 3% of the total. This still amounts to roughly $20B spent on technology in K12 schools.
- Sales cycles can be long. It’s not uncommon to hear stories of entrepreneurs selling to schools in cycles that can last 6, 12, even 24 months. When you’re a lean startup with just a few months of burn, you can’t afford sales investments that won’t pay you back for a long time.
4 Things Entrepreneurs Can Do
- Pursue “business of education” opportunities. While pedagogical solutions are harder to scale, there are many opportunities to scale the business of education. Schools and districts have many functions that must be done on a regular basis that present opportunities to entrepreneurs to improve efficiency or effectiveness with technology. Swing Education, which matches top educators to flexible substitute teaching opportunities at local schools, is a great example.
- Focus on “jobs to be done.” I’m a big fan of Clayton Christensen’s work. Don’t add to the workload, make the “jobs to be done” by administrators, teachers, and students easier, more efficient or both. Teachers and administrators have many different responsibilities and their time is incredibly valuable. There are lots of opportunities for technology to help them be more successful in their work with less time and effort.
- Tap into reliable revenue streams. It’s really hard to become an overnight success as an entrepreneur in K12. There are far more examples of successful businesses that take many years to build. In order to build these types of business, you’ll need reliable revenue streams that purchasers can tap to purchase your products and services for many years. Good examples in K12 are the Title I and II programs from the USDOE. Funding amounts may vary, but these programs have been around for decades and are relatively stable.
- Qualify, qualify, qualify. As a long time VP of Sales in K12, I learned that sales cycles don’t have to be long in K12. For most K12 B2B solutions, the sales cycle should average 60–90 days and could be even less. This is enough time to have multiple meetings with multiple stakeholders with several weeks in between each meeting to coordinate schedules. I like the BANT framework as an approach for training B2B sales professionals on how to qualify and spend their time with prospects. Using a disciplined approach like BANT enables sales professionals to spend time with prospects who have what it takes to execute a decision rather than wasting time with suspects who might tell you they like what you do, but won’t purchase. With a few exceptions (e.g., really large purchases like a Student Information System or Learning Management System), sales cycles that drag on for many months or even a year or more should be a red flag for the entrepreneur that something’s not right.
I’d love to hear from you about your observations about selling to schools and districts and what you’ve done about it. Please leave a comment or contact me.