By John Bailey
March 20, 2013
Fred Wilson has a thoughtful post over at AVC on why they spend so much time on “policy stuff.” His response,
The short answer is that Brad, who I founded USV with a decade ago, has felt from day one that policy and governance will be as important as technology in shaping what the market looks like in the coming years. And that, of course, will shape how impactful our portfolio companies are, and that will ultimately shape our returns. And we are in the returns business.
The longer answer has to do with the power of networks, which are central to our investment thesis, to be an economic force in society. These networks will reshape markets, lower costs, bring efficiencies, and disrupt the ways that things are done. And those who are incumbents in today’s model will fight these networks tooth and nail, because they threaten their incumbency. And that will lead to policy fights. We want to get out ahead of all that as much as we can.
He raises an interesting point that is often missed with respect to investment in education innovations. Scaling a web-based service like Twitter, Facebook or Instagram can happen rapidly and relatively easily because the markets are relatively deregulated and there is very little interfering with the decision between the user and the service provider.
But scaling in education is different because it is a heavily regulated market with a complex series of school based policies and state and federal regulations and laws. This web of red tape looks different from state to state but it impacts everything from how decisions are made related to adoption of services to who is eligible to receive services to how funding flows to pay for it. Even more complex is that often the person or committee approving services aren’t the end users themselves which means innovators have to meet requirements that may not be what the actual end user – teachers and students – wants. Those decisions are made by central office staff who run lengthy, complicated adoption and procurement processes (which often are dictated by regulations).
That is the reason why DLN is so focused on modernizing state policies. Because policy can create the conditions under which new innovations can be tried and scaled or it can further entrench incumbent models. Policy can free up funds to flow to digital content or it can reinforce print resources. Policy can expand student eligibility for online courses or it can limit the number of students who can enroll. Policy like seat-time can be a barrier to scaling blended models of learning or it can open up the opportunity to allow new models like Rocketship Education and Carpe Diem to serve students. Policy can accelerate improved data systems or it can restrict the collection and use of data.
Technology can disrupt education but only when policy allows for the system to be disrupted. As Fred points out, disruption is threatening to many incumbent players and they will use policy to protect themselves from change. That is why we saw more than $4 million poured into last November’s ballot initiative in Idaho that overturned a law that would have expanded online education to students.
Later this week, DLN will be unveiling the 2012 Digital Learning State Report Cards which examines each state’s policy climate against the 10 Elements of High Quality Digital Learning. The report will also summarize more than 150 state laws passed last year that opened up or closed innovation to students across the country. And we’ll offer some recommendations for how states can pursue the urgent reform needed to usher in next generation models of learning.