An Acceleration of Trends That Have Been Building for Years

Moving From B.C. to A.D.

The Coronavirus has instantly forced 1.6B students and teachers online. Effectively, more than 90% of total enrolled learners and educators around the world have been thrown into the deep end of the online learning pool and told to sink or swim.

Some of these new online learners will sink. Some will crawl out of the pool and never go back in. But we believe most will get the hang of it, like it, and will no longer be confined to the shore. Effectively, the genie is not going back in the bottle… digital learning has come of age. We have a B.C. (Before Coronavirus) world transitioning to A.D. (After Disease).

Source: UNESCO

Across the spectrum of lifelong learning (we refer to this as “PreK to Grey”), we are seeing an unprecedented acceleration in trends that had been building for years prior. The fundamentals of the Knowledge Economy and Digital Infrastructure have been in place to see a massive market evolve. In the Knowledge Economy and Global Marketplace, what you know makes the difference for you as an individual, your company, and for that matter your country. With 4.5B people joining the internet over the last 25 years, this Digital Infrastructure has lowered the barriers for individuals to access opportunities and connect on a global scale.

Now, Coronavirus has provided an enormous catalyst to accelerate the opportunity of the future to today. One example of this is in higher education, where in B.C. only 30% of students were taking a course online. In A.D., essentially 100% of students are now taking their courses online. Our expectation is that this shift is here to stay.

Source: CTR, 10,000 sample size, China

“The pandemic is a game changer and creates an opportunity to make transformational change.”

— Jeb Bush, Former Governor of Florida

To date, the enormous $7 Trillion global learning market has been growing at a steady 5% CAGR. The transition to digital learning started with the rise of the internet over 25 years ago and has ballooned to a $160 Billion market today. Before Corona, it was projected to become a $440 Billion market by 2026, growing at an impressive 16% CAGR (5X global GDP growth).

What we believed to be the future has been accelerated to the present — the market that has already been growing at a healthy rate will go into overdrive. The market potential that we thought was possible in 15 years will be that size in half the time. In a frame of reference, US E-Commerce was 2.1% of overall retail sales in 2004… in 2019 it’s 11%. Currently, Digital Learning represents 2.3% ($160B) of the overall education sector, effectively where Ecommerce was in 2004. We had originally thought digital learning would follow a similar projection and reach 4.5% ($440B) of the education market by 2026. We now believe Digital Learning will reach 11% of the education market by 2026, representing a ~$1 Trillion market and a 30% CAGR, close to double the rate of growth projected in B.C.

Source: U.S. Census Bureau and GSV estimates, respectively

This is not the first time we’ve witnessed a horrific disaster spark a significant moment of innovation in society. One of the greatest disasters in human history, the Black Death of 1351, led, in part, to the invention of eye-glasses, hospitals, guns, modern homes, and more. During the Great Plague of 1666, Sir Isaac Newton discovered gravity when he had to practice social distancing and work from home. More recently, the SARS outbreak of 2002 combined with the growing internet penetration in China, resulted in the birth of modern E-Commerce. Alibaba alone experienced a 3–5x increase in users in March 2003 compared to pre-SARS, and has continued to expand to a $530B valuation today. The Coronavirus has brought forth the Dawn of the Age of Digital Learning — a time for builders to create the platforms, tools, and technology to propel society forward.

“Do I have your attention now?”

Shifts Seen in Education From B.C. (Before Corona) to A.D. (After Disease)

Fundamental shifts are being made today across the education spectrum of PreK-12 to Higher Ed to Corporate/Adult Learning as a result of the Coronavirus outbreak:

PreK-12

“Games from Minecraft to CIV show how much one can learn from a game-based experience… Kids, ages 10–18, are spending 5 hours a day playing videogames around the world.”

— Jessica Lindl, VP Global Education at Unity Technologies

• Between Kindergarten and 12th grade, students spend 12,000 hours playing video games on average… approximately the same time they spend in the classroom. And Fortnite is now more popular than football by Google Searches. Developing games that students want to play while learning key materials subliminally i.e. Invisible Learning, is a huge opportunity.

Source: Google Trends and TwitchTracker, respectively

• Classrooms will be both physical and online. The “flipped classroom” has the opportunity to make the teacher’s role more akin to that of a coach.
• Online-offline learning models allow for more on-demand teaching and pave the way for data collection and optimization, resulting in more personalized learning opportunities.
• Increase in digital connectivity between students, teachers, and parents. Connectivity creates communication, keeps everyone accountable, and provides transparency for student achievement.
• Peer-to-Peer — studies have shown that the best way to learn a subject is to teach somebody else. There will be a rise in peer-to-peer collaboration and learning through community-based platforms.
• Accelerated Learning — “RoboED” is the advent of AI-based tutors. RoboED democratizes access to specialized help, scaling low-cost tutoring around the world. With accelerated and personalized learning, students will be able to advance based on competency. The one-size-fits-all style of education will become transformed into bespoke learning.

Higher Education

“We need to accelerate the path from learning to earning.”

— Dan Rosensweig, CEO of Chegg

• The silos between higher education and corporations are becoming more in sync. As a result, universities’ curriculums are more aligned with the knowledge and skills businesses are demanding.
• Exacerbation of financial troubles for traditional institutions — losses incurring from cancellations of in-person classes, room and board refunds, and endowment exposure to public markets (35.2% of the $630B in US college endowments are in stocks).
• Of the 4500 institutions in the US, only 104 have endowments over $1 Billion, according to a study done by the National Association of College and University Business Officers (NACUBO) and TIAA. Moreover, there are only another 368 universities with endowments over $100M. Without this buffer, thousands of academic institutions are going to be severely challenged to survive this shock to the system.
• This pattern has been shown before with the disruption, and in some cases disappearance, of newspapers in the rise of the digital age. Over the last 15 years, 1 in 5 newspapers have gone under, the majority of which were small, regional distributors. Similarly, regional brand equity in the higher education space will also become less meaningful in the digital age. Top universities with accessible, online platforms, like ASU and SNHU, will soon replace small hometown colleges across the country. In other words, a college’s claim to fame will have to be more than its local presence.
• Online-first pedagogy will become normalized for virtually every college student in the world today. Universities will incorporate high production quality, highly engaging content to deliver a compelling and scalable online experience, i.e. Hollywood Meets Harvard.
• The role of the institution will also change dramatically. Similar to the disruption taking place in music streaming, students will one day be able to curate an undergraduate “playlist”. Rather than having to consume all of one’s education from one “label” (a university) to listen to its captive “artists” (the professors), students will be able to pick and choose from every academic course and instructor available in the world. The accreditation from a single university itself won’t be as important as the individual instructor and course content.
• Looking forward, with the number of students in higher ed doubling from 207M today to 414M by 2030, all of this growth will be happening online. Furthermore, the majority of students that were formerly solely on campuses will now also be taking classes online.

Adult and Corporate Learning

“More than 50% of the workforce is going to need to be re-skilled in the next three years.”

— David Blake, CEO of Learn In; Founder of Degreed

• Learning will become even more continuous and lifelong. No longer will you fill up your “knowledge tank” in 25 years and take off, you will be continuously refueling over the course of your lifetime.
• An acceleration of automation in the workplace will cause further individual spending on reskilling and corporate spending on learning opportunities.
• Rise of government as a buyer, reskilling citizens at scale, with “reskilling officers” becoming the norm.
• Digitization of live learning experiences (i.e. conferences, seminars, and night classes). The degree is no longer the sole ticket for career opportunity and is augmented by other ways to demonstrate capability such as with certificates, badges, and other “Knowledge Currency”.
• Rise of“whole self” education…focused on mind, body, and soul — meditation, cooking, health, fitness, etc.

Examples

“We’re moving from a system built upon exclusion to a system built on inclusion.”

— Arne Duncan, Former Secretary of Education, U.S. Department of Education

Growth of Education Apps in Overall Rankings

Overall US Apple App Store Rankings Over Time (Source: App Annie)

Rapidly scaling EdTech apps, Weapons of Mass Instruction, accelerated dramatically in March 2020. Google Classroom and Remind* each had historic moments in the overall rankings, reaching positions of #2 and #9, respectively.

The average ranking of top movers in education shot up from #502 to #121 in the overall rankings between March 4th and April 1st.

Surge in Edu App Downloads in the US (Source: App Annie)

Important shifts we’re seeing in the education market are not only occurring on online-first platforms but also on mobile-first platforms as well. The category of applications that saw the most usage as a result of the Coronavirus was primarily communication applications that can utilize unique features of smartphones that in-turn allow for more on-demand, multi-faceted use cases further promoting connectivity.

Collaboration apps across K-12 — like ClassDojo* in K-8, and Remind and Google Classroom at higher grade levels — saw a +290–580% increase in weekly downloads vs the average in Jan. 2020. Another app, Seesaw, which allows students to share their work in digital portfolios, grew from being unranked to the top 150 in the app store.

Zoom, the widely popular video conferencing service, has become a critical piece of the digital-classroom infrastructure in K-12 and higher ed. The platform has seen daily active participants jump 30x in just 4 months from 10M in December to 300M in April 2020.

Further examples below showcase the incredible upticks in adoption seen amongst digital learning platforms in the U.S. and worldwide.

Chegg (CHGG)

Chegg, the leading connected-learning student platform offering products and services for the higher ed market, reported a 35% increase in new subscribers YoY in Q1, largely due to the acceleration it saw in March as a result of COVID. After reporting Q1 results Chegg’s stock increased 32% and its market cap increased by over $2B. Android downloads of Chegg’s Mobile Study App were up 247% in February and 94% in March YoY.

ClassDojo*

ClassDojo is a collaboration app for teachers, children, and families in PreK-8. Before Corona, it was actively used in over 90% of K-8 schools in the US, reaching ~1 in 20 children in primary school globally, in ~180 countries. It is used to share pictures, videos, messages, and moments through a child’s day. The app has now seen 10–15x YoY new signups, and 5–20x the rate of sharing of photos, videos, activities, and messages.

Course Hero*

Course Hero is an online learning platform with over 40M course-specific study resources, an average of 12M students/month, and thousands of educators on the platform prior to COVID. Since the outbreak, the platform has seen student growth rates increase over 70%. Verified educator growth rates have increased 200% since COVID. Tutoring QA growth has increased from +120% to +215%.

Coursera*

The world’s largest online learning platform with +57M students, Coursera, has seen huge upticks in both its higher ed and consumer businesses. Within higher ed, Coursera saw more than 29,000 university faculty from 120+ countries around the world requesting to use Coursera’s platform to transition their content online — Coursera has onboarded more than 3,100 universities in just a few weeks. Furthermore, on the consumer side, Coursera user traffic was up 4–5x in March with a 15x YoY increase in new user signups. Coursera ties into a key GSV theme — Weapons of Mass Instruction — rapidly scaling learning solutions catalyzed by digital infrastructure, digital natives, and digital models.

Source: Coursera

Duolingo

The popular language-learning platform on mobile, Duolingo, has seen an incredible 108% increase in new downloads worldwide between March 9th and 30th. In the US specifically, the platform has seen a 148% increase in new users during the same period. Further, Duolingo is seeing a 10x daily increase in the number of English Proficiency Tests taken worldwide. This ties into another GSV theme, Knowledge as a Currency — the belief that knowledge, not a college degree, is the key to the future. Duolingo is laying out the groundwork for Knowledge as a Currency in the language space at scale.

Khan Academy

The free expert-curated content and resource platform used by students from elementary school through university has become the go-to service for students across the US and the rest of the world. The platform is expecting 1.6B minutes of engagement per month — 2x pre-COVID. They experienced +30M DAU’s on March 19 and 20 vs 18M MAU pre-COVID, and a 10–20x increase in parent and teacher registrations, reaching over 50,000 teacher registrations in one day.

The Noodle Companies

The Noodle Companies, a studio with multiple subsidiaries, Noodle-branded education companies. Noodle.com provides a search tool for parents and students to find information on educational resources. Noodle Partners help universities bring degree programs online and now works with over twenty US universities including the University of Virginia, Tulane University, New York University, Boston College. Noodle Pros connect students and parents with high-performing tutors. The Noodle Companies and its subsidiaries have raised over $60 million from venture firms and individuals.

Photomath*

The popular math-solver, Photomath leverages AI and the camera on mobile phones to instantly capture, solve, and explain complicated math problems using step-by-step explanations. Prior to COVID, the company already boasted over 25M MAU and is now seeing an average of 64% YoY global install growth and over 100% YoY increase in US users alone.

Pluralsight* (PS)

Pluralsight is an enterprise-oriented technology skills platform with expert courses and skills assessments. The company reported that Q1 revenue grew by 33% to $92.6M. Further, as part of its “Free April” campaign, where the company made all of its content freely available for the month of April, the platform had over 1M new users sign up around the world. As a reference, they had 1.3M B2B users on the platform prior to COVID.

Quizlet

Quizlet, the tool for creating digital flashcards and other learning resources, had over 50M students on its platform prior to COVID. Since the outbreak, the company has experienced 200–400% growth in sign-ups across its top 50 markets around the world.

Remind*

The K-12 messaging app, Remind, was connecting more than 26M MAU in students, parents, and teachers pre-COVID. Since the outbreak, the platform has added 6M MAU in March alone and has more than doubled the number of messages sent in a day to 100M compared to back-to-school numbers in 2019.

Udemy

The online learning platform, Udemy, has seen a +400% surge in course enrollments between February and March. The spike continued into April, where growth remained above 300%.

2U (TWOU)

2U helps universities and colleges by giving them the tools and resources they need to establish online extensions of their on-campus courses. The company supports over 400 educational offerings, including graduate degrees and professional certificates, and has helped over 150,000 students and lifelong learners. Since the outbreak, the company reported $175.5M in Q1 revenues, up 44% YoY.

Learning Management Systems (LMS)

LMSs including Canvas, Blackboard, and more are seeing unprecedented spikes in usage as higher ed institutions are relying on this infrastructure to transition their classes online.

China, the initial epicenter of the outbreak, has always been at the forefront of innovation in online education and its biggest players are seizing the opportunity of students learning from home. For the first time in history, China is outspending the US on R&D ($501B vs 493B).

DingTalk

Alibaba’s online communication platform — added 50M students on China’s first day back to school upon the recommendation of the Chinese government.

New Oriental (EDU)

New Oriental is the largest provider of private educational services in China based on the number of program offerings and total student enrollments. In 2019, they had over 8.4M student enrollments. As a result of COVID, the company transferred over 1M students to online programs through its proprietary cloud-based classroom platform. The company reported a 15.9% YoY growth in revenue to $923.2M in its most recent Q3 2020 earnings call.

TAL (TAL)

The largest educational technology company in the world by market cap, TAL, offers comprehensive tutoring services to students from PreK-12 both online and offline. After the outbreak, the number of student enrollments in long-term courses increased by 56% YoY, largely driven by online enrollments. The company reported an 18% YoY overall revenue growth to $857.7M in their most recent Q4 2020 earnings call. Their market cap is currently $30.8B.

Yuanfudao

The Chinese online education platform, Yuanfudao, closed $1B in funding on April 1st, valuing the company at $7.8B. The company has 400M users today.

“Overseas, we’ve seen a tremendous acceleration of a phenomenon — sharing courses across universities… This is going to take off now.”

— Rick Levin, Former President of Yale University

ApplyBoard

The latest EdTech Unicorn, ApplyBoard, is the “Common App” for international students to discover and apply to universities around the world. While free to students, the startup sets up revenue-sharing agreements with partner universities to be featured on the Applyboard platform. Before Corona, the platform helped 100,000 students in 110 countries to study internationally. Since the outbreak, ApplyBoard has seen a 200% MoM increase in sales to new partner schools.

Byjus

India’s largest Ed-tech company offering a full suite of K-12 learning resources, BYJU’s, has seen a +150% increase in traffic in March as a result of the Coronavirus. The platform has added 6M new users to the platform in March.

OpenClassrooms

OpenClassroms, one of the largest online education and training platforms in Europe, has over 3M monthly active learners and offers over 400 courses. Since COVID, the company has made all of its content free for academic institutions, and, as a result, has added over 2,000 institutions and 200,000 students to the platform to continue learning in a digital-first environment.

Ruangguru

Indonesia’s largest ed-tech company offering K-12 solutions from tutoring to online courses to learning resources, Ruangguru, saw +1M student app downloads in a single day, March 16th, beating out the like of TikTok and Instagram.

Vedantu

Vedantu, the live online learning platform based in Bangalore, India, saw enrollments surge 10x since mid-March. The company added 100K users in 10 days during the outbreak.

WeSchool

Italy’s largest classroom collaboration tool, WeSchool, saw a 40X increase in website traffic as a result of the outbreak.