> EdTech has the worst returns of any industry in venture capital. Why?

I think this one is fairly simple. Half of consumer spending comes from the top 10% of earners, whose kids we can assume have generally pretty decent educations already. The people who need education help the most don’t have money to spend on it.

The parents who do have money to spend want to invest in tailored education from a human teacher, not cheap, generic scalable technology. So margins will be low.

So if you want to make money, you need to focus on things like enrichment and test/college prep for the top 10%. Helping inner city kids who are 3 grades behind in reading doesn’t print money and VCs don’t want anything to do with that.

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Ray20 4 days ago | parent [-]

> So if you want to make money, you need to focus on things like enrichment and test/college prep for the top 10%

But there's no potential market in the top 10%. I mean, these people just hire a good teacher and that's it. There's no room for improvement; there's nothing that can beat a good teacher.

> Helping inner city kids who are 3 grades behind in reading doesn’t print money

This is a political problem. Political problems cannot be solved by technological means. So there is no market here either.

	▲	doctorpangloss 4 days ago \| parent \| next [-]
		> This is a political problem. Political problems cannot be solved by technological means. So there is no market here either. Another POV is: pick your disruption. AI stuff has definitely disrupted education... for the worse. It happened within a political and economic status quo. The AI stuff did not need to wait for the movement of any levers of power to happen at all. If you are seeking a way to fix low returns in ed tech (and for that matter, Health IT, which is like, #2 worst performing sector): attack Enterprise Sales. Destroy it. Make stuff that destroys the monetization system where districts buy exactly what they ask for. It isn't complicated. Scratch and early Khan Academy provide a template for good ed tech targeting the learner directly. Whether you make $1 million or $1 billion doing this, I don't know. Chegg got to, and fell from, great heights by delivering cheating, which ChatGPT does for free now. Cheating ALSO worked within a political and economic status quo, that 30% of students cheat, and that the cheating is a necessity, apparently, for the survival and thriving of a vast number of people, all around the world. There are markets. Lots of them. You can do good or bad. Paul Graham doesn't invest in Cluely, even if it makes money, it's kind of evil (A16z doesn't care about cheating, the people who run it are the ones who cheated in school). So there are even opportunities that are missed by the very best seed fund. To me, a big opportunity lies in things the government education cannot do. Some things good, some evil, some complicated. For example, no matter how hard it seems to try, the government cannot functionally collect on a trillion bucks of student loans. What does that mean for education? I don't know, but I think if you are looking for $1b+ opportunities, they're there.
	▲	janalsncm 4 days ago \| parent \| prev [-]
		Getting into an elite college is an arms race. Anything you can sell to a parent which will give them a leg up over other parents is a viable product. To put a finer point on it, a teacher + your product beats a teacher. > Helping inner city kids who are 3 grades behind in reading doesn’t print money 100% and this is broadly why ed tech doesn’t move the needle.