Hey Startupon crew. Another quick post from me this week. I guess when you go on vacation, the work emails and slack messages pile up. Who would have thunk it? đ§ đ¤ˇââď¸ Anyway, weâll be back to our regularly scheduled programming next week.
Today, weâll be looking into e-learning with Outschool. As always, you can find the list of companies weâve previously examined here.
*Update* I will be sending next weekâs email on Thursday. Donât miss me too much!
Consumer Spotlight: Outschool
Company Snapshot:Â
Founded: 2015
Employees: 500+
Funding: $240M
Valuation: $3B
Stage: Series D
Locations: San Francisco
Company Overview
Outschool is a marketplace for live online classes that connects learners, parents, and teachers together.
Tell me more
Parents use Outschool to accelerate their children's learning in core subjects, fill in gaps in their knowledge, or pursue interests in topics that aren't covered in regular schools.
The company provides an innovative education platform that offers a variety of engaging, small-group classes online for students aged 3-18. Unlike traditional classes, Outschool gives kids the unique opportunity to explore their interests through interactive classes taught via live video by experienced, independent teachers and organizations.Â
Similarly, Outschool provides opportunities for certified teachers to create supplemental income by creating classes and uploading them to the platform. Jade Weatherington, a single mom in Atlanta makes over $10,000 per month teaching classes on Outschool!Â
Market Opportunity
If youâve been paying attention to the creator economy, youâll know itâs booming. LinkedIn rolled out itâs creator platform (P.S. the cofounders of my old company are now leading Product over there), Patreon poached Julian Gutman from Instagram to build out monetization tools for creators, and in the sector raised over $5B in venture capital funding in 2021. Riding the creator wave, teachers can leverage digital learning platforms like Outschool to monetize their skills and teach students everywhere. Â
Despite being one of the most high-impact careers out there, teachers are paid an average of $58,950 per year. With all the recent talk about inflation and increased cost of living, itâs easy to see how the core pillar of Outschoolâs three sided marketplace could be interested in becoming creators and earning additional income. Â
For some high level market analysis: The United States has ~75M people under the age of 18. Classes on Outschool range from $5 to as high as ~$60 per class. If we take a conservative $10 per class and multiply by the 75M people under 18 years old, we get a market opportunity that could be worth $750M. To get a more accurate market size, we would have to segment the K-12 population based on income, propensity to spend on digital classes, repeat purchase behavior, school licensing agreements for students, and any additional features Outschool provides.Â
If you have some free time and want to dive into Outschoolâs market size, reply to this email and Iâll include it in next weekâs post!.Â
Why I like the companyÂ
Our education system looks eerily similar to how it did 50 years ago, but not because itâs as best as it can be. In 2019, Dani Grant outlined the stagnation of the United States education system.
Test scores, earning potential, teachers salaries, and education satisfaction are all flat. This, along with the rising cost of higher education makes e-learning an attractive option for students, even if itâs supplemental to public or private school. For Outschoolâs marketplace, the cream of the content will rise to the top and the best teachers will be rewarded through a self governing platform.
Outschoolâs three-sided marketplace combines to create attractive SaaS-like economics through student subscriptions, enterprise licensing deals through schools, and low cost of sales given its user generated, cloud-hosted content. Today, Outschool has over $100M in bookings and offers 150,000+ virtual, small-group classes to students between the ages of 3 and 18. Since COVID began, the company has grown its base of teachers from 600 to over 7,000+ today.
Likewise, the company realizes the responsibility it has to teachers, parents, and students alike. The company recently established Outschool.org, which has given $2.5M worth of free classes to low-income families and allocated 2% of its equity pool to its teachers.
Lastly, Outschool is well positioned to increase its TAM by adding adult-level courses, increasing access to creator tools, broadening access to its platform through school partnerships, and creating a tailored curriculum in-line with K-12 standards.Â