Edtech Insiders

Building The Spotify of Textbooks with Gauthier Van Malderen of Perlego

August 16, 2022 Alex Sarlin Season 3 Episode 6
Edtech Insiders
Building The Spotify of Textbooks with Gauthier Van Malderen of Perlego
Show Notes Transcript

Gauthier Van Malderen is the co-founder and CEO of the University Digital Library Perlego. Gauthier decided to start Perlego as a Cambridge student after realizing how many people were having problems financing their textbooks. In 2017, he decided to found a subscription service to provide all the textbooks a student would need, in eBook form, at an affordable price.

Perlego raised $50 million in March (out of $75M total funding) to expand its business after seeing its platform boom through COVID-19. The London based startup currently has 400,000 paying subscribers who get all-you-can-read access to some 850,000 titles — textbooks, fiction and other literature that students are assigned as coursework at universities and other higher-learning institutions. It works with 5,000 education publishers, including Cengage, Routledge, Cambridge University Press, Elsevier and Harvard University Press. That catalog makes Perlego the largest online textbook subscription service in the world. Perlego has won 26 awards including Europas Best Edtech, Virgin Voom and the KPMG pioneer award.

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Alexander Sarlin:

Welcome to Ed Tech insiders. In this podcast we talk to educators and educational technology investors, thought leaders, founders and operators about the most interesting and exciting trends in the field. I'm your host Alex Sarlin, an educational technology veteran with over a decade of work at leading edtech companies. Gauthier Van Malderen is the co founder and CEO of the university Digital Library Perlego gets here decided to start her Lego as a Cambridge student. After realizing how many people were having problems financing their textbooks in 2017, he decided to found a subscription service to provide all the textbooks a student would need in ebook form at an affordable price for Lego raised$50 million in March this year out of $75 million of total funding to expand its business after seeing the platform boom throughout COVID-19. The London based startup currently has 400,000 paying subscribers who get all you can read access to some 850,000 titles, textbooks, fiction and other literature that students are assigned as coursework at universities and other higher learning institutions. It works with 5000 Education publishers, including Cengage Routledge, Cambridge University Press, Elsevier and Harvard University Press. That catalog makes Perlego the largest online textbook subscription service in the world for Lego has also won 26 awards for edtech, including Europa's best ad tech, Virgin and boom and the KPMG Pioneer Award. Gauthier Van Malderen. Welcome to Ed Tech insiders. Hey, thanks for having me. Good to see you are one of the youngest entrepreneurs we've ever had on the show Perlego is not even your first venture. Tell us about your journey in entrepreneurship and what brought you into the EdTech space? Sure. So

Gauthier Van Malderen:

when I was at university, I had a small marketing agency, which basically collated Facebook pages, we had a page called Student Life, which had over at the time, over 4 million likes, and basically post funny videos, which would relate to students and people would like those pages. And then we did some advertising on those those works really, really well. We had girl life nine to five life 90s Life and student life, we sold that to big media group. I got a bit of money from that. And then whilst I was doing my Masters, one of the big pain points I had was very expensive price of textbooks. And I thought, okay, maybe we should give this go try and build a subscription service for academic content. I didn't launch the business straightaway actually started working at the Financial Times. I absolutely hated it. And then I was like, Okay, I'm gonna give this this startup idea ago.

Alexander Sarlin:

Absolutely. And you know, you started for Lego in 2017. And it's just grown enormously, you know, you describe for Lego as sort of the Netflix or the Spotify of textbooks. So give our listeners an overview of what pro Lego is why it's called Pro Lego, and what it offers for students, educators and publishers.

Gauthier Van Malderen:

Sure. So polygamy is the verb to read in Latin, I read, I scan over. And basically, there's a problem on both sides. So on the student side, students are really frustrated by printers a format, a lot of students today find that a bit old fashioned and a bit lumber, some annoying to carry to university, they also find the content very expensive. So on the student side, we're seeing a shift from ownership to access models. And we're seeing that price sensitivity with textbook prices haven't gone through the roof over the last 20 years, students are looking for more and more affordable solutions. And then on the publisher side, you know, if we look at the big publishers, they lose a huge amount of money due to the second number of market students selling secondhand books to other students. And then what's really hard for them even further is the massive rise of piracy rates of students typing in macroeconomics edition free PDF, and then they find lots of websites where you can download illegal sometimes bad quality versions of the PDFs. But that's another 30% of lost revenue for the publisher. So on the student side, super unhappy with the status quo on the publisher side, look, publishers are only monetizing about 36% of the potential revenues. The solution we built is a simple space where students can find all their core learning material for publishers, less piracy, and for students and much more affordable solution.

Alexander Sarlin:

So you're mentioning, you know, for on the student side, affordability is really key. And, you know, we've gotten to a really strange place in terms of the the cost of textbooks, which is, you know, one of your big insights in, in founding for Lego, give us a little insight, you know, why did textbooks get so expensive in the first place? You know, why are these chemistry textbooks for colleges, you know, 150 $200 and you know, what, have you heard from some of the students that use per Lego that what has happened by decreasing those crazy prices. Have you been able to keep students in college? Have they gotten tons more money to use on other things? I'd love to hear your talk about affordability.

Gauthier Van Malderen:

Sure. So to answer the first question, the reason textbook prices spiral through the roof is due to the cannibalization. And historically, this was in print. So let's give an example. Let's say a big publisher sells 10,000 copies of introduction to economics, the first year students at a university in the US in the second year already 6000 copies will be recirculated in the second book market, so they'll only sell 4000 new editions. So what would happen is every three years they would release a new edition saying intro to eco one a one addition to that would be an extra $8, because they have to justify the difference with an extra chapter or a few more changes. And that's how it continues to compound as some of the books which are now on edition 1617 are costing 200 $300. So on the more on the affordability side and how Pelago helps with that, I think it's really important to note that globally, we have 252, higher education, learners, right via University lifelong learners. And today, textbooks only 10 of the needs for about 42,000,019 point 8 million students that we have in Europe, and then about 21 million higher education students that we had in the US last year, this year will be a bit less, but let's just say roughly 40 million. If we look at places like India, piracy is 100%, right? I don't know if you've ever been but if you go to a university, you have this massive universities that you can literally buy photocopies of the books, and they look so professional for maybe one or $2. And if we look at other territories, you know, some places like one of my friends went to Zambia. And to get those textbooks there's print textbooks sent out there, it's very expensive, very costly that it just doesn't make sense. So you can drive accessibility and affordability in two ways. One, on the affordability side, because you don't have to pay for print distribution, wholesale costs, it's a much more efficient model to sell content. Basically, one ebook publishers can sell across the world. So they're much more efficient from a cost perspective. And then I think the nice thing for publishers as well, it's a recurring revenue line. So what you tend to see is maybe a student might use textbook for three months and never use it again, well on plague, or they might dip into it in their third year, their fourth year, and that continues to build recurring revenue. On the affordability side, I think, again, a big thing for publishers is yes, you might think I'm making less money because I'm selling $100 textbook, and now I'm going to be making maybe 30 or $40 on my textbook, but actually you're making your total addressable market much bigger, because you can serve way more students. And then again, we've seen it in the music and the movie industry, if you provide convenience, and accessibility and affordability, well, less people will go to party channels, because they won't see price, it's such a big challenge for them to buy the content in the first place.

Alexander Sarlin:

I hadn't realized that piracy and that need to continually put out new editions was one of the main driving factors behind the spiraling cost of textbooks in the first place. It's really interesting. And then, you know, opening up the total addressable market, allowing people from countries all over the world to actually access textbooks from top publishers is obviously enormously valuable. I'm curious if you've heard from some of the students even in the US, or UK or throughout Europe, who have seen enormous changes in terms of their finances by using Pro Lego instead of you know, having to buy full print textbooks the way they have in the past. There's no question that for an Indian learner, or for people all around the world, it would be game changing. What do you hear from people, even in the markets that are the traditional markets for textbooks,

Gauthier Van Malderen:

so the average students spend on academic content in the UK is 469 pounds in the US $1,200. Right now, of course, that changes depending on the course in the year of study, if you're a first year undergrad students studying biology, you might actually spend a bit more because you've got to use all the courseware products as well. And I'm sure you've heard of the massive rise of open access material or VR content. One of the big challenges with OER is the quality of the content isn't always there. And it's frustrating for the instructors and the professors to adopt that content because you don't have the ancillary material around it. So I can confirm that for students, we're saving them a ton of money. But I think as well what's really important is because you're paying basically the it's the price of it's $18 in the US a month, you can dip into any content. So what we're seeing is students might study medicine, but they might dip into a history book or a computer science PHP coding book in their free time. So you're opening up that breadth and depth of knowledge and not just focusing on that one niche piece of content that you might be studying at university. And then I think a really important thing to note as well as about, I'd say 30% of our subscriber base are lifelong learners. So maybe someone like yourself, you might be like, Oh, subscribe to the Lego. It's like my online library. They have all the best nonfiction titles on how to build businesses or coding is, again, something I'm mentioning and I'm Seeing them education is becoming much wider, not just your four years at university anymore is everyone's rescaling upskilling during their careers and plague is becoming a tool for that as well.

Alexander Sarlin:

Yeah, that's a really exciting sort of byproduct, I would say maybe it's purposeful byproduct of a subscription model, is that you by opening up the entire textbook library for a single cost, just like the way Spotify or Netflix does, it allows students to go interdisciplinary to, as you say, if you're a medical student, maybe you're reading about the history of medicine, in a textbook, you would never have been able to even you never would have, you know, dipped into or even thought about buying in the past. And I'm sure that's true across many, many disciplines. It's really exciting. And you know, Politico clearly has a lot of benefits for students, the subscription model lowers costs, they get more access, they get content outside of print, talk to us a little bit, I know, you've already begun to say some of this, but about some of the advantages for publishers. So, piracy, second hand book market are two very big ones. What do you hear from publishers? When you ask them about pro lega? Why do they get excited to offer their content, you have 5000 Education publishers?

Gauthier Van Malderen:

Yeah, I think ultimately, to publish, we provide four main benefits. One of them is as a streaming service, we have all the data in terms of consumption trends, right. So what I think is really interesting, especially with textbooks, and that's why subscription model and textbooks makes sense is being quite honest. And publishers see this. Now, students don't read a textbook from A to Zed, they might read two chapters here, three chapters, therefore, chapters there. And so you can provide all that data back and this really cool publishing dashboard where they can see Whoa, most of my students only reading chapter four, five, and six, maybe I have to reconfigure the content in my next edition. The second is a much more efficient distribution model, we talked about it, you don't have your whole print, and you don't have your retail markup, you don't have to pay 40% margin back to Amazon. So a more efficient, sustainable way to distribute the content. And the sustainability angle is something that a lot of students are very conscious about today, right? Like, it's crazy. But a big thing is I'm not going to buy a 200 premium page textbook, because sustainability is at its core of how I think about purchasing my products. So the second is more efficient distribution and sustainable travel. The third is, as we talked about increasing the total addressable market, and by being an aggregator publishers don't have to do the marketing to students anymore. So historically, some of the big textbook publishers would have to go on campus, try and get adoption, you don't have that. So again, a much more efficient sales and marketing model. And then I think the fourth is incremental revenue with professional lifelong learners, we have a few corporate clients who are buying Pelago for as an employee package, right? You get all the best code, coding books, thanks to your company, again, as an aggregator you can sell into those articles, whilst as a single publisher is very difficult for you

Alexander Sarlin:

to do so. Very comprehensive answer. And it makes a lot of sense. It's interesting, I think we've seen some of these new models of media, enter the education space over the last few years. And I think for Lego is one of the most exciting models of sort of taking that subscription mindset. And that digitization mindset, you know, instead of lumbering, cumbersome print textbooks that you have to pay middlemen and ship them to Zambia, you know, use ebook content, get use streaming services, subscription model, and it just really changes the economics and the accessibility. So it's really interesting to hear, I wanted to get your take on one interesting piece of news this week, which is that Pearson recently announced they're turning some of their textbooks into NF T's so that they can track the digital rights and make sure that you know, as they potentially get resold, that are totally trackable. I'm curious about your thoughts on this strategy, versus you know, streaming and subscription and whether this sort of web three technology has any role in digital rights management?

Gauthier Van Malderen:

Yeah, I think it's very interesting. We've seen that come across in music as well. Now in art, I'm sure you've seen that as well. I personally don't see it, and I don't get it. And I'm also surprised about the backlash from students from from the faculty and from professors. I also read The Guardian article, The Verge article, those that came out, and a lot of people are very upset because they feel this is a way how publishers can property even further on the content. Right. So it's a way for them to, again, make the content less affordable by monetizing the second half book market piece. So I think it's a very insightful headline, I think it's a good press story. But in reality, I just don't see how that could potentially work. And, and I was really surprised about the backlash from the kind of student, Professor community on how pretty much they're against it. So I think what I kind of want to stress is, what publishers have to do is provide convenience, affordability and build a product that students want to use that students love. And I think Lego can be a channel for them to sell their content, distribute their content, and the whole NFT piece. I can't get my head around it yet, but maybe I'll be wrong in that we could talk about a year or two I don't know, what are your thoughts? Actually, if I could ask, do you see it as well?

Alexander Sarlin:

Yeah, no, it's a great question. I mean, from what I've seen so far, I think it feels like an alternative approach to try to address a similar problem to what you were mentioning for publishers earlier on, which is that once a textbook is out in the world, it decreases the value of other textbooks, it becomes resellable, it becomes it goes into a sort of vast secondhand, you know, textbook market. And because textbooks are so overinflated in price, then the second hand market is super appealing. So I sort of sympathize with some of the naysayers in this saying, hey, making this into an NFT. Yes, it makes it resellable. But it also gives the original publisher total insight into transparency to everything that ever happens with that book. And it feels a little bit like a like a big brother move, even though I'm sure that that's not how Pearson is trying to frame it. It feels a little like, instead of just having open rights, it's saying, Okay, now we're going to truly monitor everything that ever happens with this, this piece of content, which I'm not sure that's actually beneficial to students.

Gauthier Van Malderen:

I think what's interesting is pacing really is becoming almost like a technology company under Andy Bowser leadership, he was ex Disney we're seeing that's becoming it's no longer an old school textbook publisher and a very interesting business. But it's going also completely counter to what we're seeing as a huge movement, which is open access. And, you know, journals will be all made freely available. And 2025 is going like against that as well, which, hey, let's see, I think it's an interesting play in the market. And hopefully we'll be able to comment on it in a few months.

Alexander Sarlin:

Yeah, definitely interesting to keep an eye on. I wanted to ask a question about the open education resource movement that you mentioned earlier, it strikes me that, you know, obviously, at heart, it's a wonderful movement to try to get content to be able to be completely free and accessible and open to students. And what you know, you mentioned that you're the Spotify of Ed Tech. And it strikes me as you know, the parallels between Spotify and Napster or, you know, the original sort of free and open services that were sort of tried to make everything free and open for everyone. But as a result, there was sort of quality issues, sometimes some legal complications. And you know, all of us who really do you know, I care about the OER movement, I'd love to see it succeed. But I really do see your thinking around a streaming service with a relatively low monthly price allows the highest quality content without any of the downfalls of open education. I'm curious if that metaphor makes any sense to you.

Gauthier Van Malderen:

So I see a parallel in the sense that right now, the big textbook publishers, or academic publishers are very similar to the music industry 2017 2007 witches, piracy is killing this industry. And if something doesn't change, they're going to continue to lose their money. And what I do think is interesting is with OER, it's like making a song available for free. But as we know, the best content creators need to be able to monetize their IP. And I do believe there's a huge amount of value in publishers creating premium quality content. And what they should focus on, in my view is getting those great authors getting as the music labels is great artists, developing those artists developing that content, and platforms like Lego or other players to distribute the content. And today, publishers would go from consecration to distribution to try to sell it into universities to getting the adoption with professors, I think we're going to see a change where publishers will focus on their niche to creating great premium quality content, and other players will do the other side of that the model

Alexander Sarlin:

makes sense. So distribution channel is real. And a platform is a really key partner for content creators. And, you know, one of the most exciting aspects of pro Lego to me, and I think to you as well is that, you know, Netflix, Spotify, audible cable television, some of the other really sort of innovative subscription services, have really created opportunities to offer content in very new and different formats. You know, we saw Spotify started music, and then move pretty heavily into podcasting. Among other things. We've seen Netflix and audible and HBO start with curation and then pivot to becoming large creators of content. And all of these platforms have escaped some of the traditional restrictions that came with entertainment content. So the length requirements are gone, that there are no commercials that can be released on any schedule all at once or on a cadence. I'd love to take some of that thinking and some of those innovations that have come from the entertainment world, as you've been mentioning, and think about what they might look like in an educational content ecosystem. I'm sure you've thought deeply about this. And I'd love to hear what you think the disruptions might look like for educational content.

Gauthier Van Malderen:

Yeah, I love that question. It's super interesting. So if I was to unpackage that I think there are several things that I'm excited about. And I think it's very exciting for edtech. The first is if we think about the learning experience of a textbook, it's existed for hundreds of years and it's free One sided, you'd buy the book, read it by yourself highlighter, and never be able to collaborate or work with other people. Now, if you have an affordable subscription service and your digital and purely online, you could collaborate, work directly with your fellow students, your peers, your professors on the book, going from a one sided reading experience to multi site reading experience that drives better learning outcomes. Because as we've seen this, a lot of students also learn from the comments of their peers or what they're saying the questions they answer. And that is, one thing I'm super excited about is, once you have that content layer, you can build that community or layer on top. I think the second which is also very interesting is a lot of professors are creating great quality content, and just sending that via email to their students or uploading it into YouTube and just sending a YouTube link. And when I speak to professors, and when I speak to students, one of the big issues they have is, you don't just study a textbook nowadays, the study of so many different formats, video content, audio content. And one thing we've we've launched a few months ago was workspace. So the ability to aggregate all your learning content in one space, you can upload your slides, you can upload YouTube videos, you can link back to presentation and interesting articles. And by doing so you create this beautiful workspace that you can share with your classmates and your friends. Again, making a much better learning experience. So I think on one side, I'm excited about collaboration and community on the other side is about curation, and aggregating not just your textbook material, all your academic material and being able to share that with other students or other peers. And I would take that one step further, right, if we think about our mission to make educational content more affordable. Imagine if you could work with Philip Kotler the most popular marketing textbook author, and he creates a community on his textbook directly on polygamy where people once a month can ask them questions live or collaborate or work and see what are the most highlighted parts of the new book. That's another great way to drive better learning outcomes. Because you don't necessarily need to go to university anymore to learn from the best professors or authors, which again, is maybe a big bold vision, but I think truly can become reality. Fiverr AC.

Alexander Sarlin:

Fascinating. So I'm hearing lots of emphasis on community, community, between students community between instructors and students multimedia, being able to combine text, video articles, bring in external sources and combine them with the textbook. I'd love to hear you talk about the chapter issue. So you mentioned earlier that, you know, one of the benefits for publishers is that they can see that only chapters, you know, four, or five and six are being read by their by their audience. I'm sure that's true for many, many, many textbooks, people don't tend to read textbooks cover to cover, do you see a world in which a chapter of a textbook becomes a space to commune a space to learn rather than the textbook itself?

Gauthier Van Malderen:

100%. So I'll just give you an analogy, there were a lot of startups about 10 years ago, that would take chapters of specific books and create their own book together. And publishers absolutely hated that. Because it was like I don't want to be associated to my direct capacity. Right. And very similar to how you had the album concept that now has become the song concept. You'll have the book concept become the chapter level concept where you'll read two chapters, one book three chapters from another. And because publishers are always monetizing the content, no matter what, it won't make a fundamental difference. I see that shift happening today. And I see that in terms of consumption trends on the platform. And I think a very important factor to take into account in education is academic freedom, right? So you might have seen one or two publishers tried to launch their own subscription services, but fundamentally, that resulted in high churn and not driving enough scale, because you might use that textbook for one or two semesters, but then you'll use another book where you might use another chapter. So it's aggregation. And we have over there over 9000 different academic publishers, no one has enough market share to retain a student throughout the whole four years of best study. So yeah, I'm seeing that today. And I think, who knows, maybe that will continue on even audio content, where you might only list one or two chapters, and not the whole audio, but feel

Alexander Sarlin:

really interesting. And I would imagine, you know, textbook publishers can also publish new content without needing to publish a new edition of the book. So if there's a new innovation, let's say in artificial intelligence for astronomy, rather than a new textbook, a new everything they can publish one additional chapter, hey, here's, here's what we have an additional page. And because of the distribution channel for Lego that can be immediately accessible to everyone who has the book, I'm curious a publisher see that as an advantage or as a disadvantage given that the addition model has been monetarily advantageous to them in the past?

Gauthier Van Malderen:

I haven't seen that trend yet. What I have seen as a trend is, for example, history books, because we have so there are two interesting trends I've noticed which are quite which I would have never thought so when you see macro trends happening in the news. You see the search results on palabora increase so We have, for example, the conflict in Ukraine, you see that there's a huge adoption of books on Russian history, for example. And what I'm seeing is publishers then update content, but more about maybe, in that course, your product, so you read about it in the textbook, and then you might have to do a test and link through directly from LEGO into the courseware. But yeah, I think that's definitely going to happen is where textbooks get updated on a maybe monthly bi monthly basis, or, you know, annual basis, and you'll get the live version straightaway. Again, I think the really nice thing with Lego is, as soon as a book is released, you have it the next day on the platform. So just as they send to all other retail channels, sometimes a print book might take you 10 days to get to you Well, the next day, it's already live on the platform. So but who knows, maybe Yeah, I haven't seen it yet. And I think that's definitely gonna happen. And when it does, I'll let you know, because I am sure that's going

Alexander Sarlin:

to happen in the Ukraine example is a fantastic example of that that's, you know, history happening in real time, a new war. And obviously, it's relevant to the entire corpus of, of Russian history, European history, military history. And it's great to be able to see students engage in that content in real time in relationship to what's happening and current events.

Gauthier Van Malderen:

And because the content doesn't cost them anything else, they'll dip into two, three chapters read a bit about it, they'll search directly for avoid 1981, or whatever. So I think the fact that they have to pay for the content on top of their monthly sub is something that also drives more consumption. Yeah, this is

Alexander Sarlin:

something we've also seen in Spotify, there's been some really interesting articles about how many Spotify subscribers listen to older music, rather than new music, because they have access to all music at the same time, and how it's actually created resurgences and in all sorts of different type of it's sort of made the longtail come alive. And I see a similar thing. And it's really exciting when you apply it to education, because people can pull any kind of relevant content from any book. And again, you have 5000 publishers. So this is like a very, very big corpus. So I want to drill down on the community aspect, starting with the student side, traditional textbook interaction tended to be something of an isolating experience. So many of us who grew up, you know, over a certain age, remember having homework that sounded like, you know, read pages 124 to 135 of the textbook, take notes, complete the questions at the end of the chapter. And you know, you'd assume that that was going to be you alone with a textbook, and a loose leaf binder, a very solitary activity, but as you mentioned, with PROLOGO students can interact with one another comment. There's multimedia, it's not just text at all this courseware give us a little bit of what that looks like with Lego.

Gauthier Van Malderen:

Yeah, so the first layer is, if I stick to the user flow is Professor creates a workspace shares that and sends an email or notification to all their class, the class get a notification saying Professor Alex has added due to Alex's workspace and you have free material slides, YouTube video, and you have premium content, which you might have to pay a monthly subscription for. Now, once you pay that subscription, within the content layer, you can see what are the most highlighted parts of the book and what students are commenting within that book. So where are you seeing the most engagement? What is the more contentious part in the philosophy, but what are people agreeing and disagreeing with? After the professor instead of manually have to reply to 9070 100 emails, they just do it all directly on the content, they're so also streamlining and driving, better efficient use of their time, which is again, a big problem for the instructor. And then I think what's interesting as well on the instructor side, and everything's normalized, but they can see how people are interacting with their content. So they'll be able to say no one is reading the video content. However, everyone is reading the business case review, maybe to drive more engagement on my lectures, I should adopt more business cases, because students like interacting with that content. So you can see what is getting highlighted more what is getting more interaction, driving better efficacy of the learning outcomes, because students are more engaged in the content. I think the really shocking thing, right is for professors today and instructors is their biggest problem is free reading ahead of class. So hardly any student reads it had a class. So they come to class, who's done the pre reading off, sorry, haven't done it, and three for Legos infrastructure, you can send notifications saying, hey, class, don't forget to reach out to two, three and four ahead of the class. That is super powerful as well. And that creates more virality into our product as well and allows you to have much more organic growth.

Alexander Sarlin:

Really interesting. And then, you know, you mentioned sort of what are the contentious parts of the philosophy textbook, I'd love to drill down there. So do you see students sort of debating inside per Lego around a particular a certain claim in a textbook or disagreeing or pulling in additional resources from other textbooks to say, hey, according to this book, this is true. So what does it mean in terms of this? How do students sort of really choose to go deeper with the textbook experience?

Gauthier Van Malderen:

Yeah, that's a very difficult one because you'd have to manually go into every group and try and find a way. So one of the two will be built on top of the reader is the ability to do all your referencing. So you can copy and paste directly references from the book into your essays. And we can see what are the most reference books for certain themes. So philosophy, let's say Introduction to Philosophy, these six books again a reference 1000 1000 times. And then what we do is we can cross correlate what is being referenced against other things. So it's not a very great form of AI yet I would be maybe not lying, but I'd be overselling it if I said, we have super fancy AI, but we do in a very sort of soft version, populate content to the relevant field of study. So if you're highlighting and commenting a lot on one book, and we're seeing that there's a lot of interaction with intro to philosophy, one on one, and you're talking around, maybe Rousseau, we see that we can then push Rousseau one on one, his theories and his concepts that you are commenting and debating a lot as the next content layer. We need to get better at that on seeing what are the most engaged parts of the content, but I can only see the highlighting commenting interactions, but I can't actually see, what are people contentious about right now?

Alexander Sarlin:

Well, the training set is there with hundreds of 1000s of subscribers. And yeah, there's so much data that the AI, there's a lot to figure out. And that's, that's exciting. And you mentioned some of the community aspects for professors, they can aggregate materials, they can get insight into what people are actually accessing or not, they can communicate, I'd love to hear just a couple of anecdotes. You know, when you talk to professors who use per Lego versus the traditional way of assigning textbooks, what sort of stands out to the most what gets them most excited about this model, versus what they've done in the past?

Gauthier Van Malderen:

Yeah, I think it falls down to three things. So speed and efficiency. So by being digital, you can search directly within a book, you can find directly what you're looking for. So that's super helpful was before you had to manually look at the pages, etc. The second is no need. And we've talked about this is the ability to use different formats and different textbooks to teach one class, before a professor would be less inclined to ask the student to buy seven textbooks because it would cost them a lot. But if you've got it all on a subscription model, you're going to take the best of all books, and then you make the best of all the content you have on them. So what I'm seeing is not just using one tech, several textbooks. And then of course, not just textbooks with different content, there's and the most popular one is video. And I think audio is going to be the second growing segment. A lot of people listening to podcasts and audiobooks. We need to continue to build on that. And then I think the third is what instructors absolutely love is the ability to send push notifications to students in very subtle ways. In guys, this is the most highlighted part of the book, make sure to read this ahead of class next week, which drives better discussions in class because students like oh, have my class next Tuesday, I better read it because if not, I'm going to become unprepared. So that translates into more active discussions. And actually, we've proven that we can increase the pre reading of about 40% with our instructor assignment piece already so far. So it's not perfect yet, but it's already a good benchmark to where it was before.

Alexander Sarlin:

Yeah, that's a significant lift, especially because pre reading is such a black box, and something that students often try to get away with not doing all levels. This may be a strange question, but I feel like you probably have some really interesting thoughts on it. You know, one of the newer aspects of Spotify again, which is a parallel to a lot of things, you do it for Lego, it actually offers listeners the chance to contribute directly to artists. And I'm curious, can you imagine a future in which individual professors actually might monetize the content? They're adding to pro Lego in addition to the publishers?

Gauthier Van Malderen:

Yeah. So it's really, really interesting question. I think exactly that. So what we're seeing is speaking to our user communities, a lot of people are creating great quality content and not able to monetize that content. Well imagine you're a professor and you write up a very interesting 40 page Word document around a certain theme in your class, you could upload that into a Lego royalty model and become a micro publisher, in effect, that creates unique IP that makes more defensive, but it's on the pilliga platform, and also is a great way for professors to have a wider reach with their audience and community, which they wouldn't be selling to anyway, and also removes the whole slow process of trying to get it published through a publisher, etc. So very similar to how some ad tech companies allow students to monetize their notes, I think is a first layer will allow professors and faculty to monetize their ancillary content. They can also offer that for free, but maybe it's a nice, you know, imagine you have 1000 students reading your content that might be 234 $5,000 a month without too much additional work.

Alexander Sarlin:

And at least in the US, you have a huge army of adjunct professors who are working really hard, doing really, really good work. work and are often underpaid. This is a it's really intriguing concept to think about a monetizable model where all the work that's going into creating class content could actually become added to a subscription service and monetizable. I think that's incredibly exciting.

Gauthier Van Malderen:

And I think also, what's exciting is we see the themes that students are looking for. And some themes don't even have books. So I'm gonna sound crazy here, but there's like witchcraft is a huge theme right now, don't ask me why. And we have like seven books on witchcraft. But imagine you have a very niche Professor that's gonna write the history of witchcraft and stuff like that, she can be very niche for quite a lot of people looking for that. So it could have continued to build that longtail of the education space, which the big textbook published can't afford to do, because they need to sell a minimum 100 to 300,000 copies, whilst with Palenko, because you have a very low cost structure, even if it sells 600 700 copies, or a few 1000 students read it, you'll still make a nice margin on top of that.

Alexander Sarlin:

And that reminds me of one of the other really interesting parallels with Netflix, which is that they use their extensive data to be able to sort of create micro niche content and say, Okay, we know there are all these people watching these three shows, we're going to create a new show that's very much in the same theme. And we know that might not be for everybody, but the significant number of people who like these three shows will definitely watch it, it will definitely push it to them. And then you create, you know, as you say, really interesting, longtail niche content that expands what it could be a show that never would have been made and regular television era.

Gauthier Van Malderen:

Exactly. I think one of the shows was a Spanish show, which became a massive hit globally, and who would have thought that a very small niche Spanish show would become so big. Hopefully, we can do the same for academic content as well.

Alexander Sarlin:

That's really exciting to think about. You mentioned that you can see on for Lego, what parts of the textbook are most highlighted. And I just wanted to ask, just to give our audience a little bit of the understanding of the experience, you know, how do you mirror some of the traditional physical interactions that people do with textbooks? Is there a way to sort of write in the margins or underline key points or copy things out? You mentioned references, how does Lego work in terms of just the logistics of getting all of the pieces of the textbook together in an ebook format?

Gauthier Van Malderen:

Yeah, so we get sent a PDF format to us by the publishers. And in terms of functionality, I believe print is amazing product, you can highlight annotate as you separate. And we do all the same functionality, but we try and make it even better. So it print, you can't search for the book in two keywords, you can't directly plug your reference, you have to manually write your reference or the book in the page, we do that all automatic for you. So it's all the same functionality as a traditional print model. But we just try and bring it to the modern era, and add lots of cool tools on top of it. So one thing I want to do in the future is the ability for you to put flashcards within the book, to help you learn if the biggest and most important themes within the textbook. So these are all tool sets that you can build on top of the content layer. And then of course, with the community there, you can also streamline the learning experience where you can see the most highlighted parts of the book very similar to how medium sometimes as the most highlighted parts and articles, you could also offer that within your once you open the book, you can see most highlighted parts from all the community. And that will bring that up straightaway.

Alexander Sarlin:

That's exciting to hear you envision the use of video, sort of I know that you mentioned that video is sort of the number one medium that's being used in audio a second, you envision the video or audio notes like that students could be able to be reading a textbook and then film themselves talking about what their response to it in a way that other students could access.

Gauthier Van Malderen:

Oh, that's very cool. I have not thought about that yet. So when a student reads a really interesting book, and might comment it and make a theme about it, and then upload that into the play very consistent with the content layer. Yeah, I think that's the beauty of once you have such a big subscriber base, and you have so many, the student could create a workspace or the professor could create a lecture slide on top of the book and share that. And who knows, right? The data will tell. And that's the beauty of having a community is we'll probably be surprised at some of the things that like best like Switchcraft mentioned, I would have never thought I

Alexander Sarlin:

would not have guessed about that topic either. But it is really interesting. It's such a fascinating model. We have a few minutes left, and I just wanted to talk about a little bit of the logistics of Lego. It's such a, you know, you launched in the UK in 2017. You are a master student at Cambridge really thought about how to make this amazing model for Lego has raised I think $75 million over the last five years, including a $50 million round quite recently. Where is prologue available now? What are your biggest markets? What are your biggest languages? How has it expanded in the last few years throughout Europe or elsewhere?

Gauthier Van Malderen:

Yeah, so we're available basically, across the world. We're not available in Russia, and we're not available in China. The reason we're not available in Russia, you know, what's going on in the world. And the reason we're not available in China is there's quite a lot of censorship around things Apple. Now it's quite a big team Taiwan, right? They don't want books around Taiwanese history to them on the platform. So pretty much available everywhere are three big markets, Europe, the US, the US is actually our biggest market and growing the fastest. And that's all of SEO to organic search on pirated content. And then what's really interesting is that town is growing incredibly fast for us. I'm so surprised about the growth there. But the adoption of content, both in English and in Spanish, is growing really, really fast. Today, we're available in eight different languages. So English, German, Italian, French, will be opening another few, the way we think about the language is based on demand. So English is a huge language use globally everywhere. So I think probably by the end of this year, you already have about 15 languages on Duolingo. And over one and a half million textbooks, so it's growing quite nicely on the content side of things.

Alexander Sarlin:

That's incredible. Yeah, one and a half million textbooks that would take quite a while to get through for us. I could imagine. It's thrilling. You know, it's interesting that you mentioned the Lifelong Learner use case and the sort of enterprise or lifelong learner use case, because you and I met at the ASU GSB conference, and we talked a little bit about this model. It's really incredible what you're doing. And somehow it never crossed my mind that, you know, as somebody who is older than traditional student, would still find this incredibly interesting, the ability to subscribe to a million textbooks on every topic and the world's Intermat. You know, to marry them together, aggregate, put pieces together, but coming out of this call, I think I'm going to subscribe, because it really is, I mean, talk about a lifelong learners sort of dream to be able to get access to all the top textbooks from all the top publishers with one monthly cost, but monthly payment, it's pretty exciting. I'd love to hear you talk God's gay about the future of Lego. It's grown like crazy. You're about five years old. Where do you see for Lego going in the next five years? What are sort of the moonshot ideas that you hope to see manifested through the work you're doing?

Gauthier Van Malderen:

Yeah. So I think over the next two, three years, what I'm really excited about is continue to grow that community learn to continue to build on marketplace vision, where you're not just got offered textbook material you're offering, as I mentioned, right, maybe courseware, you can integrate lots of different so really the marketplace where we find all your core learning material, those. And then the third is empowering instructors to become micro influencers in your ecosystem. Those are the three big themes. I'm really excited from a product perspective, I think, where Pelago could be in five years, and this is a much bolder vision. But we know and we've all talked about how the university system is broken, and degrees, incredibly expensive to attain right now $30,000 to go to university, sometimes you've got to commute to go to university, sometimes you have to pay for your dorms, etc. Well imagine through a learning environment where you have all the content, you can learn from the best professors on a community that they're working with all the instructors potentially ask you, you could also offer the ability to do micro degrees and degrees. Were students out there and self paced can complete the content. On the back of that you could add gamification layers, you could add add rewards. There's a really interesting one where we were approached by a big coffee chain, he said, If a student reads two books a month or three books, we'll offer them two, three coffees for free a month. I mean, it's just a silly concept. But you can add so much to the ecosystem to drive better learning outcomes. But yeah, for me, it's ultimately we're on a mission to make educational content more affordable. And I think the next leg to that is potentially offering after the content layer, you could offer maybe the degree layer as well. I know lots of companies like Coursera, a lot of companies are doing this. So maybe it's about building that partnership. Who knows, I think the next two years, we've got our product roadmap pretty much secure, and we still got to do a lot. But yeah, that's kind of me, the big bold mission is maybe you don't even need to go to university anymore. You can just learn everything on your online library and get a degree out of that.

Alexander Sarlin:

It's a bold and very exciting vision. I've been joking with my wife because we have a newborn baby. And we just started to put in a college savings fund together and the when you put the college calculator together, it says that college by the time he is old enough for it will cost$960,000. Yeah. And being an edtech. And having this podcast, it makes me kind of gleeful actually because, you know, I don't think that will really happen. But if prices continue to spiral universities don't sort of get their act together. innovators and disruptors, like her Lego and Coursera and others are going to create incredible models and you know, I would have my son on for like a subscription as soon as he is old enough to appreciate it. But I really appreciate that you're thinking about things like influencing community, video, audio, you know, really taking the concept of the textbook, which is one of the sort of older fashioned ideas in education. It's been around 100 years and bringing it very rapidly into the year 2022. And it's just thrilling to see it happen. We always end with two really quick questions. One is what is an exciting trend you see right now in the Ed Tech landscape that you think our listeners should keep an eye on?

Gauthier Van Malderen:

Oh, there's so many. I think one of the biggest trends I'm seeing is rescaling upskilling. And I'm actually surprise look, in our own data, the definition of a student, you tend to think is 18 to 23 year old today, it's actually a lot of them are moms have two children, for example. So the definition of a student I'm seeing that the average age on Legos 29 to 33, right now is no longer that 80 to 24. So how do we build a more flexible learning environment for people who have other obligations who are doing jobs and are learning part time? I think that's one. And I think for me, the second one is, I think there's a big theme around micro credentials, micro certificates. I've seen a lot in the professional space, like even our own developers, they're doing AWS certification, right. So you're doing a lot more of these micro certifications throughout your career, and throughout your learning experience. So I think that's another big trend that we'll see a lot of growth in over the next few years.

Alexander Sarlin:

So a final question is what is one book or blog or Twitter feed or newsletter that you would recommend for anyone who wants to dive deeper into any of the topics we discussed today?

Gauthier Van Malderen:

Oh, that's a great question. So any book any Twitter feed? So I actually very interestingly, quite like bright eye ventures that sort of venture fund here based in Europe, they do some very interesting statistics on learning. They do some very interesting reports on the EdTech space. So maybe that's one. I also quite like reading. There's a guy who used to work at Pearson, called Adam black. And he's got a really interesting blog called enabling insights. He used to be the chief strategy officer McMillan, some great, great input on the ed tech space of learning that I like reading on him as well.

Alexander Sarlin:

Fantastic. And as always, we will put links to those resources in the show notes for this episode. Thank you so much for this fascinating conversation for Lego is really exciting. I'm halfway through signing up for my free trial right now. Not even joking, go to a Ben maldron. Thank you so much for all the work you do. Thanks, Alex. Thanks for listening to this episode of the EdTech insiders podcast. If you liked the episode, remember to subscribe on Spotify, Stitcher or wherever you get your podcasts. And if you're listening on Apple, please leave a rating and review so others can find the podcast. For more ed tech insiders content subscribe to the Ed Tech insiders newsletter at edtech insiders.substack.com