In this Episode, Guests:
Big Story:
Other articles discussed:
In this Episode, Guests:
Big Story:
Other articles discussed:
This episode of edtech insiders is sponsored by magic edtech magic Ed Tech has helped the world's top educational publishers and ad tech companies build learning products and platforms that millions of learners and teachers use every day. Chances are that you're probably using a learning product that they've helped design or build. Companies like Pearson McGraw Hill, imagine learning and the American Museum of Natural History have used their help to design or build some of their learning products. Now magic wants to bring its pedagogical and engineering expertise to make your key learning products accessible, sticky and well adopted. Check them out at Magic Ed tech.com, which is Ma GIC. Edie Te ch.com and when you get in touch tell them Ed Tech Insider sent you. Welcome to Tech insiders where we speak with founders, operators, investors and thought leaders in the education technology industry and report on cutting edge news in this fast evolving field from around the globe. From AI to xr to K 12 to l&d, you'll find everything you need here on edtech insiders. And if you liked the podcast, please give us a rating and a review so others can find it more easily. Hi, everybody, it is early May week in edtech. It is Ben Cornell and Alex Sarlin. Coming at you with the latest news. I will tell you, I don't think we've ever had a crazier time here at ed tech insiders. Just the last like three weeks with the amount of podcasts, events, activities, what's going on in the pod and newsletter at Tech Insider universe. We're flooding the zone with it on the podcast side. So we did 10 interviews at ASU GSB with amazing people. And we're putting them out as they get edited. Which means we had two more amazing ones this week with Ashley Chimpo, the chief learning officer of emeritus and Chuck Kohn, the CEO of nerdy and his chief institutional Officer Anthony Salcedo, who was at Microsoft, super cool. We also published a interview with Perry Calamus, who runs a company called a caller that's trying to democratize college admissions. Check them out, there are a lot of them. You don't I hope nobody feels compelled to sort of binge it. But check out whatever's interesting. And we're trying to give you as much ed tech inside knowledge as we possibly can. There's a lot of episodes this week.
On the event side, we've got a happy hour coming up in Redwood City, California that's in the peninsula, just south of San Francisco on May 18, from four to 6:30pm. Shoot us an email or check out us on Eventbrite. We also are going to be at ISTE in Philadelphia, as well as London tech week. So the first time we're going international, please look us up. And we're also planning to do a happy hour event there as well. So many great headlines this week. Our listeners will note we did a special episode on Chegg will follow up a little bit on that today. But I'd have to say the top headline, you know, big shining lights for today's episode is really what's going on with bio Jews. India's anti money laundering agency evidently went to bide uses house. So this is byju raveendran who is the founder of by Jews. It's called the enforcement Directorate. And they did searches at three different properties. And they say that they seize various incriminating documents and digital data. I feel like we're on some sort of Netflix documentary here. We're just at that first phase in the first episode where you don't really know what to believe. What do you think this means? What will be revealed? And what are you hearing? Alex, all I've been hearing about when it comes to this by Jews news is that this is a big deal for them. It's a big deal for by Jews, I've talked to a couple people who work at advise us subsidiaries. And they basically said, you know, the company told them that this happened, but they haven't given them a whole lot more instruction. But I think there's the feeling that this is a real thing. And we'll see where it goes. But it does feel like a like a homeland or something like some kind of drama. Because I mean by Jews, as listeners will probably know it's the largest ad tech company in the world. It is the largest startup in India may not be any more but it has been and it has amazing investors from multiple countries and it's sort of been the flagship ad tech company, certainly of Indian edtech if not all of that tech is sort of the big success story. So the idea that this is now getting caught up in a financial scandal is a huge deal. What have you been hearing? Well, I will just remind listeners that, you know, more than a year ago, you know, our kind of coverage of biases was really like, Where there's smoke is there fire. And I think, you know, wave one was really a lot of complaints in India about the advertising and marketing practices, as well as the quality of the tutoring support. And then we also heard a lot about the mergers and acquisitions strategy, not going as smoothly as people had hoped with different companies not having clarity around their remit complexity there. And then the third kind of warning, flare was the kind of funding round which half of it was filled by, by Jews himself. And the use of his own capital and his own equity to fund around was also like, you know, it was either this like bold move, I want more of the company, or it was a sign that the financial players were concerned. And I think now, this story, you know, creates a connect the dots picture that is quite quite concerning. And I had a chance to talk to a couple Indian and tech entrepreneurs, and they fully expect the board to relieve Baijiu of his job as CEO. And this is purely speculative. So you don't have any insider knowledge specifically on that. But that's the speculation going on in India, and that they will replace Baidu with a CEO, and that they would start selling off different parts. Now, the other news was that Akash, which is one of their other subsidiary businesses, was going to be going, you know, IPO going through the Indian markets. And there are questions around like, if Baijiu wanted to IPO in the US, would they have to do so via SPAC because of their governance structure? So there's just like, a lot of big questions more than answers. But I think this is a turning point. In terms of the big story, you know, we watched the World Cup in the summer with Lionel Messi, the big US spokesperson. And now here we are in, you know, what appears like it could be an accounting scandal. And it's really sad. And by the way, I think we support it. And for listeners know, Alex and I, one take no joy in like covering the downfall having myself been and I know, Alex, you've been at organizations that the press was glowing on the way up, and it was, like, horrible on the way down. The reality is there's people who are running these companies who are really impacted. And ultimately the, you know, the customers or the schools and learners all gets, you know, the short end of the stick in the process. I think where we're even more concerned about this one is the overarching impact on edtech. And it's just going to make it way, way harder for Indian ad tech companies to raise money. Just last week, we talked about the consolidation of funding their expect that to be only more accentuated with this news. And I think there's a rollover effect into us ad tech, you know, with Chegg, you know, and the other public companies taking a hit by juice, the largest privately valued at tech company, taking huge hits after huge hits, is going to be really hard for an LP at a venture firm or private equity firm, to go raise a new tranche of money from an institutional funder to say, education is where it's at, when we're having these kind of outcomes for our leading companies. And meanwhile, the kind of narrative around Chechi Beatty disrupting everything makes it a really hard time to know, where's the solid ground to stand on? So I think there's so many facets to this story, when you think of the so what and what this means to the average listener, that average ed tech entrepreneur, what's your takeaway? I think it will have some level of chilling effect on the already chilled investment market for ad tech. We saw the hole in IQ report that tech investment was down, you know, huge percentage is sort of eight to one, you know, an eighth of the funding that happened in the last year happening this year so far. And a lot of people are invested in by Jews. It's been around a while it's had many rounds. I just wonder. I don't know. I mean, this was a company founded by Baidu himself and his wife, he was an ex teacher and really famous tutor And I think it may, it will probably just accelerate the need to do more diligence to think more about what these what these investments are really going to, especially if they're in other countries where you don't have as much contact with people. There has been really weird news we also saw, you know, one of the only headline I think you skip Ben was just a few weeks ago, I think maybe like six weeks ago, there was a revaluation of buy juice from some of the top firms basically saying it was half as valuable as it says it was. And we've seen these huge BlackRock, we've seen these huge numbers go up and down, you look at the nature of this is basically saying, they said they hadn't prepared financial statements this year, they hadn't been audited properly there. There's all sorts of direct investment coming in. And they there's no way to know what's happening, where and it's just I think that's been the story. I mean, that's smokin fire metaphor comes from Matt tower, who wrote a terrific article in his ad tech thoughts blog about by jusy, you know, are all these weird headlines adding up to something? And I think this is the answer to that question. And where it goes from here, you know, we'll have to see, but it's a can't be good for the sector. Yeah. And it's gonna, you know, episode two or episode three of the next Netflix documentary. You know, the question is, is this going to turn into a narrative that is, you know, educator tries to make good grow big company gets a little over their skis? Is it a, you know, Sam Beckman fried slash Elizabeth Holmes, like Inception, you know, story? Or is there a part of the story that's really around, like, where the market was headed, and, you know, kind of over irrational exuberance, and then things coming back down. And it could be, you know, we really don't know, like, it could be a little bit of all three, it's just pure speculation at this point. But I think the thing that we do know is that this is going to have this particular investigation. Crosses want, like a meaningful new line, in people's association with buy juice, and will have pretty profound impacts on the company, as well as the broader tech ecosystem. Yeah. So with that, we have two terrific interviews today. So why don't we just do a quick round the world this by just headline is by far the biggest, but why don't we just do a quick around the world of some of the other things we've been looking at this week. And then we gotta move to these really good interviews with agathon capital and nectar, which is launching a new AI tool. So Ben, what else caught your eye this week? Yeah. So two stories, you know, I'll kind of take the K 12. B, two stories that came up for me, one was really around teacher salary rises. So there's a California bill proposing a 50% school staff salary hike over seven years. There's also an article that dives into Los Angeles Unified, kind of landmark 21% salary increase for educators there. And meanwhile, enrollment in LA Unified is going down. And so there's this question of, you know, how are we going to pay for this, and in LA, there's a blooming deficit, which essentially would call for required by law, you know, pretty large cuts in both infrastructure as well as staffing. And so we may end up seeing, you know, much, much larger class sizes, we may end up seeing school closures coming. And all of this is in a bid to kind of keep up with the rising cost of living in California and other major cities. We also had seen, you know, in Alabama, the or No, actually, I think it was Arkansas, you know, this idea of teacher minimum wage at $60,000. You know, I've been arguing that should be 100,000. I think it's really important to contextualize this with what's going on with AI because there is no solution set, where you end up doubling everybody's salary, and not increasing revenues, that you can make meaningful teaching and learning work anymore, unless you're thinking about how to deliver that learning in a fundamentally different way. And so I think, you know, none of these articles suggest that we've gotten to that conclusion point. But I think the looming risks of financial distress, especially in our nation's largest school districts, I think is accelerating and will be important to follow. And the second one that I'm reading about is an article around teachers feeling a growing obligation to incorporate chat GBT. This article comes to us from government and technology, Gov tech.com. And it raises real questions around first like product adoption, it's been classically assumed that teachers are slow to adopt Oh contraire. This is the the example where why aren't you using chat? DBT? Why doesn't my child have access to chat DBT and it's so such a flip, because, you know, just a few months ago, you know, New York City banned chat DBT. And there was all this concern. Now there's a flip back where, you know, teachers are feeling a lot of pressure to have personalized lesson plans, and make things more interactive using AI bots. And at the same time, now, we have a growing call for AI regulatory regimes in the New York Times. And basically, from every news source possible, Whitehouse just also announced seven new AI centers, quote unquote, centers, one of which is around AI and learning. So it's just interesting kind of flip flop here. And I wouldn't be surprised if it flips and flops several times around what is the appropriate classroom use of chat GPT and other AI tools? What is not appropriate, what teachers are doing and what teachers you know, should be doing? And I think it is also a moment where school districts as organizations are kind of stepping back and saying, Okay, are we going to go with a let every flower bloom every teacher kind of do their own thing? Or are we going to try to create coherence in our system and and recommend certain tools that you know, every child gets access to or teachers use? So I think it's a great story for May, which basically bodes for how the fall is going to play out. Chat. GPT is going to be in your kids classroom, AI is going to be in your kids classroom. The real question is how, what about you, Alex, what's catching your eye this week in terms of headlines? Yeah, I mean, besides the Chegg story, which we discussed in our in our Live episode, which is a big deal, but check his back up 10% Today, and you know, we'll say the two stories that caught my eye were pretty different from each other. But I thought they were both really interesting. So one was an ED surg article about that sort of went and talked to Richard Richard Mayer, who's one of the sort of godfathers of instructional design, one of the most cited folks in all of education, to ask about the sort of like personality and gender and race and some of the things that that we haven't really talked that much about, when it comes to AI bots, or AI agents, they call them virtual agents is what they always call them the research. And the reason this was fun to see. And interesting, too, I thought it was a great idea by Jeffrey young, the higher ed editor there is that there is a lot of good research about virtual agents, and about how people have already been treating computers like humans in many ways, and reacting to them in ways that are very, maybe surprisingly intimate for many years. And now that we have this new generation of AI, this is going to be turbocharged, we've already seen the potential to customize your teacher and make AI avatars that look like anything, we're definitely gonna see AI personalities, AI influencers are already coming up. So I think it's actually a very prescient article in terms of the discussions we're going to end up having about, you know, is it a good idea to, you know, make more black male teachers? Because we know we need more black male teachers in America? Or is it a good idea to make black male AI tutors? Because of that? That's a thorny, weird question to ask, right. I mean, it feels weird even saying it. And this is going to be real. So I liked that article. And I think I recommend it. And I think it's a it's a sign of things to come. The other one was about unionization, spreading through many different layers of higher ed. And you know, higher education leaders have been pilloried, but from all sides, you know, demographic issues and enrollment issues and ROI issues, and some schools have been closing or merging or having to go online and the pandemic and to add to that panoply of issues is the fact that unionization is picking up across the country, we are seeing undergraduate student workers petitioning and forming a union at Penn. We're seeing Temple University graduate and undergraduate workers lobbying for unions. Of course, you're seeing, you know, actual strikes. So we saw a strike at Ann Arbor from graduate school workers, you're seeing postdocs start to strike. And it's a really, frankly, I mean, I it isn't maybe my political stances coming out here, but people in colleges are desperately underpaid, especially this particular group of adjuncts, graduate school, graduate students, postdocs, there's been this idea for a very long time that they they're sort of, you know, giving their work to the school in exchange for teaching, you know, or teaching in exchange for learning. And there's been this sort of wishy washy idea here, but these are some of the most exploited people in the country. I mean, adjunct professors make, you know, 20 something $1,000 A year and go graduate students who are, you know, live in poverty, you know, throughout their PhDs, I actually think that it's kind of an exciting moment. And it's also really interesting to see, you know, some of the quotes, there's an article from Forbes talking sort of wrapping together all the different union unionization efforts. And one of the quotes is about how post pandemic, I'll read, the quote is from Professor at Hunter College, this is all stemming from an explosion of post pandemic labor activism, particularly by a new generation who understands that representation has strong advantages. So the Youth is rebelling against the system that is sort of systematically exploiting them in sort of coming and going, right. I'm kind of, and then capitalists here would say, I actually think this is also just another sign that the kind of four year university value proposition has not been working for, basically, anybody but professors, and administrators for a long, long time, potentially, like high net worth donors, maybe. And this is, rather than this signaling some new dawn of like, worker empowerment in the higher ed sector, I think this is hastening of the decline of the kind of dying industry. And like we've said many times before, I think, you know, people who could go be an adjunct at Harvard, for 20k, might be getting a good deal because the brand affiliation creates acceleration elsewhere, but when you're talking mid tier colleges, and and below, it's going to be really, really hard for that to stand up any longer. And, actually, you know, the other ironic part is, this is your workforce that is primarily delivering the learning to your students. So when they're not happy, and it's not working for them, like the learning is deteriorating, which makes it makes students not happy, which then makes them not calm, which makes your whole system not work. So, you know, having been a union member myself for many years as a K 12. educator, I totally agree with them in terms of the the kind of value proposition of being an adjunct faculty member is no longer worth it. But I've just also had a lot of experience in seeing how these things play out. And it's unlikely that there will be, you know, a dynamic revolution in these institutions and much more likely that the adjunct professor is going to flip to an alternative model that has flexibility, good payment, etc, etc. I have been wondering why an edtech company, maybe this has happened, I haven't seen it doesn't take advantage of this crazy situation. There are so many overeducated adjuncts, two thirds of which are making less than $50,000, a year, a third of which is making less than $25,000 a year, desperately underpaid, highly over educated, they can teach they teach they teach intro courses, why aren't we creating alternative jobs for them, there's got to be a way that they should be teaching in an edtech company rather than a university. It's just an incredible opportunity that I'll just end it there. Yeah, we can start adjunct.com. And, you know, get your own personal adjunct professor. I think this is one of those frameworks, though, that you're like, look at all the asset we have. And instead, it's often best to start with the market, like, what is the problem we need to solve? And what's the markets willingness to pay? And this is where the adjunct professor folks are in a quandary. Because once you mean, if you look at some of the like, dissertations that people have been working on, it's so minut and obscure in some cases, that it's not, you know, we've kind of lost the like, practicality of that learning, for the learner to achieve whatever objective they have. So, you know, maybe it's this like, because of the large s of the post war America, we could afford to have 1000 people's, you know, rereading Shakespeare and writing new takes on, you know, every single word, and now we can't, but those folks need a, they're smart people they need and they're passionate. They need a path to pivot and apply those things. And I say that with humility, as it history and literature major myself, you know, it's, it is just a really interesting moment for so many careers that are being disrupted. And how do you reimagine your work to deliver the income that you need but also be something that you're good at and passionate about? 100% Well, that people will be Good at what they're doing and passionate. I think it's probably a good time for us to transition to our interviews. Hi, everybody. It's exciting to go to our interview section of today's podcast. First up, we had have Nishad Bala Chandran, Vice President of Avataan. Capital. agathon is a growth stage investor in companies that are trying to transform education shot. So great to have you on the podcast today. Thank you for having me. I'm excited. First, tell us a little bit about agathon. You know, I think our viewers are really familiar with the typical early stage venture capital company. But what makes agathon different? Sure. So, you know, I think part of that is in our name, right. So let's start with the name. So the philosophy of outline sort of embedded our name, it comes from two Greek roots have been to bind together, and Athan from Marathon. And so really the, you know, the goal is to be a platform where we can bring ideas, people, companies together and make a difference, and sort of the education and workforce ecosystem and build enduring organizations, right, even beyond our ownership and our involvement. And so in practice, what does that translate to? That translates to, you know, we're a private equity firm, we're entirely sector focused. So we focus entirely on the Education Workforce ecosystem, primarily in North America. We're agnostic to business model, though. So we, we look at businesses that are technology companies, we look at services oriented organizations, and we look at multi unit business models as well. And generally speaking, you know, we're looking to back founder led founder run organizations that have reached an inflection point. So that inflection point typically means they found product market fit, you know, that maybe they're about 10 million or so revenue may or may not be profitable, but they're looking to bring in capital, but also a partner, right, that help them in that next evolution of the business and growing the business further. And so many of our deals look similar at the end of the day, irrespective of business model and sector, which is a founder who may or may not be looking to transition, who is looking to grow his or her business. And our capital goes in to provide some liquidity, but also goes to the balance sheet to help invest in some of the under developed functional areas of the organization, in product in sales and marketing, and ultimately build sort of an organization, you know, that delivers both impact, but also makes business model sense at the end of the day. Yeah, and one of the reasons why we wanted to have you on the show is, people are getting pretty creative out there. It's been kind of the Ed Tech winter here for six months to maybe a year and a half. First, before we talk about like funding options. What are you seeing in the marketplace? How would you characterize the moment from an investor perspective? It's interesting, from the standpoint that I'm not so sure the last two to three years were sustainable, right? I think, whether it's because of COVID, or other factors, you had a lot of tourist money potentially coming into the sector. And I'm not so sure that that was sort of a sustainable trend moving forward are sort of the benchmark that you'd want to be looking at. So in many ways, at least from our vantage point, you know, you sort of have a return to business fundamentals, right? Like how do you build organizations that are making a difference, but, and more importantly, and they also make economic and business models sense such that they're enduring and self sustaining or a long period of time? And so in many ways, it's sort of a return to like, how do you build good businesses in this space. And that just takes time, you know, there are long sales cycles in our sectors. It takes nuance and specific knowledge. And in some instances, it takes being able to navigate some of the challenges that come your way in terms of getting institutions and other stakeholders to adopt your product or adopter solution. And so it just takes time. And I think I think what you're going to see is a return to investors who have been in this market and understand this market. And perhaps something that we've seen prior to sort of the the uptick that we saw over the last two to three years. I'd love to talk a little bit about some of your recent portfolio companies just to get give our listeners a sense of sort of how agathon thinks you said it's agnostic to model could you just give us like the super high level about companies like advance and re up which and the adult space and Galileo In the sort of younger kids space, yeah, sure. So, you know, let's take rehab as an example. So rehab was the latest investment that we made. Re UPS ethos, if you will, is helping adult learners return to the traditional education ecosystem to earn a degree. Historically, the business has done that through a technologically enabled coaching a solution. And about two years ago, now, almost two years ago, we made the investment and re up acquired sort of the majority stake in the business, and have since you know, augmented the team and the goal being, we wanted to have a more expansive vision for the business, such that if you're an adult learner, we're able to sort of help you evaluate your options, depending upon where you are today. And that would sort of be a product lead exploration of your career options and your educational options. And were then able to not only bring you back to the institution that you potentially dropped out of, but institutions that maybe sit within a marketplace, right, and with the eventual goal being perhaps even credentials that sit within the marketplace of academic options. That's sort of what we're working towards right now is, you know, how do we how do we build a more expansive version of the initial vision for re up, and the team has made tremendous strides and progress towards that, on Galileo, sort of give you an example in the earlier stage earlier learner stage. So Galileo operates summer camps stem summer camps. For our earlier learners, part of this stemmed from some of the work that we were doing, we do a lot of sourcing and research work within the firm. And we looked at the enrichment space within k 12, as one of the areas where we wanted to be investors. And Galileo was one of the companies we'd built relationships with over time. And we knew that the market would sort of return at the end of the day, right beyond sort of the pandemic, and that parents would want to continue investing in enrichment activities for their children, there's demonstrated impacts and benefits to that, that extend long beyond sort of called the K 12 timeframe. And that was the investment pieces was to sort of acquire a platform in the space with a good brand name. And continue to build out the programmatic offering guide the business through the recovery from COVID and the pandemic. And then eventually, you know, potentially evaluate inorganic acquisitions and activity because it isn't really fragmented space, such that you could build a broader enrichment solution for some of our earlier learners. Okay, so time for like one or two, just captain obvious questions. But I'm actually really curious. And you know, it's hard for entrepreneurs to get a straight answer from a funder when they're pitching. Why is 10 million in annual revenue this like magic number? And if you're like stuck at like five or seven, and you're grinding, like, what should you do? If you do you wait to get there? Is that just a guideline? But why is it that 10 million seems to be the like, ticket to admission for a company to get, you know, meaningful venture funding or be eligible for like private equity space? It's a good question. But I mean, at least from our vantage point, right, I would say we treat it as a guideline, it's not a line in the sand unnecessarily. It's more for us a proxy that as a fund, and we're in the business of taking scale risk, and not product market. Fit risk, right. And so it's not exactly 10 million, it's more Do you have a path? Do you have server your visibility into sort of getting to that 10 million number where you've had enough data points such that we can go look and see that there's a replicable way with where more capital could help architect a more refined go to market strategy, a more refined product strategy. And you could scale the unit economics of the business to hit a certain margin profile at the end of the day when the businesses 20 million 30 million 50 million in revenue. And it's just hard to do that right to your point where, at the earlier stage, you are iterating, a fair amount you are pivoting perhaps in many different ways. You're exploring which channels in which customer types work best for your product and your organization. And so we've just sort of historically found that when your approach During that 10 million revenue mark, there's just more replicability that we can look at. And it just helps us sort of better underwrite a business plan. Because at the end of the day, our model is a little different from the venture model in the sense that we are taking more concentrated positions from a portfolio construction standpoint. And our goal is to be the single source of capital to an organization, right, where we are underwriting a business plan together in partnership with the founder or with the team, with the goal of scaling the business with a particular investment thesis, you mentioned that you're sort of not looking for Product Market Fit risk, because there you can see why that would be you're looking for companies that have found product market fit that already are sort of really off to the races. From that perspective, I'm curious how you're looking at this new crop of AI based education companies, they're, you know, new ones almost every day. And none of them, I think, quite have product market fit yet. And they may not for a couple of years, does that mean that agathon will keep a close eye on the space but but not jump in and tell somebody really find something? Or are you already sort of really cute in and starting to look for who's going to take the lead in that kind of race? Yeah, look, I think, you know, it's hard to be focused in this sector without having a point of view on sort of the generative AI technologies that are cropping up. And so part of what we do is we have a cadence, and a system established around what we call sourcing and research. And the idea is that we have defined points of view, the sectors that we sort of cover, I think, Alex, to answer your question, in terms of like, investing in new technologies that are that are cropping up, I think there's significant disruption risks, there's still sort of an evolution of sort of the business model that needs to come about to where maybe we won't be participants directly in those businesses today. However, you know, we are looking at generative AI from the standpoint of how does this impact on the investment theses that we have the businesses that do occupy and serve the sectors that we're looking at? We're also looking at and working with our companies to say, how does this impact to you from a product standpoint? How can we leverage generative AI within the workflows of our organizations to where we have more efficient organizations, and that creates real enterprise value or the ability to serve our learners more effectively and better? And so I think at the end of the day, there's no avoiding sort of generative AI right, I think it's just more from our vantage point, we're going to watch it very closely, we're going to sort of leverage our point of view to determine when we're making investments, how could generative AI be a disruptive factor or be an additive factor to those investments? And then for our existing companies? How can we better proactively prepare them for the change that has already come and that will continue to come that we're seeing from some of the public companies that reported earnings this week, for instance? Super, this has been so illuminating. Thank you for kind of pulling back the curtain for us in a shot on how investors think and specifically growth capital or private equity firms. It's a very dynamic market right now. And if people want to reach out to you, or to Abidjan, what's the best way for them to find out more? Yeah, you know, our we obviously have our website, but I would also encourage everyone to reach out directly on LinkedIn, we're active on LinkedIn, and we respond to direct messages as well as outreach. And I think our email addresses are on our website as well. So if you just like to learn more about Amazon, or any of our companies, you know, we're here. Thanks so much. Nishad. Vice President and Vaughn, we're so glad to have you on the podcast today. Please keep in touch and let us know when you're seeing that breakout entrepreneur or venture we want to have them on to thanks so much. Thanks, Ben. Thanks, Alex. Appreciate it. And for our next guest, we have the amazing Kavita guy, CEO and founder of nectar.io. And she is coming on to announce that they are doing some really interesting new work with generative AI to really expand their community platform. Welcome, Kavita. Thanks for having me, Alex and Ben excited to be here. So tell us about sama. Yeah, we are really excited here at nectar to finally after months of working on our own AI tool to announce Soma. And essentially the best way to describe Soma is she sits within any natural class chain. at all. So let me back up a little bit and give some context on nectar first, to set the stage first, I think it's probably best to explain what nectar our product that we've had for over five years does for schools and for the EdTech market at large. We my co founder, Jordan and I started nectar when we were undergrad students at UC Santa Barbara. And it was really in this effort to eliminate these communication silos between students, staff, faculty and admin, and create this one level playing field where you have a virtual network for your entire campus. So imagine essentially slack for schools, you have a group chat for every class on campus that's auto created through the LMS. And then it auto adds the students and the instructors into it, so that they have a place to ask and answer each other's questions, build community in the class, and really create an effective communication platform for the entire campus. And so when we looked at what are the best nectar channels of all time doing, right, these some of these channels have 500 students that have sent 38,000 messages to each other over the 10 weeks of their course. And so we're seeing student engagement unlike anything ever before. And we really wanted to figure out across all the campuses across the nation that have been using nectar, what is that consistent X factor that really gets students to engage like no tomorrow. And surprising to me and my co founder, it happened to be the presence of a teaching assistant, any class that had at least one teaching assistant, we saw up to five times the engagement of a normal channel. And from looking at the data, we presume that it was because students felt that confidence of having another person that they could go get help from that could help them feel prepared to get into this classroom community, and engage authentically about the material because they had their basic course questions answered. But when you're looking at a deficit of 300,000, plus teachers across the US, and 1.3 million students not going back to college after COVID, something is really going wrong with the amount of support that students feel like they have or don't have, in this case in their classes. And so we wanted to figure out, how can we really build AI into our product, especially the first version of it to genuinely help students and teachers do what they need to do, right, not just be a vitamin or an Advil, but actually be an antibiotic that fixes some of these huge pervasive issues that we're seeing in education today. And what we came up with, and I can't even take credit for this, this came from us talking to students, faculty admin from across the nation for the last three months and saying, What do you need? What do you want to see come out of the EdTech market that would completely be a game changer for the way that you teach and learn. And we arrived at Soma. And what Soma is, is essentially, it allows any instructor to create their own chat GPT bought basically, within their nectar channel. So you have a customized, personalized AI teaching assistant in every nectar class channel, where the instructor can upload their syllabus or their course material, whatever information they want to Soma from right within their nectar class channel. And then it automatically memorizes the information and becomes this personalized TA for all of those students in the class. So essentially, for a student, anytime of the day, 24/7 They can go to their nectar channel and ask Soma. Any question from what's due next week? When's the midterm two? Can you give me a review of everything that we learned last week, and the instructor alone gets to decide the parameters of Soma. So if the instructor only uploads the syllabus that sets her parameters, that is all she's able to answer for the student, only the information that she's given in the syllabus, but let's say the instructor at the end of every week, wants to upload their modules that they just taught. They can train Soma over time, to be as effective as them at teaching their students that information. So not only do you have personalized ta that's getting all those basic course questions out of the way for you. But you can also turn xoma into a personalized tutor for all of the students in that class. And we're really excited about this because this is the first time that you're really going to create equal access within a classroom to all of the resources that are available. I think it's so exciting the one potential for learning, but also the kind of ability to take some lift off the shoulders of an educator too. So it's both exactly benefit to the learner. And the educator. I when I was teaching, I ended up having three student teachers and I remember I was my best self when I had the student teacher really helping and that was Still one to many, tell us a little bit about the business model and how you think about going to market with this, because we are seeing kind of a Cambrian explosion, as Alex likes to say, of AI tools, and figuring out how to make a business out of it and how to bring it to market is top of everybody's list. Absolutely. So right now the model that we use is we go into campuses, either at the department or the campus wide level, and we give them nectar at $7 per student per year. So you're just paying for the students, all of your faculty, staff, and admin accounts are completely free. And once you've got an actor on your campus, anybody can create their own channel, and then build their own Soma bot within it. So as long as you create a channel, you'll just have a drag and drop section where you upload whatever material you want. So technically, you can train your own Soma bot within that channel on any information that you want. And so that can even be you know, an advisor creating a channel for their students, or you know, a campus tour guide that's able to answer all of the stuff on the website. So it really allows schools to expand their ability to scale help to their students, without having to hire a bunch of people to do that. And what we're looking at right now, and I'm sure this is going to evolve over time, but we are really focused on ensuring that students have the basic help that they need to then feel confident jumping into their classroom community on nectar. Because that's really what from survey we found hold students back, they are afraid to even say anything to each other if they feel like what if this is a stupid comment or a stupid question. I don't want to look dumb in front of everyone else. And so to that mission, it really just makes the most sense to us to build nectar and soma into each other and create one seamless product, where initially, we're actually going to give Soma to the schools that already have nectar for free. Because our goal from day one has been we'll figure out the money part of it. We have incredible VCs and investors backing us that trust us to turn this into a billion dollar company. But first, we've got to prove to the world that we can actually change teaching and learning and improve the academic outcomes of students. By integrating this really modern deep tech, that previously would have seemed really scary. But that's been our mission at nectar is let's go find the most advanced technology on the tech market and repackage it in a way that is actually accessible to students and their teachers in the classroom. So it strikes me as you talk about the nervousness of students, or the willingness to talk if there's a teaching assistant that teaching assistants sort of play two roles in a Slack channel. They can answer individuals questions, somebody can, you know, direct message them and say, Hey, I forgot what's the homework, and they can say, Oh, here's the homework, that very kind of logistical thing, or just one on one. But they also can, you know, give prompts to the whole class or, you know, answer something that one person asks, and everybody else gets the answer to? I'm curious how you're thinking about Somas, one to one versus one to many sort of public versus private behavior inside a group setting? Yeah, that's a great question. So when we laid out our AI roadmap for the next five years, the version that we have right now of Soma is just the first version of what we want to build. And initially, in order to alleviate some of that anxiety of, of instructors of what can my students really do with this API? Right? Our goal was, let's get them really comfortable with generative AI. So initially, you can only ask questions to Soma in the actual class channel. So you just tag or you're right at Soma, and then whatever your question is, and she'll pull up a little thread the exact same way it looks within discord, or slack or teams, so you already know how to use it. And she'll answer the question right there in that class channel for everyone to see. So it sort of amortizes the information for everybody off the bat. But then if you were to access so much in a direct message on nectar, so a one to one, she is actually your campus wide ta at that point. So she's trained on everything nectar related, and so you got all of your questions answered about, you know how to actually use this tool, you've got personal one on one tech support, but the campus can actually upload information to that one on one Soma. So that they can ask something like, I am planning on adding another major, what am I supposed to do for that to happen? And Soma will say, okay, great, I'm happy you want to add another major. Here's the office that you need to go to this is when it's open. And here's how long it takes to walk there. Any information that is fed to Soma from the campus, she then becomes that guide for the students in that one on one space. That's really interesting. Does Selma ever instigate a conversation or is that something you've been thinking about for your free richer? Yeah, that's a really interesting question. At first, like I said, we're going to keep it really simple to just make sure that everyone gets their bearings and learns how to use generative AI to their advantage. But eventually, we'll get to a point where Soma is actually enabled to integrate with the classroom analytics that we already have. So within every Nektar class channel, you can pull up a live analytics dashboard, super simple to read. And it'll tell you, the students that are the least engaged the most engaged, what was the engagement like week over week, where maybe some students suffering more than others. So where we love so much to come in, is to be able to feed a report to the instructors on a weekly basis, just a one to one message that pops up and says, Hey, whether or not you got a chance to look at your analytics dashboard. Here are the top 5% of students that disengaged this week, would you like me to send an automatic message to those students to see if everything is okay, and loop them back into the classroom community. And I think that's where we're really going to see the shift of students getting that personalized learning that we keep hearing about, where it's actually going to give them actionable instructions and results when they need it most. So you're not waiting for a student to fail a test, you're seeing the moment they disengage in real time, they're getting a message that says, I see you, I hear you, I'm here for you, can we bring you back into this conversation. And from us doing that sort of the duct tape solution with a nectar now, just telling the instructors, here's the top 5% of students that are disengaged, you go ahead and send them a direct one to one message over an actor. We're seeing 60% of students that would have dropped out by the drop deadline in the second week of school, stay in that class simply because they got that direct message from their instructor, right when they disengaged in that second week of school. It fascinating to think about how quickly you were able to not only come up with the concept, but deploy and deliver many entrepreneurs out there are thinking about how they can leverage AI, both from a user experience standpoint, but also operationally how we do outbound outreach, or how we think about, you know, our internal content production processes. You know, what advice given the journey that you've been on? Like, what advice would you give to other entrepreneurs? And what are the kind of lookouts to make sure that you're leveraging AI in a way that actually does like propel your impact and your business word? Yeah, that's a great question. For us. I think one advantage that we had is that we're still a very lean and mean team. And so we can pivot very quickly and start building something completely new. And when chat GPT came out a couple of months ago, that was exactly what happened. I called an emergency all hands meeting with my team and said, This is it. We've been waiting for this moment forever. When we first came up with nectar five years ago, everyone looked at us like we were crazy. Why would you need communication technology in the classroom. And now five years later, it's very quickly become something that almost every classroom already has. And I think that is the exact same thing with generative AI, we're going to see it evolve into I think education focused tools first, before we see it in other industries. I think that I mean, actually to speak to that my co founder and CTO, Jordan went to stripe sessions in SF yesterday, actually, and was able to sit down sit in on a fireside chat with Sam Altman, the CEO of open AI. And when Sam was asked, What startups are you most excited to see us chat GPS API. He mentioned just education. That was his number one answer, I'm so excited to see the tutoring and teaching assistant tools that come out of education, I really think that's where we have the most need. So to hear him back that up, that's awesome for all of the EdTech founders out there. This is our time to shine, we have a door wide open to create the future of education. And that is the most exciting thing that I've heard in the last five years of building in this space. And for our team itself. Every time we want to build something new within nectar, we first have a scoping process where we go back to ourselves as students and say, what did we need in the classroom to succeed? What did we not get? But should have been there that if we could have that today, it would have completely transformed the way that we felt in college. And we'll start from that perspective, what do I want as a student? And then once we've scoped it out, and this is literally sitting in my living room for four or five hours, shooting ideas back and forth, no wrong ideas. Everything is on the board. And then once we have a few of those we distill it down to here's what our hypothesis is. But does the market need this do the Students, faculty, admin staff, do they see this? As like I said, not just a vitamin or Advil but as an antibiotic. And so we have a metric of 10 people per week, 10 students, instructors, admin staff per week that we'll reach out to, and just sit down and have a conversation with them about what hurts the most right now, what really sucks about your day to day? What do you wish could be completely transformed if you had a magic wand, and you could turn the classroom into anything that you wanted. And when we did that, for AI, it was a different response than we had ever gotten before. Everybody had an idea of exactly what they wanted. And it was the first time that they said, I know exactly what I would do with that magic wand. It's this to the point that when we talked to UCSB, they had a full roadmap laid out of exactly what they wished would be built within generative AI. And it was essentially Soma. And so that is initially how we do our half product market fit, right? Let's go to the actual customers and users and ask them, What do you want to use from nectar? What do you want us to build for you. And I think that is, the only way to really have full confidence in what you're building is to know, my customers already want this, when this is done, they're going to be the first ones to pull it off the shelf. And that's how we do every single one of our product iterations. But it is truly just been the most exciting to do with AI, because everybody that we talked to, is just as excited as we are. That's a very inspiring message. And this is kind of a silly question. But you look at some of the other edtech companies that have launched generative AI based features, you see Chegg launching checkmate and Quizlet, launching que chat, and Khan Academy launching conmigo. And those sound like bots. The name Soma reminds me of Siri, and Alexa. And it sounds like a person and the way you've referred to it throughout this conversation is sort of Somas your guides almost your tutor, it's like, like, I'm curious how you decided internally to sort of brand your chatbot more as a person than as a service, which some of the other edtech companies are doing? Yeah, that's a great question. For us, it really started with how to create the first truly personalized learning experience for every student that uses nectar. How do we make it so that they feel like this is that golden ticket that they needed to feel confident going into every single one of their classes, because what we imagine is a campus where every single student walks into a class milling, I've got so much in my back pocket, it doesn't matter if I have the ability to go to office hours, or if I have a TA in this class at all. I know I've got her to give me that basic help that I need 24/7. And I'm not going to have to bother anyone to do it, I can basically take charge of my own learning experience. And what that looked like for us. And this is comes back more to team culture. And again, building as students who face these problems ourselves. You want school to feel like a personalized experience for you, because you're paying that much money for it. And so our goal with making Soma feel like a real person in the class, who is everybody's friend that they need? It is exactly that. Let's give students that psychological feeling of support that they've got someone there for them. That's just for them. And I think especially when we look at the other tools on the market, again, I think anyone who's building something with generative AI, it's similar to Alex or Yeah, similar to Alex, what you were saying last week, 1900 car companies, right, that was what we first saw when cars came out 1900 companies said we're gonna build it. And then pretty quickly, you were pared down to just three or four major players, I don't necessarily think it's going to be exactly the same. I think we're still going to have a ton of players for the next couple years. But I think the people that win are going to be the ones that focus on the student experience and ensuring that not only does the student get exactly what they need, but the instructors are supporting them and are happy for them to stand alongside them as they do it. And in order for that to happen, you've got to bring that generative AI and sit it right between the instructor and the student. Because one, that's where you're going to get the best information. It's got to be personalized to that classroom and to what those students specifically need. And to you have to have the instructor support for the students to feel confident using it. It's exactly why we tell everyone the first thing that you do when you build your nectar channel is to tell your students I give you permission to turn the chairs inward, I want you to rely on each other as active knowledge creators, rather than just passive listeners of me. And the same thing applies to so much they need that permission if you're going to ask them to do an entirely new behavior that they've never done before, and to speak to where some of the actual name comes from. It comes from an Indian Moon Deity that was said to bring Soma, the nectar of the gods down to the earth, that was giving immortality to all of the people that she would bring it down to. And so the idea of somos name is to create this immortal education resource that lives inside of every class forever. Really interesting. I like the metaphor. Yeah, Kavita, it's just been so great to hear both about your vision, how you're executing it. And also, I would just say inspiring about how the learning is really driving your innovation. We'd love for our listeners to be able to keep up with your journey. What's the best way for them to follow up? Is it your nectar website? Or can you direct them where they can find out more? Absolutely. So we are so excited to release Soma this week, the waitlist is out there, it's getting filled up. So you can find soma and nectar at our website nectar.io. That's n e c t ir.io. And the best place to follow along with our live updates is definitely our LinkedIn, we are engaged with our nectarine community over there are posting every single day so you can see all the latest and greatest that comes out. I love posting on our blog about all the new things we're building and how to really effectively use it. And yeah, I think as long as you find us on social media, I am always willing to have a conversation even outside of buying nectar. I love talking about this, as you can see. So any ideas that anyone has anything that you want to see built inside of Ed Tech. We're here to listen to you. We love building the future with you. I think that's the only way to do it is to do it together takes a village. So please find me on social media. Find me on the Nectar website, and let's have a conversation about what you think the future of education looks like. incred Awesome. Well, thanks so much for being here too. I think this is an exclusive announcing, you know the first announcement of nectars new AI tools. So thanks so much for being here, Kavita. Thanks, guys. Thanks for listening to this episode of edtech insiders. If you liked the podcast, remember to rate it and share it with others in the EdTech community. For those who want even more edtech insider subscribe to the free ed tech insiders newsletter on substack. This episode of Ed Tech insiders is sponsored by magic ed tech. Magic Ed Tech has helped the world's top educational publishers and ad tech companies build learning products and platforms that millions of learners and teachers use every day. Chances are that you're probably using a learning product that they've helped design or build. Companies like Pearson McGraw Hill Imagine learning and the American Museum of Natural History have used their help to design or build some of their learning products. 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