[JupiterJazz]

It seems that they are serving the wrong customers. Most edu startups try to sell to parents, teachers, or administrators. Sell directly to the student. Thats one reason I think Khan Academy is having such success.

What I would like a startup to offer me is this: Buy my product/service, invest your time and energy as well as you can learning the subject, and in return we will make you as employable as humanly possible.

Maybe work backwards from that. Just my 2 cents.

[avichal]

Unfortunately students have the same mentality and have no buying power on their own. Khan Academy has built a great brand but is free. The demographic analysis in the article supports the thesis -- in my unbiased opinion ;-)

[paulgin]

This is an easy excuse but it's dead simple wrong. Students represent a huge amount in spending power, with a huge percentage of that being discretionary spending on non-essential items. Students spend money. Lots of money. Parents spend even more. A lack of a market isn't the reason ed-tech startups fail. It's lack of value.

[avichal]

That's the point of the post. There's lots of money out there. But it gets spent in ways that are different from what the typical entrepreneur and VC expect it to be spent on. The dynamics of how purchasing decisions are made are around cost, not quality.

Let's talk data. How many students spend money on educational services? 15% of students take SAT or ACT prep outside of school. By the time a student is 16 and has some discretionary spend and has some influence of a parent's spend. If students took their spending power/influence and prioritized educational spend you would have a lot more than 15% of students getting test prep outside of the school.

Consumer spending is huge. Consumer spending on education is large. Consumer spending on education where the primary driver is quality is much smaller.