Quality and Profits: About False Starts and Restarts
My problem with the acquisition route is that I don't see the value at all. What I am trying to do is to disrupt an industry, something that I believe is broken and in the middle of a change, and aligning with one or the other existing player is expected to slow down, or completely undo, the disruptive nature of the business. I am amazed by the fact that some of these very smart private equity executives think more of the same is an option, and they see value in acquiring the private sector colleges in the UK, whose business models have just disappeared. It may be that people who are interested in education, by which they mostly mean K12 and not the kind of education we are trying to offer, are trained to think in terms of continuity, not disruption. So far, the only saleable thing in the education market was vintage, and one can't blame investors for trying to buy a bit of that. However, for someone in the thick of it, this is a time to challenge the notions and change the models, and this is why I even thought private capital will make the difference.
However, may be not : My understanding is that the people I am talking to are incredibly smart but blinded by the sophistication of their technique. The feeling I get is that they really believe that every business is reducible to some simple template where everything should be comparable to everything. Their art is of this reduction, which they have mostly learnt from the best business schools in the world. However, they are completely oblivious of everything else, the messiness of the real life business, the everyday social life, the human and emotional factors that differentiate success from failure, and the reasons why a business exist at all, escape their template. They have an underlying arrogance that if anything comes on the way of making money, that can be fixed: Rules can be changed, governments can be persuaded, media can be won over and activists can be bought, everything with a tried and tested techniques, a template, stored in the closet.
Whether or not this gets my project off the ground, this sure helps my enquiry - into the models of For-Profit Education that can also deliver value to its students. Indeed, despite my lofty sentiments about businesses being there to solve social problems, the point of For-Profit is profit: It may come from creating education solutions for the students, but only through exploiting arbitrage, reaching out to students who the public institutions can not serve, or buying out the public institutions which have fallen out of favours and run out of funding. It seems that the disruptive ideas about education, of newer forms of institutions and of transformational models, which is not just about converting non-users to users but creating success where none exists, have to come from outside the realm of For Profit enterprises. In a sense, it shouldn't be surprising that the For Profit Education in United States and other places are not at the sharp end of educational innovation: The endowment funded institutions generally are. Despite my scepticism about mandatory philanthropy, which some countries seem to want to impose on education businesses (like India, where only not for profit institutions can offer Higher Education), this is my deja vu moment, the realisation that my goals may be best served by adopting a different approach, and a different model, to the job at hand. This is also the time to recognise that it is not the money, but the ability to do the work that attracts me. As long as I can stick to this, and wave a good bye to my millionaire dream, I may just seek out another form of getting the job done.