The Future of Education

Chris Hoehn-SaricCEO Educate, Inc

$33.6

$68.2

$154.9

$242.3

$300.0

$25.3$11.0

19991979 1991 1994 1995 20031993 2004 est

99% 97%

47% 45% 43%35%

0%

20%

40%

60%

80%

100%Brand Awareness

The Education Industry• $900B – 2nd Largest Segment of

US Economy• Growing at 2x rate of inflation• High Degree of Consumer

dissatisfaction• Resulting in …

Education – Paradigm Shift – 1980From Castor Oil to

Monolithic, Institutionally Controlled, state provided, “free” education

Apartheid Education – Geographically defined education based on a citizen’s ability to pay for housing

Consumers exclusively relied on schools

Education – Paradigm Shift – 2004Cherry Chewable Cough Drops

Educational consumerism & deregulation are driving reform and opportunity

Schools, Non-profits and Businesses must change how, when and where they deliver education

Three Forces Driving Change

GROWINGCONSUMERISM

GOV’T POLICY

ECONOMICDRIVERS

Economics

High School Diploma

103% of Avg Salary

Manufacturing

73% of Avg Salary

Knowledge Based

1970 Today

28704

46800

70148

0

20000

40000

60000

80000

$ Do

llars

Annual Salary

High School AA Degree BA/BS MA/MS PHD

Government Policy• No Child Left Behind –

Standards based education• 1980’s Medicare drove

deregulation and reform - 11.5% of total healthcare spending

• The “Special Edification” of classroom instruction

The New Consumer• Consumers Demand a

voice in schools and education

$12B is spent on supplemental education products and services

1 out 6 children has left the traditional public schools - Charters, Private, Virtual Charter, Home Schooling

The New Consumer – Kids are now decision makers

Parents no longer tell kids what they are having for dinner ...They ask what their kids would like.

Kids 7 to 12 spend $8.9B/ year on products

Brands Matter

“I want it all! Tailor it to my kids’ needs! Deliver it online! ”

“I want it all! Tailor it to my kids’ needs! Deliver it online! ”

- How many moms under 40 have tattoos?

- What does POS mean to your 12 year old?

- What form of online music sold more songs than the Apple IPOD last year?

Teens now split their time 60% - TV 40% Internet

LeapFrogToys and Education

0100200300400500600700

$ Do

llars

(,000

,000

)

Revenues

19992000200120022003

In the past 60 days, what has become the #1 selling DVD/Book in Sam’s Club & Costco?

In the past 60 days, what has become the #1 selling DVD/Book in Sam’s Club & Costco?

Conclusions• Education will follow the rest of the

economy• We must respond with

programming, services, and products delivered in modalities that resonate with Consumers

• Brand, Marketing, Advertising, Technology, & Packaging will differentiate effective education from “castor oil” education

Conclusions• Education will follow the rest of the

economy• We must respond with

programming, services, and products delivered in modalities that resonate with Consumers

• Brand, Marketing, Advertising, Technology, & Packaging will differentiate effective education from “castor oil” education