It’s old news that Blackboard has been acquired by a private equity firm for $1.64 billion.
An education company being acquired is hardly novel – we are entering a period of dramatic change in education and the change will largely be led from outside of the education system.
$1.64 billion – that is novel.
Why is Blackboard worth that much? If you speak with academics and students, the product and company is almost universally disliked. This largely stems from their D2L lawsuit a few years ago and the concerns that generated around patents in the educational technology market.
Providence Equity must have been aware of this end user negativity before they purchased Blackboard. Which means they are seeing the investment from a perspective that I don’t recognize. And it has been bothering me.
Providence has three areas where it can generate value for its Bb purchase:
1. Integration of tools as a competitive advantage: The LMS market requires integrated tools – as I detailed here – in order to add value in what is a Moodle-dominated LMS market (globally).
2. Integration of existing companies within the Providence investment portfolio to leverage advantage from Bb. Have a look at their education-dominated investments. None of these companies seem to target end users. They are generally listed as:
- Technology-based learning solutions focused on student training and testing results in healthcare and other vocational fields.
- subscription-based online education products.
- or vaguely, the largest independent education company in Sweden
- leading provider of technology solutions and services to the K-12 education market.
- leading provider of private post-secondary education in North America.
- leading provider of technology-oriented post-secondary education in the U.S.
- leading provider of university access and preparation programs and English language courses to international students, as well as a provider of vocational courses mainly to Australian students.
(at this point, you talk to your PR people and say “hey, look, you’ve used your quota of the words “leading provider” on our website – can you hit a thesaurus please?”)
- global leader in integrated software and processing solutions and is a leading provider of information availability services.
3. Content-centric value that fosters an educational ecosystem with Bb at the centre – such as recently announced partnerships with educational publishers. Before long, Bb will deliver courses and assessment in their entirety to the cash-strapped education sector. Plug and play faculty. Offering degrees, as Pearson is doing in UK, is a logical step – even if only done in partnership with existing universities.
Blackboard’s strategy, as detailed above, focuses on product integration, full-spectrum education (content provision to testing), targeting the needs and concerns of senior-level decision makers (management focus), and fostering ecosystems where other companies enhance Bb’s centrality by providing content and related services in the Bb platform.
Bb is not focused on learning and teaching in their strategy, though I’m sure their language to faculty will include teaching language. Where words can misrepresent focus, investment history presents a clear reality: the focus is on shaping the education field and targeting leaders and decision makers within the field.
And, if you’re an entrepreneur trying to make a profit by offering a service to a troubled sector, Providence Equity has taken the right approach. In the US and UK in particular, higher education is at the early stages of a massive shift from public ownership to private ownership and entrepreneurial solutions. As the funds flow to innovators – or in Bb’s case, value hubs – tremendous wealth will be created for the risk-takers. In language and ideology that I’ve heard in numerous discussions over the past five years “education is the last industry to globalize”. Providence is one of the early companies out of the gate. Pearson, U of Phoenix, Capella, Laurette, and others are marching in a similar direction.