I Used Startup Frameworks To Analyse K-12 Schools — None Of Them Would Survive The Free Market

I can’t think of a system that’s more important but also more broken than the education system. Everything we achieve as humans literally depends on education, yet our view of the system, I suspect, is very skewed.

Perhaps a good way to illustrate it is by looking at the schools as if they were startups.

What is a startup?

Startups are new companies that are still searching for their business model. Every startup is a new company but not every new company is therefore a startup.

For example, a new restaurant is usually not a startup, because people have been doing restaurants for thousands of years. All the components of the business model are very well known.

(There are a few exceptions — for example, the franchise fast foods chains which emerged only in the 20th century.)

What is a business model?

Business models can be described in various ways. I personally prefer to use the Four Fits framework. It’s simple enough to memorize yet covers all the important pieces and relations between them. Plus it comes from the real world.

The Four Fits comprises of:

• the market (the target group and their use case)
• the product (the solution to the target group’s use case)
• the distribution channels (the growth loops)
• the pricing model

These pieces are related to each other (that’s why it’s called “fits”) but for simplicity, I will not cover the relations here.

Additionally, feedback loops are used to improve the product, channels, and pricing. No company can survive without them.

So what are the Four Fits and feedback loops of K-12 schools?

The Four Fits of a Typical K-12 Public School

The Market

The target group consists of whoever happens to live near the building. Between the ages of 6–18.

Although the target group has a clear use case (to get prepared for adult/working life), it is muddied by the government.

So, instead of the bottoms-up approach (the market (parents, students) decides), the top-down centrally planned approach is used instead.

Each government, however, has its own agenda to push as well. It’s why every time there’s a revolution, one of the first things to change is the school textbooks. He who pays the piper calls the tune (more on funding later). And, of course, the publishers are only too eager to release yet another new edition of their textbook.

The Product/Service

If the use case for the target group is to prepare kids for adulthood, then schools do an extremely poor job with their service.

The problem is, that schools have almost nothing in common with real life. You don’t get good at business by learning the theory. You get good via practice and iteration. Yet it’s almost completely missing from schools.

Here are just ten principles from the top of my head that get violated in schools:

1. Work doesn’t happen in 45-min intervals. Instead, you work on a project/task until it’s finished or you get tired.
2. Learning doesn’t happen primarily through one-to-many instruction. You mostly learn on your own or together with your peers. One-to-many instruction doesn’t fit anyone — for one half it’s too fast, so, they can’t catch up, for the other half it’s too slow, so, it becomes boring.
3. The main goal of the work is not a simple one-bit task. Usually, there’s a complex project which you need to break into more manageable tasks. The tasks are, however, not separate from the bigger goal.
4. Complex projects are rarely mono-disciplinary. Even in order to be a farmer, you need to know how to plan your budget, how to operate machines, how to save money, which crops to plant, how to farm, etc.
5. Workers are not organized into teams based on the year they were born. Yet this is exactly how classes in schools are organized. Can you imagine only getting hired to a team if you were born exactly in 1983? It would be insane.
6. Bad employees are not kept around. If you can’t do your job, you will be fired. This is not the case with teachers. Some schools even have tenure for teachers.
7. Employees are taught mostly by their peers mostly. You could argue there are a few exceptions. But in general, it’s true. In schools, however, kids are being taught by some random third party called a teacher. Note that the teacher might have zero life experience — they might not have held any job ever (let alone start a business) before they started to “teach” the children.
8. Skills needed aren’t prescribed by the government. Companies/teams choose what’s needed in order to do the job/project, while schools are being told by the government what exactly to teach. (There are a few exceptions where lives are at risk (doctors, structural engineers, etc.), so, some kind of standardization is needed on the basic level for those specific roles.)
9. Workers aren’t locked into bad companies. If the company sucks, you can leave. Not so with schools.
10. Workers are graded by the market. Eventually, the market decides whether a team or company is successful (although in the short-term there’s also feedback from the team and management). Not so in schools. The success is essentially decided by the government (using teachers as an intermediary).

Imagine building a product/startup that gets so many things wrong. Even if you somehow got funding, you’d be out of business within a year. So, how come the schools (as products) survive?

The funding for schools doesn’t come from the market. It comes from the government. So, there is zero accountability from the market.

The Channels

Successful startups grow not only because the product matches the target group’s use case but also because there are ways to find new customers. In startup jargon, we call those ways growth loops.

In simple terms, growth loops bring new users to the product, whatever the process. And those users, in return, help bring even more users (either through their actions or the money they spend). That’s why it’s called a loop.

For example, if I start using Slack, I pay a fee to Slack. Slack can then use that money to invest in marketing to get new customers. Or I might invite a new team member to Slack directly, in which case Slack doesn’t have to pay for marketing and makes more profit.

Schools, however, don’t have any growth loops. They can’t have them in principle, because the normal free market economy is disrupted. They will always get students and the amount of students they can get is capped. So, there’s no punishment for having a bad school nor any reward for having a good school.

The Pricing Model

Startups aspire to match their pricing model as closely as possible to the value they are providing.

This is why ridesharing companies like Bolt price their ride per distance traveled and why Dropbox charges per GB of storage.

Schools, however, don’t make money from their customers. Instead, they basically have guaranteed funding from the government. It makes little difference if the school improves or not. The funding stays the same. And the salaries as well.

If the schools were to charge per value created, they would have to receive their funding from the graduates. Either through donations or through a % of their income (which can be capped in several ways).

Another way would be to charge the parents. However, some parents might not be able to afford schools.

The alternative is to give parents the money for the education of their child and let them decide where to spend it (with some limitations so they wouldn’t gamble it away).

These are the only true ways to align the incentives. This is even more true at the higher education level. Yet none of the public schools utilize it.

The Feedback Loops

There isn’t a single successful startup that doesn’t have feedback loops built into their product. Feedback loops, in common terms, take feedback from customers and use it to improve the product.

This is why, after each ride, Bolt asks for feedback about the driver or the car/scooter. Bad drivers will get fewer rides and eventually will be replaced by better ones.

No such mechanism exists for schools. Teachers are not evaluated by the students. Even if they are in theory, they don’t face any serious consequences.

Nor are the materials evaluated by the students. The textbooks come from a third party with enormous time delays. There might a few exceptions where the teacher has come up with their own materials but there is not much incentive for the teacher to do so — the salary stays the same.

So, schools, for all practical purposes, don’t have any feedback loops. They can’t have them in principle because there’s no free choice for their customers.

The ultimate feedback loop for a school would come from the market. If the students graduate and do well, the school’s funding should depend on it. But it does not.

Conclusion

I hope I’ve shown how schools as a product are one of the worst products in existence:

• The target group’s use case gets overridden by the government’s and/or publishers’ agenda.
• The product does not solve the original use case.
• The distribution channels are broken.
• The pricing model does not align with incentives.
• The feedback loops for improving the product don’t and can’t exist within the current framework.

I specifically chose to compare schools to startups because they would not survive as businesses. They haven’t reached the product-market fit. Therefore, at best, they would make failed startups.

But instead of letting them fail in order to build better ones, they are being kept artificially alive by government funding.

This is the first of a series of posts I plan to write about the education system. In the next posts, I want to dig deeper into various parts of the education system.