End of the Line for Much-Hyped Tech Company

After failing to live up to the expectations it (self-)generated, the adaptive learning company Knewton goes out not with a bang but with a whimper.

May 7, 2019
 

If any company epitomizes the danger that excessive hype can do to its brand, it is Knewton.

The educational technology company, which famously boasted about the power of its adaptive learning platform to “semi-read” students’ minds, has been acquired by publisher Wiley Education.

It’s an anticlimactic end for a company that raised more than $180 million in venture capital and seemed dead set on shaking up higher ed as we know it with its “robot tutor in the sky” and big promises about hyperpersonalized learning.

After a decade of strong investment, funding streams ran dry. As debts began to pile up, it appears investors sought to get out.

“It’s a fire sale,” said Phil Hill, co-founder of Mindwires Consulting and co-publisher of the e-Literate blog. “In the press release, they don’t say they’re buying Knewton the company, they say they’re acquiring its assets -- they don’t even try and sugarcoat it.”

The terms of the acquisition were not disclosed, but Hill thinks it’s likely Wiley got a good deal. “Wiley’s got a CEO with a strong private equity background -- he knows what he’s doing.”

Knewton has been looking for a buyer for at least a year, said Hill. “The company simply didn’t work out, that’s the long and short of it. My guess is that the pressure to sell was driven by investors who realized the jig was up.”

The company started out selling its adaptive learning technology to publishers. Its first high-profile partner, Pearson, used the technology until mid-2017, when it decided to end the partnership and develop its own technology. The departure of Pearson was a significant blow to Knewton. Realizing that many other publishers might follow suit, Knewton shifted gears, creating its own adaptive courseware.

In January 2018, Knewton launched its first direct product to higher education -- an adaptive learning platform called Alta. The pivot to courseware was “too little, too late,” said Hill.

Kim Thanos, co-founder and CEO of Lumen Learning, said that "from the beginning, Knewton struggled to deliver on the hype." 

"As that became more and more apparent, adaptive providers trying to draw capital for some really interesting and promising solutions struggled to engage investors," said Thanos. "It negatively impacted funding for the next wave of adaptive providers." 

Knewton's attempt to create a "mystique" around its solutions left educators feeling the company had a lack of transparency, said Thanos. "Adaptive learning came across as a black-box approach that should not be trusted. No one wants opaque, seemingly magical solutions that traffic in student learning data." 

A positive outcome from Knewton is that investors and educators are "asking better questions," said Thanos. "Educators in particular are demanding greater transparency and accountability around how education technology providers manage student data and privacy," she said. 

For Wiley, Knewton’s adaptive learning technology and focus on open educational resources could be a useful asset, said Hill. Wiley has a courseware platform called WileyPLUS, but it is not a “full-fledged adaptive platform,” he said.

Renee Altier, vice president and general manager of digital education at Wiley, said that Knewton’s mission and suite of products “align strategically with Wiley’s focus on providing students with high-quality, AI-driven adaptive solutions that are not only affordable but also result in improved learning outcomes and course performance.”

A number of publishers still license and integrate Knewton technology into their own adaptive learning solutions, said Altier. “We appreciate their partnership and are committed to continuing, and even expanding, those relationships. They will see no disruption in their service as we complete this acquisition.”

Expanding the companies that license the Knewton technology would be a throwback to how the company started, said Hill. But publishers are unlikely to want to expand their licensing agreements with a competitor. “Wiley is saying they’re going to honor these commitments, but if I were a publisher, I would want to find an alternative solution.”

Licensing technology to other companies is something that Knewton’s CEO, Brian Kibby, fought to move away from. He has previously described this strategy as “misguided.”

In the press release, Kibby welcomed Knewton’s sale to Wiley. “Joining the Wiley family fulfills our vision to put achievement within reach for all,” he said.

Brian Napack, president and CEO of Wiley, said that Knewton’s technology would help Wiley address “two critical needs in education -- outcomes and affordability.”

“The addition of Knewton’s technology capability and the Alta platform to Wiley’s portfolio of leading content, learning platforms and business models enhances our position as a leader in the high-demand, career-focused markets where Wiley chooses to play.”

The acquisition announcement comes just days after McGraw-Hill Education and Cengage announced plans for a “merger of equals” -- creating one giant company focused on affordable digital courseware.

In addition to building up its digital courseware, Wiley will continue to expand its rental programs for print textbooks and sign up more classes to inclusive-access programs, said Altier.

Like Cengage and McGraw-Hill Education, Wiley stressed the importance of affordability for students in its announcement. Both Wiley and Knewton have partnered with OER textbook provider OpenStax in the past, and “that will not change,” said Altier.

“We continue to support the use of open educational resources with premium assessment content through the Alta and WileyPLUS platforms,” she said.

Many publishers are encorporating OER into their catalogs, said Thanos. "But it's hard to point to anyone who is demonstrating real value." 

"In order to fully benefit from the advantages open licensing can provide to teaching and learning, it requires a very different mindset from the current publishing model," said Thanos. 

Rajiv Jhangiani, associate vice provost of open education at Kwantien Polytechnic University, said that Knewton Alta's reliance on OER is a "strong endorsement of the quality of OER." 

"To the extent that Knewton provides value-added services that map onto OER (which should itself be accessible outside of their proprietary platform), this would be a case of a popular business model known as open-wrapping," said Jhangiani. This model is "growing in popularity among large commercial publishers and other for-profit players in this space such as Lumen Learning," he said. 

If big publishers really add value to OER, then open-wrapping is not necessarily a bad thing, said Jhangiani. This is different to "openwashing" where publishers spin a product as open while continuing proprietary practices, he explained.

"However, in order for this role to actually be beneficial to the community, they would need to radically change their mentality so that they do not price gouge and do not limit the choices and formats available to students and faculty," said Jhangiani. "They also need to stop behaving like parasites who simply absorb OER into their catalogues and instead also contribute resources back to the commons (like Cengage did a little bit last summer)."  

The Alta platform will live on, said Altier. “We plan to support the existing platform, while also expanding the catalog to support new courses,” she said.

Currently, the Alta platform focuses on first-year general education courses in math, chemistry and economics.

“We will be investing more to launch new courses over the coming years,” said Altier.

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