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Higher ed technology people are not actually in the technology business. We are in the communications business.
This fact has come as a rude shock to many of us. Communicating is hard. Technology is fun. Did we really sign up for this?
Can edtech people get better at communications? This is an open question, and the early results are not all that encouraging, but maybe we will evolve.
I’d like to suggest that our higher ed tech community try something different in our efforts to get better at communicating. Spend some time with the Snap S-1 IPO filing.
If Snap can get investors to value the company at $20 billion, then we should be able to convince a bunch of skeptical professors, deans, provosts, and presidents that technology is good for higher education.
At face value, it should be difficult for Snap to convince anyone that they will make money investing in the company. In its short life, the makers of the Snapchat app (and Spectacles) have burned through $1.2 billion dollars. In 2016 the company brought in $404 million, but spent $925 million.
Over the next five years, Snap is contracted to pay Google Cloud Services $2 billion dollars and Amazon Web Services $1 billon to run their business. Snap currently spends more money on cloud services than it takes in on advertising.
The next time someone on your campus gets worried about your AWS/Google Cloud bill - just talk about how little money that is compared to what Snap is spending.
What I love about the Snap S-1 filing is the idea that the more we talk about risks, the better a business looks. The risk factor summary of the S-1 contains the following items (and I’m paraphrasing from the list):
- The growth rate of the user base may decline over time, and existing customers may leave.
- The business depends entirely on platforms that Snap does not own or control - such as mobile phone, cellular networks, and the internet.
- Everything that makes Snap work is on Google Cloud or AWS, so hopefully nothing will break.
- Snap makes all of its money from advertising, and advertisers have lots of options where to place ads. Besides, everyone hates advertising.
- We generate substantially all our revenue from advertising. The failure to attract new advertisers, the loss of advertisers, or a reduction in how much they spend, could seriously harm our business.
- The two twenty-something co-founders are keeping control of all decisions about the company. Buying stock in Snap will not give you any voting rights.
- Snap needs to develop new products beyond the app - Spectacles is cool but how many people really want camera glasses?
- Facebook owns Instagram and is crazy rich. Some other new company could start and do everything that Snap does, but do so without the annoying advertising.
- Snap has lost a ton of money, is planning to continue to lose money, and may never make money.
- The people who make Snap run could go work somewhere else.
- The founders of Snap have no experience running a public company, or any experience running a company that makes money.
- Hackers could bring down Snap.
- Nobody knows if mobile advertising is really effective.
- Snap employees don’t even work together - as their offices are dispersed throughout the city. This part of the S-1 is worth quoting: "This diffuse structure may prevent us from fostering positive employee morale and encouraging social interaction among our employees and different business units. Moreover, because our office buildings are dispersed throughout the area, we may be unable to adequately oversee employees and business functions.”
Wow - that is a lot of risks.
Still, I’m betting that lots of people will want to buy Snap stock when the company goes public. Why? Because the upside potential of a risky bet is much larger than the downside.
Throughout the S-1, Snap makes clear that anyone investing in the company is making a bet. The company is comfortable with a high risk, high reward strategy.
A few choice quotes on how Snap understands risk:
“...we are willing to take risks in an attempt to create innovative and different camera products that are better able to reflect and improve our life experiences.”
"While not all of our investments will pay off in the long run, we are willing to take risks in an attempt to create the best and most differentiated products on the market..”
“... our co-founders may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm our business.”
The lesson here for edtech folks is that we should not shy away from talking about the downsides of technology, and the risks of integrating technology with education.
We should be confident enough in our vision of how technology can advance higher education that we should be the most vocal in talking about all the problems, challenges, and roadblocks that we face.
An effective edtech communications strategy may be to be our own biggest critics.
Total honesty and transparency is the best method that we have in advancing the higher education technology cause.
What if we wrote our annual reports in the format of S-1 filings?
