How Mindflash Disrupted Itself by Taking Training Software to the Web

12/13/11Follow @wroush

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open a marketplace where third-party course developers can upload and sell their own training materials.

Given the product’s radically lower price structure—the startup offers a free 30-day trial, a $29 monthly plan for small companies, and plans that work out to about $3 per month per employee for larger companies—Wells’ hope is that the new system will basically sell itself, eliminating the need for a field sales force. And in fact, trainees have completed more than 100,000 online courses since the 2010 relaunch.

There’s no question that there’s a huge need for technologies that help corporate America and even small businesses with on-the-job training. Companies with high turnover, a large proportion of seasonal workers, or a highly distributed workforce need inexpensive ways to get new people up to speed quickly. “The most common use case is where an organization either has a geographically dispersed group of employees, or has a high velocity of information that they need to get out to employees—think about product and pricing information for your sales force,” says Wells. “Also, any retailer or franchisee with lots of holiday or summer employees—those companies are very aggressive in finding us.”

The Mindflash course dashboard lets employers track which courses trainees have completed, and how they scored on quizzes..

But Mindflash didn’t actually start out in the corporate training world. When IGSB first invested in the company, back in 1999, it was called MetaCollege, and its target market was the university classroom; founder Valerio De Angelis thought that “there should be a more efficient way to transfer information from professors to students,” says Wells. But the academic market—always a slow-moving one—proved unprofitable, and by 2003 the company had renamed itself Mindflash and refocused its product on the online training needs of businesses.

The startup was profitable in that niche, but its executives and investors soon realized that its 1990s-style on-premise software wouldn’t stay popular forever. “The thing that became pretty obvious to us in the beginning of the last decade was that these enterprise installs were at some point going to be disrupted by cloud-based applications,” says Reece Duca, the IGSB partner who led the firm’s original investment in MetaCollege. IGSB is an education-focused fund, and Duca says other portfolio companies like GlobalEnglish, an enterprise English-language training platform, were facing the same issues.

One big problem was that acquiring each new customer was an expensive and lengthy affair. “There are going to be survivors in this area of high-priced, feature-rich applications with field sales forces,” says Duca. “But the market we wanted to be in is the lightweight model where customer acquisition does not require a field sales organization, and where users could begin to experience the product during the customer acquisition process. We had a company that was growing, but we saw that if you looked at the long-term horizon, the opportunity was greater. So we essentially pursued a path that disrupted ourselves.”

In the end, that meant changing almost everything, including finding a new CEO who “had gone through hyper-growth and sustained periods of product introductions,” Duca says. Wells fit that bill—she’d been one of the first five employees at Mint, and as chief marketing officer, she’d helped to come up with the instant-signup process that made the personal-finance monitoring tool so popular among young consumers. Only a few key members of Mindflash’s original team stayed on through the transition, and more than half of the company’s 25 employees now focus on the new Web-based product.

Creating a course in the new system is as easy as uploading PowerPoint slides, Word or PDF documents, videos, and audio and arranging them in a timeline. Most course developers add multiple-choice quizzes every few screens to make sure trainees understand the material. “You want to present information in several different modes,” says Wells. “A combination of text, video, and voice, interspersed frequently with checks on comprehension, is the best practice in learning design.”

One big goal for the redesigned Mindflash system was to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • Joe Goldberg

    I have no doubt Mindflash will be a success with Donna Wells as its CEO.

  • PO Salmon Creek

    I don’t think one company can “cannibalize” another unless they are subsidiaries, otherwise it is just old fashion competition – w”who can make a better mousetrap.” “Cannibalize” …. to quote the classic movie The Princess Bride, “You keep using that word, but I don’t think you know what it means.”