GlobalScholar’s Kal Raman, Fresh Off $160M Deal, Seeks to Build an Oracle for K-12 Schools

12/20/10Follow @xconomy

Kal Raman has one of those classic poor-boy-makes-good life stories. He was born and raised in a village in India, hungry, with no electricity, no running water. The poor boy grew up to make a small fortune in the executive ranks in the U.S. at companies like Wal-Mart, drugstore.com, and Seattle-based Amazon.

Now Raman, a fast-talking entrepreneur, put himself in a position to not just make more money, but to shake up the market for K-12 education software in such a way that he hopes will help more kids like him climb out of poverty. So he started on a journey about seven years ago that led him to make headlines last week—when he sold his latest company, Bellevue, WA-based GlobalScholar, to a worldwide holding company for up to $160 million.

“It was about seven years ago, and I was financially independent,” Raman says, describing the beginnings of GlobalScholar. “I did some due diligence on my own life. It’s good to do that every once in a while. I realized the game changing thing in my life was education.”

The big idea at GlobalScholar, from when it got started in October 2006, was to help make schools function more efficiently through information technology. He learned when he really started sizing up the K-12 educational software market that it was huge—with a global value of about $7.5 billion a year. The problem was that there were, and still are, hundreds of different proprietary software offerings for hundreds of different narrow niche products that schools use—online gradebooks, programs that evaluate teacher performance, and longitudinal data collection that tracks how a student progresses over time. The average school bought stuff from 14 different software vendors. Those programs don’t work together seamlessly, and school IT staff really can’t stitch them together in a coherent way.

“I learned that education as a sector is about 20 years behind retail and finance in use of technology,” Raman says. “There are thousands of problems technology could solve, but aren’t being solved.”

Kal Raman

Kal Raman

One way to attack this inefficiency was to create a soup-to-nuts software offering for schools. Done right, it could free up teachers to spend more time teaching and less time bookkeeping, and administrators to spend more time administrating. This idea drew early backing from Michael Milken and Raman’s old boss at drugstore.com, Peter Neupert, along with Bellevue, WA-based Ignition Partners.

Raman ended up raising about $50 million, making four acquisitions, building a company with 330 employees, and putting together 5 million lines of code. GlobalScholar, which M&F New York-based M&F Worldwide (NYSE: MNF) agreed to acquire last week, has a product that is used to help track the performance of about 5 million students in 1,000 U.S. school districts, after less than three years on the market. If it goes on to capture about one-fourth of the market—with software for tracking 52 to 55 million U.S. students—then it could generate several billion dollars in revenue per year, Raman says.

The impact on society is no small thing, given the constant drumbeat … Next Page »

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