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

12/20/10Follow @xconomy

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to do an education startup. Raman figured it was his passion, and he was young enough that he would do one more startup in his life, over the next 10 to 20 years. “The purpose was to use technology to make high quality education affordable and accessible,” Raman says.

Easier said than done, of course. Raman spent six months “running around,” he says, talking to teachers, school administrators, nonprofits, foundations, and companies, each with their own perspective on what’s wrong or what’s missing in education.

If he could find a way to eliminate the waste that he saw in this classic Tower-of-Babel software integration problem, he could save about 30 days a year of teacher time that could be redirected from paperwork to more productive “teacherwork.” And by tracking student performance in a more integrated fashion, teachers and administrators can quickly spot a student who’s falling behind and act on the data to help turn things around. “That became our value proposition,” Raman says.

It might sound great, but the reality is that budgets at schools are tight, especially for something that costs about $40 a student, and which does a lot of things a school is already supposed to do. It wasn’t easy to get started with, either, as GlobalScholar’s software required customers to migrate all their data from an existing system over to a new thing. Suffice it to say, it didn’t catch on overnight.

“The marketing challenges are phenomenal,” Raman says. “I had patient and passionate investors. I convinced them we wouldn’t do this by marketing. We would do it by building a great product, great customer experience, and let word of mouth take off.”

GlobalScholar’s sales, which he didn’t disclose, roughly doubled this year compared to the prior year, with what he calls “no marketing.” He says he’s not really up against any direct competitor, although, when pressed, Raman named Pearson (NYSE: PSO), the New York-based textbook publishing giant, as one threat to his company.

Raman plans to stay in Seattle, keep his team around him, and work within his new owner. M&F Worldwide, which oversees an Eagan, MN-based unit called Scantron, made sense as an acquirer because it has a global sales and marketing network with an intricate web of relationships with school districts. Scantron has what he calls an “excellent strategy” in selling and maintaining hardware in school districts like printers and scanners, as well as its own software. With GlobalScholar part of its offerings, Scantron’s sales and marketing team will now have another valuable thing to offer their customers.

Big challenges still remain. Despite Raman’s wish to shake up education worldwide, most of the company’s customers are in the U.S., where despite tough financial times, many school districts spend thousands of dollars per pupil, and can still justify another $40 per student to replace an inefficient program. That’s not true in poor parts of the world, like where Raman grew up, or in China. His goal is to boost the volume of sales, keep innovating in the technology, improve customer service, and bring down the price to make the software more affordable and raise higher barriers to would-be competitors.

If he can do that, he’ll have a product that could be working behind the scenes of education, sort of like how Oracle and SAP work behind the scenes to make big companies more efficient.

“We are in a business for a passionate social cause,” Raman says. “If we do that right, we’ll make lots of money.”

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