💼The Backbone of Schools (Business Feature #15)

🧠 Top of Mind Technology

• One of the benefits of getting an electric vehicle is cheaper fuel costs. For some lucky EV owners, soon they will not even need to pay to charge their cars at home as Ford and charging company TXU Energy are teaming up to offer free charging for vehicles during peak hours.

• If you use ChatGPT to read articles and summarize books, you may want to hold off for now. This recent article from New York Magazine deep dives into many of the issues LLMs are facing when summarizing information (including humor, exaggerations, etc.).

• When you turn on the TV this Fall to watch some NFL, you may notice some of the players looking slightly different than others. Starting this season, players will be allowed to wear an NFL Guardian Cap, which is a helmet add-on that is intended to make players more concussion resistant. But how do these caps work? Find out here.  

🍪 Business Bites

• Looking for a new business podcast? Look no further than My First Million. These guys are basically The Idea Journal, but in podcast form. They’ve done hundreds of episodes where they talk about the latest trends in business and tech, and also brainstorm a ton of new business ideas. And now, they’ve compiled all of those ideas and put them into a database that you can access here for FREE.  

• We’ve featured tons of business ideas in this newsletter, but maybe none as unique as this blue-collar business: Trash Can Cleaning. The guys from GI Bins are interviewed here and give you a behind the scenes look at what they charge, the number of customers they have, and how much they’ve scaled their business since its inception.

• If you are in your early to mid-twenties, this housing market for sure has you feeling like you’ll never own a home. Is it possible? One of our favorite bloggers, Mr. Money Mustache, writes about how you could realistically buy a home in this market even without an amazing salary.

Idea Journal Business Feature: Instructure

⚾The Elevator Pitch

Instructure is a leading ed-tech company that developed Canvas, the leading Learning Management System (LMS) in the industry with an 80% market share.

 💡The Idea

Instructure is an Ed-Tech companies that builds the Infrastructure (haha) schools and academic intuitions need in this digital world. Within their leading software Canvas, schools and professors are able to post assignments, grade exams, share important documents, post lecture recordings and notes, collaborate, and use it for just about anything you think professors and students would need for class. A full list of Canvas features can be found here.

Beyond these features, Canvas is also published as a Smartphone app, which allows students and professors to keep tabs on their courses away from their computers. It is also worth noting that Instructure does offer four other software tools separate from Canvas (Mastery, Elevate, Impact, and LearnPlatform), all of which are a much smaller portion of the company’s revenue.

Instructure makes their money by charging institutions for use of their software tools. Fortunately for students and professors, they do not have to pay for the service (though I guess they do indirectly with their tuition bills). While it is unclear how much they charge for their services, one could assume that depending on the size of the user base for an institution, the number of features used, and the amount of customization required, the prices can vary, but the cost is probably easily over $1000/yr at the bare minimum.

💸Revenue

• Software Fees – Whether Instructure charges a subscription fee to institutions, a fixed fee, or both for their software tools, they clearly cost a pretty penny.

• Customization/Development – This could be counted under software fees, but custom features that Instructure developed for specific clients would cost additional money.

🔻Expenses

• Software Costs – Typical costs such as development, servers, upgrades, etc.

👍The Good Stuff

• Market Share – Canvas has replaced predecessors like Blackboard and now own 80% of the LMS market.

• Primed for Expansion – The capital pledged by KKR in the acquisition of taking them private will allow them to continue to expand outside of LMS and Canvas and acquire other companies, as they have already done with several companies including Parchment for $835 million.

• Serving a Two-Way Market – Canvas is used by BOTH students and professors, which makes it a much more valuable tool to universities and thus can be priced higher compared to if it just served one particular group.

👎The Risks

• Canvas-Centric – For such a large company, its revenue is really reliant on one product (Canvas).

• The Future of Education – Any significant changes of higher education patterns could threaten business (i.e. rising costs of colleges cause less students to go to college and some colleges close).

📚For the Road

• KKR to take edu-tech firm Instructure private for $4.8 billion

• Instructure is leading a $52 billion industry. Here’s how they did it