Social Networkers Bet on Education as Next Frontier

Posted by: Rachael King on December 8, 2011

By Ari Levy

Reid Hoffman and Matt Cohler, two of Silicon Valley’s social-networking pioneers, are throwing their hats into the education ring.

The entrepreneurs-turned-venture capitalists today led a $15 million investment in Edmodo, a free learning site for teachers and students that claims almost 5 million registered users. The cash pile, from Greylock Partners and Benchmark Capital, gives the management team the runway to hire developers and add products without doing the one thing they prefer not to talk about: making money.

“The platform will always be free for teachers, students and schools and we don’t plan on advertising at all,” says Nic Borg, founder and chief executive officer of the San Mateo, California-based company. “The purpose of this raise and the folks that are coming on board is about driving forward this grassroots movement.”

A free Web service with no ads? Sounds like the early days of Facebook, where Cohler was one of the first employees. But that was back in 2005. This year, the social-networking site is poised to reap more than $2 billion in display-ad sales, according to EMarketer, thanks to brands such as Coca-Cola, Subway and Adidas.

Then there’s LinkedIn, the professional-networking site founded by Hoffman, and Cohler’s employer before he joined Facebook. While many of the site’s 100 million plus users don’t pay a cent, they’re subsidized by premium subscribers and advertisers. LinkedIn’s revenue more than doubled in the third quarter to $139.5 million. Cohler is now a partner at Benchmark and Hoffman is at Greylock.

In the press release today, Hoffman called Edmodo the “educational graph for learning,” similar to Facebook’s role as the connector of friends and LinkedIn’s position in the workplace. Teachers at more than 60,000 schools, three-quarters of them in the U.S., are using the site to assign and grade homework, post educational videos, and share content with other teachers and classrooms. Edmodo works in the browser and on mobile devices such as smartphones and the iPod Touch.

Rob Hutter, the company’s chairman, said the new financing gives the company “several years” to build and expand the product without worrying about generating revenue. He and Borg are looking for developers who are passionate about education and want to build something that they say is helping change education.

Of course, venture capitalists don’t invest in startups unless they see the opportunity to make several times their money back, and Greylock and Benchmark have been among the most successful firms in that regard.

While expectations for Edmodo are surely no different, Cohler wouldn’t divulge any more than the company, reiterating that the emphasis now is on reaching more people and hiring engineers.

“Revenue opportunities that emerge over time that we get excited about will be ones that are consistent with the mission of the business,” Cohler says.

As for generating revenue today? “That’s not what we’re focused on at this point,” he says.

Reader Comments

Don Steele

December 8, 2011 1:54 PM

Education is being used as a distraction as it's quality is not holding back either our economy or job opportunities. The economic damage created by imbalanced trade has been responsible for our economic problems and will continue such.
There is no global economy, never has been and more than likely never will be, just unfair opportunity for selfish few to recognize the world as their personal oyster until nations recognize that the word global applied to economy fails to compensate more than short term for the economic damage created by large prolonged trade imbalance.

tim duffy

December 9, 2011 5:07 PM

Amen

unekwu P onyilo

December 9, 2011 11:40 PM

you don't get it right, what caused the imbalance of trade in the first place? Education!!!!!!!! go and read your books very well the most educated and talented nation will continue to acquire fortune by it. Remember "let those that want to govern themselves should be armed with the power knowledge gives" James Madison.
Nobody should be held as culprit. People learn on the street, classroom and homes. so cut the crap about distraction. Is ignorance that is actually distractive.

Angus Beef

December 10, 2011 12:25 PM

K-12 education has been experiencing the least effective spending and learning in history. Much of this has been from central government management of local education. Central government's "one size fits all" and statistical models do not work. Edmodo is putting the cart before the horse.
The first step for improving education would begin with eliminating the Federal and State Departments of Education which dictate the direction of the educational system instead of allowing local educators to experiment with new techniques and share best practices. Allowing educators instead of politicians to shape the direction of public education will result in several templates of success for schools based on their demographic needs.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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