Starting a startup: What it takes to innovate in education

Sergio Monsalve (00:00):

At the end of the day, entrepreneurship is almost like you're hiring David to beat Goliath.

Denise Pope (00:09):

Today we're diving into the world of entrepreneurship and how it's driving innovation in education. We'll be exploring how business strategies and creative thinking can help make learning more accessible for everyone.

Dan Schwartz (00:21):

And we'll take a look at the skills and dispositions that make great entrepreneurs and how they can be applied to education to create lasting change.

Denise Pope (00:29):

I think it's going to be a good one. Welcome to School's In, your go-to podcast for cutting edge insights and learning. Each episode we dive into the latest trends, innovations, and challenges facing learners. I'm Denise Pope, senior lecturer at Stanford Graduate School of Education and co-founder of Challenge Success. And I'm with my co-host Dan Schwartz, dean of the Stanford GSE and the faculty director of the Stanford Accelerator for Learning.

Dan Schwartz (01:02):

It's my pleasure to introduce Sergio Monsalve. So Sergio co-founded the Entrepreneur in Residence Program at the GSE. Again, the idea was there's a lot of students and maybe some faculty who would like to bring their products to scale and industry as a way to do this. So we brought him in his expertise in 2018, and the program has been going since. It's really good. Sergio teaches a beloved course on this. He has a degree from Stanford. He has an MBA from the Stanford of the East Harvard. He started his career working at a venture capital in eBay and PayPal, but then he moved to education and we'll want to find out why he made the switch. And he has his own shop called Roble Ventures. And the quote is, they invest in human enablement with a focus on lifelong learning and human adaptability. So tell us about, before we find out the secret sauce to picking winners, why did you end up in education?

Sergio Monsalve (02:00):

Well, it's accidental, as you mentioned, I did an engineering degree at Stanford, loved my time there. In fact, Roble, funny fact is the name of my freshman dorm at Stanford, Roble Hall.

Denise Pope (02:11):

And by the way, I was an RA in Roble Hall. We have a little bond.

Sergio Monsalve (02:17):

Oh, great. I was my freshman dorm there, so loved it. It was my intro to Silicon Valley, and I just loved my time learning. But one thing I realized when I was an investor is that I started in 2010, I started investing in education by accident. So the companies that we looked at that we liked, entrepreneurs that we liked, which we'll talk about, but it was very much about thinking about the lifespan of a student and how it typically formally ends at 21 or in the case of a PhD, maybe a little later than that, but for the most part, 18 to 21, you start at five years old and you end at 21 years old. And so I asked myself, why is there no formal education at 21 years old to a hundred years old?

(03:07):

And so that's my entry into a company that we ended up taking public, I was on the board for seven years called Udemy, which really focuses on making education very accessible to people by pricing it very low. And then allowing teachers to put up their courses online, sell them worldwide. And some of these instructors are making over a million dollars a year on the platform just going beyond the four walls, so the classroom. So to me it was empowering both from the supply side, the teacher side, but empowering for us, educating the world on skills that were very necessary in a world that is moving faster and faster and faster, which may actually require you to have multiple careers in your life, unlike our parents and grandparents that actually got to do one career and perhaps even not even move jobs over their lifetime. So this dynamism of the future of work means that you also need to download new concepts into your brain beyond 21 years old or 18 onto a hundred ideally.

Denise Pope (04:12):

I like how you're just stopping in a hundred there. And after that, that's it, you're done, and no more learning. I'm kidding. Yeah, I'm kidding, Sergio. I do like the idea of selling my courses and getting a million dollars though, so we'll talk about that after.

Dan Schwartz (04:29):

So was it a moral prerogative or you just found it an interesting space that you developed some expertise in or?

Sergio Monsalve (04:37):

Yeah. We invested in Udemy and then we looked at others because success begets success and entrepreneurs come to you in that specific field that they think you know much about. I realized that number one, I didn't know much about it because I came from engineering and business, and I was missing a big part of it, which was learning science pedagogy, and really the meat of how we put things on our brains. And that happened to all of us in the sort of private world of EdTech, there are engineers and businesspeople that would say, hey, I was good at school, I must know learning, so I'm going to start a company with my engineering skills and business skills too. And so they were missing the education piece.

(05:19):

So when I got into education, it was because I got to talking to Paul Kim a CTO at GSE, and he obviously has a pulse on EdTech, but also has a pulse on Stanford and said, "Hey, it'd be really interesting to think about this entrepreneur in residence program." And from that, I started talking to a lot of you at GSE and said, "Hey, this would be amazing to bring together with the engineers and the businesspeople and the education people because then we would actually minimize failure rates in EdTech if we actually had these three types of people talking to each other." I said, "Well, beyond the one-year entrepreneur residence program, what can I do to create more of an ongoing sort of effort?" And that's how the class came together.

Dan Schwartz (06:07):

So, Sergio, that's a great idea. There's a guy at Stanford who would run a fellowship and he would get a medical resident, engineering graduate student, and a business student. And their job was to develop a product to start up. And he said the hardest, I asked him how much work was that. And he said, the work's the first five months so that these three very different sort of sensibilities and skill sets learn to talk to each other. And that's where he has to play a really active role-

Sergio Monsalve (06:37):

Absolutely.

Dan Schwartz (06:38):

... to get them so that it's interesting that there are different assumptions and strategies and attitudes.

Sergio Monsalve (06:45):

Yeah. And we see it all the time. That's the hardest thing to bring people together that come from different points of view. And it takes a longer time, but it creates a better culture long term, right?

Denise Pope (06:57):

So when you're teaching these folks, you're teaching them about entrepreneurship, are you also teaching that mean you have so much experience now picking winners, right? That goes back to when I was talking to Dan about choosing talent. What's a good pitch? What do you even look for?

Sergio Monsalve (07:13):

So the entrepreneurs, I mean, first of all, God, entrepreneurs are just very small portion of the population and they're very rare, especially the good ones.

Dan Schwartz (07:23):

Seems like 50% of the people at Stanford are entrepreneurs. I'm just like, I'm surrounded by, it's not AI all the time. It's entrepreneurship all the time.

Sergio Monsalve (07:33):

Yeah. Well, a lot of them definitely want to be that and some of them make it -a lot of them, Stanford's unique, right? I think they have to have a few things. One is a reason to do it. So back to Dan's mention of why are you doing this? Sort of the intent, it has to be real. It has to be authentic. They can't just want to do it because they want to get rich quick. It has to be sort of almost a chip on their shoulders. So I look for that. Usually, and it's actually very proven and documented that a lot of them have had a history in their lives. Over 50% of them, for example, came to this country from a different country. So naturally you're not an insider to the country. So a lot of them are underdogs. A lot of them have a chip on their shoulder.

(08:24):

They have incredible curiosity, hence why Stanford I think has a much higher hit ratio than others. They have to be experimental, be okay to fail. And so we test that not just by looking at their resume and interviewing them, but by really doing a very strong back channel referencing, front channel referencing, really spending time with them, really trying to get to something beyond the resume. Because at the end of the day, entrepreneurship is almost like you're hiring David to beat Goliath, and how does David beat Goliath has to be a real, real person, knows how to maneuver, be adaptable, reshape the landscape, make sure they don't go with in the box way of fighting Goliath, which is via strength. So you have to kind of reshape the landscape. And so that requires a lot.

Denise Pope (09:16):

Okay, that sounds like almost impossible to me. I was like, wow, that counts me out. Okay.

Dan Schwartz (09:23):

So I was talking to Jorge Paulo Lemann , one of the wealthiest people in Latin America, and I was asking him about people who really super successful, and he said, "They're all insane."

Denise Pope (09:34):

They're insane? Is that what you just said? Are you calling Sergio maniacal and insane?

Dan Schwartz (09:38):

Maniacal? Driven. No, I'm raising the possibility.

Sergio Monsalve (09:44):

I am. I am a little bit.

Dan Schwartz (09:47):

But just sort of echoing the point that you need someone who's quite driven and bounces back from setbacks and-

Sergio Monsalve (09:56):

Being adaptable, resilient. I mean, why would you go into a ring with a giant and try to fight that giant? That's stupid. Insane is probably another way to put it, right? So I 100% agree, Dan. I don't know why people do it.

Denise Pope (10:11):

I just had a little inkling that I should look up the definition of the word entrepreneurship and where it came from. And I have to admit, I don't speak French, but it comes from the French word entreprendre. I don't know. Someone's going to correct my French on that. What do you think that means? And don't cheat. Did you already cheat? Did you already look it up? Are you looking up right now? You are, such a cheater.

Dan Schwartz (10:47):

Let me just think. It is the activity of setting up a business or businesses taking on financial risks in the hope of profit.

Denise Pope (10:55):

Okay. That's the definition of entrepreneurship. But what do you think the French entreprendre, whatever means? Take a guess and don't cheat.

Dan Schwartz (11:05):

Yeah. So my two years of high school French, my one year of college French, preneur, to make lots of money by getting in between people.

Denise Pope (11:15):

It's interesting. So according to this article, I could be wrong, it says undertaker or adventurer. And what I thought was so interesting about that is they probably don't mean undertaker in the way that we use undertaker, but you could understand that if a business totally goes flop, you might be an undertaker in the sort of traditional American way. But I like the concept of adventurer and you're undertaking something, right?

Dan Schwartz (11:44):

Yeah.

Denise Pope (11:44):

Kind of interesting.

(11:50):

Sergio, I have a question for you, because you were talking about qualities that you were looking for. Insanity was one of them, but there was a whole list of qualities. And a part of me is thinking, but wait, you're also offering classes on this. So can you teach someone to be an entrepreneur? Is it a learned skill?

Sergio Monsalve (12:08):

The answer is yes. There's some proclivities that people have when they're sort of young and how they grow up, but I think is very much behavioral. Hence, why I do think that who your parents are and how you grew up and all that does affect it. And we've seen that it does affect it. It runs in the family and runs in the society. Stanford's very infectious, and so that society itself breeds more infection around entrepreneurship. And I do think that there's exercises, if it's a training, there's exercises you can do along all this sort of the handful of dimensions that we look for as an entrepreneur to actually exercise those muscles and really get better at it. Because there's very uncomfortable things that you need to do as an entrepreneur, that are not natural for any person, but it's more natural for some than others. But you could also [inaudible 00:13:05].

Dan Schwartz (13:05):

You have to give an example.

Denise Pope (13:06):

Yeah. Give an example, definitely. What is this not natural thing?

Dan Schwartz (13:11):

I want to know if I'm unnatural.

Sergio Monsalve (13:12):

So that's what I was going to get to. I'm glad that you're teased by that. I think, for example, feeling uncomfortable is very unnatural. And so what I try to do for myself and others is to have you done something that feels incredibly uncomfortable in the last week. And what is that? Meaning that is for me, sometimes it's socially uncomfortable. I'm trying other things that are physically uncomfortable, but just get yourself outside of your comfort zone. One great example of that, Dan, is teaching the class at Stanford in front of 50 super sharp, sharp, sharp students for the first time ever, having never taught was incredibly uncomfortable. But I had to rise up to that. And it was the most incredibly exciting experiences I've had, but it was quite a bit of preparation to get there. And so I just don't think enough people, as they get older, do enough things that are experimental and sort of, hey, I'm going to try this, but I might fail and it feels totally uncomfortable but I'm going to do it.

Dan Schwartz (14:20):

Yeah. So, Denise, does this mean that in my courses, I should make everybody feel uncomfortable?

Denise Pope (14:25):

No. No, Dan.

Dan Schwartz (14:26):

Hey everybody. It's Wednesday morning. It's uncomfort day.

Denise Pope (14:29):

Yeah. Or there's going to be a pop quiz or whatever. No, I think what Sergio is saying is that you in his class, it's a safe place to practice this and think about getting out of your comfort area because you're going to have to do it so much as an entrepreneur.

Sergio Monsalve (14:43):

It has to again be intrinsic. It has to be intrinsic. Because if, Dan, you're telling your students to be uncomfortable, that defeats the purpose [inaudible 00:14:52].

Dan Schwartz (14:52):

No, no, I wouldn't tell them. I would make them.

Denise Pope (14:55):

He does that normally, Sergio. No, no, no, no, no. Just kidding. Just kidding.

Sergio Monsalve (14:58):

That's normal.

Denise Pope (15:01):

No, no, no. But wait. Okay, so I understand that you have to teach them to be comfortable with discomfort, but there's also some basics like, I don't know anything about marketing. I mean, there's some business things that as an educator maybe, I don't know, like you said, there was some pedagogical stuff that you had to learn coming from business. How do you do this?

Sergio Monsalve (15:18):

The one thing is that you have to realize that to be an entrepreneur, you almost have to be a decathlete and you have to do 10 sports, but none of them, you do really, really the best. You're never the best, but you need to know enough. So what I look for is this incredible curiosity that where a lot of the entrepreneurs have a knowledge or curiosity about a lot of things. So that's your sort of very wide but not very deep. And then they have a very deep function that they've gone really deep in. So they may be natural engineers or marketers, and that's been their career, but they have incredible curiosity about other things, legal, marketing, sales, all the things that require you to kind of grow a firm. And so what happens then is because you know enough to be dangerous and you're also need to be incredibly introspective about yourself and really know yourself, which is actually a really, really hard skill.

(16:15):

But if you actually know yourself and you know enough to be dangerous on all these different areas, then you'll know what to hire for or how to pair up with the right person as a co-founder, so that you at least have the basics at the beginning. The basics at the beginning are very simple. You either build the product or you sell the product. That's all there is to it at the beginning, but later on you actually have to count the beans and count the money that's coming in, and so you need finance, you need all these other things, HR, but at the beginning is all about building that product, making sure your customers love it, and then sell it to the customers. And so those skills are at the beginning, the most important things. But if you're introspective and you know enough in other areas, then you're going to be pretty successful. So you don't have to be an expert at everything. You'll be a decathlete.

Dan Schwartz (17:05):

I want to ask a different line of questioning, it's an honest concern. So I am bringing corporate sensibilities into the academy, but the academy is on a very slow timeline. It is deep expertise in one thing. And so meanwhile, in the corporate world it's, go fast, you got to beat other people to market. Are these two cultures, can we get them to work together? Or is it ultimately we're going to get students who aren't interested in the depth of scholarship because they want to be entrepreneurs and so they're going to have trouble in classes or the faculty will become entrepreneurs and stop doing the depth? Am I making a mistake bringing these two cultures together?

Sergio Monsalve (17:54):

I think they cohabit, but there's different, some are very fast twitch muscles. The other ones are more long distance, sort of, again, the athletic analogy here, but Dan, I think they could cohabit. I always think of it as why are entrepreneurs so fast moving is a lot of the decisions, especially in software, I think of it in terms of two-door decisions versus one door decision. If it's a two-door decision, means that you can make the decision and come back to it. And so in software, a lot of times you can do an MVP, take it back and relaunch it.

Denise Pope (18:28):

Wait, can I just say MVP does not stand for most valuable player here. It is minimally viable product. Is that right?

Sergio Monsalve (18:35):

Yes, that's right.

Denise Pope (18:37):

Aren't you excited that I know that? I just learned that two months ago. Minimally viable product, okay MVP. Thank you, Sergio, sorry to interrupt.

Sergio Monsalve (18:46):

You can launch your prototype, your MVP, and you could take it back. But in academia, you can't just put out something that's inaccurate and then take it back. So you're dealing with more of a one door decision sometimes. So again, I'm giving you the academic versus entrepreneur, but in life there's always, always decisions that are irreversible versus reversible. I think it's important to go beyond academics and entrepreneurship when they're oil and water is more like what are the things that we need to think about that are irreversible versus reversible. And then those mentalities, then maybe there's a sort of translation mechanism so that both worlds can live together, but it's all about what kind of decisions are you making, I guess.

Denise Pope (19:36):

There's another tension that we tend to see too, which is, this is going to be best for kids and this is going to make us a lot of money. And sometimes there is a choice where you have to say, wait a minute, that's not necessarily best for kids. So bottom line of an educator might be different from a bottom line of company. What do you make of that, Sergio?

Sergio Monsalve (19:58):

I know that's one of the biggest dilemmas we talk in class, because I always think of it. I show my students this really nice framework where if you're teaching something where you're going to get out of ROI very quickly, those business metrics do work because let's say in the case of adult education where you're just learning one skill and that'll help you accomplish your assignment next day, then that worked. You learned the skill, you created your project, and your boss was happy and the full cycle happened.

(20:32):

What I'm really struggling with, and this is why I brought the class together with educators is how do you in a delayed gratification situation where you're teaching kindergartners something that may not have ROI for a long time, how do put product efficacy and pedagogical value up front rather than economic value versus the lifelong learning approach, which is very close. So I've been struggling, and that's why we have a third in our class that are educators, to really think about, okay, how can you infuse that early on in the product? Because long-term, it'll be a better product if it has the efficacy, but it takes a while to know that, right? So we need a better data to come up front so that we could operate in a much more faster cycle environment and much more accurate, right?

Denise Pope (21:26):

Interesting. And sometimes you don't have that data, sometimes you really won't have that up front data, so it makes it even harder.

Sergio Monsalve (21:32):

Yeah. Exactly. But this is where I think a lot of the work that happens in the GSE is very valuable because there is science on what makes people learn better. And so if you bring it and you build it, codify it into something that's scalable technologically, then it's going to be better for everybody. It has to be all, I call it three disciplines, business, engineering and education. But obviously we have a humanities, we just signed up a medical student, and so I think all seven schools at Stanford get involved into this problem. And that's why I think we have six out of seven schools usually represented. The lawyers usually don't come, but that's a whole different-

Denise Pope (22:14):

But you definitely need the lawyers too, right?

Sergio Monsalve (22:17):

We do, but I think they have a whole different registration, so I'm going with that.

Dan Schwartz (22:23):

So I have an opposite problem. So faculty have made a very good educational product. Oftentimes it's kind of a test, right? Universities are very good at making measurement, and they refuse to monetize it because they believe it should be a public good, and I appreciate this. At the same time, their code base will become obsolete and they're going to have to keep rewriting the code, things like that. But they don't want to monetize. And so they don't have a plan for how to bring this to scale. They expect people to just come to it or how to provide customer support. They just hope people take it and use it. And so how can I convince them?

Sergio Monsalve (23:06):

Well, the value exchange... So first of all, there are things that shouldn't, I don't invest in. I don't want to invest in a tutoring service that charges $10,000 per student because that's very gap widening. There's things that are very gap closing. And so when you actually make the value exchange very fair and accessible to a lot of people. So like the example of Udemy where the courses are $40 or in Kahoot, the courses, the little games that I play in my class, the Kahoot games are very accessible to any teacher to buy or even free. And so to me, that's a very fair value exchange.

(23:46):

I think you should say that you could raise money two ways, philanthropy or by exchanging value with your customers in a fair way and equitable way. I like that better because then you could hire employees, you could actually do marketing, you could do a lot of things when it's an ongoing concern, rather than you having to spend all your time pitching non-profits to give you money on an ad hoc basis because that's not very sustainable, and that also doesn't attract the best employees because they don't feel like the company's an ongoing concern, an ongoing entity.

(24:21):

So I always say, what is the fair exchange that is equitable and accessible to a lot of people, right?

Denise Pope (24:31):

I think just even in this one little session today, I have learned a lot, and you've given us a lot to think about, Sergio, and we so appreciate all of your metaphors, the decathlon, the one door versus two doors, and the David and Goliath. I mean really, you've really helped us to visualize it.

Dan Schwartz (24:51):

Agreed. It's great stuff to be thinking about, especially when it comes to finding that balance between keeping education accessible and building sustainable models.

Denise Pope (25:01):

Right. And I thought another really important idea was the idea of a fair value exchange, right? Making sure educational tools are not just affordable, but also that they can grow and that they can be sustainable. I think that's important for educators and entrepreneurs to keep in mind.

Dan Schwartz (25:16):

So a key, I thought was the combination of education, business and engineering working together to ensure that we're tackling education solutions from all angles.

Denise Pope (25:26):

Yes, I love that. I love that combo, right? How powerful. Sergio, thank you so much again for joining us today, and thank you all for tuning in to this episode of School's In. Be sure to subscribe to the show on Spotify, Apple Podcasts, or wherever you tune in. I'm Denise Pope.

Dan Schwartz (25:44):

And I'm Dan Schwartz.