After years spent making their way into classrooms across the US, education tech company ClassDojo is changing how things are done in order to pay the bills.
Since August 2011, they have provided free materials to public school teachers, reaching at least one elementary or middle school classroom in 95% of the country. That’s one in six students under the age of 14. But after promising to never charge schools and teachers, ClassDojo now has to find a way to reimburse the backers that got this venture off the ground.
How do they plan to do both? ClassDojo Beyond School, a subscription aimed at parents of children who already use ClassDojo at school so they can continue their studies at home. This new app will allow parents to look in on their child’s activities, take part in meditation exercises, and take advantage of a points system that rewards tracked behavior.
Behavior incentivization has long been part of the classroom versions of ClassDojo, and they will make a reappearance in Beyond School. Like teachers are able to, soon parents will be able to reward or deduct points based on performance and behavior, and they can set the criteria for earning points.
Parents also stand to get a few things out of Beyond School. Mindfulness and meditation exercises are accompanied with instructional videos they can help parents perform with their children. They will also have access to self-reflection videos their children can record, providing insight to their emotional well being. And the children can express themselves further with custom avatars that they can customize to their liking.
ClassDojo CEO Sam Chaudhary sees this as a method to start conversations between child and parent that may not come up in the classroom.
It’s not easy for a startup to operate for so many years without revenue. Chaudhary said the secret is to be frank and detailed with investors, letting them know the reality of how the business will be built. With a long-term strategy, ClassDojo has been able to develop a reputation among educators that makes it legitimate in the eyes of parents. By giving the product directly to teachers, Chaudhary was able to work with a conservative marketing budget, leaving more funds to assemble a team of a couple dozen employees.
Since 2011, ClassDojo has raised $31.1 million from investor GSV Acceleration, Reach Capital, and General Catalyst.
Most tech start-ups tend to stay private, at least until they get their footing, but David Zalik has decided to take his company public much earlier. That company, GreenSky Credit, has already filed a confidential application requesting an initial public offering (IPO). The move already has analysts guessing that Zalik’s company will raise as much as $1 billion through the offering, bringing the estimated value of the company as high as $5 billion.
Although other successful startups, like Uber, Stripe, and Credit Karma, are still privately owned, David Zalik sees the benefits in offering up shares to investors. Even though the application has already been submitted to the Securities & Exchange Commission, Zalik still has the option of keeping his company private. He has yet to share his plans, but, if he does intend to go public, the confidential filing gives him the time to prepare for the debut of GreenSky Credit in the market.
GreenSky Credit is based on a lucrative premise. It offers quick loans to homeowners interested in making home improvements, but the actual holders of the loans are commercial banks. This means that Zalik’s company earns a profit, while letting banks like SunTrust, Regions, and Fifth Third take the risks. While GreenSky Credit doesn’t hold the loans or lose out on defaulted loans, the pay they receive from each bank is based on loan performance. In addition to those payments, Zalik arranged his company in a way that requires each bank to pay about 1% to GreenSky each year as payment for facilitating the loans.
The situation benefits homeowners as well. They use their mobile devices to apply for loans of up to $65,000 on the GreenSky Credit app. Applicants receive a decision in just a few seconds, making this one of the fastest and most hassle-free ways to obtain a loan currently available. While other lenders have gone public and failed miserably on the market, David Zalik’s approach may be more attractive to investors. The business model developed by Mr. Zalik creates a generous profit margin, while facilitating loan applications in much quicker way. These benefits may pave the way for a new kind of lending, while helping Zalik present a very promising IPO.