"This Is What a Startup Should Look Like"

CEO Ron Packard, ’89, got the idea to launch K12, Inc., the world’s largest online school for kindergarten through 12th grade, “purely by happenstance,” he said. His daughter’s kindergarten schoolwork did not provide enough math instruction.

Packard gave a keynote presentation at the tenth annual Entrepreneurship and Venture Capital Conference at Gleacher Center on November 14. Sponsored by the student-led Entrepreneurship, Venture Capital & Private Equity Group and the Polsky Center for Entrepreneurship, the day-long event drew hundreds of students to six panel sessions, a morning keynote from Ken DeAngelis, founder and general partner of Austin Ventures, and a fireside chat with Scott Griffith, ’90, chairman and CEO of Zipcar. 

“I went online and thought I would just buy a math course from what the best private or public schools in the world were teaching,” he said. “Amazingly, I found thousands of individual courses, but nowhere did it say, ‘This is what a kindergartner or first-grader should know.’

“At that moment, I got the idea that if I built something like that, other people might want it. Even more than that, if I built every course in every subject for every day, there’s no reason children couldn’t go to school full-time online in today’s world.”

Founded with the vision of providing a world-class curriculum to every child who wants it, K12 generated $6 million in revenue its first year, $36 million the second year, and $70 million the third year, Packard said. Today the company is profitable and offers 15,000 lessons to more than 55,000 full-time students with revenue of more than $310 million. “This is what a startup should look like,” Packard said.

Each lesson includes a 20- to 30-page interactive website, he said. “We built everything internally, including the core textbooks,” Packard said. “It’s all proprietary. We built all the systems necessary – content management systems, online schools. We deliver the complete Basil curriculum. We built every lesson every day in every subject.”

As long as students are enrolled in K12, they receive free computer and internet use, he said. The company’s customer satisfaction rating is 95 percent. “That’s about as good as it gets,” Packard said. “It’s almost too good to be true. As a result of that customer satisfaction, our largest source of new students is referrals from existing families. That is the sign of a great business.”

K12’s next hurdle is to decide how to grow from so many options, Packard said. Enrollment at its existing schools is still growing 30 to 40 percent a year, but the company has not gained market entry in 29 states. Outside of its fundamental service, K12 is exploring five other innovations:

1. Simplifying the sale of content to customers interested in only portions of the curriculum.
2. Creating more hybrid schools, such as one in Chicago, that send students to brick-and-mortar schools two days a week and provides online instruction three days a week.
3. Expanding international offerings in addition to its U.S.-accredited education available anywhere in the world.
4. Utilizing the company’s content for classroom-based instruction, such as a Philadelphia pilot that increased math proficiency for low-income fifth-graders from 22 percent to 66 percent in two years with the same faculty and staff.
5. Selling individual courses to schools that otherwise would not offer subjects such as Mandarin, calculus, or advanced placement statistics.

The Entrepreneurship, Venture Capital & Private Equity Group invited Packard to speak because he took the less traditional corporate route before launching his hugely successful startup, said second-year student Jasper Platz, co-chair of the student-led group. “Many students here think the same way he did, that they don’t have an idea right now but they see this very viable option to go into entrepreneurship later in their careers,” Platz said.

Phil Rockrohr