Blackboard acquiring Wimba and Elluminate is probably the biggest education news of the summer. Blackboard is already dominant in postsecondary learning management systems, so why did they do it? It certainly wasn't because the financial terms of the deals were too good to pass up. From a financial standpoint, Blackboard is paying $116 million for the two companies. They expect $6 million in revenue for the last third of the year, which would point to annual revenues of $18 million combined. According to the release, renewals of current contracts can be expected to yield $27 million of revenue. In any case, Blackboard is paying 4 to 6 times current revenues. This is a very high multiple, and would require extraordinary sales growth to justify. Since Wimba and Elluminate combined dominate the education sector's use of video conferencing, webinars, and remote video collaboration, it is very questionable whether Blackboard will be able to grow this sector of the business so that sales of Wimba/Elluminate services economically justify the purchase price. Michael Chasen and Ray Henderson are anything but stupid or naïve, so why did they do this deal, then? The role of Learning Management Systems has changed dramatically over the last ten years. The first higher education learning management systems were places for professors to place materials and students to submit assignments. These were different from Content Management Systems, which allowed learners to follow a learning path through a course, grading systems, which kept track of grades, enrollment systems, which allowed students to enroll in classes, student accounting systems, which tracked payments and expenses, data warehouses, which allow analysts to mine the various systems for actionable trends, and all the other myriad systems that schools use to run their academics and operations. Today, in both K12 and postsecondary, there is a growing need to integrate these systems. In higher education, schools have tried to patch together brittle middleware applications to bridge the various systems. This has not been an issue yet for K12, because of low penetration of the LMS into public schools. But federal calls for increased use of data, and the need to handle more students and show better results, with decreased resources will likely hasten the introduction of the LMS in elementary and secondary schools. Blackboard may be looking back 20 years to what Microsoft may have been thinking in the late 1980's and early 1990's. Microsoft Word was the third or fourth place word processor. Excel was the second most popular spreadsheet. Forefront was selling the second most popular presentation program, called PowerPoint. Microsoft bought Forefront, and then integrated the three applications into one bundle, MS...

Alan Stern talked with Karen Meany of Simba's Electronic Education Report (EER) about selling educational materials and introducing new products into the school market in challenging economic times. Formerly national sales director for the Siboney Learning Group (St. Louis), Stern now provides sales management services at Academic Business Advisors (Chappaqua, N.Y.), helping clients identify the right channel for their products and services. This article is copied from the December 1 Issue of EER with the author's permission. EER: How does a market downturn impact the selling process? One of the most important things is to position a product to address specific needs, as opposed to a discretionary product or “nice to have.” Also, as districts increasingly tighten up on spending, publishers are going to have to provide measurable results for their products; accountability for both results and purchases will be key. EER: What funding sources should companies look to now? As funding tightens, federal funding becomes more important. Th ere are more specific requirements that control it; it’s difficult to reallocate for purposes other than what it was intended for. Also, there are specific time frames, quite often, where the funds do need to be spent. What’s happening now is that federal funds are going to be targeted by more and more of the publishers because they are the available funds. Additionally, there are opportunities for partnerships with corporations and foundations that are interested in providing support for schools, especially as funding gets tighter. EER: What are the challenges for new companies in this environment? What we try to do at ABA is to match the product and service with the right sales channel. If the product is heavily content-oriented, it is important to have someone who understands what the content means and how it is implemented. If the product is more administrative or data-oriented, it might do better with someone with a different skill set. The biggest obstacle for the emerging companies is brand awareness. Increasingly, the education market is being overwhelmed by marketing. There is so much noise in the market now, it’s hard for a new company to make headway. An advantage that wasn’t available before is e-mail and Web marketing. They have leveled the playing field a bit, but nothing beats feet on the street. Experienced salespeople bring so much to the table, there is no better way to reach a customer. EER: We hear that sales organizations are now partners with schools, is this really happening? Salespeople who have been in the industry for awhile are looked to as a resource. Schools have specific needs. Many schools have a wealth of materials available to...

<p>Reducing Sales and Marketing Risk</p> I just listened to a lecture that really summarized why we are in business. To set the stage, barely one out of a thousand companies become big successes. Of those 999, fewer than one out of ten are there because their product doesn’t work; more than nine out of ten fall in that group because they fail to find customers or a market. We (Academic Business Advisors) are in business to lower that sales and marketing risk for education technology companies. I got that insight listening to Steve Blank’s talk in Stanford University’s Entrepreneurial Thought Leader Series. Here is the summary of his talk; these are valuable concepts for anyone thinking about launching or expanding a product or business. Here’s the standard, accepted model for launching a business: Most entrepreneurs, reinforced by their investors, advisors, and board, are focused on getting a product out and to the first customer. But, most of the failures aren’t because the product doesn’t work; they are because the product couldn’t find a market. The model above causes hiring of staff, sales, and marketing based on events in the product development cycle; that’s backward. You design, build, test, and refine for a successful business based on market need and feedback. What entrepreneurs need is a model and tools that reduce sales and marketing risk, because that’s where businesses are most likely to fail. If you don’t find the right market and you don’t figure out how to get lots of customers early in the process, you’re just going on a random walk. As Blank summarizes: The job of an entrepreneur is to become a domain expert enough to understand a day in the life of their customer, their buyer, and anyone else in their organizational exchange. If you can’t do that, don’t do it, and become like almost every other entrepreneur who goes out of business. If you’re thinking of creating a product or company, the first rule is to understand that you have made a lot of guesses or assumptions about the market. You’ve assumed that there is a problem, and that you know what it is. You’ve assumed you know the people who have that problem, and that there are enough of them to matter. You’ve assumed that you can get those people to pay you to solve that problem with your product. You need to figure out how to turn those assumptions into facts. How do you do that? Get out of the building and talk to the people who will be using and buying the product. Is the problem that you think you’re solving really...

I had no intention of buying a rug on our trip to Turkey in December 2006. Certainly, not on the first day. I’d already purchased a rug; when my son and I had been abducted in Tunis, Tunisia in 1999. But, that’s a different story. Yet, there I was, just 4 hours after arriving in Istanbul, shaking hands with a rug merchant as he packed up our newly purchased kilin carpet. How did this happen? Educators, business people, publishers, we all seek to influence others, and we are all influenced by others. Perhaps my experience in Turkey, seen through the prism of an expert in the principles of influence and persuasion can help us all. First, let me describe the events leading up to the purchase. Then, I’ll relate those events to principles contained in the book Influence: The Psychology of Persuasion by Robert Cialdini. Our hotel, the Mavi Ev, or Blue House Hotel, was just across the street from the famous Blue Mosque in Turkey. As soon as we stepped out to go visit the mosque, the first person approached us, Salesman: “Do you want to buy a rug?” Me: “No thank you.” Salesman: “Where are you from?” Me: “No thank you, we’re on our way to view the mosque.” In the 50 yards between the hotel and the entrance to the mosque, we were approached at least 5 times, in similar ways. The sales people were pleasant, often humorous, never hostile. But always persistent, asking at least 5 to 6 questions to try to engage us. “How long are you staying in Turkey?” “How do you like Turkey so far?” “Are you thirsty or hungry?” “Would you like some apple tea?” “Do you know where you are going?” After the Blue Mosque, we walked across the park to the Hagia Sophia, and were approached another 5 to 6 times. But, as we walked up to the Hagia Sophia, we found out that it had just closed, and someone came up to us. Person: “It’s a shame that the Hagia Sophia closes so early. Have you seen the Cisterna Basilica, yet? It’s still open.” Me: “Yes, that’s one of the things I’ve wanted to see.” Person: “Let me show you where the entrance is, it’s just a block from here.” Me: “We can probably find it.” Person: “I know, but it is really no trouble and will save you some time. How long are you in Turkey for?” Me: “We’re staying for 9 days.” Person: “The entrance is just here, make sure that you walk through all of the passages. Some people just go into the Cisterna, take...