Washington Monthly - September/October 2012 - (Page 37)

with headphones on, each staring intently at a thirteeninch MacBook Air. “Do they work for you?” I ask, nodding at the people outside the glass, assuming they’re junior investment analysts or somesuch. “No,” he says. “They’re one of our investments. That’s OpenStudy.” By which he means: the entirety of the company known as OpenStudy—its personnel and infrastructure—was sitting around that table. OpenStudy is a Web site that allows people to create online study groups, for free. “Tired of studying alone?” their site asks. “Connect with learners studying the same things you are.” OpenStudy says it has 100,000 students from 170 countries and 1,600 schools. Because all of the computing capacity, electronic memory, secure backup, and related telecommunication infrastructure necessary to do this can be bought as cheap commodities from a remote provider, the actual physical infrastructure needed to run an ed tech start-up like OpenStudy consists of, in its entirety, five lovely aluminum computers (nearly everyone I meet in Silicon Valley has a thirteen-inch Air), five ergonomically designed black chairs (they are always black), one table, and a wi-fi connection. I ask Nathaniel about how Learn Capital sees the world. Is the real money to be made, per Marc Andreessen, in eating the existing education industry? Or will it be in providing services to the industry, helping them do what they do better? In terms popularized by Harvard business professor Clayton Christensen, this is the difference between “disruptive” and “sustaining” innovation. Nathaniel says that’s an “ideological” question. Learn Capital looks for two things, he says: “highly relevant niche plays,” which sound like a sustaining innovation, and winner-takes-all “platforms,” which sound like university eaters to me. In fact, if one word defines the dialogue of my trip to the valley, it is “platform.” Investors want to put their money in platforms, and start-ups want to build platforms, because right now, and for the foreseeable future, platforms rule the world. The idea itself isn’t new. Wal-Mart builds platforms— actual, physical platforms, made of concrete, with walls around them and a roof overhead. Then it connects those platforms to several gigantic networks of transportation, telecommunications, and commerce, thus connecting tens of thousands of companies that manufacture things to hundreds of millions of people who want to buy things. Because Wal-Mart owns the platforms on which those transactions take place, it makes money with every sale. Because Wal-Mart is unusually good at figuring out where to put platforms and how to manage those gigantic networks, it is currently the world’s largest private employer. Washington Monthly 37 http://www.smcm.edu http://www.smcm.edu

Washington Monthly - September/October 2012

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