They don't mention one of the main reasons they have such a huge market share/monopoly and a still shitty product: they're litigious bastards who have tons of inane patents for things like buttons and the like. They've sued the hell out of their main competitor D2L and the courts ruled against them and a lot of their patents across the board.
Blackboard is one of the crappiest products i've used at school. Thank goodness I didn't have to put up with it for more than a couple of semesters before my school changed out to a different product to manage grades/courses etc. Administrative stuff like grades, assignments, etc. with Blackboard was a mind numbing exercise. One would need the patience of a monk to deal with it. The UX still looked like it was 1991 and nobody liked to use it, students and instructors alike!
I don't know how many startups and companies have been stopped in their path to improve service and experience by these litigious patent enforcing jackholes.
At least one startup's doing just fine vs. Blackboard. Instructure Canvas just closed series B, is CEO'd by former Mozy founder and is LMS of choice for a growing number of schools (and soon to be @ Auburn if twitter's to be believed).
They avoid litigation (apparently) by open-sourcing their stack and charging for hosting/integration. Rails-based goodness.
[not affiliated - but was just identifying LMS options for a client]
They avoid litigation (apparently) by open-sourcing their stack and charging for hosting/integration.
That's a strategy to give buyers confidence in a new vendor, not an anti-litigation strategy. Open Source doesn't protect you against IP infringement claims.
My startup sells to higher ed, other governmental bodies and to businesses. Government is the hardest and takes longest and higher-ed is actually comparable to selling to businesses, once you figure out the process, in my experience.
we explored moodle for tmedweb. The problem is most of these systems provide all the possible functions, whereas, in our experience, people wanted a very select subset. Parring down a CMS proved more painful than writing code from scratch.
As developer it's even worst, it's possible to develop module for the Blackboard platform and I had once to develop a module for that. Be aware you will see the worst documentation ever, even if you have access to all of it. 2 websites for the exact same thing, in which you have a zombie forum, a wiki in which there are a lot of empty pages, a lot of document which repeat almost the same exact example, etc. The platform is in Java ... and they don't provide the JavaDoc. Good thing I was paid, otherwise there is no way on earth I would have torture myself to do that thing.
Note: I wasn't working for Blackboard, but an other company which had got a contract to do a module for the Blackboard platform.
The irony is that (in my experience) ~90% of instructors don't use Blackboard for anything more than an easy way for the HTML-illiterate to distribute syllabi, course notes, and assignments. Unless forced by the administration hardly anyone even uses the gradebook, let alone the more advanced features.
Investment company buyouts of entrenched education infrastructure are all about cash. The investment firm will cut any product development budget, raise prices, cut customer service, and eventually drive all the customers away. In the meantime, too many university administrations will waffle over the pain of moving to another platform for about 5 years. See how Oracle is abusing all the Sun education customers it inherited.
Or they could let things play out as is, seems pretty certain though whatever the case it's not the kind of acquisition where they will be looking to massively invest in improving the product.
At my work, we like to invest in companies that we think would be attractive LBO Candidates... Blackboard really fits the profile.
1. Entrenched business model
At my school we used Blackboard and we had about 50,000 students. Getting everyone on board to switch from Blackboard to a new system would be pretty tough. The university would have to spend a lot in terms of re-training which would make it tough for a new system to gain traction.
2. Recurring revenue stream
Blackboard has a recurring revenue stream which is pretty awesome for a private equity buyer. You see, the PE game is pretty simple. You buy a business for X, where about only 10-30% of X is actual cash you put up. The rest comes in the form of debt.
A recurring revenue stream is great in that your subscription fees can cover the interest payments on your debt and in many cases will allow you to have more debt as part of your capital structure than normal. Lenders will see that your business can generate a stable enough cash flow to support such large amounts of leverage. A business such as Blackboard could potentially support leverage that's on the high end of the scale because of its recurring revenue stream.
3. Ripe for cost cutting
A company like Blackboard is bound to have a good deal of fat that can be cut. Slashing R&D funding and whatever growth spending will increase the amount of cash flow that goes to investors. My guess is they will streamline the company to be more focused on its sales force than whatever developer-base they have in place at the moment.
Everything you say makes a lot of sense up to here:
Ripe for cost cutting
That isn't true. Universities are demanding clients and always want to try new technologies. Any LMS vendor has to have a strategy for dealing with technology change. Blackboard has that, and throwing it away would weaken their selling position.
I used to work for a startup with a similar product aimed at K-12. This is a pretty good summary of how the whole learning management software industry works.
It's unbelievably hard to sell educational software, but once you have some customers signed up they will stay with a particular system for literally decades before contemplating a change, regardless of how stagnant and outdated the product becomes. As recently as five years ago, there were still a significant number of schools using systems based on Foxpro.
Companies spent years establishing a customer base, and then they're almost inevitably snapped up by a larger fish. My startup was purchased by a regional educational software company, which was itself almost immediately afterward snapped up by a private equity group.
"3. Ripe for cost cutting
A company like Blackboard is bound to have a good deal of fat that can be cut. Slashing R&D funding and whatever growth spending will increase the amount of cash flow that goes to investors. My guess is they will streamline the company to be more focused on its sales force than whatever developer-base they have in place at the moment."
This is probably what will happen. And since blackboard already have a product that is widely disliked and considered very much out of date, this timely cost cutting will basically guarantee that they will not update their product as necessary and someone will eat their lunch. So that nice steady recurring revenue stream will disappear and the bank and the LBO fund will lose their money.
Although perhaps financially this totally makes sense, I had to use Blackboard in the last year at University, and it pains me to see that somebody's paying 1.6 Billion for that piece of crap!
I feel really bad for the engineers at ANGEL Learning. They were acquired by Blackboard a little over a year ago and now that they are just getting settled in there is sure to be more sweeping changes.
As cut-throat as this seems and as piss-poor a product Blackboard is, there are bound to be some talented engineers with experience in the education vertical ready to take on BigCo available soon.
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[ 3.5 ms ] story [ 66.8 ms ] threadI don't know how many startups and companies have been stopped in their path to improve service and experience by these litigious patent enforcing jackholes.
They avoid litigation (apparently) by open-sourcing their stack and charging for hosting/integration. Rails-based goodness.
[not affiliated - but was just identifying LMS options for a client]
That's a strategy to give buyers confidence in a new vendor, not an anti-litigation strategy. Open Source doesn't protect you against IP infringement claims.
Note: I wasn't working for Blackboard, but an other company which had got a contract to do a module for the Blackboard platform.
You know, I would be shocked if they could do a better job of this than Blackboard already has. It takes a special kind of malice to do that.
1. Entrenched business model
At my school we used Blackboard and we had about 50,000 students. Getting everyone on board to switch from Blackboard to a new system would be pretty tough. The university would have to spend a lot in terms of re-training which would make it tough for a new system to gain traction.
2. Recurring revenue stream
Blackboard has a recurring revenue stream which is pretty awesome for a private equity buyer. You see, the PE game is pretty simple. You buy a business for X, where about only 10-30% of X is actual cash you put up. The rest comes in the form of debt.
A recurring revenue stream is great in that your subscription fees can cover the interest payments on your debt and in many cases will allow you to have more debt as part of your capital structure than normal. Lenders will see that your business can generate a stable enough cash flow to support such large amounts of leverage. A business such as Blackboard could potentially support leverage that's on the high end of the scale because of its recurring revenue stream.
3. Ripe for cost cutting
A company like Blackboard is bound to have a good deal of fat that can be cut. Slashing R&D funding and whatever growth spending will increase the amount of cash flow that goes to investors. My guess is they will streamline the company to be more focused on its sales force than whatever developer-base they have in place at the moment.
Ripe for cost cutting
That isn't true. Universities are demanding clients and always want to try new technologies. Any LMS vendor has to have a strategy for dealing with technology change. Blackboard has that, and throwing it away would weaken their selling position.
It's unbelievably hard to sell educational software, but once you have some customers signed up they will stay with a particular system for literally decades before contemplating a change, regardless of how stagnant and outdated the product becomes. As recently as five years ago, there were still a significant number of schools using systems based on Foxpro.
Companies spent years establishing a customer base, and then they're almost inevitably snapped up by a larger fish. My startup was purchased by a regional educational software company, which was itself almost immediately afterward snapped up by a private equity group.
This is probably what will happen. And since blackboard already have a product that is widely disliked and considered very much out of date, this timely cost cutting will basically guarantee that they will not update their product as necessary and someone will eat their lunch. So that nice steady recurring revenue stream will disappear and the bank and the LBO fund will lose their money.
As cut-throat as this seems and as piss-poor a product Blackboard is, there are bound to be some talented engineers with experience in the education vertical ready to take on BigCo available soon.