What’s Happening in the Market
FAFSA updates led to a 10%+ decrease in form completions. The changes that were meant to increase accessibility absolutely backfired. But a silver lining in the data is that states who require public school seniors to complete FAFSA forms to graduate saw the lowest declines. Indiana required FAFSA completions in 2021 and saw a 1.1% decline; Texas and Illinois were likewise early adopters for form requirements and had the 3rd and 5th highest completion rates. Requiring FAFSA form completions for public school students would be a welcome development for other states, especially since it would force states to provide more resources to help students complete the form (hopefully!).
MagicSchool AI just raised a $15M in Series A funding. The company is a solution in need of a problem. Is there an actual issue with teachers needing ChatGPT to level texts or wanting to generate AI-art for their lessons? The only use case I have for the latter is maybe as a hook or once in a blue moon (although we use that all the time for our fun email thumbnail art!). That feature is also absolutely commoditized at this point. I’m not convinced and I question whether any of these new features they roll out are actually moving the needle on user retention (which I’ve heard is a pernicious issue at MagicSchool but unverified).
What We’re Talking About
Oklahoma’s Secretary of Education is mandating that schools incorporate the Bible for instruction for grades 5-12. While state law does allow for teachers to use religious texts, such as the Bible or Hindu scriptures, for instruction, it’s unclear whether it can be required.
Everyone seems to be talking about the collapse of Ed, AllHere’s nascent AI tutor which had rolled out to LA USD only three months ago, after already receiving $2M of the $6M in payments from LA USD. AllHere’s CEO has departed the company and deactivated her LinkedIn, while the company has furloughed most of its staff and is seeking a buyer. Not a great look for what was a really aspirational investment, and it speaks to a few things: The risk involved for districts to purchase tools from startups with no track record; and the inability for AI to be the instructional golden bullet many people want it to be.
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One Big Idea
AllHere’s failure rhymes with a lot of other high-flying failures; visionaries over-promising, under-delivering, and then imploding. It is an obvious indictment for AI and the personalized tutor that companies are obsessed with, because it’s perhaps the least imaginative solution. It’s just a stone’s throw away from a customer success chatbot, they think.
Chatbot source code that Whiteley shared with The 74 outlines how prompts are processed on foreign servers by a Microsoft AI service that integrates with ChatGPT. The LAUSD chatbot is directed to serve as a “friendly, concise customer support agent” that replies “using simple language a third grader could understand.” - The 74
AllHere didn’t have their operations set-up to scale to the demands of LAUSD. It bit off more than it could chew, including with how it should handle student data. A whistleblower has accused the company of mishandling student records. They literally just fed student personal data into a ChatGPT Plugin and told it to act like a customer support agent. Not even a friendly tutor or teacher!
The lack of imagination or respect is bewildering. AllHere made a bunch of hooplah about using “Humans in the Loop” AI. Human in the Loop is essentially just prompt engineering (at its most basic form). And it’s clear that AllHere’s Ed was at its most basic form.
Either AllHere’s last remaining employees are demolishing the website from the inside-out, or AllHere always had red flags. Text translates randomly. Empty text boxes abound, and ‘Case Studies’ is a dead link. I used the Wayback machine to look at their website in May and April, and that Case Studies link has never worked.
It is extraordinarily hard it is to sell to schools and districts (and justifiable so). It is not an easy market to succeed in as a startup, unless you have some super-differentiator (like the district superintendent on speed dial, or a supremely good product like Desmos’ graphing calculator). The customer acquisition costs are insanely high. Your product has to meet high product specs, and (usually) have tons of efficacy data. Unless, I guess, you add AI to the list of things your company does. Then you somehow get a compliance pass, when in fact the bar should be higher. Administrators and the media rolled out the red carpet for AllHere and their CEO, who Time Magazine and Inc. showered accolades over.