Interview
Marketing Technology to Public Education: An Interview with istation.com

Today’s generation of children is comfortable with technology. From iPods to PCs and on to Xbox360s, technology has a proven ability to kids. But is it used effectively to teach them fundamental educational skills like reading and math?

The Imagination Station does: Complementing classroom instruction, the Imagination Station adapts learning to a child’s individual skill level, teaching them comprehension and vocabulary skills at their own pace, and also provides individual performance assessment services to schools. Through a kid-friendly Internet-based network, the Imagination Station is able to service a school with hundreds of children using little more bandwidth than a 56K modem and function normally even when a school's Internet connection is lost.

George Grayson is the visionary behind the Imagination Station. A long-time advocate for using technology to better the lives of children, He founded istation.com in 1998 after 18 years of starting and growing successful software companies such as Micrografx and 7 th Level. Join us as with talk with George about business challenges of marketing technology to public education.

George, you have been a successful entrepreneur and have taken two groundbreaking technology companies public, Micrografx and 7 th Level. Your current company, istation, is aimed primarily at the education segment. Why the change in direction?

I think of myself as a throwback to the early days of the personal computer industry and always believed that one builds great software with a purpose. Today, the industry is driven by cool Web sites that can be put together quickly and by visitor traffic – basically an aggregated advertising model. That’s not me. My approach is to deliver tremendous value through an application that is truly transformative with an incredible value proposition.

Seen in this context, it’s easy to see why I picked the education segment. It needs to be transformed more so than any other segment in the US economy. Education constitutes a huge percentage of the economy, and will dictate our success going forward as a society. The need for transformation is quite obvious, yet not simple.

How did your technology, B2B expertise and experience in consumer markets crossover to istation?

From a business and technology perspective, I’ve always believed that solutions to complex problems have systems level and application level components. Systems level software allows one to write very fast and tight code for things such as multi-media presentation, distribution and performance tracking functions. The application software can then be used for those elements that don’t need to be that fast, but evolve constantly. This combination enables an end product that can be truly transformative and gets the “I didn’t know that a computer can do that” kind of reaction from users.

With 7 th Level, I learned a lot about the consumer uses for PCs and in particular about games and multimedia. I went to Hollywood to understand how they think, and learned their processes to map traditional media into a computerized environment. This multimedia experience gives istation a skill set which is key to what we do: Bringing high production value and engaging educational content efficiently to the desktop.

Thanks to earlier ventures, we were able to bring business, engineering, creative and production rigor and discipline into istation from the start. The good thing about starting multiple businesses is that putting the building blocks in place becomes faster with each company. Access to capital, balance between R&D and sales, effective use of marketing strategies, capturing analyst attention, one tends to get better at all of these things.

What underserved needs did you seek to solve with istation?

As tangential as it sounds, I’ve paid attention to education for a long time. It has been at the forefront of national issues, yet the progress, in terms of better educated children, has been nonexistent for over 30 years. This is a bit of a paradox: We are the richest country in the world yet we can’t teach our children effectively, especially in the poorer segments of society.

Over the years, there were technology companies that were trying to solve this problem. But my research showed that their products did not meet the need. The products were frequently aimed at children from middle- and upper-class families who had access to computers and multimedia. These products ignored the needs of children that came from lower socio-economic homes. Further, most of these products focused more on keeping kids busy – they didn’t focus on core problems such as language acquisition, vocabulary or reading skills.

As I looked at problems in early education, it was clear that there was a need to build language and vocabulary skills as well as reading skills. In addition to children that do not speak English as a primary language, many children do not learn much vocabulary from their families. For instance, a three-year-old from a middle-class family is exposed to four times the number of unique words, either at home or at daycare, as a child from a lower socio-economic family.

So I founded istation to develop The Imagination Station, an Internet-based educational network that could assist pre-kindergarten through 3 rd grade children with acquiring reading, vocabulary and language skills. The ability to read fluently with comprehension in English is the key foundational skill needed to enable our society to solve its larger education problems.

It is well known that the education market is huge, beset with multiple challenges, and with varying financial models per school district and state. What kind of background research did you engage in to arrive at the targeted market segments and product focus?

Taking a systems approach, I began by breaking down the problems in education. I looked for problems that could best be solved by an elementary education network and considered how to fix them. In addition, I evaluated the competition to determine who else was trying to solve these problems and whether they were using similar approaches, and if their offerings were meeting the mark. I also spoke with a lot to academicians, researchers, and thought leaders to confirm the issues and approaches that had the greatest chance of success.

The conclusion that I arrived at was that while there were challenges in related areas like math and science, reading and language acquisition were the fundamental problems to solve. As it turns out, this coincided with the priorities of the federal No Child Left Behind Act.

Did you also talk to schools to gauge their interest and understand their pain points?

I met with school administrators and teachers but soon realized that their perspectives on the problems in education were varied, to say the least. Further, the lack of understanding of computers and technology limited the value of their suggestions. Even at the district level, no one person understood all of the pieces to the problem.

For example, education standards vary from state to state and curriculum varies school to school and class to class. Prior to No Child Left Behind Act, there wasn’t even any expectation of student performance in most states nor an accountability system to track it. To be successful, we needed to focus on the root cause of the problem and come up with a product that would attack it in a systematic manner.

In terms of school infrastructure, we found a mixed bag – some schools had a reasonable base, others not so much. We designed The Imagination Station to require a modest 56K of bandwidth per student. However, when we started measuring actual bandwidth available at most schools, we found it to be a fraction of what was needed. This led us to develop a peer-to-peer distribution system. It turned out to be a brilliant move because with an extremely efficient Internet distribution, schools don’t need servers or additional bandwidth to use our product. This means that there no extra infrastructure costs associated with our solution.

George, deconstruct a public school system for us. Who are the main players and decision makers?

There is no one model for the public school system and there are a number of reasons for this. Historically, education in the U.S. has been driven by the concept of ‘local control’. Most school funding comes from the state and local taxes, so state officials and elected school boards play a key role. In well-to-do communities this works out fairly well. Parents are generally well-educated, vote and maintain a strong say in how their children should be educated, and these schools tend to turn out relatively well-educated children. In poorer school systems, the focus is less on educating the children and more on administration of the system and the money; these schools frequently lack the same emphasis on the quality education. As many of the people in these communities are poorly educated themselves, they are not always effective advocates for their children or stewards of the school system.

School district organization and school board philosophy range from highly centralized to decentralized and frequently switch back and forth. Superintendents, boards, a few key board members, or powerful administrators within a district can control policies and direction of the district and schools. Typically, school level administrators and teachers have little decision-making power.

For istation, the key people are the Chief Academic Officer, the Reading Director, Special Education Director, Director of Bilingual Education and Title I Director. Generally, the people we call on make recommendations and buying decisions for the entire district. However, in the few school districts that have site-based management, we call on principals and reading coaches in individual schools.

At the core of The Imagination Station lies a disruptive technology: A mass customized approach to teaching that challenges the status quo. How do you educate your audiences and persuade them to use your product?

The environment has changed a lot over the years. When we started, there was little emphasis on reading, but this has changed with the No Child Left Behind Act, which has brought a national focus on reading.

There has been some resistance to technology in education. Until recently, there was a misplaced notion that computers would replace teachers’ jobs. There is also the problem of unfulfilled expectations. In the past, software publishers over promised and under delivered. The Imagination Station creates the opposite situation – it individualizes instruction for each child while providing tools for teachers and administrators to easily use data to make informed decisions and ensure all kids learn to read. This combination makes both the teachers’ and administrators’ jobs more rewarding and pleasurable without adding to their workload.

Effective Internet-based instruction is a tremendous win for schools. What schools need are tools that help them do a better job. As for any fears about technology replacing teachers or schools, schools in the U.S. provide care for kids during the day when their parents are at work. This function is not going away – no matter how good technology or Internet-based instruction gets. Except for a few home schooled children, the majority still need to go to a physical school away from home.

Who benefits the most from your product?

That’s a tough one. Everyone that has a stake in seeing that children learn to read benefit from The Imagination Station. Within schools and districts, it is the teachers, administrators and children that benefit the most.

When we first started istation, our focus was primarily on teaching the child to read. As a result, our The Imagination Station provides numerous activities around each skill necessary to read fluently with comprehension. These activities teach each child specifically what they need to learn while assessing their ability level. It also addresses the complex problems of English language learners, children from poor pre-literacy backgrounds and special needs children.

As we were developing The Imagination Station, we recognized that teachers and administrators needed reporting systems to measure the progress of their children and collected performance data accordingly. Through a process of continual improvement, we made modifications to The Imagination Station to improve reporting. Today our reports not only provide performance data, but also make recommendations for small group instruction.

Since the passage of No Child Left Behind Act, accountability has become the biggest driver of change in education. The accountability requirements create a need for performance data. School districts need data to prove that they are using federal funds effectively, and to redirect resources to deserving schools. We provide data that shows individual student performance as well as aggregate data which is invaluable to administrators.

istation’s product strategy is to provide the market with the right mix of features and functionalities. How do you determine these factors?

We constantly engage in discussions with psychologists, researchers, educators, brain research specialists, and other experts that work in the fields of education, language and learning. In-house, we have excellent educators, game designers, engineers and animators, including an Emmy®-winning animator that translate this information into a design and ultimately, educational content and assessments for The Imagination Station.

There are a number of companies that provide learning tools similar to istation. How does istation differentiate itself effectively?

There is plenty of competition but no one has a solution as complete as our or that so closely follows the research. The Imagination Station individualizes reading instruction across phonological and phonemic awareness, phonics, vocabulary, comprehension and fluency. As it individualizes instruction, The Imagination Station collects assessment data and makes that available to teachers and administrators in real-time. This data enables schools to meet accountability requirements as well as further individualize instruction through small group instruction recommendations and lessons provided by the system.

When a child logs into the Imagination Station, they get assets locally, if available, otherwise they fetch what is needed from our servers. Every child that logs on after the first child shares these assets. Our software also predicts what the child might need next, and keeps it in queue. The assets and data in the knowledgebase are shared by all kids in a domain, avoiding duplication and lending great flexibility to our system.

The content itself is logically in a quasi-sequential form based on an instructional scope and sequence. It is organized into a series of logical cycles – the smallest cycle being designed to teach a specific skill. Associated skills are combines into teaching cycle clusters which then are combined to form larger cycles.

On the technical side, our competitors have client–server models which require school based servers, lots of bandwidth and are more expensive to deploy. That is because they use development and production tools like Flash and Shockwave that deliver content to single users. Our architecture is one-to-many using a peer to peer system behind the firewall and is very efficient.

istation is founded on the philanthropic vision of providing wide-based education programs. But is it also a business venture. How do you ensure that istation continues to grow and be a profitable company?

The way to be profitable is the keep the balance between the companies’ product and services, the price we charge, and the value proposition that meets the markets needs effectively. We meet the market needs better than any of our competitors and provide a meaningful solution to schools that need to teach a diverse student population to read.

Right now, given the length of the sales cycle and complexity of school funding, we utilize a direct sales model. Once we hit critical mass in the next year or two, the Internet will provide us a viral marketing advantage. From a marketing perspective, we look more like a traditional publisher today. In the future, we hope to gain advantage from being an Internet-based company. This will be particularly true as we began to sell to the home market.

We would like to close with your comments on the future directions on istation in terms of technology, products and markets. What does istation have to do maintain its upward momentum?

Reading will continue to be the center of our efforts for next year to eighteen months. We also are currently adding reading content for older students that teaches science and social studies, and is integrated with the reading program. Soon after, we intend to add math.

Longer term, our mission is to provide reading, math, science, language arts, social sciences, and history for all elementary grades. My vision is that a child should leave sixth grade reading fluently with comprehension in English, competent in math and science, and good understanding of the U.S. and its governmental system. Along those lines, as we move into foreign markets, our software will be reflective of those cultures and perspectives.

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George Grayson co-founded Micrografx in 1982 and served as its President and COO through 1992. He was responsible for the company's strategy and operations. In 1993, Mr. Grayson founded 7th Level, a consumer-oriented computer software company with an emphasis on multimedia development tools, edutainment and comedic games. In 1998, he founded istation.com to fulfill a dream and vision. After 18 years of experience growing software companies, he believed that computers should be used to teach children fundamental skills such as reading and math. He believed properly designed computer software could fundamentally improve education and that a technology company would soon step forward to address the problem. Surprisingly, none did. Mr. Grayson's solution is The Imagination Station, an Internet-based interactive education network that features an integrated reading instruction and intervention program that continually teaches and assesses children's progress learning to read.

In 1991, Mr. Grayson was selected by the Dallas Business Journal as one of the Dallas areas 40 top executives under 40. In the same year, he established The George Grayson Foundation whose mission is to help at-risk children. First in 1992 and again in 1996, he received Texas High Technology Entrepreneur of the Year awards. In 1998, Mr. Grayson received a Rainbow Award from The Adam Walsh Children's Fund for his work with NCMEC.

Mr. Grayson is an Executive Member and Co-Chairman of the Education Committee of the Dallas Metroplex Technology Business Council. He also serves on the CEO Board of Advisors for NCMEC and Board of Advisors for the Children's Education Fund

December 2006