A six year old company with revenue of $120m and more than 10% in operating income (more than 15% EBITDA) has carefully invested capital and efficiently managed growth.  They provide innovative services and produce outstanding customer results.   The company is worth 15 times what the owners invested.  They have one problem–they are a K-12 education company.

The company has considered going public (if there was a decent IPO market) but they are worried that disclosure of what in other industries would be considered moderate profitability would invite even more criticism of their work and increased barriers to further growth.  This is one of the reasons there are almost no medium sized businesses in K-12.

The main challenge we face in US K-12 education is quality at scale.  We desperately need innovative, scalable, cost effective learning opportunities of consistently high quality.  But when a company creates them, they are blocked in a variety of ways by defenders of the status quo.

Perhaps the Department’s aggressive push for scaled solutions and the increase in entrepreneurial activity in the sector will dampen the strange phenomenon of embarrassing profitability.

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Tom Vander Ark is author of Better Together, Smart Parents, Smart Cities, Getting Smart and The Power of Place. He is co-founder of Getting Smart and Learn Capital and serves on the boards of Education Board Partners, 4.0 Schools, Digital Learning Institute, Latinx Education Collaborative, Mastery Transcript Consortium and eduInnovation. Follow Tom on Twitter, @tvanderark.

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