Redefining Education in the Age of AI with Amir Nathoo (Outschool)

Amir Nathoo (00:00:00):
I have immense faith and confidence in the lasting value of human-to-human interaction, even when it's enabled, or empowered, or enhanced by AI. And I think there's going to be enduring value from parents. Parents will see enduring value from the idea of their kids spending some of their time, not maybe all of their time, but some of their time talking to humans. And that's not going to change.

(00:00:30):
So I think a focus on humans, you're on solid ground. If anything, you can imagine other aspects being commoditized more regularly, and the value of human interaction relatively going up as a result of AI.

Eric Ries (00:00:45):
Today on the Eric Ries Show, I'm excited to introduce you to Amir Nathoo, the founder of Outschool, the multi-billion dollar online learning platform that connects kids with live interactive classes on just about anything you can imagine, from math and science, to art and coding, and lots and lots of other cool stuff. Their goal is to inspire kids to love learning by making education fun, social and self-directed. And as you'll see in the interview, my family's a fan of the product.

(00:01:12):
If you've ever wondered how a mission-driven company can blend social impact with business success, you're in for a treat. I wanted to have this conversation because Outschool is one of those companies that combines being really mission-driven with having a lot of business success. Amir shares the remarkable story of how Outschool created a nonprofit arm that launched at the height of the COVID-19 crisis, and how it became a source of strategic advantage for the company.

(00:01:39):
I can remember, at the height of the COVID-19 crisis, Outschool expanded its mission to make sure that millions of kids around the world who were stranded in online learning, had a great experience. Outschool expanded its mission to serve the millions of kids who were stuck at home, denied the chance to go to school. They did this by launching a nonprofit foundation that is part of the Outschool ecosystem. Yes, this was a charitable initiative, but it also made the company much more trustworthy, and therefore, became part of its strategic advantage.

(00:02:13):
In the conversation, we also dive deep into the power of aligning profit with purpose, and why he believes that the traditional divide between for-profit and nonprofit companies is, frankly, outdated. Plus, Amir shares his vision for the future of education, and why inspiring the love of learning, not just delivering curriculum, is the key to preparing kids for an unpredictable world. This episode will challenge the way you think about business, education, and the evolving role of technology in both. Here's my conversation with Amir Nathoo.

(00:02:43):
All right, Amir. Thank you very much for coming on.

Amir Nathoo (00:02:45):
Yeah, thank you. I'm really delighted to have this conversation.

Eric Ries (00:02:49):
I want to start with the foundation, because I just think it's a really fascinating story. And I know we're kind of jumping ahead, but tell me about Outschool.org.

Amir Nathoo (00:02:59):
So we founded Outschool.org in March of 2020. In fact, we launched it on Friday the 13th of March, 2020. And that date is seared in my memory, because it was also the date where widespread shutdowns of schools were announced. If you remember that trajectory of the gradual realization-

Eric Ries (00:03:21):
[inaudible 00:03:22].

Amir Nathoo (00:03:22):
... that COVID was a thing, and what the implications were. That was a key date and a key moment. Yeah, we set the foundation up, Outschool.org, in a hurry. So we did it in one week. Now, the only way you set up a foundation in one week is you work with what's called a fiscal sponsor. This is a 501(c)(3) charitable organization that's basically able to take you under their wing, and with their structure, let you receive money, and then disperse money, but without yet having incorporated your own 501(c)(3).

(00:03:54):
So a lot of the times, when tech companies are looking to set up a foundation, and they're either unsure about where it's going or need to do it in a hurry, it's probably advisable to use a fiscal sponsor. We used the Edward Charles Foundation. [inaudible 00:04:09]-

Eric Ries (00:04:08):
Right, we'll put a link to them. Yeah, I've worked with them many times.

Amir Nathoo (00:04:12):
Yeah, who are very experienced at this.

Eric Ries (00:04:14):
Did you donate some of your equity to the foundation, eventually?

Amir Nathoo (00:04:18):
Yes. I donated some of my equity to the foundation. I've also since made financial donations personally. And we have done external fundraising, so it's actually mostly funded by external donors at this point, with very little coming from Outschool, the company. And in fact, we're working on a collective impact project, where we're effectively pooling together multiple different EdTech companies with the same values that we have, about trying to improve access in education, and offering our products together through the foundation. So it's now separate entity, and a collaborative enterprise with external funding.

Eric Ries (00:04:56):
Does it have a role in your corporate governance?

Amir Nathoo (00:04:59):
It doesn't have a role in our corporate governance. We haven't got to that yet, but-

Eric Ries (00:05:04):
But we will. Okay, all right. Well, we'll put that on our to-do list for the future. [inaudible 00:05:07].

Amir Nathoo (00:05:07):
Yeah, but I think corporate governance is an area where we need some innovation to make sure that the future has representation. It's always been a desire of mine to have kids on our board. Well, that's a whole other can of worms, because kids represent the future.

Eric Ries (00:05:27):
But who's more invested in your success?

Amir Nathoo (00:05:29):
Exactly.

Eric Ries (00:05:30):
Over the long term, absolutely.

Amir Nathoo (00:05:31):
You've got to think about boards, and how people view boards, and preconceptions of boards and what they do. And you start to realize the incongruence with the idea of putting a kid on a board. Probably need to put a kid on a board who at first will be socialized into acting like an adult, because it'll really freak out the adults around the table, if a kid was to bring their true selves into a board meeting. But I think the idea of [inaudible 00:05:55]-

Eric Ries (00:05:55):
Well, for another day, but there are quite a few techniques for creating stakeholder representation on boards. And I think to your point, for expanding the definition of what a board does, what does it mean to have a fiduciary duty to the company? When you're a mission controlled company, then the board is really the backstop, the one who's most responsible for ensuring both the coherence of the operation, and its integrity against outside forces. And when you think about it that way, you need the people who are the most aligned with those long-term vision to be on the board. So yeah, we should-

Amir Nathoo (00:06:26):
Yes. You also have the ego of a board. You've worked hard your whole career, and you're now at the pinnacle of success, you get to be a board director. I'm suddenly going to put a kid right there next to me? It really messes with people when you start talking like that.

Eric Ries (00:06:42):
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Amir Nathoo (00:07:39):
It had always been my intent to create a non-profit element to Outschool at some point in the journey, because Outschool is an EdTech company, we're creating innovative EdTech learning experiences, but it's direct to consumer, so consumers have to pay out of pocket. But we knew that when developing new education technology, access was going to be an issue. And I wanted, and we all wanted in our company, because we're so mission driven and impact driven, to enable access, so it was always on the roadmap to do that.

(00:08:14):
But then when we saw COVID about hit, we realized that this was a critical moment in time where so many families were going to be left behind. So if we were going to have a non-profit arm, it had better be right now. Because the need was going to be so acute, and so it was a remarkable case of product market fit. Because we later learned that schools, as they were shutting down, were sending information about Outschool to their families, in part because they knew we had a free option that was being funded through this non-profit arm.

(00:08:50):
And our non-profit arm has on to do other initiatives and other types of work. But initially, it was all about providing free classes on Outschool for kids who wouldn't otherwise be able to afford it.

Eric Ries (00:09:02):
I remember those days really well. I must have fielded, I don't know, 1,000 phone calls from other families, trying to help them with online learning. And Outschool quickly became a vital part of my life, my family's life, and many, many, many other families. So first of all, thank you for that. It was an absolute lifesaver during those dark times.

(00:09:18):
But what I think is so interesting about this part of the story is that we're so used to thinking of the foundation as the .org, as kind of almost like PR, or something you do later after the company's already successful. But here, it wound up having ... it's interesting you used the term product market fit to refer to it, because that's how I think about it too. And yet, usually in the discourse about companies that have a nonprofit component, we only talk about the social impact. We kind of talk about it in vague terms. Here, it was kind of like a vital part of the company's strategy, and provided, would you even say a competitive advantage? That it then allowed these other entities to become part of your ecosystem and to recommend you with a clear conscience? Talk about the business impact of doing that.

Amir Nathoo (00:09:59):
Absolutely. And there was a direct overlap between business interests and personal and societal interests, in the case of our nonprofit foundation. And I think there often is. It's just that I think that people don't look for it. Because they think, "Let's do something nonprofit," it almost taints it, if it also benefits the business in a way. And the only socially acceptable ways that nonprofit work can benefit a for-profit ecosystem is, I don't know, through PR, or through employee morale, and those are real benefits.

(00:10:40):
But if you think about education, access is a feature. It's not just a woke thing, or, oh, only touchy-feely social impact entrepreneurs care about access. A lot of people care about access in education, from policymakers, to families who don't want their kids to live in a bubble, to the people involved in building and in teaching. People care about access. And so treating these attributes, which sometimes can be relegated in our culture as primary features, has been tremendously valuable for Outschool as a business. And I think it's a real blind spot in our tech ecosystem, this kind of division, and this hard division between profit motive and social motive. In reality, as humans, as a society, we have a mix. And I think the opportunities that that presents are under-explored.

Eric Ries (00:11:41):
I appreciate you saying that. One of the recurring themes of these conversations has been that the current way we divide the world between for-profit and non-profit just doesn't make sense. It's truly just about the tax code. What we're really talking about are investor-controlled and self-controlled organizations, both of which have their pros and cons. And when we redefine profit, as we have in a number of these conversations, as the maximization of human flourishing, then this division goes away. We are trying, our purpose as entrepreneurs is to discover a business model that creates the alignment of interest, between the outcomes we want to see in the world and the mechanics of the business model, and how it operates and where the money flows. So that we make a profit when the model works successfully.

(00:12:25):
And then we know, when you look through that lens, there's all these companies ... And you must have competitors. I mean, education is rife with companies that have an exploitative model, where they're just doing whatever they can to make money, instead of really asking themselves, how do we create the alignment such that when we make money, it's because we achieved our mission? And that's all we do. That's the maximization that we're trying to accomplish. And I'm wondering if that framework resonates with you.

Amir Nathoo (00:12:50):
That framework absolutely resonates with me. And honestly, I would never consider founding a company in education, which is so important, and for the future, for my own kids, for society, if we couldn't have found a model which really matches and aligns incentives. Because the last thing I would want to do is to create a company that's financially successful, but creates all these negative externalities. And we see that in so many aspects of tech in other industries, where even founders with the best intention, who start off with, "Don't do evil," or whatever it was, if the incentives of the basic structure are misaligned, then that causes real problems.

(00:13:40):
Now, don't get me wrong. Unintended consequences are hard. So it's perfectly possible that you could've founded something with the best ... and be thoughtful about the structural incentives, and get some things wrong, or new insights emerge. So it's tough, it's tough. I don't want to throw rocks at anyone. But I think, often, founders maybe don't even consider that, or aren't encouraged to consider the societal implications. And the thing is, to do so, isn't about a guilt trip. It's because there's opportunity there, like we found without school at all. You should absolutely consider the societal externalities and attempt to match incentives. If you do, there can be massive benefits for your company.

Eric Ries (00:14:26):
That unrealized upside is a huge loss. I've seen so many companies where they could have grasped that bigger vision, and didn't, or thought they could get to it later, and then there's no getting it later. So I really appreciate you mentioning it.

Amir Nathoo (00:14:39):
But there's this thing in our culture as well, it's almost like founders have to be hardcore in many ways, tough. Right? Because it's really, really hard work.

Eric Ries (00:14:46):
Yeah.

Amir Nathoo (00:14:47):
And people then start conflating this hardcore culture with, "Oh, but what hardcore means is you need to work really hard, and it's going to be really tough times. You need to prepare your team to be resilient and tough. And oh, that means that all this fluffy stuff, you shouldn't care about. Oh, look what happened there." But we've just looped in this whole consideration set, because we want to be hardcore. And it's a fallacy.

(00:15:13):
And actually, it's a fallacy I think about a lot, was what does it mean to be a social impact entrepreneur? When you think about that, when you hear the word social impact, a lot of people immediately kind of switch, "Oh, social impact. This means charity, this means something not scalable, less valuable, less exciting, less fast, less hardcore." I kind of really feel like we need to redefine what being a social impact entrepreneur means. Because what are you talking about social impact? You're talking about changing the world, systemically changing the world. And at times, it can be brutal, because you're going to bring this world kicking and screaming into the future. Sometimes, whether it likes it or not. They need to break down old mental models. That doesn't sound very soft and fluffy to me.

Eric Ries (00:15:57):
It's not fluffy. It's the hardest of hardcore, actually.

Amir Nathoo (00:15:59):
Exactly, exactly.

Eric Ries (00:16:01):
And on the reverse, I have to teach entrepreneurs all the time, they don't process this. It's easy to see in a big company. Whenever a big company does something exploitative, there's some startup somewhere that's high-fiving. Literally, that moment, it's like, "Yes, your bad behavior is my competitive opportunity. You've actually now opened up a liability, and there's now a customer who's pissed at you. So that's going to be someone who's going to be my early adopter." You've created an unfair business model. As Jeff Bezos famously said, right, "Your margin is my opportunity." You've created dis-alignment that someone else can take as a competitive opportunity.

(00:16:34):
And what I think is really interesting, I've worked as a consultant in legacy business also. I've worked with hot startups, but I've also worked some very, very old companies. And every once in a while, I get a chance to work with a company that's up against a real mission-driven competitor, and it's awful. It's so difficult, because here you have a company that's reinvesting every dollar that it makes, that actually cares about its customers. So they're actually really happy, and actually will defend its interests with their own interests. And the most important thing is, when they go to a customer and say, "You should give us your money," they can say something like, "Look, some of the prosperity you help us generate is reinvested into things you care about." Versus, "Those other guys are owned by some private equity. They usually use colorful language, or they're just opened by public market hedge fund investors, and they don't actually care about you. We care."

(00:17:25):
And when the customer believes that that's true ... have you ever tried to do a sales call to a customer where you don't have that, and your competitor does have that? Believe me, it is as hardcore as it gets. It's really, really difficult to pry customers away when there's genuine loyalty.

Amir Nathoo (00:17:39):
Yeah, that's 100% true. And that's a mechanism by which it's a competitive advantage, but it's also misunderstood. Because people are aware that ... you get millennials, or whatever generation you're talking about, their values change, or they value values of the companies they work with, and they make emotion decisions.

Eric Ries (00:17:59):
Oh, yeah.

Amir Nathoo (00:17:59):
So that's in the lexicon. But more often than not, it's like people think, "Oh, they'll grow out of it." Or, "Oh, this focus on values is a passing fad." And I really don't think it is. I think there are deep structural problems in our society which are becoming more and more obvious over time, in part because of the changes driven by technology. And younger generations are reeling from them, and realizing how trapped we are as a society in old, obsolete ways of thinking. And they are applying market power by using their dollars in the traditional way, as well as other forms of power that are pretty obvious, like political, and trying to change.

(00:18:41):
But right now, there's resistance, and there's conflation. And interest rates are high, so we're all back in this efficiency, hardcore world. And everything's changing, but everything's changing back. Or some people think it is, but they are being guided by their own personal uncomfortableness with the change that is inevitable in the general shift in tide that is going to continue.

Eric Ries (00:19:08):
So you're saying it's not just skibidi and rizz, but there's a permanent change in the generations that is actually kind of serious.

Amir Nathoo (00:19:16):
There's permanent change, and there's resistance often amongst older people, including the venture capital community.

Eric Ries (00:19:22):
Certainly. And listen, the companies that I meet, the difference in how much complaining they do about Gen Z, between mission-driven companies and mercenary companies, is wild. It's almost like they're talking about two totally different people. And in some ways, they are. Really, it's like they behave really differently if they feel like the work they're doing is meaningful, versus if it isn't.

Amir Nathoo (00:19:42):
It doesn't seem like a very productive business mindset to be complaining about the culture of your future customers. It feels like maybe you should be listening and learning, and not in the kind of pithy avoidance sense [inaudible 00:19:55].

Eric Ries (00:19:55):
Come on, man. That's crazy. That's crazy talk, now. Listening? Listening to customers, and your employees too? Yeah, I don't know. I don't know where you got that idea.

Amir Nathoo (00:20:02):
Well, listening to young people is kind of intrinsic to [inaudible 00:20:07].

Eric Ries (00:20:06):
Yeah, that's true. You've got a lot of experience with that. I heard in another interview, I think that I was listening to as I was prepping for this, you talked about ... I wouldn't say, maybe disdain is too hard a phrase, too hard of a ... got the right word, but that you don't appreciate people who you said were well-intentioned, talking about double and triple bottom line businesses, but that you felt like ... I don't want to put words to your mouth, but my recollection is that you were like, that when the double bottom line ... it diminishes both of the two halves of what you think should be a coherent whole.

(00:20:36):
So just talk about how you think about profit, and what really is the bottom line for a mission-driven company like Outschool.

Amir Nathoo (00:20:43):
I think the problem with a double bottom line is this idea that you have two goals as a company. You are trying to increase profit, measure it purely financially and have a second goal, is you're constantly pulled in two directions, and the second goal will always be secondary. So it ends up being a bit like a fig leaf. Yes, we track this thing, yes, we report on this thing.

Eric Ries (00:21:06):
Yeah.

Amir Nathoo (00:21:06):
Well-intentioned, and a step in the right direction, but I think we can do better. And I think the way we do better is we come up with metrics that we can use as north star metrics, that incorporate both the scale and financial elements of the business, and the impact elements of the business.

(00:21:21):
And that's why when I talk about our mission, inspire kids to love learning, we actually are attempting to create a love of learning metric. And the inputs to increase love of learning metrics is, how many kids are taking opportunities to influence? How many kids taking class at Outschool, how long are they spending on Outschool? Are they coming back? And that relates to all of the financial metrics, but also, what is the impact of these classes on the kids? Do they report wanting more classes? Or do they report wanting to learn more, and increased happiness and confidence with learning? Proxies for the love part, they're loving learning.

(00:21:59):
I think if we can combine those two together and focus on that as a single north star, rather than this idea of double bottom line, we'll be in a much stronger position. But it's tough, because you're talking about re-imagining company north star metrics to not be the standard ones. That kind of change is tough. We have to do a lot of work to design that metric, figure out how to operationalize it. But I think that's very, very important work.

Eric Ries (00:22:22):
I appreciate you sharing that. You did a really good job of incorporating both aspects, both the maximization and the human flourishing aspect, into one thing. And I think that we've spoken a couple of times in this conversation, but it's been, as said, a recurring theme in these conversations, the power of that alignment. When you get it right, then a lot of these kind of traditional problems that bedevil business is just, yes, it's hard, but there is an upside to it, there's a benefit to doing it. And so appreciate you sharing that.

(00:22:48):
So let's go back. So you've taken this really different path, you've built this company that ... and I think I said this already, but just had a huge impact on my own family. I'm a personal customer of Outschool. I'll give you as many customer testimonials as you could ever need. It's a really wonderful product. And for those who don't have kids, who haven't tried, it's really exceptional. But talk about kind of where it came from. How did you decide to become an EdTech entrepreneur? That's not exactly a field that's known for its kindness to founders, and it's not exactly considered an easy area to build in. So you had a background in technology, talk ... Maybe actually, go back a little even earlier than that.

(00:23:25):
When did you first realize the power of software, the power of semiconductors? What was your first taste of that magic? I don't mean to date you too much, but yeah.

Amir Nathoo (00:23:34):
Oh, wow. The power of software.

Eric Ries (00:23:34):
When did you first get the idea that this could really change the world in a way that is special?

Amir Nathoo (00:23:41):
I mean, the power of software, I've got to go way back. I was very fortunate. I got my first computer when I was somewhere between five and seven. And back then, you kind of had to be on the command line in order to kick off games. And the manual came with a little instruction, learning how to code. And what I loved about programming and that process was the immediate results, and how you seemed unconstrained by the laws of physics. And the speeds of learning and iteration compared with other forms of learning was addictive.

(00:24:14):
So I got addicted to creating, and seeing immediate impact. And that ultimately translated into a career in software, and then starting my first company. Because I saw parallels, the joy of creation in software, and the speed of iteration, and the speed of seeing at least some initial results, I felt was also there in software entrepreneurship. Or maybe double, or quadruple in software entrepreneurship.

(00:24:47):
But then, how did I come to Outschool? Well, my first company was acquired by Square. And I left Square in 2015, and I honestly didn't know what I wanted to do. It wasn't clear to me whether I wanted to found another company, because I knew how hard it was. But one thing I did know was that, knowing something about how to start a company and how hard it was, the only way I was going to even consider doing that was if it was really, really personally meaningful to me, and as well as having the potential to have world-changing impact. Because honestly, otherwise, I'd rather have an easier life, if those two criteria couldn't be met.

(00:25:28):
But then the other reason why I started looking at education was, I didn't have kids then, but I knew I wanted to have kids soon. And so I was also facing this situation where if I was going to start another company, I was going to then have kids, and I knew how doubly hard that would be, to be founding and running a company, and having young kids. And so I wanted to integrate my life. I didn't want to be working on something that was completely unrelated. I wanted something maybe my kids could use. And that's what really got me reflecting on education, and got reflecting on my own education, and some of the systemic issues that I saw, even having got a fantastic education in the UK. And I could talk more about the specifics of that, but that's what led to Outschool.

Eric Ries (00:26:15):
You were a good student, you had a good education, you went to good schools, you were a good student.

Amir Nathoo (00:26:20):
I loved school. I did well in school. I got fantastic grades. I didn't necessarily like the social environment, for various reasons.

Eric Ries (00:26:29):
Tell me-

Amir Nathoo (00:26:30):
And then I studied engineering at Cambridge University. I got about the best possible traditional education that is possible to get in the UK. But reflecting on it, thinking about how much of the skills and knowledge I use from my formal learning, versus how much of an influence my parents had on me, and their willingness and ability to help me pursue interests like programming, talking business ideas around the kitchen table, I realized, yes, there's plenty I got from my traditional education, but there's this big other part that seems ludicrously undervalued by our society.

(00:27:06):
And I was fortunate. Both my parents were teachers, and they really believed in helping me pursue interests. They didn't help me learn how to code because they thought it was going to be valuable. No one knew how valuable ... they thought it'd be good to help me pursue interests. And it turned out to be valuable. I just realized there was something really, really missing in our conceptual model of education. It's far too narrow, far too focused on the traditional institution, versus what happens outside of the school. And I set out to explore that and change that.

(00:27:37):
And you mentioned earlier, education is regarded as a tough market for entrepreneurs, but that was honestly part of the appeal for me. There's something about this market that's really, really hard to crack. Plenty of tech people come into education, people with glittering track records, amazingly smart, highly motivated, plenty of funding, and failed, or not achieved their ambition. But in my view, that meant you had to take a different approach. Unlikely that they're just executed badly en masse. But there's also something about this domain, which was odd, and was probably incongruous with the typical way that we build companies. There's probably something wrong, not just at a product level, but some structural level that made this a really, really tough market crack.

(00:28:27):
It's also a market where the pressure's been building, like satisfaction and trust in schools are going down and down, down, yet behavior is kind of struggling to change. So it seems like pressure's building. And that, to me, sets up a situation with the potential for explosive change and explosive growth, which is I think what you should be looking for when you're thinking about startups and disruptive change.

Eric Ries (00:28:51):
So what were you specifically tuned into at the beginning? When you formulated the vision for Outschool, did you see it as a replacement for education, for traditional education? Did you see it as something that would be sold to school districts? How much of the model did you understand at that time? And what were you trying to achieve, compared to ultimately what the vision became?

Amir Nathoo (00:29:11):
So we didn't have a mission and vision at the start. In fact, we consciously resisted having a mission ... It was one insight about the space looked at [inaudible 00:29:20]. So many people have tried coming in here with these theses that failed. So we were very suspicious of coming in with too solid a thesis. It was like, "There's something about this that's fishy, and traditional entrepreneurial practices don't work. So what we're going to do is come in with some principles that we think are kind of fitting at a structural level."

(00:29:38):
One of those principles was, we're going to take a marketplace-based model. Because marketplaces provide a tremendous opportunity for experimentation through the variety and choice. And also, we've seen marketplace models transform other industries, like Airbnb in with hotels, and Uber and Lyft with rideshare. It seems incongruous that you could just click a button and solve such a logistically complex problem as getting a shared ride, but you couldn't click a button and solve a logistically complex problem like having a shared class. So [inaudible 00:30:13] marketplace model.

(00:30:14):
And then I learned about homeschooling. And in particular, secular homeschooling in the Bay Area. And it was completely different from what I had thought, and what most people had thought, in terms of how people are doing it. And I saw the link with traditional disruption theory. This idea that if you're going to find pockets of innovation, that have the potential to transform an entire domain, they're likely to be happening at the extremes of the market. And the fact that secular homeschooling was so misunderstood ... by secular homeschooling, I mean homeschooling that is not primarily for religious reasons, like everyone assumes. And this is, in fact, the majority of homeschoolers. But in fact, for other reasons.

(00:30:53):
So we had this laser focus, "Okay, what we're going to do is we're going to create a consumer marketplace of learning experiences, and we're going to target secular homeschoolers. And we're not going to come in with a mission and vision. We're going to learn, and we're going to iteratively arrive at a mission." Now we have a mission and vision, but how we started was a very intentional unstructured learning process.

Eric Ries (00:31:13):
When did it crystallize for you, what the mission and vision were going to be? At what point did you say, "Okay, now we got it"? What were the signs you looked to, to say, "Yes, this is the time to settle in and tackle this long-term problem"?

Amir Nathoo (00:31:26):
So at about 25 people in the company, and at that point, series A stage, having raised about $20 million and having tens of thousands of customers, I felt we were starting to get enough initial data about how we should focus. And I also realized that, similar to the motivation, the start was very important not to try and get too specific or narrow in our mission and vision. That in order to create a great company with very high impact and potential, we actually had to go with almost the opposite way of traditional startup philosophy, and stay very high level, and enable this very, very large playground underneath it.

(00:32:16):
And people get surprised, when we talk about mission, it seems so big, and worried about lack of focus. But it's precisely that breadth in our marketplace, and that willingness to go wider, that has been the result that has caused our success, and I believe makes our model far higher potential in education. And what we saw, what we learned from those secular homeschoolers was they were going off in all these different directions. There wasn't an overarching philosophy.

(00:32:42):
Some are unschoolers who believe in very unstructured learning, to the degree of not imposing any kind of limits on their kid. I met one unschooler dad who just wrote down every single question his kid asked, and that was the curriculum. It's like, go back and go through all the questions the kid asked. And then you have academic homeschoolers, who essentially are trying to recreate school at home, and maybe they weren't happy with the quality, but they essentially want the thing, but they're just not happy. There's a eclectic homeschoolers, who borrow from these different philosophies, but maybe aren't on the extreme ends of the spectrum. It's a multidimensional spectrum, with everyone going off in all different directions.

(00:33:24):
And I realize, that's incredibly valuable for the future of learning. Because A, I think if you help kids pursue unique learning paths, then you can actually have a chance to keep them inspired throughout their learning journey, keep them engaged throughout the learning journey. And a key problem that the one size fits all education system faces is, every kid is different and their needs change with time. And I think if you really internalize that, every kid is different, so their needs change with time, you start to realize the problem here. It's a problem of mass personalization. Not like choosing A, B, C, or just going through a limited choice work solution. Trying to create limitless journeys through human knowledge. That's like, "Oh, wow, that's what's going on here." And that's where we need the whole education system to go.

(00:34:15):
But then the problem emerges, well, but how do you put a container around this? It needs to be a really large container to [inaudible 00:34:23]. How are you going to assess whether you are making progress? Because obviously, within a particular subject, particularly when a traditional subject, like math, okay, we can have some standards, we can have some tests. But if you're now saying, actually, you want to create a breadth of learning experiences that's far greater, then what do you do?

(00:34:42):
And then we looked at what homeschoolers were doing. We started realizing, "Oh, engagement is the thing that they're doing." That's what runs across all of these. This is why they're letting their kids have this greater freedom and flexibility. Engagement is the big problem in education. By the way, Duolingo has figured this out. Now, they are a particular form of education. But engagement, it's like, no matter how good a teacher you have, or how good a curriculum you have, if a kid doesn't want to do it, you're never going to have an impact.

(00:35:13):
And this is why I think Khan Academy and Sal Khan have done amazing work, but I think the critiques of how they're measuring impact are valid. The facts that they're only measuring the impact on the 5% of kids who engage with their content, and excluding the 95% from the study. That's the whole problem, the exclusion of the 95%. That's the thing.

(00:35:36):
And we realized that the most important thing in education, and what we learned from these homeschoolers, was love of learning is the most important thing. If you could inspire kids to love learning, and that is our mission, then you have succeeded in education. And this is more relevant than ever. Because if you believe we're in a fast changing world, and the world in 20 years' is going to look completely different from now because of AI, then it's complete hubris to assume you can design a perfect education system that's going to deliver them exactly the skills and knowledge that they need in 20 years' time.

(00:36:08):
What you need kids to be able to do, if you care about their happiness and success in this fast changing world, is to have the confidence and skill to pick up whatever skills and knowledge they need, at the time they need it. And how are you going to do that? Increasing love of learning. If you can increase love of learning throughout this learning journey, develop the confidence, the experience to learn, then you've won. And that's where I think the whole education system needs to be re-anchored to, to love of learning.

Eric Ries (00:36:39):
So I can tell already that we have people listening who are reacting in three different ways to what you're talking about. You're talking about three incendiary and really interesting topics, and I want to get to all of them, and I want to weave together how they relate. So let's do them one at a time, but just to lay it out, because I know some people will be like, "Why isn't he asking about this?"

(00:36:57):
So one question that we got to talk about is, what on earth are you talking about as an educational philosophy? People who have not experienced this new secular homeschooling, who have not been exposed to this totally different way of educating kids ... to me, it's a really fascinating topic, because this is actually, people think it's so modern and radical and new, but of course, this is one of the oldest forms of education that has existed in human history. Aristocratic families have had access to this elite kind of education since time immemorial, but it was always restricted to an extremely small population. And the idea of a one-size-fits-all mass production of education is actually a relatively new phenomena.

(00:37:31):
So I want to talk about what you were seeing and maybe you can tell some stories about, what is this new kind of education? And how does that relate to Outschool's mission? Because I think some people might be thinking, "Wait a second, are you only serving those few people?" That's not compatible with how big Outschool is, because it's become huge. So it's obviously reaching a lot of people, including a lot of kids who are in traditional school. So that's one thing I want to understand a little bit more about. What did you learn from about the educational system, and the kind of educational experiences that promote this level of learning?

(00:37:59):
But then other people are like, "Well, I don't want to hear about that. I want to understand, how on earth do you build a company with such an expansive and broad mission?" Because of the conventional wisdom in startups, narrow, narrow focus, small, small, small, narrow focus. Here, you have this unbelievably expansive thing you're trying to do. How have you built a company around that? And obviously, the future and AI, what that's going to mean for education is a huge, huge topic in itself.

(00:38:22):
So while we're here, I feel like let's just dive in a little bit, tell the story a little bit more about what were you seeing in those education early adopters. Because your story, Outschool is just such a ... I might even start using it as my textbook example of this concept that is very hard for people to master from the theory of disruptive innovation, called competing against non-use or disuse, sometimes people say, which is, don't go up against competitors where there's already a product that's okay. Go find people that cannot use the current product, or are refusing to use the current product at all, and they have nothing.

(00:38:53):
So when you show them your product, yes, it's an early adopter. Yes, it's a beta. Yes, it's an MVP. Yes, it's missing this feature. And so compared to the other products, it's not as good. But compared to absolutely nothing, actually, it could look pretty good. And that is one of the central mysteries for people who've never started a company before is, how on earth do you ever get so crazy, how could you ever convince a normal person to use a product from a startup, when they could just get a perfectly good product from an established company? Why would you ever take a risk?

(00:39:20):
And certainly, okay, I get it if you're selling candy, maybe. But if you're selling education for your kids, how could you ever take such a risk? Of course, the solution to that problem is this disruptive theory concept of competing against disuse. So talk about what it was like, competing against disuse. And what did you learn, both about the product, but about what the education system needs, from that experience?

Amir Nathoo (00:39:38):
Oh, there's so much to unpack here. But I think one thing to start with, I think it's true, the way I'm talking might seem radical or different, but honestly, it's just the disruptive innovation playbook applied for education. It's just that. I think the problem people have is, it's with the disruption playbook, because it's easy to say, it's very hard to do.

Eric Ries (00:40:03):
Explain.

Amir Nathoo (00:40:03):
And it's very hard to stay true to it, especially in a field that's so emotive as education, especially since so many people are anchored in what they experience. And if you're anchored in what you experienced rather than the future, you're anchored in the past. And so it's so, so tough. And people have come in with these preconceptions, or they come in with these ideologies. Have you noticed how a lot of VC-backed EdTech startup is founded by these libertarian-minded VCs who've got rich and want to give back, and don't believe in donating to nonprofits, and they all fail?

Eric Ries (00:40:40):
My kingdom, my kingdom for a contrarian that actually tries something original. Okay? My kingdom for that. I know exactly what you're talking about. That's very funny.

Amir Nathoo (00:40:52):
And I think it's this subtle ... I mean, it's kind weird though. Because you could kind of see, if you're wedded to a libertarian ideology, you love this marketplace thing that we're talking about. But I think if you're coming from an ideological perspective, you're missing crucial pieces. And we came from a very blank slate observer perspective, as I was saying. So, well then, how do we learn?

(00:41:11):
Well, I mean what was really surprising, working with these homeschoolers in the early days, was how dynamic they were. And this can be dynamic in terms of how much they were moving around, going from an online class at home, to self-study in the park, to while they wait for the field day, which was a social occurrence, to then a museum visit, to then coming back for a tutor.

Eric Ries (00:41:42):
Home schooling is really a misnomer, because they're not even at home.

Amir Nathoo (00:41:45):
Yeah, exactly. And all the stuff about socialization is kind of laughable. We could tackle that, because it's not actually that the kid is home. Homeschooling is actually a bad word, which is why we called the Outschool. Homeschool is not descriptive.

(00:42:01):
But it was just so dynamic, and so intentional and choiceful. And for us, for many of the homeschoolers that we work with, really were partnering with their child to develop this learning. So the child's much more involved in actually constructing how they're going to use their day. And if the kid really loved volcanoes, because kids do this, they get obsessed about one thing. But rather than trying to combat that and say, "Oh, we're only going to do volcanoes for 30 minutes, then we really need to do some math," these families would go with it. And say, "Okay. Well, let's study the history of volcano eruptions. Let's study geology. Let's talk about pressure and heat, like physics. Oh, we might need some math to be able to reason about pressure and heat. So let's talk about mythology of volcanoes."

(00:42:56):
You can pick a topic. And if you're creative, you can kind of weave in all the stuff that we consider in traditional education. But instead of grouping it by the traditional subjects and the traditional categorization, you were going, always intend to, as a primary concern, you were going with kids' interests. And guess what that does? Increase engagement. Guess what the main challenge in the education system is? Engagement. So we started to map these observations about what we're seeing [inaudible 00:43:25], "Oh, wow. These families are solving key issues in education."

(00:43:30):
And we always built the company aspiring to take what we learnt in this early [inaudible 00:43:36] homeschoolers, and make it much, much bigger, and let everyone access it. This is not the case that we expected everyone to become homeschoolers, but homeschooling has in fact grown, and not just because of the pandemic. But we expected to kind of package up these learnings and insights, and build products based on those insights for a much wider audience. And that's how we've got a lot bigger.

(00:43:57):
But I think one thing that has been really surprising on the way is that I assumed that we were going to have to then start appealing to and building products for this wider audience of parents with kids in school, and kind of build kind of an on ramp to this kind of thinking. Make people realize, on the side, by using Outschool as a supplement, that there's this new and different way to think about your kids' education, and you have more choice than maybe you realize.

(00:44:31):
But then I thought it might be a 20 to 40, to 50 year journey to really transform the whole education system, but it's happening much faster. Homeschooling is growing faster than I expected, because of the challenges in the existing system, combined with the new insights that families have had through COVID. And there's now a burgeoning alternative education ecosystem, which is not just homeschooling, but it's like the micro-school movements, and other novel forms of learning. There's now a whole conference that's been running for three years at Harvard, called Emerging School Models, which is talking about this. Harvard talking about this, what was previously this odd niche, off to the side, that really only connoisseurs of education experiences knew about.

(00:45:20):
The change is happening faster than I expected, because of, unfortunately, the critical problems that we have in our society and in our mainstream [inaudible 00:45:28].

Eric Ries (00:45:29):
One of the problems that ideological founders, and I don't mean just mean political ideologies, but really, people who come into entrepreneurship with a preconceived idea of what the solution must be, they often run into this problem, where even when they get it right ... Obviously, sometimes, your theory is completely wrong, and you just collapse. In education, I won't name names, but I personally know of quite a few companies that just went straight to collapse.

(00:45:53):
But then there are some that survived that initial stage, and they managed to find that early adopter community, build an MVP, they get something working. But then they can't cross the chasm, the famous phrase, because they're pissing off the people they need to be their allies. And what I think is really notable about your approach, has been, it's very ecumenical. You never said you have to homeschool, you never said it's only for people who believe in this theory, or that theory of education. And as a result, you have customers ranging from the most wacky theories of individually personalized education, and you have families who are in public schools, who do Outschool on the side.

(00:46:27):
And as you said, in COVID, you even had school districts, who if you had been an anti-education, anti-teacher, anti-public education zealot, they would never have felt comfortable recommending your product. They would've seen you as the enemy. They were able to see you as an ally, to help them and their students in their time of need. Talk about just your willingness to embrace many of the different factions in this very contentious world, and how that's helped you.

Amir Nathoo (00:46:53):
And I'll talk over to this, but I'll say it's hard. Cross the chasm is hard. And dealing with many constituents and many different points of views is really, really hard. So I wouldn't say we've got it figured out yet. I cast some gentle stones towards our libertarian friends, but I have ideologies, right? We all do. We all have our politics. But I think if you anchor in the future, you start to realize, the ideologies of the future and the ideological battles of the future are probably quite different than today. And we probably need new ideology in the future. It's going to borrow parts from all of these fields. So that's the positive view.

(00:47:34):
The alternative point view is, we piss everyone off equally.

Eric Ries (00:47:37):
Yeah, I'm sure would too. Yeah.

Amir Nathoo (00:47:42):
Because the libertarian-minded folk love the fact that we're a marketplace, this choice. And then, socially-minded folk love that we have a non-profit, and that we offer identity-based social crops for kids. And we focus on full history, including Black history, and insisting on the certain aspects being [inaudible 00:48:03]. So we're a confusing amalgamation of these ideologies. But I think it's appropriate, because I think there's things to learn, and there's benefits to elements of all of these ideologies. But the future is going to be different, and we need to pick the appropriate parts of these ideologies for our situation, rather than being anchored in.

(00:48:22):
I too read Ayn Rand when I was 17, and some people never move on from that. And it's really important to hear different perspectives.

Eric Ries (00:48:30):
Me too, me too. Yeah. And it's not wrong. I think what you're saying makes a lot of sense, that the truth is bigger and more multifaceted than the human mind really can comprehend. And so if you're really trying to find what's true in any given situation, you're almost guaranteed to be pissing people off, because the truth is richer than any human theory can encompass. That's part of what makes it incredible, and that's part of what makes it worth seeking after.

(00:48:58):
And I appreciate that you've been willing to embrace that, even the contradictions of that, where life might've been easier at certain points. Just ally yourself with a certain faction, or just kind of retreat into that less truthful, but more comforting, view of like-minded contrarians who all think the same thing as you. I get why people do that. It's a lot of fun. You get people constantly patting you on the back, but then you're getting away from the truth.

Amir Nathoo (00:49:21):
Yeah. Yeah, I think that's right. The pursuit of truth, but also the pursuit of truth, not as a destination, but as a journey, and not of a single truth. I think that's the very, subtle [inaudible 00:49:33].

Eric Ries (00:49:33):
Okay, so now we're veering into philosophical territory that is normally reserved only for individual people. An individual person can be truth-seeking. An individual person can contain multitudes or have an open mind. And it's kind of easy to forget, because you're so thoughtful about how you talk about it. But we're not talking about your personal journey, we're talking about the journey of a company, an organization. And I think there's some people, are like, "What does it mean? Does it even make sense to talk about a organization as truth-seeking, an organization as encompassing this kind of vision?"

(00:50:08):
So talk about how you've instilled those values into the company, and put the company on a path to have this really big dream, that the collective of your employees are dreaming together. What's that been like?

Amir Nathoo (00:50:22):
Yeah. And as with everything, it's work in progress, and we're early. One thing that really ties our company together is our first value, which is, stand with learners. And that mission of inspire kids to love learning. And stand with learners is obviously related to inspire kids to love learning. But the first version of that was stand for something, by which I mean, have a purpose that's bigger than profit and sustainability. Inclusive of profit and sustainability, but more, so stand for something. And then, what is it that we stand for? And it's, we stand for kids. Those are our ultimate customers, really anchoring us in the ultimate customers.

(00:51:08):
And it seems kind of obvious, but again, it's hard to do, because kids, their voice is the quietest in education. They have the least power in our society. And so unless you intentionally stand with them, stand for them, your company, your organization in education is going to be pulled in different directions. So we really anchor on that.

(00:51:34):
But then there's a tremendous variety, and debates and different opinions about what does it mean, and how to get there. And it's one of the big advantages, and disadvantages, of having such a big playing field, is there are many, many ways that you can get there, and you've got to pick one. So I think having such a broad vision and a big tent, you need to be really good at prioritization, at focus, and about explaining a sequence of steps together, because you can't do everything at once. And that's one of the downsides.

(00:52:09):
And honestly, it's a downside we haven't been as good as we could have been in tackling, and we're getting better and better at all the time. So that's how I think about it. We've got this very, very broad tent and wide playing field we can play in, that people are very, very passionate about, and I think that creates magic.

Eric Ries (00:52:29):
Tell us about some of your operating principles. So how does that work in practice? How do you get people ... how big is the company now?

Amir Nathoo (00:52:35):
So we're about 100 people.

Eric Ries (00:52:37):
Yeah, so at 100 people, you're already past the stage where you as the founder can supervise and micromanage every individual thing. You're past the phase where everyone knows what everyone else is working on. You have the possibility of cultural drift and factional disunity, even within the context of the company. So how do you create that sensation of alignment, to make sure that the product you're putting out actually reflects your values?

Amir Nathoo (00:52:58):
Absolutely. And again, I don't think we've got this nailed. It's very, very hard. But I'm talking about radical ideas, but we have a pretty traditional operating model inside the company, in the sense of we have managers, we have executives, we organize by function. So we're borrowing all the traditional tools of company building. And those can be really helpful for clarity, for focus, for accountability, which is what's needed to build things.

(00:53:26):
And then we innovate in some areas, like having this nonprofit arm that created tremendous product market fit at the pandemic. And we also do some innovative things with titling. So we don't have traditional titling structure, because we want to emphasize how people at all levels in the company contribute, and how good ideas can come from anywhere, and to remove the kind of weirdly detailed and militaristic titling that some other companies have.

(00:53:57):
One thing that I struggle with a bit, and I think anyone who's trying to build a different future struggles with, is the right balance of using old world strategies and techniques, because you've got to live in the current world while you try and try and build the new world. I constantly struggle with that balance. But a lot of it is standard company building tactics.

(00:54:21):
I wish there was a way, though, that we could accelerate how we think about company building, in particular. And help people understand that when you're trying to create a different future, particularly in an area like education, it's not going to work to operate, in many cases, in the same way as we have in the past. And I think in tech, because we work in environments of such uncertainty and risk, we get a little bit too anchored to things. "Ah, we can hold onto this. We have our playbook for executive hiring." And much of it's good. It doesn't all need to change, but I think we're a little bit too reluctant to innovate, and a little bit too ready to do what everyone else is doing, or follow along with whatever they're saying on the All-In Podcast, because we don't want to think for ourselves.

Eric Ries (00:55:11):
Step into my office, my friend. Yeah, that's exactly right. And listen, that's the reason to do this podcast in the first place, is first of all, to develop a new playbook, and to show how ... I feel like there's so many companies like yours that are doing exceptional things by themselves. And everyone feels a little bit alone. Why am I different? Why am I strange? And while I have the privilege of being in this view where I get to meet companies that have these deep commonalities, and yet, we don't have names for these concepts. We don't have a common playbook, we don't have that.

(00:55:43):
And so of course, part of it's developing these practices and learning from each other. But I think part of it, the higher level thing that's bedeviled me ever since I entered this industry, gosh, more than 20 years ago now, is just to start to have more of an open mind, and to put the truth at the center of our so-called best practices, so that we're always evolving and learning and getting better. And we don't rest on our laurels as an industry or as a sector, to say, "Okay. We've got everything figured out, so now we're done." To me, that's the death of really, really, truly doing the kind of innovation that will have the really big changes, the really big structural impact, the new civic infrastructure that will power the society of tomorrow. That's what's needed.

(00:56:22):
And because of the exponential advance of technology, we are going to be the stewards of that change, whether we do a good job or not. It's coming no matter what we do, so we may as well get good at it, and we may as well see what's happening now as the preseason. This is our chance to experiment and test out, and try to get ready for having to rebuild so many of the institutions of society, as we're watching them collapse before our eyes. And we need that new infrastructure.

Amir Nathoo (00:56:47):
Exactly. And I feel my biggest constituent is the future. I worry about the future. I want my descendants to look back ... and obviously, whenever you look at ancestors, they're going to make a ton of mistakes from your perspective. But-

Eric Ries (00:57:03):
Of course.

Amir Nathoo (00:57:04):
... I want to feel like, today, we're doing the best possible job, me individually, as a company, and then as an ecosystem, to be stewards of the future. And when we talk about duty and responsibility, I don't think we talk about duty and responsibility to customers, to investors, to our employees. We also need to think about the future.

(00:57:26):
And if I might be so bold to make a suggestion, I love the ideas that you're sharing about putting truth at the center. I think we might need a different word, because truth is often used as a cudgel. These people aren't willing to accept the hard truth, and, "I'm the one to tell you."

Eric Ries (00:57:44):
I know. Yeah, that's right.

Amir Nathoo (00:57:47):
[inaudible 00:57:45] a ton of people like that. That's not actual truth-seeking. That's not actual truth-seeking. That's someone thinking they're right, and they have the truth, and they've uniquely found the path to the truth. [inaudible 00:57:59].

Eric Ries (00:57:59):
No, I think that's so right. One of the most eye-opening experiences for me was working with a very, very visionary founder I won't name, but someone who's gotten a tremendous amount of publicity, is known for their incredible vision. And watching some of the, really frankly, nefarious things that they did, that were not super villain-type stuff, but just kind of the little things that give you a sense that this person just has a kind of callous disregard for the people around them.

(00:58:26):
And one of their former employees sought me out and said, "Look, I need to warn you about this person, before you get too deep with them." And I said, "Oh, what's the problem?" He said, "Listen, he doesn't do what's right. He makes what he does right." And that phrase really has stuck with me. I've seen that personality disorder in a lot of founders, where it's like retroactively justifying whatever you did as the truth, as what was right. And then using that to ... basically using polarization to then force other people to take a side, for you or ...

(00:58:55):
And that whole playbook, listen, you can't knock demagoguery, because it works. But the ancients warned us about demagoguery, not because it doesn't work, but because it works, and because it works is why it's dangerous. That's the problem. So I really appreciate you calling that out, because you're right. When we say the truth, are we talking about my truth, your truth, the objective truth? It's actually very tricky. And no matter what word we use, no matter what concept we try to put at the center, we're missing out on the truly multifaceted and complicated nature of reality itself.

Amir Nathoo (00:59:26):
I love that phrase, the multifaceted nature and complex nature of reality.

Eric Ries (00:59:31):
Yeah.

Amir Nathoo (00:59:31):
That's what we should be trying to understand and play with, if we want to build the future.

Eric Ries (00:59:35):
And that's what the scientific revolution was about, that's what so many spiritual teachings are about. That should underlie the way that we build organizations. And I talk a lot about organizations as super-organisms, like they're literally alive, and they have their own moral compass and their own sense, their own kind of north star that drives them or attracts them toward some destination. And so we have to educate them as much as we have to own them, which is such a strange thing to talk about. But if you've been a founder, you know what I'm talking about. It's much closer to parenthood than you think, especially when you're younger and you've never had the experience of having kids, you don't appreciate it. But you're guiding and teaching and educating, and trying to instill this sense of purpose in this thing.

(01:00:16):
And so the big question in entrepreneurship ... we talk a lot about public policy. What should companies be allowed to do, or not allowed to do? We have a big fight going on right now about, should we be lobbying the government to have less regulation, or more regulation? The AI safety debate obviously becomes super-polarized around these dimensions. And because it's so focused on what we should be allowed to be doing, we're avoiding this unspoken sentiment that companies should do whatever they're allowed to do. As exploitative or evil as it is, do as much of that as you want.

(01:00:48):
And I think as entrepreneurs, we've got to be asking the question, what ought we to want to do? If we actually could write the rules of society our own way, what would we want it to say? And what do we want the rules of our organization to be?

Amir Nathoo (01:00:59):
Yes.

Eric Ries (01:01:00):
Does it really, really make as much money as you can by getting away with whatever you can? Does anyone really wake up in the morning and be like, "I am so motivated to go exploit the hell out of my fellow human." To me, that just doesn't actually seem like it aligns with what is deepest in most people's hearts. And so when we do that, we're actually missing out.

(01:01:18):
We were joking about Gen Z earlier, but you're missing out on this massive wellspring of human motivation, and the incredible competitive advantage of being trustworthy. Because someone who's sociopathic like that can never earn the trust of their customers, or their employees, or their investors, for that matter. So I don't mean to get on my soapbox here, but I wonder if that resonates with you as a leader. You obviously grapple with these issues a lot. How does it strike you?

Amir Nathoo (01:01:42):
It absolutely resonates with me as a leader. There's so many elements that's come to mind. But to talk about some of the societal elements, and the role in governments and tech, there are a lot of discourse in tech, like, "Ah, the FTC is interfering too much," or, "This and this tax regulation, or proposed AI regulation means we're going to lose against China, or it's going to disrupt the ecosystem." And I think it's good to have a debate about what the role of government is in tech. But I also think there's a huge missing ... and it's good to recognize that if we're trying to disrupt, if we're trying to create radical change in all kinds of industries and institutions, that it's natural that government will want to get involved and put limits on it. And then there's arguments about how and why that should happen.

(01:02:32):
Well, that's natural, but I think there's another limiting factor to disruption, which is underappreciated, which is incentives within the financial model of the ecosystem. And investors love to kind of criticize government for their interference in tech. And I love our investors, this is not a critique on anyone in particular. It's a systemic critique. Investors are limiting the scope of the disruption. If there's any form of disruption that cuts a bit too close to their incentives and how the investment model will work, man, you'll never, ever see anything quite as ... the resistance. So we're allowed to disrupt everything, but not things that touch too closely to our financial system, and specifically, the ways that we do our innovation ecosystem.

(01:03:21):
And it turns out, our innovation ecosystem touches so many elements of our society. So it's not even just like, I don't know, creating a new Y Combinator and disrupting the investment cycle. And you start to realize that, also, investors are applying their own ideologies to their investment decisions. You can't help bias, so you can't critique that. But investors are applying, intentionally in many cases, their personal ideology, and not just focusing on returns. And that's limiting the scope of the disruption that can happen. And I think it's causing tremendous damage for our ecosystem, and tremendous damage for the world, and insofar as they're wrong, and not seeking this multifaceted truth.

Eric Ries (01:04:07):
Yeah, some days I wake up and think, "Man, investors rule everything around me." And whenever I see mysterious behavior now, my first thought now is like, "Let me see how this is related to the incentive of investors," or not even the real incentives of investors, but often the perceived. There's this gravitational force around what people think investors might want in the future, and it's so pervasive.

Amir Nathoo (01:04:31):
Yes.

Eric Ries (01:04:31):
And I've seen so many companies limit themselves in this kind of foolhardy desire to make themselves more attractive to investors, forgetting that the thing that really makes you attractive to investors is that the thing is working.

Amir Nathoo (01:04:41):
Yes.

Eric Ries (01:04:42):
The boldness, and the contrarian thing, the newness of it, that's what makes it ultimately attractive. And unfortunately, the human psychology of investing, for too many investors, is they don't have independent conviction. So they're terrified of backing something new, and therefore, won't invest in it. And then the second it starts to work, they get greedy and want to just hyper-maximize that small thing.

(01:05:04):
So actually, it's one of the things I wanted to ask you about is, as you've started to have success, especially as you started to get that niche homeschooling product to work and you started to think about going out to this mass market, was there a moment when you felt that allure or that pressure from investors? Or maybe even from prospective investors, to limit the scope of your ambition, to just race to make that one piece of product market fit work, and make as much money as possible by exploiting that one niche?

Amir Nathoo (01:05:27):
Well, I think the good news is, is that the fundamental incentives of our business model are aligned. So actually, I haven't really felt that pressure. As you can tell, I'm very ambitious for the size this could be. And I have a strong belief that there's immense social good, because with scale comes this tremendous variety of learning experiences that we can provide, which makes the product better. And so all this traditional network effects advantages of a marketplace, I believe, provide social good.

(01:05:56):
But if you were to imagine a version of Outschool which is more peer to peer, or open source based, you'd have a big problem with trust and safety-

Eric Ries (01:06:03):
Right.

Amir Nathoo (01:06:03):
... if teachers and kids were connecting. So there's actually strong social value in this being centralized, but then we need to ensure good governance. How are we assuring that safety? And think about, maybe we should have a governance body that's separate from the traditional corporate structure, to ultimately control curriculum decisions, and all the edge cases when you're dealing with mass scale education policy, which is effectively what we aspire to do.

Eric Ries (01:06:25):
Well, luckily, you already have a foundation, so you're one step on that direction.

Amir Nathoo (01:06:29):
Exactly, exactly. So the good news is, there's an immense [inaudible 01:06:36] with investors. And I'm very grateful for our backers, and we're very fortunate to raise a tremendous amount of money. It's intentional, I think it's useful. So don't get me wrong, for a business like ours, we absolutely want investors, and I love them. But the critique is more structural.

(01:06:51):
And specifically, I think investors can be a little bit too married to their own playbook of what they've seen work before, or the pervading memes going through the collective investor mindset. And there's value in those memes, because this is like a sensory organ that's sensing everything, [inaudible 01:07:10] ecosystem trying to apply it. But then there's an art in figuring out how to apply or whether to apply it in specific circumstance. And this is where I think the balance between the investor and the founder, CEO, comes.

(01:07:23):
And I think, sometimes, investors do know more than founders, in many cases, because they've seen a lot of companies, but then are overconfident in their prescription. They do have that pattern matching from lots of data. They do not know the domain, they do not know the specific company, they do not know the situation. And I see investors being too quick to judge what's required in a situation, when it comes down to execution. [inaudible 01:07:49].

Eric Ries (01:07:48):
Yeah. You used the key word, which is alignment. I think when a business model has true alignment in it, a lot of these issues are solved by the fact that that alignment starts to generate its own new gravitational field that pulls people to the right answer unconsciously, and is able to then resist the siren song of the more conventional answers that are outside. So I think it's a testament to the fact that you've been able to design this in such an intentional way, and to really create that alignment. It's what's making your experience different than a lot of other founders, which I think is no coincidence.

Amir Nathoo (01:08:17):
Yeah, but I'd say it's tough. It's tough. This is the creative tension in our ecosystem that we're talking about.

Eric Ries (01:08:23):
Yeah.

Amir Nathoo (01:08:25):
But it's productive in my ... It's there for a reason.

Eric Ries (01:08:28):
So as I mentioned before, I want to talk about the future too, because you've been very vocal about AI, and you guys obviously sit at the intersection of one of the places where AI is poised to have its most disruptive impact, for good or for ill. And one thing I thought was really interesting about the approach that you've taken is, you haven't raced to AI teachers, like so many other people have. You've really viewed the AI, as I understand it, almost like a teaching assistant, to improve the quality of human teaching. That feels like a very different approach, different way of using the technology than pretty much anybody else.

(01:09:05):
Can you say more about what you've learned so far in trying to take that approach and why you came to it?

Amir Nathoo (01:09:11):
Well, I'll say, to start with, we're on the side of humans. We're dealing with kids, and we're dealing with our descendants, and hopefully, long into the future. So whatever needs to happen in terms of human transformation with respect to AI, we want to try and make good, make those transitions good. And I have immense faith and confidence in the lasting value of human-to-human interaction, even when it's enabled, or empowered, or enhanced by AI.

(01:09:46):
And I think there's going to be enduring value from parents. Parents will see enduring value from the idea of their kids spending some of their time, not maybe all of their time, but some of their time talking to humans. And that's not going to change. So I think a focus on humans, you're on solid ground. If anything, you can imagine other aspects being commoditized more regularly, and the value of human interaction relatively going up, as a result of AI.

(01:10:16):
But I actually think that AI can be truly transformative to education, and that there will be AI tutors and agents that can really do a great job of working with kids on some materials and helping them learn. I think, though, that it's a far greater challenge than many are currently projecting, to truly make an AI tutor that can engage kids. The Khan Academy challenge, yes, it's going to work relatively swiftly for the most engaged kids, but how can we use AI to solve the engagement problem? I think it's going to be tricky and nuanced.

(01:10:55):
And we believe that the way to get there isn't by kind of trying to go straight to the end destination. We want instead to get there by empowering teachers, and creating tools for teachers to ease their workload and enhance the relationship between students. Teachers, for example, our first AI teaching assistant feature helps teachers more quickly provide feedback to kids and parents after class, to turn very quick notes into more extensive feedbacks. That's encouraging a best practice that also enhances human connection. And through how they're using that tool, we will learn how to make it even better, and spur ideas for other tools. To starting with this kind of humble iterative approach, rather than to jump to say, "Oh, what this means is we can replace teachers en masse with this thing," which I don't think is going to work without a lot of nuanced discovery about what it really means to engage kids, as an AI.

Eric Ries (01:11:57):
You must get to see a lot of cool demos of what's coming with AI in education. I've seen quite a few myself, but I can only imagine how many people are trying to pitch you on the crazy stuff. What's exciting to you about what you're seeing in the future? What's going to be possible that's not possible today?

Amir Nathoo (01:12:16):
I'm actually less blown away by demos. Because in a demo environment, it's easy to create something impressive. In a classroom environment, or with all the other considerations in education, which I've become more familiar with, it's tough. So whenever I see these flashy demos, I think, "Great, but you're dealing with every kid is unique, and you're dealing with the full expanse of human knowledge. You're way underestimating the complexity." Maybe I'm wrong, maybe I'm wrong, but that's my reaction to a lot of these flashy demos.

(01:12:42):
One of the most interesting things I saw was this startup working on this essay writing tool, using AI, that captured all the prompts that you were using as you were going along, with the vision of saying teachers shouldn't be worried about kids using AI to write essays. Instead, they should be just capturing how kids are using AI to write an essay, to basically give prompts feedback. So that [inaudible 01:13:08]-

Eric Ries (01:13:07):
Grade the transcript of their interaction with the AI.

Amir Nathoo (01:13:11):
Yeah. Yeah, yeah. I thought that was very, very smart, because it turns this concern about AI in education on its head. It turns it ... "Oh, AI is going to be used to cheat." It's like, "Well, what we currently call cheating should be the normal way of writing an essay." The most important thing is that kids are learning how to use this tool to write even better essays, which I thought was a wonderful kind of reframing of a perceived problem into an opportunity.

Eric Ries (01:13:32):
That's very cool. I want to do a lightning round of some stuff that I've either heard you say, or that you've written in the past, and just get your quick reaction to it. What were you thinking at the time, or whatever pops into your head with these prompts.

Amir Nathoo (01:13:48):
Okay.

Eric Ries (01:13:48):
Feel free to pass, if it's something you don't want to think ... or if I got my notes wrong and you didn't actually say it, that's okay too. I live in terror now of accidentally quoting something that ChatGPT hallucinated, rather than what the actual person said. So I really don't trust anything I read online anymore.

(01:14:03):
You wrote that you're looking for technological and social levers that can drive positive change at scale. I just thought was such a crisp encapsulation. Tell me what you're looking for. What does that mean?

Amir Nathoo (01:14:15):
Well, this reflects my desire to change the future, or build the future in a way that's better than it is today. So, positive change. How can you drive positive change? How can you make things better? And I call out social levers in particular, and technological levers, because of course, much of what we think about in tech is technological levers to drive change. Then much of that can be valuable for business. And then some people are very focused on positive change as well.

(01:14:46):
But I think the social levers are underestimated. Like changing social attitudes, changing mindsets, because our kids and young adults live in a different world than we do. They're already living in the future. And so, keeping a close eye out on social trends, I think, is really, really important, and not talked anywhere near as much about as the technological drivers of change.

Eric Ries (01:15:16):
This one really resonated with me. You wrote that trying to recreate school at home does not work. But isn't that what we're talking about with homeschooling and all this unschooling, and all these new things? That's how I've encountered that misconception many, many times. So why doesn't it work? Why can't we recreate school at home?

Amir Nathoo (01:15:33):
Well, I guess, let me be clear. Some families do try and recreate school at home, in the sense that they create a schedule, they largely fill it with traditional subjects, they organize it at school. And I guess when I say it doesn't work, I would say I think what they often discover is that that's what they're anchored in, so that's where they start. But then, once they're in that environment, they start to realize what their actual goals are for their kids' education. And it tends to dissolve if they're truly committed to this direction.

(01:16:07):
Because usually, if there's a motivation to take your kid out of school, it's for a reason. And maybe sometimes, it's purely the social environment at school, like there's a problem with bullying, or concerns about safety, but otherwise, you won't school at home. But usually, there's some other underlying driver, which families discover after a while. So I would just say that most families find, it ends up being a big missed opportunity if you homeschool by simply recreating school at home. You might start there, and then you start to realize, "Oh. Now, I'm in this [inaudible 01:16:41]. I've passed through or crossed this chasm into this new world. There's so much more opportunity."

Eric Ries (01:16:49):
How much do you think people are being held back simply by their mental model of what education is supposed to be?

Amir Nathoo (01:16:55):
I think it's a very, very large factor. Honestly, I think it's the major factor in our society as a whole, is our mental models, our underlying beliefs about how things should be, and how the world works, what we experience, where we grew up. It's hard to keep hold of that change, and ability to continuously change your mental models and beliefs, but I think it's intrinsic to innovation.

Eric Ries (01:17:19):
I've counseled a lot of people debating new education models, and given a lot of people advice over the years, and it's really striking to me, just what you were saying really made me think of it, how many people believe they're dealing with a physical, financial, social constraint preventing them from getting the really exceptional education that they want for their kids. And it's really difficult to get them to believe that it's all in their mind. Because of course, as we said before, when you have one of these personal truths that you're committed to, it's really hard to see how flimsy it is. But the second they step outside of that perception, it's amazing to see what they're capable of doing.

Amir Nathoo (01:17:53):
It comes back to this fallacy of a single objective truth.

Eric Ries (01:17:58):
Don't tell Ayn Rand. Oh, yeah. Here's a quote that you gave in an interview. I don't know if you remember giving this quote, but I just thought this was great. "We are building an ecosystem of public and private organizations that can ultimately provide a realistic alternative to the traditional educational system."

(01:18:17):
I think most people starting a startup do not appreciate the extent to which they're engaged in this kind of ecosystem development, this kind of public-private partnership. They start out thinking, "Oh, I'm just building my little product, my little piece of software," and often are caught unprepared by that transition. So talk about why do you conceive of it as an ecosystem, and how can it really ultimately be an alternative to the public education system, which is one of our bedrock pieces of civic infrastructure in our society?

Amir Nathoo (01:18:46):
Yeah. What you described is our vision, and we shorthand it to be, the global school, an ecosystem of organizations that can deliver a realistic alternative. And it's how we intend to achieve our mission, to inspire kids to love learning. And why do we need this ecosystem of organizations, rather than the single institution school? Why? It's wildly unrealistic to believe that a single institution can serve all of any one kid's needs, let alone all the needs of all kids. Wildly unrealistic. And that's why we end up so kind of confused about our school system, because we're still anchored on the belief that one institution could do it, or it can't.

(01:19:28):
And so I believe many different public and private organizations have a role to play in the future of education. And by creating this rich ecosystem with the right services and navigation layer on top, we can address this fundamental issue, that every kid is different, and their needs change with time. So we need to provide a tremendous variety of unique learning journeys. And this ecosystem is the right design in the market in order to provide, ideally, infinite, but at least vast compared to today, a choice in learning journey.

(01:20:07):
And I think it's great to have a big vision. It's also really important to have a starting point, a very specific starting point. So you heard me talk earlier about how we had this marketplace model, we serve secular homeschoolers. And every point along the way to the vision, you are focused, but you need them both, this ecosystem vision of where the world is going and should go, combined with the entry points and steps along the way.

Eric Ries (01:20:33):
All right. I hope you don't mind me closing with this one, but a number of years ago, you wrote a really beautiful essay about the things you learned from your father, who passed away 10 years ago, now, I think.

Amir Nathoo (01:20:43):
Yeah, [inaudible 01:20:45].

Eric Ries (01:20:45):
Yeah. And a lot of things you said there stuck with me, and I would quote the whole thing ... We'll put a link to it. It was really quite lovely. But I just thought, talk a little bit about your father and what he meant to you, and yeah, some of the things that you learned from him.

Amir Nathoo (01:20:57):
Yeah. My father meant so much to me, and he's such an inspiration on Outschool. When I talked about my parents, both my parents helping me pursue interests, that was my father and my mother. And my father owned a electronics store in Ealing, London. And we fell on hard times, and he became a teacher. He fell back on his teaching, after that store fell on hard times. But that's why I got a computer, because in the early computer days, they were distributing through these electronics stores. So he brought one home one day, so immense influence.

(01:21:32):
Talking about business ideas. He was an entrepreneur. So we're talking about business ideas around the table. So it's not an accident, I think, that I chose that path. And then in the blog post, I talk about some of the, I don't know, emotional lessons, personal lessons that I take away. He was a tremendously kind person, kind of quirky, he would tell silly jokes and not really care about being awkward. And I take away a lot of that.

(01:22:05):
I would say, though, in the same way as I've talked about not being anchored in ideologies, I'm different from my father, and I've learned some things. And so I think I would stand by everything I wrote in that blog post, but he'll always be a part of me, but just one part.

Eric Ries (01:22:27):
Thank you for sharing that. And thanks for being vulnerable, and sharing how the companies that we make are an expression of who we are, and the many people who get to be a part of that, both formally and informally. I think that's underappreciated in the way we talk about startups, so I wanted to say thanks for sharing a little bit of his spirit with the rest of us.

Amir Nathoo (01:22:49):
Yeah, thank you. And I really appreciate the questions and angles of exploration, which I care deeply about, but are very different from what we typically cover in startup business podcasts, so very excited to be a part of this.

Eric Ries (01:23:03):
Well, listen. On behalf of my whole family, and especially my kids, who were very excited when they heard you were going to be coming on the show, and had a lot of product feedback, which I'll give you offline. But we are prolific customers of Outschool, and love the product. You were there for us in some difficult times a few years ago, and we've had a chance to collaborate. So on behalf of, whatever, the millions of kids who you have touched in a positive way now, and who you will in the future, I just wanted to say thank you. And thanks for sharing your story with all of our listeners. And I hope it inspires other people to take the hard slog into education, and to tackle other of our society's most difficult problems, taking what you've learned, and putting it to even greater use. So I appreciate it.

Amir Nathoo (01:23:45):
Thank you.

Eric Ries (01:23:47):
You've been listening to the Eric Ries Show. The Eric Ries Show is produced by Jordan Bornstein and Kiki Garthwaite. Research by Tom White and Melanie Rehack. Visual designed by Reform Collective. Title theme by DB Music. I'm your host, Eric Ries. Thanks for listening and watching. See you next time.