Rethinking Education: Is the Customer Always Right? Stride, Inc. CEO Weighs In

Welcome to the Future of Education. And now here's your host, Michael Horne.

Welcome to the Future of Education. I'm Michael Horn. And you're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And to help us think through how we get there, I'm really delighted that we have James Rue, the CEO of Stride Inc. For those of you that don't know know, you may remember stride's former name, K12 Inc. Back in the day, when I got in this world and co authored Disrupting Class, K12 was sort of the big player on the block, if you will, helping to think about how digital learning could really open up opportunities for individuals that had not had it in the conventional school system. The company's continued to evolve quite a bit, rebranded as Stride, has a number of offerings. We're going to get into all of that and more because this is Stride's 25th birthday, if you will, 25th anniversary. So, James, thanks so much for joining me and having this conversation.

Thanks for having me, Michael. Appreciate it.

Yeah, you bet. So let's just start high level because I suspect people tuning in will know some of the history, but maybe not your history. And so tell us about your own path into becoming the CEO of Stride.

Yeah, sure. At first, I would say this is the first time I've ever been CEO of a company. So I'm still sort of a rookie at the job, you know, learning as I go. You know, I, I mean, I started as an accountant. You know, tell people the only real profession I guess I'm really qualified for is accounting. I was, and I was probably average at best at that maybe. But, you know, so I sort of obviously said then I came up through the finance, you know, and end of the company. And yeah, I always like to tell people I was not a very good student. I was sort of a C student and, you know, so running an education company, I, I don't even know if it's a bad thing, but I take us maybe a slightly different lens to running the company. Having been sort of not such a great student, I've never been an educator, which again, I don't say necessarily think is a bad thing, but it certainly puts a different lens on how to run the company. I think, you know, the, the education system in this country hasn't produced, I think, the outcomes societally that we want probably. And so I think coming from a different angle or a different perspective, you know, has some benefits. I think, you know, so anyway, so I came to the company 13, 14 years ago and I came on the financial side. I was the cfo. I had come from previously that to that I was with a company called match.com. i think a lot of people have heard of Match, and I was very fortunate to be there when we started this little app called Tinder and sort of helped sort of explode online dating. And I always say that it's somewhat relevant, that experience because people maybe of my generation remember, but a lot of people don't remember it. Online dating used to have a huge stigma to it. Like it's now very commonplace and you know, you don't really have a lot of stigma associated with anymore, but it used to have a lot of stigma associated with it. And, and I think online learning or different modalities of learning, certainly different angles to take at education, they have some stigma associated with it. And I think the ability to overcome that stigma is one of the things that I think is important for. For stride, certainly in K12. And I think that, that, you know, just like in online dating, it can produce amazing results for people if we can overcome some of that stigma. And so I was a CFO here for a number of years and there was some CEO transition. And you know, most. Most companies go through like sort of succession planning. And about a year before, more than a year, almost, probably almost two years before I became CEO, the then CEO at the time, who's a mentor of mine, Nate, continues to be a mentor and friend of mine, he approached me on behalf of the board and said, would you consider being the CEO? And I actually said no for a fairly long time. You know, like I said, I was an accountant. I was very grateful to have been the cfo. You know, a lot of accountants don't even get to reach that professional summit, I guess, and. And I just never thought of myself as a CEO. I really thought of myself as a finance professional. And it took some number of months before I sort of convinced myself to throw my hat in the ring for the job. And obviously I ended up getting the job. I think what the board saw at least, and you know, I'm now four years into the job, hopefully they continue to see is. Is one is I have a real passion for the job. Meaning, you know, and I really consider this job a job where irrespective of the company, we have a set of current and potential future customers. And our job, my job is to try to meet the needs of those current and future customers. And I think that will in your Great benefit for our shareholders and stakeholders. And so really that's sort of how I view my lens to the job is really sort of a customer focus. And I say that very specifically. And in this company, when I became CEO, I really, I'll say it sounds weird, but I introduced really the word, the term customer into this company. And I think, I think largely it should be introduced into the education vernacular more broadly because, and specifically In K through 12 education, you know, we think of them as students, that's fine. And by the way, you know, they are students, but they're also customers. And I think if we thought of them at that way, you know, the establishment of K through education has long thought, I think of their customers largely as an entitlement. And structurally there's a reason for that. Because you've got one school in a geographic area and that school really has dominion over the students in that area. And so you didn't really have to work for your customers in a way, right? They were an entitlement to you because you live in that area and historically you live in that area, you go to that school and that's still sort of pervades today for 90 plus percent of the population in the country. And so you can see why that framework established this entitlement sensibility, if you will. But in most other aspects of our lives, we want to be treated as customers. And the reason we want to be treated as customers is, is because when you're treated as a customer there's this, there's a sort of two way dialogue, if you will, it's not always explicit, but you know, there's this push pull of what's best for the customer. What does the customer want? What does the customer need? What outcomes does the customer want? Right. Like if you're running a restaurant and you're a dietitian running a restaurant, you may be like, okay, well I know what's best for the customer. You know, low calorie, high protein, you know, low fat, right.

We're cut out those sugars, we're going to get the right oils, et cetera, et cetera. Yeah.

But if you listen to your customers, your customers might say, you know, actually the reason I eat out is because on a special occasion or whatever, I want to indulge maybe a little bit, or I want to try something that I can't make at home or that's different for me or whatever. And maybe health isn't the most important thing in that circumstance. And as the customer, you know, restaurants listen to that and Obviously you have this wide variety of offerings and choice that enables what customers want and the outcomes that they, that are important to them. And I think that's really important. If, you know, if you sort of put that lens on, on education, then you have some different perspectives, I think maybe than historically we've had. And even when you think about, you know, and I know you're probably going to maybe get into this further along, but you know, if you think about the outcomes that people want and you think about my restaurant examiner, I don't know, like a lot of the educators and people are going to say, oh, you know, but you know, eating is different than education. Of course it is. They're all different. Every customer experience is different. But I would argue health is pretty important and education is both pretty important. So, you know, we're talking about, I think, comparable outcomes, you know, healthy, healthy people and educated people, you know, and I think that if you think about that sort of analogy, sometimes what the customer wants isn't actually a healthy diet. And in our country, if we listen to our customers, unfortunately a lot of families aren't in the position where the most important thing to them is getting an A in going to Harvard. Sometimes the more important thing to them is survival is actually the high school diploma which allows them entree into a job or a field that requires a high school diploma that helps them put food on the table for their family. So the outcome often that we think about is, oh, well, you know, you have to get good grades maybe. And of course that's important. And of course learning is important. I say more importantly, learning is important and learning skills is important. And hopefully real world skills that you can apply later in life are important. But in some families cases, I think we have to remember that the grade, and particularly high achieving grades, A's are not always the most important. And I think again, just taking that lens of like, what does the customer really want, what's important to the customer, how can we deliver for that customer is really important. And so go, sorry, I know I.

Drifted a little bit, but going, yeah, this is helpful.

Yeah, yeah, about how I got into the job. So, you know, like, whatever, I, you know, I, I, I almost begrudgingly accepted the job because I thought I could take a little bit of a different lens to what we're trying to do and expand how we think about our customers. And I think that sort of was important to me.

Yeah, well, I want to lean into that angle because I think there's a few things there that you said that That I just want to key off on one. Sort of. You labeled yourself. And I don't know if it's true or not, but as a C student. But it certainly gives you a window Right. Into the people that are not being well served by the traditional system, maybe being taken for granted. Maybe they are motivated by other things. Right. Engaged by other things. From our research on what customers want and motivation and so forth, I don't think there's anyone who's unmotivated. They're just not motivated to buy what the system is off. Right.

What family doesn't want their child to sit.

Succeed.

I mean, in whatever. However they define that.

Yeah, I totally agree.

Yeah. However they define it, they want their child to succeed.

Yeah. And I think that's a big thing. And I, I guess let's follow that energy because as you know, like one of the big criticisms, I don't think you're hearing it as much at the moment, but certainly five, seven, eight years ago in the field of the virtual schooling in particular, that you all helped define that landscape was that large numbers of students weren't being served well. You could look at student outcomes on test scores and things of that nature and make certain assertions. And then people had different explanations for what's going on. Right. They ranged from, oh, you know, virtual schooling isn't good for folks to, oh, some of these companies maybe are not investing enough in teacher professional development or the teacher, you know, the teaching experience to, uh, what else was there? You know, something, you know, things around the curriculum and stuff like that. Right. And so I'm just sort of curious. You've made the point that individuals, when, you know, and families, when they come to a virtual school specifically, you know, their top priority might be help my kid get out of a bullying situation. Right. This is, this is no good right now. And yes, we want them to learn, but we just need to get them back on course right now. How do you think about those as competing with, say, the learning outcomes that critics like to point to? And how do you think we ought to be measuring it?

Unfortunately, I think sometimes we let politics creep too much into our education system, and I think it's really unfortunate political agendas. You know, when, when. When I hear people talk about. The, the education system and the students in. In terms as if they're like the afterthought, you know, because there's this other agenda here that's more important. I, I think it's, it's. It's troublesome to me, I would say. And, and by the way, all those critiques that you mentioned, I'll also say I think many of them are fair. I think also as a society and as a company, I don't think we should be. I don't want to lean into that sort of political dialogue where, okay, well, now I've got to figure out, I've got to frame the way to say it in a way that sort of subverts what they've said or end runs what they've said. The reality is we're certainly not perfect. I think that there's a lot of things we can do better. A lot. I mean, the list of things we can do better is actually longer than the list of things I think we do well. Frankly, I think that again, the customers that choose our types of programs, you mentioned a, an element of a category. I think that's a much broader category, which is safety. Right. Bullying is an aspect of child safety that parents are worried about. Gun violence is an aspect of it. There's a lot of aspects of child safety that, where virtual learning is for that family, that customer, that's the most appropriate choice. And I don't think that we should be dictating to those families what's the best choice for them in their particular circumstance. Now, I also think that while the criticisms of this company have often been fair, I think that some of them are not completely accurate. And I also think that they're often being levied by the same system that I could easily say throw the aspersions.

At it as well.

You know, they have some of the same issues, I think, you know what I mean? So, you know, so I think sometimes it's a little bit of the pot calling the kettle black and, and that to me feels more political than it does so like figuring out what we can do for, for families. We, we've invested more in the past. I've been the CEO for four years. We invested more in the past four years and in any other four year, four year period in the history of the company across whether it's, you know, our teacher professional development or, you know, new and new curriculum or new technologies or new platforms. And I think that a lot of what we try to do is also invest in things like the professional developments. Maybe Teach Professional Development is, is one example where, you know, the, the in person model of, you know, the district professional development days where, you know, the kids get off and the teachers come in, you know, they have people come in and when I talk to teachers, a lot of them say that the subjects aren't often hitting the mark. The day isn't well utilized often. So what we've tried to do is actually invest in an online teaching platform that gives teachers some empowerment to maybe choose the types of professional development they want. You know, not everybody maybe has to do the same thing.

So their own choice to break out of the one size fits all sort of way. Yeah.

They may know better where their areas of improvement are and what they need to sort of lean into and what they're struggling with in their classrooms or you know, whatever the situation may be. And so some of our investments are more towards those types of things than maybe, you know, trying to do it the traditional way. So again, some of the criticism may be fair, like, yeah, oh, they don't do it a certain way. That that's actually true. Maybe we're taking a different angle to it. And by the way, maybe that angle isn't even perfect yet. Maybe that angle, it has a lot of room for improvements still. But, but I do think taking maybe a different lens to them, some of these things is important and I think those are a lot of things that we're trying to invest in.

Gotcha. Let, let me ask you this because that's obviously the virtual school conversation, but over the last decade plus really you all have become a much larger company with larger suite of offerings from digital courses for students to career options or career connected learning options and things of that nature. Just like how do you all think of, you know, when you think of what Stride Inc. Is today? We've obviously been geeking out in the virtual school portion, but how do you think about it and the portfolio or suite of things that you all offer.

Yeah. So I think about it just in terms of what's the market we're really trying to address here. Right. And to me the market is the 55 million K12 school age kids in the country that may or may not want something different. By the way, I think many families are actually very satisfied with their, their situation. But, but I think that though, like the way that the established system works has probably evolved less than most other sort of large scale categories, if you will, in the country. You know, whether, whether it's, you know, retail or entertainment or you know, whatever it is, it's evolved less. And so I think Stride is a company that really is what we're trying to do is see how can we improve the overall customer experience and outcomes that they want, those customers want across the landscape of 55 million students. And that is everything from, you know, we're Investing now in a, not just a curriculum. I mean, we've been investing in curriculum for a long time, but the platform to deliver the curriculum that allows for just, you know, a little more easier, more intuitive experience. You know, if you can think about like a Netflix type of experience, you know, where, you know, it gives you recommendations based on what you, you know, what you like in, in an educational sense. More of like recommendations maybe on what you need, what your sort of next step is in, in there maybe a little bit, A little bit working away from the traditional, like chapter one, two, three of a textbook and more, you know, towards an engaging type of, of experience. I think it's a little more in line with what the customers experience in other parts of their lives as well, where, I mean, of course, just like I guess everybody else in the world where, you know, we're, we're really thinking about how to invest in AI. I mean, you can't sort of, I think, say anything these days without at least mentioning it. I think our approach to. It's a little bit different in the sense that AI, I don't think is actually the, the answer. I think including elements of AI in an overall user experience solution is more the answer. You know, you've been in the industry probably around the industry a lot longer than I have actually. So, you know, how long have we been talking about like personalized learning and, and how like really today after we can talk. And by the way, you know, there's been, you know, tens of billions of dollars of investment in VC money that have gone into education company. How personalized is the actual learning today in, in schools?

Not super personalized at all.

I mean, if you, if you really walk into a classroom, right. I mean, just walk into any random classroom and hopefully you can't just walk into any random classroom.

Yeah, but when I get to visit and so forth. Yeah, for sure.

Yeah. But if you just walk into a random classroom, I mean, I happen to, I, I live near a school and I have a dog and so I walk my dog actually around school and I, you know, I'm interested, I peer in, you know, there's windows appearing. I. Look, the, the personalized level of learning that is happening is not, I think, what we thought would happen 15 years ago. Right. And so. Well, how can you personalize learning? I mean, you can't put 30 teachers in a classroom. There's a teacher shortage. I mean, you were barely putting one teacher in every 30 person classroom, let alone, you know, putting 30 teachers in. I mean, that would be the real Way to personalize it. Right. If you, if you sort of think.

About the tutor for every child. Yep.

Right. You can't do that, though. So as much as I know some people really don't like the technology in the classroom and technology taking over education. If we're really going to personalize learning, I think I do think we have to do it through technology. And, but I don't think it's just, oh, AI, you know, and everybody says AI. I don't think it's just AI. It's, you know, if, if, imagine if the, the student goes into the classroom and the first thing that they, you know, they turn on the computer and the first thing they see is some prompt, though, that says, oh, good morning, Michael. How are you feeling today? I mean, that, that little level of personalization, by the way. I mean, if you go the, if you're, you know, if you live in a rich place and you know, you're, you're, you're really wealthy and you send your kids to private schools, the private schools, the first thing they do is the headmaster stands out, the school greets every kid, good morning, how you doing today? Right. That's the first greeting those kids get. Right. And if we can make that part of the opening of every day of every student through technology. And by the way, Michael may say, you know what, I was up late studying for an exam or I was up late watching the super bowl or whatever they were doing. I'm a little tired. And if the interaction could be, oh, well, in that case, why don't we just take three minutes, watch this video and get up and stretch a little bit before we get into the lesson. That's personalized learning and it has nothing to do with education yet, by the way. Right. But I think that personalized, and again, that's a more customer centric view of learning, I think, than what maybe the educational norm would suggest is about personalized learning. Right. Because we do know that a kid who's more engaged learns better. And by the way, a kid who can pay attention better is going to be more engaged. By the way, a kid who's tired needs to get, you know, some their blood circulating to be able to be able to do that. So I don't see there's nothing wrong with having that engagement through the computer. Get up, stretch your arms a little bit, get, you know, get your blood flowing a little bit. Now let's dive into the lesson. And when I say technology and thinking about your customers, it's more those kinds of experiences, I think we can bring into the classrooms. And those are the kinds of things that I think Stride would like to invest in and help that experience for those customers improve.

No, it makes a ton of sense. I mean you're preaching to the choir on a number of fronts as you, as you may know. But among them, as my wife likes to say, when she visited our kids current school and she saw a kid in the middle of a lesson pop up, go outside, run around, take three laps and then get back in. And she was like, what was that? And they were like guess he chose he needed a brain break. And she was like we're going here. So, so I told. I totally dig that example. I'm curious because you all are servicing a lot of curriculum. There's teacher professional development. You're helping in some cases change the structure of classrooms in traditional schools. You have the virtual school. You've also invested, I think in some career training platforms. You purchased Galvanize right before the pandemic, if memory serves correctly. There's a whole bunch of chatter about how coding boot camps are no more or they, they crested and they fallen. I like, I'd love to hear a little bit about the career connection of what you all are doing. And the reason I ask also is just to put my prior out there. I think we have, in an effort to not lower expectations for kids, we have sucked out the connections to careers and the building of social capital for basically everyone to the detriment of helping people find reason to engage in many cases with the learning and explore and be prepared for the world. So I'm sort of curious how that has filtered in and where things are.

Yeah, so years ago, before I was a CEO, we, we, we strategically saw an opportunity in the career space and specifically in The K through 12 more high school, obviously high school, middle school type for careers because you know, and if you think and just put sort of, I'll say career learning, the, the, the name we use aside or, or whatever. But like skills, you know, I think that's really the, really the thing that we're after here. Right. Is is providing students the ability to acquire skills at younger ages that are useful in real practical ways post high school graduation. Right. That's, that's the real objective. If you think about like what we're really trying to do right now in some, in some instances, I think that can be a direct correlation of acquire a skill or set of skills leads to maybe a certificate, that certificate leads to a job. And therefore after high school, either you don't want to you're not well qualified for your financially can't afford college, you can go out and earn a standard of living that can support your family. And I think that's really important, at least strategically for us, is to really lean into that skill development side of it. And I think on the flip side of it, I think some people are maybe critical that it's trying to maybe de. Emphasize, you know, going to college or the college experience and things like that. And I, I don't think it has anything to do with that. I think it really has to do with whether a child decides to go to college or not. Here's one thing we categorically know. Most kids who go to college don't use their college major in the job that they're in, right? So, so either way they're going to have to obtain skills for some career that they're going to pursue. And I think the earlier they can acquire those skills, it's going to be better for their lifelong professional journey. And so whether they go to college or not, whether, you know, whether they go to a four year college or a two year college, whether they go right into the workforce and later go to college, there's so many permutations of this. But I think the base level and by the way you're seeing now led by I think tech companies, but sort of more broadly across industries, companies that are really doing away with the four year college degree requirement and you know, really prioritizing skills and, and I think that that's a trend that's already started. I think it accelerated a little bit during the pandemic. I think it's going to continue to persist. And so our view is that we want to be able to offer those skill acquisition opportunities for students starting at younger grades. Virtually all of our programs now have that opportunity. I'll go back to where we started with some of the critiques of us, which is I think what we haven't done, so those are available. I think what we haven't done a good enough job of is really ensuring that the, the holistic view or the holistic support necessary to really enable those students to embrace that we haven't done yet a good enough job of. And I think that's sort of where we'll make some future investments is you know, they need better guidance and you know, like traditional guidance counselors, they usually are focused on, okay, so what credits do you need, what college do you want to go to and what credits do you need to go to that college? And you know, I Think, I think. And if that's what they want, we should provide that to them. But also, I think we should supplement that with. Hey, also along the way, you know, if you're interested in cars or, you know, maybe you should take some things in mechanical engineering or whatever. We know, whatever the thing is, you know, the boot camp specific stuff. We did buy a couple of companies in that space and they were bad acquisitions, unfortunately. I think the like when we were looking at that space, there was virtually nobody in the entire industry that was making money, by the way. It was entire industry that was losing money. But they had a lot of sort of fanfare and popularity. And we happen to own and operate one or two of the only profitable companies in the industry. Tech elevator. And there's been some, I think, broader market shifts moving away from those programs. I think the other CEOs that I've spoken to that are participants in that space have all said, you know, volumes are down dramatically. I think, you know, what they publicly say and maybe what they privately say are a little bit different. But I will tell you that our volumes are down dramatically. I think I don't necessarily see a recovery, I think, because the, I mean, say AI again, but I mean, AI, I think, has at least in the psyche of a lot of people, suggested that maybe those types of jobs, and particularly at the lower levels, are not going to be needed as much. And I think that's probably directionally right at some point. So I think there's a shift in the marketplace and I think that we got that sort of bet wrong in where that was headed. So shame on us, I think. But I think that broadly speaking, there's still tremendous opportunity in skilling kids, whether it's through the boot camps or not, or particularly in computer science or not. I think that's sort of the secondary importance. I think the primary importance is kids need to get skills. They need to get skills to give them job opportunities. And we, and I think our country needs to do a better job of focusing in on that. And I think we're going to continue to invest in that. I think it's really important. And I think parents, and if we can go from a customer perspective, customers want that for their kids. Yep.

That's where I was going to wrap up is like, as you think about, you know, 25th anniversary strident, you all have a number of, you know, irons in the fire, if you will, different priorities you've named here. What are you hearing from parents? Right. As we. I think it's fair to Say, in many states, we're shifting to more and more, not just school choice, but educational choice. I think the next few years we'll see a continuation of that for sure. Many of the parents I talk to, I agree, they're fine where they are. And many of them are saying, I'm not relinquishing this choice at this point, but what are their priorities that you're hearing at this point as we wrap up this conversation and how that may impact what Strident focuses on over the next however many years?

Yeah, okay, so I'm hearing a lot of the same things you are, by the way. I think the research supports it. I think, I saw research recently said something like upwards of 70% of families have considered at least some alternative. But I also hear safety continues to be a big concern for parents. Again, that sort of broad category, whether it's bullying or gun violence, et cetera, et cetera. Right. Mental health is, is a big concern that I keep hearing from parents. I mean, our customers.

Stay on that, stay on that for one second because, like, the mental health thing is being so pinned on technology right now. How does that interface for you guys? You're obviously not a smartphone app company, but I'm just sort of curious. Yeah.

How do you think about that? I, I don't want to comment on the root cause of our mental health issues in this country because I'm, I actually just don't have the expertise to, and I don't have enough data to really, frankly, to synthesize, to really understand it well enough. But I, I, I do know that an increasing number of families that are in, in programs that we help manage are state mental health as an issue with their child. An increasing number of the children themselves are stating mental health, you know, you know, and I say set up as a broad category.

Sure, there can be any number of things underneath.

Exactly.

But the point is, they're coming to you is, is an issue.

And I think part of the reason that virtual learning is very attractive for families that have some of these issues is, is sort of some of the flexibility. Right. So if you have some mental health issues, maybe you can't deal with some of the structure, or maybe you can't deal with some of the social interaction, or maybe you can't deal with the, the, the rigidity. And so the flexibility that's offered through virtual learning, sometimes it just, it helps families deal with some of those issues and, you know, whether they're because of technology or not. Again, I don't really want to delve into that I think that the reality is unless the government steps in, which, you know, I'm not saying they should or shouldn't, but unless the government steps in and regulates the the use of technology for children, which by the way, some countries are doing, the use of technology is only going to continue to increase unless the government steps in and regulates it. So while we may have differing opinions on whether it's a good or a bad thing and kids should be using technology or shouldn't be using technology, the reality of our customers is they are using technology and in increasing ways. And whether the the result of that is some of these issues or not.

You take them as they are, they're.

Also using it to help with some of the solutions.

Got it. Super interesting, James. Just a fascinating conversation. You guys are touching your hands in so many of the cutting edge things. But I think I'll take away from this the voice and intent and motivation of the customer and, and personalizing around that being two major thrusts as we as, as you all continue to go into this next chapter of growth for Stride Inc. Fair to say, absolutely.

See you in 25 years. We'll do it again.

That sounds good. Thank you so much and thank you all for joining us on the future of education. We'll be back next time.

Sam.