We will discuss the challenges and demands on the power grid, why nuclear is the obvious solution for the future, and our investment in Aalo Atomics, a fast-moving company making modular nuclear reactors for data centers.

Let’s get into where we are today:

AI is on a Collision Course with the Power Grid

In 2018, Elon Musk resigned from the OpenAI board, picked a public fight with Sam Altman, and then went into direct competition by launching xAI. Musk was an initial founding investor, board member, and promoter, but he became frustrated with Altman and OpenAI wavering from their non-profit R&D roots. By 2023, the tension spilled over into an attempted coup and ouster of Altman, which failed. Now, it’s devolved into a lawsuit and a countersuit, and the most expensive ego battle in world history.

But for xAI to catch up to OpenAI, even with the massive proprietary data sets of Twitter/X and Tesla, Elon needed massive, specialized GPU and NPU data centers to provide the “compute” for model training. And, of course, Elon’s data center needed to be bigger and badder and better than anyone else’s data centers. This is the guy who coined the term “gigafactory.” So, he brokered a deal with the City of Memphis, where the Mayor was happy to have the tech jobs, and Musk planned to buy and install over 1 million GPUs at a staggering cost of $30 billion in NVIDIA chips alone. (Smelling money, NVIDIA has productized this interrelated set of hardware, and you can now shop on their website for an AI Factory.)

But when the xAI team calculated estimates for energy demand, it was clear that just one specialized data center would break the grid for the entire city. So, what to do?

In a rush to build the world’s most powerful data center at any cost and faster than anyone thought possible, xAI did some clever engineering and retrofitted natural gas turbines into trailer-tractor containers and stationed thirty-six of them in what looks to be the parking lot.

This is a clever makeshift solution. And natural gas is the cleanest-burning fossil fuel. But this is not an industrial-grade power plant with industrial-grade pollution controls. Within a month of starting operation, entire neighborhoods in Memphis were complaining of a constant gas smell. Grandmothers with breathing problems were going to the emergency room.

Musk’s practical quick fix for the power generation needed for large-scale creation of AI Models has angered activists and social media influencers. The community has taken to the streets to protest, disrupted city political meetings, and influencers like the famous black cowboy Roland Martin have put out angry social media content. Elon’s break from controversy will have to wait for another media cycle.

Wouldn’t it be nice if there were a clean, quiet way to provide a stable, on-site, off-grid energy source for Specialized AI Data Centers?

The Model Wars are an All-Out Arms Race

If you are not a Machine Learning enthusiast, much of the wild west of AI remains invisible. The story from Memphis is but one dramatic case of technology leaders and politicians scrambling to secure enough “compute” in what could be called “The Model Wars.”

Like everything happening in AI, it is happening bigger and faster and with larger numbers than even the most optimistic predictions. The capital investments found in public announcements in the past year alone exceed $1 trillion.

It was only in 2007, not even twenty years ago, when Amazon launched Amazon Web Services. There were server racks and data centers before Amazon’s launch, but the AWS release was the watershed moment. After that, technology companies launched in “the cloud.”

Cloud Services got all the hype and the attention, but the physical hardware of the Data Center – dystopian rows upon rows of computers and cables – was what made them all work. Sending friends money on a mobile app is cool, but it’s only possible because millions of people are putting boxes on racks and connecting them with wires to the “tubes” that make up the Internet. In 2025, Data Centers are already an estimated $900 billion annual business and estimated to reach $5 trillion by 2034. Blackstone has already invested $100 billion in Data Centers and calls the vertical "its highest conviction investment.”

Getting the AI research engineers the “compute” they need is playing out like a full-on arms race with mind-boggling sums of money and tabloid-style, not-to-be-outdone behavior.

“Big tech companies have spent the last decade amassing huge piles of cash; now they're all spending it in a race to build the gargantuan physical infrastructure necessary to create AI systems that, they believe, will fundamentally change the world. Computational infrastructure of this scale has never been seen before in human history.”

• The xAI build in Memphis alone is costing up to $40 billion. Musk calls the facility “Colossus.”

• At Google Cloud Next 2025, Google CEO Sundar Pichai confirmed their intent to invest $75 billion this year in AI-specialized data centers.

• In January 2025, OpenAI announced “The Stargate Project” with $500 billion in financial commitments from SoftBank, Oracle, Microsoft, and MGX, with technology partners Arm, Microsoft, NVIDIA, and Oracle.

• Not to be left out, Jeff Bezos is personally driving similar efforts at Amazon. It also has its project codename – Project Rainier. And it's with OpenAI’s primary challenger, Anthropic. Amazon expects to invest $100 billion in 2025 alone and promises it will be “the world’s largest AI compute cluster.”

• Meta, being conspicuously low-key, is investing $29 billion to build a data center in Louisiana. The fact that investment in Louisiana, one of the poorest states in the US, is so small as to suggest a contrarian strategy - which could well be the indicator you need to understand just how intense The Model Wars have become.

If you have been keeping track of numbers and doing napkin math, we are already at $744 billion in urgent capital investments.

Europe Wants In: Money Pouring into European Initiatives

The European High Performance Computing Joint Undertaking (EuroHPC JU) was initiated by the European Union’s Digital Single Market strategy in 2016, began earnestly in 2018, and the bureaucracy was operational by 2020 with a budget of €7 billion. Yet hearing of the Model Wars from America, a not-be-outdone panic set in across Europe. And a tried-and-true European response was needed, i.e., let’s have a summit.

The AI Action Summit was held in Paris from February 6-11, 2025. This was no ordinary summit; this was an action summit. Save some revelry with French food and wine, these people meant business.

At the end, the President of the European Commission announced the InvestAI initiative with a budget of €200 billion, spending €20 billion alone on Data Centers. The initiative brought in 60 private sector partners, called AI Champions, that committed to allocate €150 billion to invest in AI-related infrastructure and activities. Of course, €50 billion was a government subsidy. It’s the EU, after all.

“We are doing this through our European approach – based on openness, cooperation and excellent talent. But our approach still needs to be supercharged. This is why, together with our Member States and with our partners, we will mobilise unprecedented capital through InvestAI for European AI gigafactories.”

- European Commission President Ursula von der Leyen

The resulting fund from the AI Action Summit announced plans to build up to 5 “AI Gigafactories.” A month later, another 6 were announced, bringing the total to 11.

All of these plans are on top of the existing forecasts, for which CBRE claims front and center: “a lack of available power across metro markets will inhibit growth to some degree.”

Given Europe’s more solid commitment to environmental protection and clean energy, we doubt they will repeat the mistakes of xAI in Memphis.

But, where will they get the energy?

The Only Winners of an Arms Race are the People who Sell Weapons.

It’s hard to believe, but 10 years ago, NVIDIA made chips for gamers who wanted to have higher resolutions and screens that produced images at faster speeds. They designed “Graphics Processing Units” and had them manufactured at Taiwan’s TSMC. Early in the Machine Learning age, NVIDIA recognized that GPU architecture offered speed advantages in parallel processing computations over CPUs. They doubled down.

While AMD and Arm are starting to give NVIDIA competition, for a good 8 years NVIDIA’s GPUs were the only suitable chips for which to do “machine learning” at massive scale. Even now, if you want to run a “large parameter” variant of an AI model to perform a basic task, you probably use an NVIDIA chip.

You’ll see the well-known NVIDIA’s stock price chart below. This is what being the only arms dealer in “The Model Wars” can do for return on investment.

Renewable Energy is on a Collision Course with the Power Grid

How Not to Achieve 100% Renewables

It’s nice and sunny in Spain. Solar energy has become widespread through decades of relatively bold policies, Royal Decrees, Feed-in-Tariffs, international agreements, and the extra boost of Spanish competence in large-scale construction projects. Incentives to drive residential adoption have been combined with several large-scale solar projects coming online in recent years.

This can have unintended consequences. On an abnormally sunny day in 2025, the solar power being added back into the grid exceeded the capacity of Red Electrica de Espana’s infrastructure. All grids are designed to handle a relatively stable oscillation; sudden changes can and often do result in equipment shortages, failure, and, in some cases, fires and explosions. Because these failures (or explosions) can cascade to nearby equipment, travel on wires to the next set of transformers, etc., the entire grid, piece by piece and spot by spot, is designed to shut down in the event it might experience a catastrophic influx of power.

On April 28, 2025, a single problem in a sunny spot in Spain caused a seemingly minor issue. Within 4 seconds, it took out the entire physical grid network in most of Spain and Portugal. The result was a near nationwide blackout across the Iberian Peninsula that lasted 23 hours. Of course, this sounds short. But consider a day of your life and the world around you. Within that time in Spain, a military emergency was declared, factories and logistics networks came to a halt, and restaurants, bars, and grocery stores had to throw out their refrigerated and frozen items. Insurance claims are now backed up for months.

The stabilizing technology that usually handles excess energy is still located in the old fossil fuel power plants. Solar doesn’t pass through them. The technology that could help is called “synthetic inertia,” and it has yet to be adopted at any meaningful scale in Europe. Massive-scale battery capacity capable of rapidly absorbing excess electrons is not widespread and is produced only in China (for now).

100% renewable should be the goal, right? Right. Well, Norway has been 100% renewable for decades. The country isn’t experiencing blackouts. Why? Because Norway isn’t sunny, it’s rainy.

Rivers with Hydroelectric Dams in Norway

Hydroelectric dams come with the helpful feature that they are relatively predictable and can be turned up or down. Excess water pressure can just be released through a spillway. Easy. But wind and now specifically solar can be massively productive but are also necessarily volatile. There’s not really a built-in “release” feature like a spillway in a dam.

Sunshine in Spain

The blackouts in Spain and Portugal are estimated to have cost $2.5 billion according to analysts at the Royal Bank of Canada.

So, if not renewables, then what energy?

Advanced Heavy Industry is on a Collision Course with the Power Grid

On-site power sources are the historical norm. What we now think of as the energy industry has its origins in the Industrial Revolution, particularly in the emerging steel industry. Any facility that dealt with metals had to secure its own source of heat – usually impoverished men shoveling coal into a furnace. Any facility that had the precursors to modern machines had to be located on a source of moving water – powered by the same mill wheels used for a millennia.

The hundred years of worldwide tinkering with magnets and wires that James Clerk Maxwell and Michael Faraday kicked off in the 1830s were funded primarily by industrialists scrambling to power their increasingly mechanized manufacturing facilities. The result would be marquee companies (and investments) like Westinghouse, General Electric, and Siemens.

Similarly, we are seeing an avalanche in heavy industry.

First, rapid adoption of advanced robotics, and second, the co-location of every process and team you could possibly fit under one roof. Compared to their 150-year-old counterparts in the English Midlands, the Rhineland, or the river networks of the American Great Lakes, organizations building gigafactories are in a more desperate scramble for more and stable power sources.

Tesla’s Gigafactories consume nearly 100 megawatts per day, the equivalent of 80,000 homes. Estimates of the annual bill for the Nevada Gigafactory is about $95,000,000.

Factories and facilities like this will either need to secure their own source of energy or will increasingly choose to do so if the power grid becomes unstable.

An independent analyst did the math on what it would cost to operate the Nevada Gigafactory in Germany based on energy prices. The estimate was $1 billion annually. Just in energy costs.

How Not to Geolocate a Gigafactory Site

In the last forty years, developing nations have had an advantage in manufacturing at scale. Their populations were largely rural, and as agricultural productivity increased, young people were willing to move into dormitories that sat alongside large-scale factories. Currency arbitrage allowed manufacturers to hire more people without needing to invest in industrial tooling, engineers, or the automation of processes.

Buying low-cost goods at Walmart is great until society realizes that no one knows how to make anything anymore and all the beloved companies and brands are dependent on sourcing labor from places with increasingly authoritarian, unstable regimes. And this shift in mindset comes into further focus when a fifth of the population struggles to find work. China’s manufacturing dominance has become so profound that elections and policy shifts in the developed world keep focusing on a desperate desire to restore “good jobs” in “real industries” that make “real things.”

The hypothesized answer to creating stuff at home again is the gigafactory – a highly roboticized, massive-scale factory. To achieve the productivity boosts typical of knowledge work on corporate campuses, gigafactories aim to consolidate more processes and people into a single site than previously thought possible. Genius. What could go wrong?

Aiming to open their first gigafactory in Europe, Tesla found one of the only ideal sites in East Berlin – primarily a bunch of woodlands, the nearest spot on the map being the town of Grünheide.

And then Europe got in the way. Grünheide’s surrounding forests included protected, old-growth forests, some of the last remaining on the European continent. (Elon’s PR teams have real job security.)

Waiting until protestors need to go back to school and work is a cost of doing business for most large multinational corporations in heavy industry. Yet, these German protestors had peculiar stamina and inventive tactics. Many of them built treehouses and moved into the trees for months and months, delaying construction at a massive expense to Tesla. The police had to train up on, if not entirely invent, treehouse crowd control.

What can be surprisingly expensive? When activists are so committed, they will live in trees for months and realize that a gigafactory’s single point of failure is their connection to the power grid.

Despite all the drama and impossibly expensive setbacks, and energy costing 10 times the first gigafactory in Nevada, the German area is experiencing an “economic miracle.” So, of course, now the world wants more gigafactories in more industries. In the effort for European industrial companies keep pace, Ford & LG are partnering with Koc Holdings to build an EV battery gigafactory in Turkey. In France, Japanese company Automotive Energy Supply Corporation (AESC) is building its first European gigafactory. Volkswagen has six gigafactories planned to open by 2030, three of them in Europe. Soon, we will have gigafactories for everything, and they will be everywhere.

The only reliable and cost-effective way to do this kind of industrial build will be for these gigafactories to secure their own stable, clean, on-site source of energy.

But where will they get the energy? The Obvious Future For Modular Nuclear.

Nuclear traditionally has been out of reach as it’s expensive, slow, and politically unpopular for being seen as unsafe. That has now changed.

First, there is now higher support among the general public for nuclear energy. It is seen as one of the most reliable forms of renewable energy.

Second, the current US Federal Government and the Texas state government are all-in on nuclear.

President Donald Trump has been actively promoting nuclear energy as part of his administration's strategy to enhance U.S. energy independence and security. He issued four executive orders in May to show his support, and his initiatives include the Nuclear Reactor Pilot Program aimed at advancing nuclear technology and getting test reactors ready by July 2026. Yes, that is 11 months from now.

Move over, Silicon Valley: The Arms Race Headquarters is in Austin, Texas

A few data points:

• OpenAI / Project Stargate’s gigafactory is being built out in Abilene, TX.

• Amazon’s Project Rainier is building out their facilities in “an unassuming lab” in Austin, TX.

• Musk has moved the primary operations of all of his companies to Austin, TX. The “Giga Texas” plan now churns out 126,050 battery cells per day.

• Gigafund, a massive spin-out of FoundersFund, Peter Thiel’s primary Venture Capital fund to back egregiously large infrastructure investments, is based in Austin, TX.

• Aalo is headquartered in Austin, TX.

• And, yes, Avalanche is also headquartered in Austin, TX.

Texas is the energy capital of the world. Houston and Dallas are to the energy industry what New York City is to the Finance industry. Republican Governor Greg Abbot has been active in assuring that Texas retains this role by tossing out red tape and regulations and setting up the Texas Advanced Nuclear Reactor Working Group. Of particular interest was promoting Texas as a hotbed for Small Module Reactor (SMR) technology.

The Texas Working Group has already established: 1) the position of Texas Nuclear Permitting Officer as a single point of contact for developers, 2) a Texas Advanced Manufacturing Institute to develop and foster a nuclear network, and 3) a direct grant cost-sharing—a nuclear energy and supply chain fund—to incentivize early development and siting.

Who Is Selling the Best Weapons: Enter Aalo

Aalo is born out of the Idaho National Lab, one of only a few advanced nuclear research labs in the United States, and early team members from Bloom Energy, an innovator of onsite power. Additional highlights about the team include:

• the Former head of the MARVEL at Idaho National Lab, founder of Westinghouse eVinci program,

• the Former Senior Director and CSO of energy at Microsoft. Google & Amazon,

• the Former VP for Government Programs at GE, Hitachi, Zeno Power, as well as many years at the Department of Energy,

• the Former Director of Manufacturing for SpaceX’s Falcon 9 rocket, and,

• the Cofounder, CEO, is a second time CEO who exited his first company for $150M USD.

Aalo is tailoring their product design into mobile, portable “pods” perfect for Data Centers. While facilities often have solar panels, they do not occupy enough land to generate enough solar or wind energy to power themselves. In addition, they need predictable, constant energy. The variable nature of other renewable energy sources is a non-starter. Aalo’s flagship Aalo Pod is a 50-MWe extra modular reactor (XMR) that is purpose-built to provide fast, reliable, clean, safe, and scalable on-site power for modern data centers. Each Aalo Pod comprises five Aalo-1 reactors, which are fully modular to enable scalable deployment, from single 10 MW units to gigawatt-scale facilities. This is perfect for the hurried nature of the demanding, urgent Data Center customer base.

“I needed it yesterday, can you have it here tomorrow?”

“What’s your budget?”

“$500 Billion Dollars.”

The Most Credible Enabling Network in Nuclear

Both of us (Michael from Hypernova and Katelyn from Avalanche) have spent time at the Aalo facilities in Austin. This latest $100M Series B is led by Valor Equity Partners, and particularly by Antonio Gracias, founder and CEO, who has been a long-term capital partner of Elon Musk’s enterprises and knows intimately the various factors creating a collision course with the power grid. The rest of our co-investors are a broad coalition that recognizes this as obviously the future.

We are excited by the potential for this future and invite you to join us!

Further Reading

• Global Data Center Trends 2024, CBRE

• Aalo Atomics Secures Capital, Regulatory Backing for 2026 Modular Nuclear Project at INL, Eyes Potential First Data Center Pairing - in Power Magazine

• Aalo: Nuclear Energy for the AI Era

Nice to see you here in 2025.

This year, I will go broader. Not all of these predictions are in the first inning, but they are certainly in early innings. And this is not an exclusive or exhaustive list. I’ve chosen to focus less on the details of technological progress and instead on the areas of implementation where new technology and innovative thinking can deliver massive results.

I wrote 14 predictions in 2024 and still stand by all of them. They are all happening and unfolding in interesting ways. As a brief tour:

In learning, school choice, alternative education, and efficacious edutainment are all advancing. School Choice was a big US election winner, with clear support from President Trump and his new Secretary of the Dept of Education to make a big regulatory push in the first legislative session. The startup winners will be those who sell and implement well. Always has been, always will be.

In earning, this one is hard to capture because so many “trends” are more effective practices for running organizations and businesses. Humanizing the enterprise is ultimately a choice for leaders at the top. However, every organization worldwide will be forced to increase productivity across the board.

In owning, I didn’t make any predictions about the government and the public sector. That will be a big change this year. The popular discourse has woken up to the business of government, and there will be much more focus on efficiency, delivery, and decision-making. Last year, I predicted that owning digital assets and platform control would become more important; I’d double- or triple-down on this one. This category is the most exciting.

As always, comments, thoughts, and intelligent disagreement are encouraged.

Founders building behind these massive trends, please reach out!

— Katelyn and Avalanche

Big Picture

The Overton window expands.

With Elon Musk supporting Trump's winning election campaign, the Overton window will open significantly in 2025. Ideas previously unspeakable or off-limits are now on the table. Jokes, like DOGE, have become serious. The crypto ecosystem will likely be a huge beneficiary, and stablecoins may very well eat into payments. Prediction markets (a.k.a. gambling) will likely continue with fewer regulations. The new defense technology companies have significant allies in the White House. The US's territorial expansion is already a topic of conversation (and, therefore, a possibility). Maybe Greenland, maybe beyond.

Long-term demographic trends are becoming pronounced.

The dependency ratio worldwide rises as birth rates decline and the population ages. Government deficit spending cannot continue at its current rate to fill the pension and benefits gaps, especially as the need for support for young families becomes more pronounced. Many implications here will surely take more than this year to play out, but the attention to this trend is rising year by year, with no solutions implemented at scale (yet).

Software productivity has accelerated, and computing power is increasing exponentially.

AI and LLM adoption is happening in both enterprise and consumer markets, but we are still in the early innings, particularly for legacy markets. Software development is always first and has shown significant productivity increases. This year, the market will realize how easy it is to commodify LLMs and how quickly the leader can be replaced. The other implication is the need for dramatically cheaper energy, so innovation and a push for nuclear capacity and other highly efficient energy sources will be major topics of interest.

Inflation is here to stay.

The incoming Trump administration's policy proposals—tariffs, deportation, tightening up illegal immigration, and re-shoring American manufacturing—are all inflationary. Bond markets are beginning to price in higher inflation expectations, as the 10-year rate has risen despite the December federal funds rate cut.

For 2025 specifically:

Decentralized and Local.

Crypto, media, security, businesses, regulation, etc. The world is now too complex, fast-moving, and fragmented for top-down action and leadership.

1. Systems and platforms that allow user ownership and control will gain ground. Bluesky saw a big influx of users in 2024; its longevity will depend on its decentralized, open infrastructure, not because it’s a liberal haven.

2. Indie creators and collective intelligence show the power of individual influences and the collective to predict and drive change. Prediction markets using collective intelligence have proven more reliable than polls. Citizen journalists have broken more significant and ‘closer to the truth’ stories than the traditional media. Breakouts poised for further growth in 2025 include The Free Press, which has just passed 1 million subscribers, deceptively not-so-niche podcasters, and YouTube channels with independent takes.

3. Arm the Rebels: Powering the modern SMB. SMBs represent the economic engine of the US. With approximately 30 million SMBs in the US employing 60 million people (47% of the private workforce), the sector is pivotal in driving economic activity. The global SMB software market, valued at $56 billion in 2021, is projected to grow at a 7.4% CAGR. Yet SMBs continue to face outdated processes, labor shortages, and financing challenges.

   The 2024 ServiceTitan IPO will pique venture interest in this space. We have seen that typical consumer or prosumer acquisition strategies can unlock SMB acquisition. Additionally, AI-driven software will greatly benefit SMBs, which often lack bandwidth and have lean central teams. For example, Hammr helps contractors track, manage, and pay their people.

Learning and System Change

4. New Schooling: The room where it happens. While the world is transfixed on the potential of AI tutors, most people are still sleeping on the most significant unit of change: schools. Driven by the expansion of school choice and the inability of the existing system to produce the desired results, there is a demand for high-quality, independent schools. In all its forms, schooling is where learning happens, and the implementation of tools is the hinge point. New models will emerge from microschools, podschools, homeschools, and niche private schools across every vertical. Some of the biggest education companies in the world are direct delivery models, and I expect that to continue, given that’s where the true value is created. For example, Stride, the virtual schooling provider formerly known as K12, ended 2024 up 75% in public markets, driven by “families desiring different learning modalities for their kids.”

   There is a recognition that high-quality foundational learning is critical for everyone to succeed in a world with AI and humanoid robots. Nothing in later learning can make up for this critical period of cognitive development.

   We need WAY BETTER new schooling. Cue the cavalry in 2025.

   Our EIR, Arvind Nagarajan, is pioneering a new, innovative middle and high school model at Astra Schools. Ben Somers at Recess is just getting started inspiring kids to think bigger and take on enormous challenges.

5. The AI opportunity in education will continue to focus on improving system efficiency (vertical SaaS 3.0) across administrative functions such as financial aid, grading, scheduling, admissions, enrollment, payroll, and credential validation. AI in learning will flourish, but the breakout products will either be micro-niche (e.g., literacy tools for ESL learners age 3-6) or best-in-class mainstream consumer technology (e.g., OpenAI, YouTube). Enrollment and student-program matching are hinge points for the efficiency of education systems and a huge area ripe for innovation. It’s where the system transformation will take place. Platforms like Tether Education and Odyssey Education are implementing these enrollment and placement solutions.

6. Beyond Degrees: “You Can Just Do Stuff.” Increasingly, what matters is the quality of your work, who you do it with, and how the outcome and your network can verify it. This is true even for top AI researchers at OpenAI. People will pay for early job experience as a substitute for what they might have paid for the classroom. Ladder Internship is a good example - an 8-week internship with a startup CEO where the intern pays $2,500. People will be savvier about monetizing their side hustles and online labor.

7. Learning and knowledge are open (and often free). Similarly, people will realize how much of what they want to learn is available on the Internet, on YouTube, or through tools like Perplexity. Getting access to the correct information, presenting it in an engaging format, and formatting it in a pedagogically optimized manner can be easily automated. Massive platforms and technology companies will be the main channel for this behavior.

Productivity and Outcomes: Working better, smarter, harder, faster

8. Lossless Collaboration: software for ease of knowledge transfer. It’s estimated that 90% of knowledge economy time and insight is lost. This is the endless meetings with too many people. Insight is never fully recorded. Information and data are sitting in silos or behind gates that never get put together. The opportunity for AI-driven analytics software is to increase productivity by decreasing losslessness. Glean is the enterprise early mover, but the concept quickly expands to all products. Pencil Spaces has created a lossless classroom for tutoring and is thinking big and beyond.

9. Everyone is an Entrepreneur, or they must learn to think like one. The era of defined ‘career pathways’ is over. There is no guarantee that after years of study, a job or career (years of the same job with upward progression) will be there on the other end to cover the time or financial investment. Thus, there will be more ‘learn and earn’ arrangements where people learn quickly while on the job, and employers will design training to upskill talent speedily (and not rely on universities).

10. Capital efficiency and small teams will dominate niche software businesses. SaaS markets will become increasingly competitive as software development and sales productivity improve. These businesses may raise no capital or take on one-and-done seed rounds underwritten more like growth equity than power-law ventures. Josh Mohrer recapped his 2024 as an indie hacker building Wave, a personal AI note-taker, with some big numbers:

11. Software and Services Continuum: It’s the outcomes, stupid! Is it the age of Software AND a Service (SAas)? Software-Delivered Services (SDS)? Services with integrated Software (SwiS)?

    Over the last decade-plus, software-as-a-service has automated, digitized, and optimized most mundane corporate workflows. With the rise of artificial intelligence and the continued scaling of technology companies, many have predicted the demise of professional services. So far, that has not played out. Many service firms have thrived as leading firms have evolved and outsourced essential functions, as developing markets have grown, and as technology has proven persistently challenging to implement.

    This year, software implementation in the knowledge workforce cuts even deeper, and every organization must define its technology collaboration model. This could be deflationary over the next several years if outcomes are truly measured and paid for accordingly.

The Business of Government

12. Government success is measured in outcomes. The last decade has seen an onslaught of government spending on big infrastructure and social programs. There’s now a spotlight on results. In many cases, they are severely lacking. Now, catalyzed by Elon and DOGE, and by the attention this topic is receiving on X and other platforms, people demand greater visibility and transparency into those outcomes. This should be a long-term net positive, particularly regarding public dollars. Software-driven companies have an opportunity to help every element of the public sector be more efficient, from permitting to response times to payment mechanisms. These might be more state and local in the US than federal.

13. Technology in the democratic process, policy-making, and resource allocation. Governments differ from businesses because their leadership selection and decision-making processes are more diffuse and decentralized. There are armies of lawyers, lobbyists, special interests, and voters who may need to be convinced, swayed, and influenced. The tooling and organization of this apparatus will improve with technology in 2025 as the public spotlight grows brighter. For example, US Lege is revolutionizing legislative data analysis using AI, ensuring that citizens, businesses, and organizations can stay informed and engaged with the democratic process.

14. Government procurement gets an upgrade. Since the government can’t deliver most goods and services, procurement is the linchpin of government. In the longer term, we will see the rise of tech-native defensive companies like Anduril and SpaceX and the challenge they pose to incubators like Boeing, Raytheon, and Lockheed that use cost-plus models. On a local level, companies like Civic Marketplace transform procurement to shorten timelines, make purchasing more transparent and competitive, and secure the best contracts for community needs.

15. Helping the private sector navigate the public sector. A wave of new companies is lowering the entry barrier to selling to the government by offering a one-stop-shop platform to access the government’s active bids, intelligence on government contacts, and AI-assisted proposal writing. These companies make it easy for companies to access governments’ bids and provide wraparound support to help companies win. Starbridge and GovDash are the leading companies in this space.

People Choose to be Happy and Healthy

16. The non-alcohol movement is accelerating. Consumption is already down among younger generations, and new replacement beverages are growing in each category, including beer (Athletic, Heineken Zero), Spirits (Ghia, Seedlip), and wine (which is being replaced by kombucha and prebiotic sodas, kind of). 

The rise of personal health influences (Don’t Die, Huberman, etc.) drives education and knowledge. The government just added its kicker, calling for a new drink-label warning about cancer risks. It’s piling on to a trend that is already happening. 

17. People will pay out of pocket for high-quality healthcare. This is driven by the rise of concierge medicine in the name of ‘longevity’ and physicians' decision not to take insurance. Quantified self-tools like Whoop and continuous glucose monitors are more consumerized and mainstream. Health Savings Accounts (HSAs) could be broadened to substitute for some of what consumers expect from health insurance (referred to as a ‘discount card’ rather than the traditional insurance model these days), particularly if there are regulatory changes.

18. Increased search for meaning and revival of religion. As reported in the Wall Street Journal, sales of Bibles are booming. Publishers attribute a 22% jump in Bible sales this year to rising anxiety, a search for hope, and/or highly focused marketing and designs. Christian apps posted big growth numbers in 2024. For example, Hallow, a Catholic prayer app ($60M ARR, up 3.5x YoY) and Bible Chat AI, an app that allows you to interact with the bible ($10M ARR, first 16 months in business, 700K+ MAU) as reported by Arfur Rock on X.

But this buyer is also the seller's worst nightmare. You need to open hundreds of websites to find out what they’re buying, navigate countless compliance requirements, and navigate different budget cycles. 

This dreamy and nightmare all-in-one customer is the US government—the single largest buyer in the world. In FY23, the federal government spent $9.3 trillion, the largest spender in many sectors. But selling to the US government at the federal, state, and local levels is challenging, like navigating a complex labyrinth in complete darkness. The process involves rigorous compliance requirements, extensive paperwork, and often lengthy approval times, making it a formidable task for even the most determined businesses.

Because of this high barrier to entry, government spending doesn’t match the economy's representation. In FY23, only 28.4% of federal contract dollars were awarded to small businesses, while the group employs nearly half of the workforce and represents 43.5% of America’s GDP. 

The government’s enormous purchasing power has caused enormous inefficiency and inequities. And this is not just a procurement problem. Critical areas like education, homelessness, and healthcare rely on the best solutions to reach the government and help it serve the country better.

The inflection point is nearly here.

The government has always been a big spender, but there are a few converging forces that make this a potentially solvable problem: 

First, government procurement is highly fragmented. On the federal level, there are over 500 separate departments and agencies with procurement authority, each operating somewhat independently. The SLED (State, Local, Education) space is even more complex, with 50 States, 3,000+ Counties / Boroughs / Parishes, 36,000+ Cities / Towns / Municipalities, 12,000+ Public School Systems, 2,000+ Higher Education Institutions, and 38,000+ Special Districts. 

Second, the government is significantly behind in the race to digitization. Of the 22 sectors McKinsey and HBR studied in their extent of digital transformation and adoption, the government ranked 5th to last. Moreover, the government exceeds the sector’s average in digital spending but only scored ⅓ of the sector average in business processes. As such, we have all encountered government sites that have clunky UI/UX and outdated links. A tiny number of federal government employees are UX researchers or designers. The handbook that classifies government positions has roles for sewing machine operators and bowling equipment repair but not design roles.

Virginia’s e-procurement platform “eVA” links buyers and sellers with 2000-era looking UI/UX

Third, the pain point for delivery is going up, and the market is ripe for 10x better solutions. Citizens demand better systems and look to the private sector as role models. According to Brookings, 75% said the federal government is almost always wasteful and inefficient. A 2019 Gallup poll indicated 80% of Americans agree that businesses can do things more efficiently than the government. The contrast between public vs. private sector service is stark. Consumer tech is getting better, which makes government services pale in comparison. The demand for the private sector to take over the last-mile delivery of public goods is gated by inefficient procurement, and such pressure will necessitate changes in the procurement process. 

Fourth, there are policy tailwinds to support a more diverse set of government contractors. President Biden’s Feb 2024 Annual Agency Equity Action aims for 15% of federal contracts to go to SDB1 by 2025. If SDB had met this target in 2020, they would have received $25 billion more in contract awards. 

Startups are beginning to tackle government procurement.

There is an increasing opportunity and need for new, efficient, innovative service providers to work with the government. We see disruptors who are changing the landscape for both sellers and buyers. 

One wave of new companies lowers the entry barrier for companies to sell to the government. Companies like StarBridge, Govly, CivIq, GovSignals, and Pursuit provide companies with a one-stop-shop platform to access the government’s active bids, provide intelligence on government contacts, and offer AI automation support in proposal writing. These companies make it easy for companies to access governments’ bids and provide wraparound support to help companies win. Companies that used to have five different tools to prioritize their accounts now only need one and can avoid stabbing leads in the dark. The centralized information platform brings transparency and usability into an otherwise difficult-to-navigate process.  

The other wave of companies is improving the purchasing process on the government side. Civic Marketplace is building a one-click compliance procurement marketplace for cities and municipal governments. Sourcewell is building a procurement co-op for SLED clients, starting in Minnesota. Sourcewell facilitates a cooperative purchasing program that harnesses the collective purchasing power of 50,000+ participating agencies to secure cost-effective and efficient purchasing solutions. Pavilion (formerly CoProcure) also plays in this space.

There are vertical-specific solutions, too. Companies like Odyssey Education act as a seamless intermediary between government funding and end consumers, liberating and decentralizing the flow of public dollars. Odyssey administers education savings accounts for state governments. Medicare Advantage is an all-in-one alternative to original Medicare. Private insurance companies offer Medicare Advantage plans that Medicare approves.

What will it take for startups to win in this space?

• Deep domain knowledge and expertise in government procurement, especially recognizing that knowledge of one jurisdiction’s specific regulations is not readily transferable to another. This expertise helps navigate the system, anticipate potential challenges, and prepare effective strategies to address them.

• Fluency in regulatory and compliance requirements: Startups’ that can swiftly and accurately communicate and meet regulatory requirements can gain competitive advantage and customers’ trust

• Patience and strong design partners: Government procurement cycles can be long and slow. Startups must be prepared for lengthy sales cycles and maintain patience throughout. Additionally, strong design partners can help refine product offerings that wows users from the get-go.

• Attention to capacity building of government officials to onramp to new solutions: Introducing new solutions in the government often requires cultural and operational shifts. Startups cannot overlook capacity building that provides training, support, and education to help civil servants effectively use the product. This approach also fosters stronger relationships and trust, paving the way for future collaborations.

We’re seeking startups serving the world’s largest TAM.

Improving the efficiency and effectiveness of the public sector is a critical component of our ownership thesis, as the collective citizenry owns public dollars. In the past, the government technology space was traditionally unattractive to investors. With the recent exit of OpenGov to Cox Industrious and the political pressure from Silicon Valley to tackle major regulated areas like space, energy, and manufacturing policy, GovTech has been rebranded and reborn to American Dynamism.

While the greatest concentration of venture dollars has gone to revitalizing military assets and space development, we see opportunity at every level. We are excited about the critical infrastructure layer of procurement.

Further readings

• A Path To Successful State Procurement Transformation

• CivStart is an ecosystem of civic-minded entrepreneurs navigating the pathway through the government market and bringing innovative solutions to communities across the country.

Note: We are investors in Civic Marketplace, Starbridge, and Odyssey Education

While the world has changed dramatically, the traditional school system has not. US public schools have suffered from underinvestment, politicization, and perverse incentives. Traditional schools have bored students, poor learning outcomes, frustrated teachers, and dissatisfied parents.

The erosion of social safety nets has saddled the traditional school system with problems it is ill-equipped to solve. Teachers can't deliver on educational objectives when many students lack housing and nutrition.

As a result, the quality of education is not enough to prepare students for the workforce. In 2019, only 34% of eighth graders could read proficiently at or above.

Enrollment trends show that what began as a trickle of students out of the public system has become a flood. Urban school districts have seen reduced enrollment over the years. NYC’s Department of Education predicts a decline of 30,000 students in September 2022. This school year is continuing a clear downward trend (see below).

As students leave the traditional school system, parents are pursuing alternative education.

What is alternative education, and why is it attractive?

'Alternative Education' refers to the variety of approaches to teaching and learning outside of traditional schools, including: homeschooling, charter schools, microschools, learning pods, online schools, and religious schools.

Parents choose alternative education for several reasons. First, the mainstream school system is not working for their children. Until recently, alternative education existed as a means of remediation. It was thought to be exclusively for vulnerable students with special needs. As more alternative schooling options target successful students, this stigma has decreased. Personalized learning has become desirable regardless of supposed learning differences. Everyone is different.

Second, they might also like their child to be educated using more bespoke, innovative methods. Every family has different values. They may want to emphasize creativity through the Montessori method.

Third, they want geographic flexibility for their family. Remote work has opened up a new world of possibilities. More parents are considering becoming digital nomads or traveling by the season. The family unit has become more complex and non-traditional. Family members might live in different locations. Distance learning helps ensure continuity of learning without one set home base. Online charter schools like Connections Academy and Stride Learning have been in business for 20 years, serving this need.

Parent interest in alternative education is at an all-time high

A 2024 Report on School Choice conducted a survey of 2,319 parents that shows a tremendous preference for alternative education options.

Learning pod research shows a similar story. 58% of parents reported that their child was doing much better or slightly better in a learning pod. Parents also report having more information and influence over what their children learn.

Homeschooling, already on an upward trend, doubled during the COVID-19 period. Between spring and fall 2021, the number of U.S. households homeschooling rose from 5.4% to 11.1%, according to the U.S. Census.

Parent favorability of school choice and ESAs is incredibly high.

Why is Alternative Education now an inflection point? Teachers, Technology, and Government.

Traditional school teachers are leaving the public system and finding new career opportunities.

It's not only students who find the public system untenable. Teachers themselves are leaving the current system and finding new ways to make a living.

Fifty-four percent of teachers said they are “somewhat” or “very likely” to leave teaching in the next two years, compared to 34 percent in 2019. 90% of teachers suffered from burnout and requested higher pay last year1. Teacher dissatisfaction has prompted an exodus from the public education system, as evident in the data. There are currently 567,000 fewer educators in America’s public schools today than there were before the pandemic, according to BLS.

The Wall Street Journal reports in February 2022:

Quits in the educational services sector rose 148% in that time frame, while quits in states and local education rose 40%, according to federal data. By comparison, quits in retail trade rose 27% in the same time frame. According to LinkedIn, the share of teachers on the site who left for a new career increased by 62% last year.

Teachers seek new lines of work, often outside the teaching profession. Others have become more open to teaching in alternative settings. Teachers have switched careers to tutoring, leading a microschool, and offering online classes. New roles could include teachers as solopreneurs of their own pod businesses.

Technology is now ubiquitous.

Devices and internet connectivity have become ubiquitous. In 2021, 93% of households with children reported some distance learning. Video conferencing, messaging, interactive media, and online assessments have become commonplace. There are endless EdTech products in every flavor to aid with learning. Educators have options to create a custom curriculum tailored to their students.

U.S. state governments have invested significant funding and resources in alternative education programs.

Across the United States, new solutions that offer parents more choices are gaining momentum. At the forefront are Education Savings Accounts (ESAs). ESAs open up possibilities for state funding of alternative education by providing state-supervised funds that parents use to pay for education options. A parent can use the funds to cover private school tuition, online learning, supplemental curriculum, and other educational expenses.

Arizona piloted the first ESA program in 2011. The program grew to 10,000 students last year. Arizona voted in June to scale the program to universal eligibility. Nine states have active ESA programs—see below. West Virginia intends to expand its Hope Scholarship program massively in 2022. New Hampshire has launched a pilot program to pay up to 40 students to attend a pod system.

ESA policies have already had a significant impact on alternative education providers. Outschool recently reported that ESAs have grown from 0 to 10% of its business within 12 months.

With the rise of alternative education, what are the significant opportunities?

Venture capital has allowed founders to experiment with new alternative education offerings. Emerging companies are building the infrastructure for a systemic shift toward alternative education. They are also helping parents reimagine what quality education looks like. They are showing, not telling.

New well-funded startups are also making inroads into the market with unique offerings. A few exciting use cases include:

1. Implementing online and hybrid forms of schooling. One example is Sora Schools, which offers project-based, virtual middle and high schools. Primer launched micro-schools in Arizona and Florida using tax dollars for the upcoming school year. Kubrio is a global model that offers coach-led pods as mini-learning communities. The Hub offers an educational support organization geared to serving the homeschooling population. Recess provides homeschoolers with an online social community.

   

2. Reducing the traditional barriers that prevent families from adopting alternative education is critical. Getting the in-person component of alternative education is vital. Boundless Life is an excellent solution for digital nomads. They offer a complete living arrangement package matched with an agile K-6 education. The education component blends an online Nordic curriculum with in-person activities. Kaipod provides in-person learning pods for online learners and homeschoolers. Its pods offer a community for students and resources for parents. Kaipod has partnered with Odyssey and Sora Schools in the coming school year.

3. Modernizing the administration of state funding for alternative education. To unleash massive change requires government dollars to follow students. Odyssey is helping catalyze this change by partnering with state governments. Its unique platform administers education savings accounts (“ESAs”) and microgrant programs. Tether Education also helps parents make informed decisions about school choices.

4. Providing access to a high-quality teacher or tutor. Tutoring marketplaces have been around since the rise of the internet. There is a significant opportunity for onboarding, incentivizing, and developing teacher talent. Successful companies need to embed pedagogy into the delivery mechanism of teaching. They will treat teachers and tutors like partners and professionals. The technology and user experience will enable a seamless experience. Pencil provides a high-quality LMS for tutors to use.

5. Learning completely outside the system, maybe in the 'metaverse.' Pioneers like ClassDojo are blowing up the system completely. These programs appear as supplements to schools or replacements for social media. Both organizations have indicated they have learning design goals to build soft skills.

Of course, it could all go wrong:

Regulation and legal challenges could prove tricky. An uncertain legal landscape drives up costs and increases risks. In July, a judge in West Virginia ruled that the state’s ESA program was unconstitutional, a ruling two months before the start of the school year, which unsettled parents.

Teacher unions are not keen on new market entrants and often resist innovation from outside the existing school system. The American Federation of Teachers (AFT) advocates for strict regulation of charter schools, and the unions are likely to lobby for similar restrictions against alternative education.

Parents might suffer from the '40-year communication gap'. They often have high regard for the education they received as children and assess educational quality based on their own lived experience, even though classroom management has improved since those adults were students.

Quality measures are difficult. Parents and governments want to ensure that students receive a high-quality education. Measuring learning outcomes in education is tricky. In the past, some private providers have been accused of putting profit before quality. Strong efficacy measurement systems and accountability for outcomes are critical, particularly when public dollars are at stake.

Conclusion: The future is bright

The alternative education movement is still in its early stages but is gaining cultural acceptance. With new technology and startups, alternative education can meet increasing parent demand, creating a self-reinforcing flywheel. We are beginning to open up a new world of learning possibilities.

Further Reading:

• Seeing Beyond The Mirage: How pragmatic stewardship could transform learning outcomes in international education systems. Co-authored by Katelyn Here.

• CRPE Pandemic Pods Report. Here.

• 2024 Report on School Choice

• Comprehensive reading on ESAs from the state policy network. Here.

• The rise of alternative education. Here.

• Education Statistics: Facts About American Schools. Here.

Disclosure: Katelyn Donnelly is the Managing Partner of Avalanche, which is an investor in Odyssey, Boundless Life, Pencil, and Tether Education.

Thank you to Dalglish Chew for the feedback and editing.

Useless education is still prevalent: We’ve all sat bored through a lecture, have been assigned to read a lifeless textbook or instruction manual, or have been expected to retain information from passively watching videos. It happens throughout life. It’s content you can’t see a use for and has no obvious, immediate application. It often comes via a delivery method that you know will prove useless when it comes to you retaining anything. It all feels like a performative waste of time.

Technology is now ubiquitous. In homes. In the workplace. In hands. In classrooms. Nearly everyone everywhere has a device that lets them tap into the World Wide Web. Google is a verb. Facebook is the primary source of truth for many. Education has followed pace and accelerated in the time of Covid.

If we have great technology that operates at scale, why do poor-quality learning experiences still happen?

Despite technology pervading education products, many EdTech products haven’t followed the basics of learning science.

EdTech 1.0 was the age of basic technology infrastructure, including student information systems and ubiquitous tablets/laptops. EdTech 2.0 was the wave of implementing engagement mechanisms: video lessons, generic quizzes, gamification infrastructure, and functional learning management systems. Each wave was necessary, important, and disruptive. But neither has fulfilled its ultimate promise: transformed outcomes.

Unfortunately, test scores on basic literacy and numeracy exams haven’t budged. There are still many more job openings for technical talent than applicants with the appropriate skills.

If the last school year taught us anything, technology-enabled learning is here to stay. And when it’s done well, it can be transformative for any skill, setting, or stage of learning. And when it’s done poorly? Well, it’s a waste of time and money.   

Strong pedagogy designed into tech products is critical.

What do I mean by pedagogy? Pedagogy is the formal word for the science of learning or the approach to teaching. Often, too little time is devoted to this area. We understand the desired outcomes and have mechanisms to measure them, but we have not implemented the appropriate pedagogy. Designing products with appropriate pedagogy that can optimize students’ engagement—benefiting from being more responsive than a textbook or auditorium-scale lecture—should improve students’ learning outcomes.

Enter EdTech 3.0: Pedagogy at the Center

True transformation, where education technology catalyzes dramatic improvements in students' learning and life outcomes, has not yet come to pass. Yet, with EdTech 3.0, we can drive efficacious learning at scale.

I (and many others) have written about the vision for efficacious education technology at scale for many years. Professor Michael Fullan and I published Alive in the Swamp in 2013, which contained an index for school administrators to evaluate EdTech solutions.

The index includes three main headings, all related to impact on the student: technology, pedagogy, and system change.

• Technology quality must be high—accessible 24/7, entirely online, with robust UX/UI, and steeped in real-life problem-solving.

• Pedagogy should include clear learning outcomes, a strong relationship between teacher and learner where the teacher acts as an ‘activator’ or change agent, and an embedded assessment platform for measurement.

• System change includes support for implementation within the school day, the ability for schools and classrooms to collaborate and rise together, and, critically, for the school to have high value for money.

Researchers have evidence that some learning methods work better than others. Below is a meta-analysis of over 1,000 studies in which John Hattie assessed the impact of learning practices on student achievement.

‘Teacher as activator’ (or change agent) has an impact size over three times greater than ‘teacher as (mere) facilitator.’ First, it’s important to note that Hattie was not focusing on technology. Second, simulations, gaming, and web-based learning do not fare well. We guess the low impact is because they were employed with poor pedagogy. In other words, the ‘guide on the side’ is a poor pedagogue.

This could be for 5-year-olds learning to read, high school students trying to understand the world, middle schoolers learning to navigate social settings, and even corporate executives trying to understand blockchain or how to conduct a discounted cash flow. The way that learning is delivered matters.

The catch is it’s hard to do

High-quality learning products are not cheap or easy to produce. They require talented product designers, thoughtful content creators, technological experts, and management with a long-term vision. However, like any media or technology company, scale and distribution can recoup high upfront costs. Companies that create outlier products that help students learn should produce outlier financial outcomes for investors.

Can technology implement Bloom’s?

The holy grail of education has centered on

Pedagogy-led technology-enabled companies

You wouldn't invest in an artificial intelligence or quantum computing company without technical due diligence, right? So why would you invest in or buy the products of an EdTech company without an explicit theory of learning placed at the center of the product? It’d be almost irresponsible.

Here are a few companies Avalanche VC invested in that meet a high bar of exceptional pedagogical design:

The Social Institute offers a gamified online learning platform that empowers students to navigate their social world, with a particular focus on behavior on social media platforms. The platform neither endorses nor condemns social media but encourages students to make responsible daily decisions about technology use. In this instance, the pedagogy is built into the tech platform. It includes peer-to-peer content to ensure the material is cutting-edge and immediately relevant to students’ online experiences. The company has a strong focus on social-emotional learning, and they work with teachers and school administrators to fit the curriculum into the school day.

“Rather than scare and restrict, we empower and equip.” – Laura Tierney, CEO and co-founder of The Social Institute

Prisms is reinvesting the way math is taught with the insight that to learn the intuition and reasoning behind the concepts, math needs to be taught experientially and spatially. They built core Algebra and Geometry lessons using real-world problem-solving powered by virtual reality. Teachers and students receive real-time learning insights to track progress over time. Initial efficacy studies indicate strong positive results. Prisms’ first module is Pandemic: How can we save our city’s hospitals?, which allows students to develop fluency with exponential functions by experiencing and modeling the spread of a viral outbreak.

Pencil has developed dramatically better teaching tools for teachers and tutors. Its fully integrated systems create a picture of the whole student with a cutting-edge user experience. The founders have deep technical and product expertise from Google and Facebook and have brought their capabilities to produce the same quality in education.

Why is now an inflection point?

Today, internet bandwidth is generally strong, devices are almost 1-to-1, and software infrastructure is in place to power the back-end administration of schools and other organizations providing learning services. The big game-changer is that Covid restrictions opened our imagination to what could be done when the moment required it and what is now possible, especially after parents and students had to navigate a version of trial-and-error over the last eighteen months. Some schools struggled; others thrived – the key is that we collectively improve, especially as we start another unusual school year.

Additionally, venture capital is flowing into Education Technology markets. Early EdTech companies like Duolingo, Coursera, and PowerSchool have had successful public market debuts. Countless others have been valued >$1Bn in private markets. EdTech specialist funds that were once niche have now raised hundreds of millions of dollars for new funds. Generalist funds have seen the returns and are now adding EdTech as an investing vertical.

We also feel an increasing need to do something different, given that our society requires an educated populace to thrive, if not survive. Michael Barber writes of the urgency eloquently in Impossible and Necessary: Are you ready for this?

The challenges we have set for ourselves – environmental, social, and economic – as a result of the innovations of the past, can only be solved by further innovation which will need to be both scientific and ethical.

Our school system needs to foster innovative capability in every young person. This will require each young person to learn a body of knowledge, including, needless to say, to read, write and do mathematics to a good standard, and to learn how to think for themselves and influence others. Moreover, they will need to learn these things within an ethical framework which prepares them for the 21st century.

Since no school system in the world is currently achieving these objectives for every young person, innovation will be essential.

We need a populace that can read and communicate efficiently, reason through complex logic, use technology (the hammer and nail of our time), and empathize with people of various cultures and belief systems. We need young people who can innovate and build.

We need innovative education technology powered by pedagogy to get us there.

How could this trend go wrong?

• Learning outcomes are challenging to measure, and there are always plenty of distractions. There might be lengthy debates over impact and research. It could take a while for winners to emerge, and we might lose valuable time.

• Decision-makers might choose legacy products. The inertia of the status quo is a powerful force. While Covid has helped expand the consideration set of solutions in the near term, incumbents will fight to keep market share without investing in overhauling their product portfolios.

• Buyers and Venture Capitalists need to choose based on performance and product design. Buyers of learning products are rarely trained to assess quality at a deep level, and they might be misled by snazzy marketing.

• High-quality pedagogy business models might have smaller gross margins than typical software businesses. They might spend more on customer experience and R&D, while the leaner companies attract larger capital allocations and can grab the narrative.

Bottom line: Once learners experience quality, they won’t go back.

We’ve seen how wasteful it can be when education technology doesn’t work. Teachers, parents, and learners are all frustrated. Society loses. Now is the time to be bold and to design solutions that produce outcomes for learners. In the long term, quality wins.

High-quality, efficacious EdTech products will gain market share and be the commercial giants of tomorrow.

Further Reading:

• The New Education Frontier. Article by Anurupa Ganguly and Jeffrey Davitz

• Alive in the Swamp: Evaluating Digital Innovations in Education - Essay that turned into a book written by Michael Fullan, a world-known education expert, and I

• Visible Learning - John Hattie’s ranking of influences on learning achievement

• Impossible and Necessary: Are you ready for this? - Essay by Sir Michael Barber

We discuss the state of elite universities with Matthew Rascoff, the Vice Provost for Digital Education at Stanford University.  

Matthew is one of the most innovative administrators in the industry and a leader who puts ideas into action. He is pioneering new digital models to bring credit-bearing Stanford classes to lower-income high schools across the US. 

With digital learning, Matthew is reaching upstream to build more effective bridges for young learners.

Tune in this week to hear from a leader that will make you feel bullish on elite universities

We cover:

• Matthew's journey from a horrible high school experience to a resurgence in college

• The role of standardized testing in college admissions and prediction of performance

• Admissions is one of the most creative areas of higher education today

• The challenge of finding venture outcomes for “new measures of merit.”

• Matthew’s venture to have Stanford offer credit-bearing courses to Title 1 high school students to increase access for low-income students.

• The continuous challenge of professor-to-student ratio in higher education and the difficulty of scaling course quality

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• Teaching at Harvard with an AI Faculty Co-Pilot by Jeff Bussgang

• Baumol’s Cost Disease Theory

• The Child is the Teacher: A Life of Maria Montessori

• A Collection of Essays by George Orwell

• Private universities have public obligations. Providing education to students from modest backgrounds isn’t a novelty at Stanford. It is part of who we are as an institution and dates back to our founding documents. By Matthew Rascoff

0 Comments

Nice to see you here in 2024.

Usually, I refrain from annual predictions as the pace of the calendar year is arbitrary for gaining conviction, but I thought it’d be fun this year.

The list is not MECE (mutually exclusive, collectively exhaustive) in consulting parlay. Not every category may be venture-investable. Many businesses we see in these categories should prioritize capital efficiency.

There are also more speculative trends that I excluded from the list. These are under the radar and early. Take this as a couple of the big ones that are obviously the future this year.

Next week, I’ll do another post covering the underlying technology trends and our 2024 venture capital and startup markets outlook.

As always, comments, thoughts, and intelligent disagreement are encouraged.

Katelyn

Learn

At the foundation of every successful life is a learning journey. Learning compounds and creates more demand for itself. Avalanche invests in technology that delivers learning outcomes at scale at every life stage and in many contexts. 

1. Efficacious education continues to grow.

Gaming + immersive reality + effective pedagogy had a breakout year in 2023.  2024 will see technological advances embedded into product teams, and distribution will see a step change improvement. VR headset prices are decreasing, and Apple will launch the Vision Pro headset in early 2024.  Generative AI makes content production cheaper, more elaborate, and more personalized. Prof Jim estimates they help educators create content 15 times faster.

The lynchpin of efficacious education is the quality of pedagogy designed into products to produce learning outcomes. Companies like Prisms of Reality that have cracked the code and provided third-party validated efficacy studies will flourish and scale. 

2. The Education Freedom movement in K12 accelerates. 

Eight states in 2023 went universal with their school choice programs, representing 1 in 5 students nationwide. Many others, including Idaho and Arizona, have active ESA programs and amended policies so that parents can choose options to attend the best school based on needs, not zoning. Education flexibility is now a policy priority in 2024 for Texas, New Hampshire, Louisana, and Tennessee governors, and polling shows solid bipartisan support from voters. Implementing these programs is critical. Odyssey Education has built a best-in-class complete platform to make program administration a breeze for everyone.

3. Digital enrollment goes global.

Education choice and diversity are not just a US phenomenon. Education systems worldwide have also increased choice and transparency; these options are now coming online for the first time. Chile is the first country to have country-wide public & private digital enrollment. The platform ‘Get on the List’ launched this week and is powered by TetherEd. The market will globalize as courses and programs become more hybrid and online. 

4. The market for supplemental education, homeschooling, and alternative education deepens. 

As collective imagination on school flexibility has increased, and policy changes put dollars directly in the hands of parents, a wave of supply-side providers is maturing to meet the demand. We’ve seen growth in micro-schools, lower-cost privates, and homeschooling for online, in-person, and hybrid implementation. Increasingly, a new class of professionals can implement the blueprint for an online school model with an in-person social component. All sorts of alternative education models are flourishing.

5. AI-tutors disappoint for learning, but AI-driven software improves the efficiency and productivity of the sector. 

Mike Goldstein wrote an evidence-based take on tutoring that concludes that AI tutors will work for motivated students (who are in the slim minority) and broadly not impact the unmotivated students (who are the vast majority. That’s roughly right.

AI chatbots thus far resemble homework helpers and are a faster way to get answers than pedagogical learning tools. This is great for curious, ambitious students and may aid their progress. But, these are the minority of students. Keeping students engaged and motivated is a more challenging and fundamental task for most teachers.  

6. With declining enrollment, higher education competes on cost and quality - the original avalanche thesis accelerates.

Post-secondary students are wisening up to the value for money of various degree programs and choosing institutions and career tracks that have a strong signal and track record of vocational success. Many students have chosen to forgo traditional higher education altogether, leading to 1 million fewer young men in college today and 200,000 fewer young women compared to 2011. GenZ is likelier to want to ‘earn and learn’ even if it takes longer and values programs tied in with employers.

For example, Bootcamp-like programs focused on skills and advertising lower prices will continue to be in demand as standalone services and/or bolt-ons with university branding.  Upright Education is an excellent example of a course platform that partners with 30+ community colleges to offer courses on in-demand career skills.

Original Avalanche Is Coming: Higher Education and the Revolution Ahead paper.

7. New measures of merit

Traditional ways of assessing merit for scholarships, admission to education programs, and entry-level workplaces are being reinvented. Technology that takes in a wide range of data and can robustly prove competence or potential can replace arduous exams, lengthy interviews, and fraught human decision-making.  We expect to see things like college admissions and job application processes being disrupted and revolutionized as AI prediction machines are fine-tuned.  

Earn

The world of work and career is fundamentally changing to be more platform-driven, flexible, and independent. Everyone is an entrepreneur, or they must learn to think like one. We invest in platforms that drive a shift to greater efficiency and empowerment and increase skills in every vertical. 

8. Technology hiring is open but measured.

Technology companies and startups had layoffs and downsizing in 2023 after a manic 2021 and 2022. In 2024, employers will return to hiring but will be selective and strategic. According to the BLS, web developers and digital designers are projected to see a 16% job growth from 2022 to 2032, significantly outpacing the average for all occupations. Salaries and compensation packages, outside of highly in-demand technical or experienced hires, will be lower than in boom years. However, the best way for employees to secure a compensation raise is to secure a competing offer or to move companies. Platforms like Offered make finding a new job more manageable.

9. Productized services replace freelancer marketplaces.

It’s time for the gig economy to mature. The revenue growth of last decade's freelancer marketplaces (Fiverr and Upwork) has slowed. Enterprises and SMBs looking to engage freelancers want to buy results and quality. Platforms and companies that can productize the link between freelancers and businesses who want outcomes will thrive. 

10. Strong healthcare and hospitality labor demand will continue with limited supply.

Both categories require soft skills and on-the-job training rather than extensive classroom time on theory and reading. Companies that effectively recruit, upskill, onboard, retain, and performance manage this labor pool will do well. Technology platforms that can make these jobs more productive by automating routine tasks are poised for success.

11. Creator-led businesses succeed and mature.

More than 50 million people worldwide consider themselves creators. Last year, significant creators launched consumer products, like Mr.Beast with Feastables. Creators and influences are increasingly sophisticated with their courses, communities, and merch. Duolingo, the breakout success of consumer EdTech, has shown the power of a strong social media-first brand. I expect an acceleration of this trend and that dedicated tech products and services will help the large creator long tail monetize their communities and curation.

Own

The path to prosperity includes increased access to assets and ownership. In an AI-driven era, owning data and rights to intellectual property is a critical element of wealth. The effectiveness of the state where you reside is crucial to wealth building. We invest in companies that increase ownership of assets, power small and medium-sized businesses, and efficiently deliver public services more effectively. 

12. Citizens vote with their feet.

2023 was a year of US internal migration from high-cost, high-tax states to lower-cost, more business-friendly jurisdictions. We expect this to continue globally.  Cities, states, and countries that adopt outcome-oriented policies that make work and life easier for their citizens to thrive. International desire to move countries is also increasing.

13. Digital nomadism is here to stay. 

While 2023 saw many workplaces enact back-to-the-office policies, digital nomadism, a concept that accelerated during covid, is significant and not going away. One of the macro drivers is the geo-arbitrage combination of low-cost living with higher expat income. Last year, 58 countries created special digital nomad visas to lure this population. 

Digital nomads have unique consumer preferences, leading to the creation of bespoke products that cater to their demands. Boundless Life is an international community with a built-in schooling compound for digital nomads with kids.

14. Owning digital assets and platform control gains importance.

In an AI-driven economy, owning data and rights to your intellectual property will be a critical element of wealth. Blockchains, cryptocurrencies, and programable money are technological solutions to drive decentralized ownership.

As crypto prices have increased in the last three months, new life has come back into the digital asset ecosystem, and it looks like a Bitcoin ETF may be approved soon. Younger generations believe crypto is here to stay as an asset and have ~15% of their portfolio in digital assets. Platforms like Bluesky that allow users more ownership and control of their experience will accelerate. The web3 excitement from 2021 will likely make a re-emergence in 2024 as a more serious and practical force. We stand by most of our predictions from 18 months ago (Web3: It’s all still happening).

In our inaugural season, we released 12 episodes on the podcast that featured four Avalanche founders, four fund advisors, three Austinites, three professional storytellers, and 12 guests sharing their views on the future.

Season 1 Recap: The stories we highlighted

Why did you focus on storytellers? Why tell origin stories?

Origin stories. Every hero has one. Every company needs one.

Stories are scouts venturing into the world to clear the way for your ideas.

And stories are home, reminding you who you are, even as you grow.

Damien Walter reminded us that ‘story is the physics of the human world,’ and we agree.

Arvind’s title at Avalanche is EIR and Chief Storyteller. Learning the art of storytelling is one of three pillars in his innovative high school model.

We take origin stories - and understand the why - as foundational to every venture we engage with and invest in.

Removing middle agents to empower people directly.

Michael Barber discussed the original Avalanche, the unbundling of higher education driven by students as a customer: ‘It is students who are paying money to go to university. So the students don't choose you, you are gonna struggle, and if you don't mark their work, you're not likely to attract them in the future.’ Warren Carlyle discussed his realization that ‘talent is going to be able to reach their audience directly, and there's a lot of things that are kind of being decentralized and changed.’ Our youngest guest, Wesley Wang, described how he has crafted his film storytelling career and garnered support and views on social media, and bypassed traditional gatekeepers.

Technology drives outcomes and results.

“It makes a huge difference to the public to know whether you're approved in one second instead of two weeks,” said Joe Connor about his company Odyssey Education, which implements ESAs on behalf of governments. Chris Neilson described how effective school matching and information drives market efficiency and his goal with Tether Education: “And so then you start to up the game and you make this market more efficient, especially at the bottom.” Al-Hassan Hlelieh and Saad Rizvi explained how technology drives outcomes by providing transparency in government.

Shared values and thoughtful design are the foundation of community building.

Elle Beecher discussed how she ‘speeds up the process of genuine connection by leading and maintaining the shared values of being curious, kind, and open-minded.’ Nick Gray told us that designing in-person interactions specifically for introverts was important.

Invisible trends underneath the surface in our world.

Catalina Kaiyoorawongs, CEO of LoanSense, highlighted how “The loan officer is the financial advisor to the average person.”

Deepak Sekar illustrated how Generative AI and ProfJim are revolutionizing the traditional textbook.

Dalglish Chew explained that the wisdom we need isn't easy to scale quickly, and exceptional coaches are unlikely to be replaced by AI anytime soon. Maybe AI can’t solve every problem, and humans still have a role.

Our Story

We have featured origin stories and visions of the future that we would want to live in. We (Arvind and Katelyn) have weaved in our individual and collective origin stories through the season. In Season 2, we aim to be more precise and more explicit about what Katelyn is building at Avalanche and what Arvind is building in his new high school.

Book recommendations to your younger self

At the end of each episode, we asked guests to recommend a book to their younger self. These ranged from practical business books to immersive novels to storied philosophers. We present the recommendations to you for your perusal:

• Ep 1 - The Brothers Karamazov 

• Ep 2 -Crooked Cucumber: The Life and Zen Teachings of Shunryu Suzuki

• Ep 3 -Shoe Dog: A Memoir by the Creator of NIKE

• Ep 4 -I Will Teach You To Be Rich: No guilt, no excuses 

• Ep 5 -Dune - Novel by Frank Herbert

• Ep 6 -Bodhicaryavatara

• Ep 7 - Write Useful Books: A modern approach to designing and refining recommendable nonfiction

• Ep 8 -Games People Play: The Psychology Of Human Relationships By Eric Berne

• Ep 9 -The Surrender Experiment: My Journey Into Life's Perfection

• Ep 10 -Prediction Machines: The Simple Economics of Artificial Intelligence 

• Ep 11 -Story: Style, Structure, Substance, and the Principles of Screenwriting

• Ep 12 -The Philosophy Of History by GW Hegel

Your feedback requested and what’s next.

The sound quality will improve. Season Two will launch again in March. In the meantime, we hope to share more original research and perspectives from team Avalanche to this email list.

We'd love your feedback and thoughts as we record the second season. Please fill out the 3-question, 1-minute survey at the link below. We’d greatly appreciate it :)

Feedback Survey

Final words of thanks.

Thank you to Matthew Xu, our analyst intern, who helped catalyze this podcast and edited most of the first season!

Thank you to our guests (and several others unpublished) who gave their time and attention.

Thank you to every active listener. Your thoughts and engagement keep us going.

See you in 2024!

For years, the importance of building demonstrable skills has been growing. The research is clear: skills acquired through work experience increase lifetime earnings. Yet, a massive shift in how learners, educators, and employers think about skills is beginning.

Three subtrends set the stage for a massive inflection point in how we think about skills:

First, the gap between the skills higher education produces and those valued in the labor market is at an all-time high.

In the United States, students spend hundreds of thousands of dollars in debt to invest in a college education. However, students are left alone to bridge degrees in traditional disciplines to practical roles in industry. For example, turning a degree in economics into a job in product management or a degree in English into a job in content marketing.

Almost half of all university graduates will end up in jobs that don’t require a university degree. This has been true for almost three decades, as the chart below shows.

The escalating cost of a college education has given this underemployment a new urgency. Recent political debates and a rising student debt crisis highlight a broken system that is too expensive for what it produces, leaving individuals to bear the burden.

Second, employers and project marketplaces are moving away from degrees and moving toward skills-based hiring.

Talent shortages and a growing recognition that employers have been using a bachelor’s degree as a poor proxy for skills have led companies to drop the college degree requirement in hiring. In the last two years, employers reduced degree requirements for 46% of middle-skill positions and 31% of high-skill positions, according to data from Lightcast. Governments are following suit: Maryland announced earlier this year that it will no longer require four-year degrees for thousands of state jobs. Employers are now looking to non-college educators and skill providers for evidence of skills instead.

Third, people change jobs or careers more often.

The data indicate a generational increase in career switching: the median tenure for workers aged 25 to 34 is 3.2 years, whereas for employees aged 65 and over, it is 10.3 years. Workers in management, professional, and related occupations had the highest median tenure (5.5 years), and workers in service occupations had the lowest median tenure (3.2 years). Each job move will likely require new skills, increasing the demand for upskilling and reskilling.

Why is now an inflection point for skills?

The inflection is driven by rapid advances in tech-enabled productivity, demographic change, and higher interest rates in the labor market, with employees increasingly seeking autonomy and flexibility in work life.

The half-life of technical skills is shortening. Strong foundational skills are paramount.

Foundational skills such as the three Rs (reading, writing, and arithmetic) and four Cs (collaboration, creativity, critical thinking, and communication) have long been considered the minimum base for any successful adult in society. These skills are evergreen and drive workplace performance. However, in today’s workplace, foundational skills are not enough. As the rate of technological innovation grows exponentially, the technical skills that jobs require will have a shorter shelf life. Mastery requires constant learning, as new tools emerge in knowledge and information work. The imperative to constantly upgrade one’s skills to be considered a high-skill worker will lead to an increased demand for upskilling products and services.

Advances in artificial intelligence put pressure on the human workforce to differentiate its skills.

Each iteration of GPT has gotten smarter and smarter, and an increasing number of lower-skilled human activities can now be substituted with AI.  This ratchets up the need for workers to learn skills that involve the use and control of AI-enabled technology and that are unlikely to be automated away. 

The demographic pyramid leads to a shrinking labor force in the Western world

Finding qualified labor across industries is challenging. Teaching and nursing are in high demand as the labor force ages, and the number of retirees increases. Schools and hospital staff are now heavily recruiting foreign labor from the Philippines and other countries with an educated workforce. A similar dynamic is emerging in skilled trades such as plumbing and construction. Workers are retiring, and there are not enough people to replace them.

Higher interest rates are driving changes in the labor market. 

As interest rates have risen, jobs in the knowledge economy are becoming scarcer.   Employee engagement is at an all-time low. Employees have reflected that learning is one of their main priorities in selecting a job. As the costs of acquiring labor have increased,  employers have spent more to train and develop the workforce they already have. As a recession looms, companies will cut programs lacking effectiveness and concrete outcomes. While the ‘day in the life’ of the big tech employee videos were cute, they won’t stand the test of time when results matter.

Everyone will need to be or think like an entrepreneur as remote work becomes more prevalent.

In the Internet economy, teams can be globally distributed, and individuals can work from anywhere. Access to a global, distributed remote workforce enables employers to demand “just-in-time” skill sets. While remote work may not be suitable in every context, it is certainly a significant driver of demand for concrete skills. The demand for output-based and the rise of freelancers, creators, and microbusinesses is interconnected, with skills being the connective tissue. Demand for higher productivity will drive the commodification skill assessment, verification, and onboarding of remote talent.

What projects and trends are capitalizing on transforming skills?

Learning will be the only constant throughout a career.  Success in the modern workforce is learning experiences to build skills, and the best way to build skills is to do real-world projects.

Below is a sampling of organizations and companies pushing the boundaries. Some of these are established players with mature businesses and tested business models. Others are early upstarts with a vision for a new way of working. Many of these new models are backed by Avalanche

Bootcamps: An Effective approach to developing concrete skills in a short period.

Today, many online boot camps for tech-industry skills are marketed to students. These have demonstrated effectiveness and are linked to employment.

Job-Embedded: Learning skills on the job is critical.

Research shows that the most effective skill training happens on the job. The effectiveness and availability of employers' programs are critical. Emerging new models bring down costs and clarify outcomes.

Workforce Development: Skills for the trades need a tailored approach

Trades like construction, plumbing, and electrical work require their own forms of training and quality assurance. Some solutions train people in skills that can be used in their local service marketplace. Others are social networks built for people in the construction industry. Others resemble a vertical labor marketplace.

Project-based training, e.g., apprenticeships

New programs have emerged that allow students and career changers to complete project-based work as proof that they will succeed on the job. Leading examples in this category include career apprenticeship programs and solutions bridging the gap between learning and experience, e.g., providers of shadowing and internship opportunities and opportunities to complete bite-sized virtual work experience programs micro-projects that give students a career advantage.

Credentials & Skill-Based Hiring: Assessing skills over degrees

Companies (and even state governments) are dropping college degree requirements. Opportunity at Work has led this movement. They have a talent-matching platform where trained professionals who are "Skilled Through Alternative Routes" (STARs), rather than having a bachelor’s degree, can find jobs. As a higher education degree is no longer enough to qualify for a job, new proxies have emerged for hireability. Full-stack solutions have emerged, enabling individuals to showcase their skills and connect directly with hiring managers. Technical interviews and skill assessment platforms can enhance the candidate experience and streamline the hiring process.

Micro and Meta Skills: Learning using video

These are short and can be consumed all at once. They often use video or interactive media. They may have a library of content on a big platform.

The essential meta-skill of our time is learning how to learn. An ‘entrepreneurial mindset' is an example of that skill. In practice, this means taking the initiative, seizing opportunities, being resilient, and having the drive to succeed. In our competitive, global world, this meta-skill correlates to success in other skills. Luckily, a few organizations help people foster this mode of thinking.

What makes skill-building businesses tricky?

The business model for skill-building has challenges

The industry is challenged on all fronts by high sales and customer acquisition costs, low willingness to pay, and a high premium on proof of efficacy and return on investment.

B2B business models often require selling into the Human Resources or People Operations function. The learning and development function often lacks resources as the team is not directly tied to revenue. If the ROI on learning is low or unprovable, operational executives are less likely to want to devote resources toward upskilling.

B2C business models often struggle with high marketing costs to attract customers. There are several reasons for the high costs. One is that there is a limited barrier to entry, resulting in numerous competitors. It's hard to differentiate a brand, and the products are highly similar. Additionally, most buyers are likely cash-strapped as they try to elevate their income.  The businesses resemble schools that often have negative economies of scale. Each extra enrollee is less able to pay and less an immediate fit for the curriculum. The market for the target student is inherently limited and should relate to the job market.

There is no skill standardization. 

There is a general lack of agreement on skill standards, especially soft skills (see this mapping from the Harvard SEL project). There are over a million credentials in the US, and it’s difficult for learners to determine which will truly matter for their skill sets and career outcomes.  While every company feels compelled to differentiate itself by developing unique skill taxonomies, the industry needs a common standard to enable “interoperability” and advance.

Conclusion:

Skills have never been more critical, but upskilling is as confusing and convoluted as ever. The business models are complex, as any business that wants to scale must demonstrate a durable competitive advantage in distribution and costs. Yet there is opportunity in the chaos.

As machine learning progresses, human learning must keep up. Companies need to upskill their employee base to compete in the global economy. Software companies need to build learning mechanisms into their products. These will have a learning flywheel that updates their users with product improvements.

The need for upskilling is real. There are many emerging solutions but not one dominant player. Human learning will need to keep up with machines for society to prosper. The opportunity is everywhere — the question is, who will seize and scale it?

Disclosure: Avalanche is an investor in Sparkwise, Upright Education, Kurios, and Hammr.

Further reading:

• Embedded Education

• Skills-Based Hiring Is on the Rise

• The Transformational Opportunity of AI on ICT Jobs Report. This is a 197-page treatise summarized by the finding that 92 percent of jobs analyzed are expected to undergo either high or moderate transformation due to advancements in AI.

• If you want to grow in your career (and lifetime earnings), you need to focus on doing this

• Human capital at work: The value of experience

• The Emerging Degree Reset and Skill Disruption Report from Burning Glass

Damien Walter is a "rockstar critic" in science fiction and fantasy. He runs a 30,000+ member Science Fiction community and hosts the popular Science Fiction podcast and YouTube channel, where he explores the myths underpinning our society through modern entertainment.

We discuss Damien's reaction to Marc Andreessen's Techno-Optimist Manifesto and explore the future of storytelling, AI, and education.

Damien's thoughtful views reinforce several Avalanche VC theses - from efficacious edutainment to the importance of online communities.

We cover:

• Reaction to Marc Andreessen’s Techno Optimist Manifesto as a neo-religion

• How Science Fiction narratives are embedded in technology companies

• YouTube is the largest university in the world, but this is more evident outside the Western world

• We are going back to an oral culture: speaking and listening

• Gender imbalance in the Science Fiction community

• Imagining the most productive part of a career between 13 and 19 years old

• Book Recommendation: The Philosophy Of History by GW Hegel

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• Stellar Crisis, the web’s first complete multi-player strategy game

• JG Ballard vs Andreessen Horowitz on Science Fiction podcast

• The Dangerous Philosophy of Ursula Le Guin - Video on YouTube

• The Ocean of Story - Damien’s Kickstarter for a new video project

Wesley Wang is a filmmaker, an 11-time national chess champion, and a sophomore at Harvard. His first significant film, nothing, except everything, a coming-of-age short movie that has won many awards and gone viral on YouTube with 2.7 million views.

We talk about Wesley's approach to learning and building his career in film. He treats every film like a startup and constantly improves his skills and products.

At Avalanche, one of our theses is that everyone is an entrepreneur or will have to learn to think like one. We like businesses that are platforms and tools that catalyze this reality. The internet is the great equalizer as the gatekeepers are removed.

We cover:

• How Wesley thinks about building his career and reputation in filmmaking

• How technology played a role (or not) in his path to playing chess at a globally competitive level

• Wesley reflects on his choice to stay in high school and enroll in Harvard instead of homeschooling or going to Hollywood

• What is better validation: Film festival awards or views on YouTube?

• Wesley flips the conversation and asks us about our experience on the frontier or low-cost private education and why Katelyn founded Avalanche VC

• Preserving optionality is a trap. Why finding your passion and niche can help you grow.

nothing, except everything.

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• Wesley Wang’s YouTube Page

• Watch now: nothing, except everything

• Wesley Wang on IMBd

• A24 Films

• Pearson's Quest to Cover the Planet in Company-Run Schools

• Wesley’s Book Recommendation: Story: Style, Structure, Substance, and the Principles of Screenwriting

• Film recommendations: Mulholland Drive and Sound of Metal

Professor Chris Neilson is not your typical founder. He was born in the heart of Silicon Valley to undocumented immigrants from Chile. He is a former elite professional rugby player and has advised education policy for governments across the globe, the World Bank, and the IDB. He is a Professor of Economics and Global Affairs at Yale and has devoted his career to helping partners make the best education choices.

Chris has always believed that the market inefficiency in the schooling market was fixable, that technology-based solutions are inevitable, and that he would be leading the charge to build them.

In this episode, we talk about Chris’s childhood education experiences, his early entrepreneurial and athletic leanings, his successful research career at Yale & Princeton, and his most recent venture as CEO of Tether Education. At Tether, he is implementing his research at speed and scale. Tether is creating a connected network of schools and students through a digital platform. No school would be left behind.

What does Chris see as obviously the future?

• The middle class in Latin America is growing.

• As people get wealthier, education grows as a percent of GDP.

• Governments aren’t getting efficient at the same rate. They are slow to keep up with new technology and updated regulations.

• Despite the increase in digital innovation within the education sector, there is a risk that access to quality education may become even more unequal than it is today.

• Ensuring efficient and equitable access to education requires a well-designed digital platform infrastructure to provide a  well-functioning market of choice, promote competition, and speed up the adoption of innovations. 

• Governments and small businesses in education will need help to stay connected to the frontier of technology and innovation and not fall behind. 

Today, Tether and Chris prove this thesis by matching parents to schools and daycares across Latin America and tethering schools to a platform to increase digitization.

Chris is an unstoppable force with a massive vision and an insatiable desire to succeed. In the full interview, learn more about his journey and what he’s building at Tether.

We cover:

• Removing ‘micro frictions’ to achieve more economic growth

• Increasing choice and competition in the school and daycare market

• Fixing equity gaps by providing a platform for better decisions

• The digital divide in schools is even bigger post-Covid

• Academia vs Startup life: Having skin in the game with your VC

• Being an athlete, learning quickly, and building a team

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• Chris Neilson’s research homepage.

• Tether Education

• Seeing Beyond the Mirage: Ensuring every child has access to a high-quality education.

Note:

Avalanche VC is an investor in Tether Education. Katelyn is on the advisory board.

Kind, Curious, and Open-Minded. These are the core values that Elle Beecher is building The Board Walks community around. She aims to unite people for energizing conversations, growing as humans, and connecting with people who share a "learn something, teach something" mindset.

Elle calls The Board Walks ‘a quaint idea.’

It sounds simple: weekly five-mile walk on Saturdays kicked off with a highly intentional set of ground rules and hosted by a hand-selected and intensely trained guide to set the values.

Elle has invented and productized The Board Walks over 60+ weeks of iteration to generate ‘planned serendipity.’ She also discusses the type of feedback conversations she has on almost every walk. Her approach to community management is rooted in constructed feedback and offering a road to redemption for people when they violate a ground rule.

We talk about Elle's masterclass mentality and response to being roasted on Twitter for her walks, her second viral tweet about change connection at an airport, and how she helps community members improve emotional intelligence through feedback.

Elle is just getting started. The Board Walks are currently held weekly in Austin and San Francisco. Starting in early 2024, she is expanding to ten cities around the United States and is gearing up for global demand.

We cover:

• Responding to a viral Twitter roast

• Creating planned serendipity: the magic of The Board Walks

• Enforcing shared community values: Kind, Curious, Open-minded

• Scaling The Board Walks by inventing in real-life experience parity 

• Intentional product design for building human connection and learning at scale

• Why it’s okay to take things personally

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• It’s Personal. Locker Room Speech by Deion Sanders

• The original Twitter roast.

• Elle’s second viral tweet. “What advice would you give for choosing a life partner?”

• The Board Walks homepage and newsletter

• Elle Beecher on LinkedIn

We dive deep into the world of Warren Carlyle, a professional community-building strategist who works with purpose-driven brands & influencers to build highly engaged online communities and wildly successful social media campaigns. He is also the founder/CEO of OctoNation- The Largest Octopus Fan Club, a nonprofit organization that inspires ocean conservation by teaching the world about octopuses. OctoNation has over 1 million members and educational content that inspires and enthralls millions each week.

Warren is a neurodivergent thinker who has studied ‘the games people play’ to capture people’s attention and influence their behavior. He now exclusively works with creators & community builders who can facilitate nuanced conversations at scale that make people a better person.

Warren has recently worked with Emily D Baker to build a massive legal learning community called Law Nerds. Emily has the most live concurrent viewers of any streamer on YouTube that's not a gamer (~300k).

Listen to the full episode or watch it on YouTube to discover how Warren went from studying classical saxophone to a New York fashion photographer to building and advising some of the largest online communities.

We cover:

• Using the Octopus as a wedge to inspire wonder of the ocean

• How brands start small and niche to grow big

• What it takes to grab and earn attention to create entertaining and educational programming

• How Warren overcame initial rejection from the academic community 

• Working with Emily D Baker to create a legal literacy community using pop culture commentary.

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• OcotNation homepage

• Efficacious Edutainment

• Warren’s homepage

• Learn from Warren: Profitable Community Academy

At we are big believers in Nick’s 2-hour cocktail methodology and implement his best practices at all our events (name tags, always!), so we are excited to hear all the insight in this tactical conversation.

Nick explains why he believes in-person events designed for introverts are obviously the future. Further, we explore how social media can complement in-person interactions to keep in touch and why you shouldn’t call your event a ‘networking event’ even if that is purpose.

Our conversation contains tips and tricks to make you a successful event host and how we judge a founder's learning cycle based on how quickly they implement tactical advice.

Listen to the full episode or watch it on YouTube to discover how to build the top of your friend funnel with a network of loose acquaintances, design events for introverts to be successful, and why it’s sometimes okay to do unscalable things.

We cover:

• Doing things that don’t scale to build relationships

• Good online friendship hygiene - double opt-in intros, personal newsletters

• The Friendship Funnel: Going from acquaintance to friend to deep friend

• Why Nick helps people build friendships

• Assisting people with social anxiety enjoy events

• Nick’s viral Instagram video - 26 million views

• The 2-Hour Cocktail Party on Amazon

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• Nick Gray's Personal Website

• An Unfiltered Conversation with MrBeast - conversation with Colin and Samir

• How to Introduce Two People via Email: Sample Scripts

• 9 Career Day Speech and Presentation Ideas

• Party Times: Start, End, & Best Times

• Icebreaker Name Tags: Examples and How to Do It RIGHT

• How to Host an Event: Parties & Networking

• Where to Throw a Party? Ideas and Venues for 2023

• Icebreaker Activities for Your Next Event

• Friendship Recession Website

In this episode, the entire team is on for a conversation with our coach-in-residence, Dalglish Chew. Dalglish received a Ph.D. in English but left academia and cut his teeth at McKinsey, working with healthcare clients and conducting due diligence for private equity firms. He is now an executive coach and an investor at . He works with startup founders and investors across Silicon Valley to do, in his words, the “inner work that unlocks hyper growth.”

Dalglish has no doubt that there’s a significant return on coaching for venture-backed founders. However, in a world full of well-meaning advisors, mentors, and people who want to "add value,” wisdom is in short supply. Dalglish explains why the wisdom we so sorely need isn't easy to scale quickly, and why he’s skeptical that exceptional coaches will be replaced by AI anytime soon.

We cover a lot of ground in this episode. Listen to the full episode or watch on YouTube to discover why coaching is difficult to scale, why human coaches are not likely to be replaced by AI anytime soon, and how Dalglish’s unique background has shaped how he coaches (and what the tattoo on his back means!)

We cover:

• How does coaching help us do our inner work?

• How close are we to having AI replace human coaches?

• What’s the role of personality tests in coaching?

• What makes coaching difficult to scale, and what does wisdom have to do with it?

• How a unique upbringing and a Ph.D. in English have influenced Dalglish’s journey as a coach

• “Coercive Productivity,” and what it reveals about the differences between Americans and Singaporeans

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

For as long as space remains, for as long as sentient beings remain, so too may I remain to dispel the miseries of the world

Shantideva, Bodhicaryavatara

Show Links:

• Dalglish Chew: Personal Website

• Return-on-Coaching for Venture-Backed Founders. Overview of how we think about coaching at

• Towards a Return-on-Coaching for Venture-backed Startup Founders. A literature review by Dalglish.

• Non-Self-Coercive Productivity

• Why the best leaders want their superstar employees to leave

We discuss government, delivery, and technology with our long-time friends and colleagues, Saad Rizvi and Al-Hassan Hleileh. Saad is currently a partner at SuperLayer, a consumer crypto incubator, and previously co-founded Delivery Associates and co-authored An Avalanche Is Coming (along with Katelyn). Al-Hassan was most recently the Head of Digital at Delivery Associates and previously founded and worked at several Silicon Valley startups.

U.S. government spending was 37% of GDP in 2022. Public trust in government is now hovering at 16%. The effectiveness of public services impacts the quality of life of every member of society. While technology and service delivery in the private sector have surged, public institutions feel calcified in the past. Something has got to give.

Today, we are focused on solutions.

What can be done to get outcomes for public dollars? How can technology startups play a role? What are the investment opportunities for companies that solve public problems? Can crypto play a role?

Listen to the full episode or watch it on YouTube to discover the massive opportunity to drive efficiency and effectiveness in government using technology.

We cover:

• Background on Delivery Associates, DA Digital, and Deliverology

• Most government officials are not experienced operators of huge organizations

• Ensuring a sense of urgency in government

• Quick wins vs. fixing systems long-term

• How technology drives outcomes and transparency

• DA has partnered with Trill Impact, a Private Equity firm. Building DA took discipline from not taking venture capital.

• Future of delivering public goods. Digital end-to-end delivery increases efficiency. Example: Pano AI helps government manage wildfires

• Dune as a government vs. citizen conflict

• Crypto as an extension of government — crypto as pro-citizen

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Show Links:

• How to fix a country in 12 days - Essay from

• Pano AI

• Original Avalanche Is Coming - Essay published in IPPR

• Dune - Book by Frank Herbert

• SuperLayer - Consumer crypto venture studio

With rising interest rates and high student loan debt, getting a mortgage and being a homeowner is less accessible than ever. Catalina Kaiyoorawongs is a passionate expert in increasing access to home ownership. Join us to understand the real deal with federal student loan forgiveness, the changes to credit underwriting, and why now might be one of the best times for first-time home buyers.

Catalina founded LoanSense, which helps loan officers boost home affordability by reducing student loan payments and lowering debt-to-income. LoanSense also saves the 7 out of 10 loans turned away primarily due to Americans' high student loan debt and gets them back to the lender in 21 days.

Americans are denied the dream of homeownership with little understanding of how to be accepted for a mortgage, while 82% of the wealth of people’s retirement comes from their homes. Catalina created LoanSense to build a more inclusive America where every rejected applicant for a home loan can leave their lender with a clear pathway on how to get back to the closing table.

Join us for a conversation about the future of home ownership, student debt restructuring, and the future of credit underwriting.

We cover:

• The desire to rent vs. the goal to buy

• Why can’t people buy homes? Debt to income ratio instead of FICO scores

• What’s the real deal with federal student loan forgiveness?

• The link between the higher education system and home ownership. Is it worth it? Wage premium vs. wealth premium of a college degree

• Revolutionary changes to credit underwriting

• Changing laws to protect financing privacy will level home buyers' playing field

Listen to the full episode or watch it on YouTube to discover what it takes to increase homeownership for Millennials and GenZ.

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Episode links:

• Americans Are Losing Faith in the Value of College. Whose Fault Is That? New York Times Magazine.

LoanSense is a portfolio company of Avalanche VC.

We talk with a technologist on the front lines.

The COVID-19 pandemic has significantly changed the education system, prompting parents to become more involved in their children's learning. Deepak Sekar is one of those parents and an inventor with 214 patents who has successfully merged his passion for AI with his commitment to revolutionizing the education sector.

Over the next decade, 50% of all online content will be produced or augmented with Generative AI. This episode discusses the evolving dynamics in building education companies with artificial intelligence and generative AI. We deep dive into how technical skills matter to create differentiation and not underestimate the time and effort required to develop unique and innovative solutions.

Prof Jim is an AI-enabled platform that transforms traditional textbooks into interactive video courses. The current generation of learners prefers video-based learning over conventional textbooks. This innovative approach reduces the cost of producing content by 15x and is poised to revolutionize the education landscape.

Join us for a conversation about the future of robotics, artificial intelligence, and learning.

We cover:

• Robotics and Chowbotics. Where is robotics headed?

• Deepak’s transition from a robotics-based startup to an AI education

• How Prof Jim merged AI & learning together

• Deepaks predictions for the future of AI and the most critical skills for prompt engineering

• IIT Madras and the IIT education systems 

• Is Deepak an AI optimist or skeptic?

• Nostradamus gives us his take on what’s Obviously The Future

Listen to the full episode or watch on YouTube to discover how education is being revolutionized with engaging content.

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Leave a comment

Show Links

• Nostradamus’ Predictions

• Efficacious Edutainment

• Generative AI’s Act Two - essay from Sequoia

• 3 ways AI can impact educational outcomes positively - essay by Deepak

Education is a fundamental pillar of society, shaping the minds and futures of our children. However, traditional education models have often fallen short in meeting the diverse needs of students.

In this episode, we speak with Joe Connor, the founder and CEO of Odyssey. He shares his experiences with two legendary education organizations, KIPP and Rocketship, and how they have shaped his perspective on education. From the importance of mission-driven organizations to the power of parental involvement, Connor delves into the evolving landscape of education and the rise of alternative models. 

Joe is a rare combination of lawyer, teacher, school system expert, and technologist.

He has been a classroom teacher, a policy lawyer, and an EdTech operator. He is now building his second company, Odyssey Education, to catalyze the avalanche toward access to alternative education by operationalizing system change through a seamless technology experience that connects government funding, parents, and learning providers.

We cover:

• Joe’s experiences from his time teaching

• Why now? What is the demand from parents higher now than ever before and at a tipping point?

• What does Odyssey Education do? What is an ESA & micro grant?

• How did Joe identify alternative education implementation as an area he was uniquely able to solve?

• Why do state governments want alternative education? Are ESAs and School choice bi-partisan? How does this issue cut on political lines?

• What are the outcomes for students? How do you measure value for money?

Listen to the full episode or watch on YouTube to discover how education is being revolutionized and join the movement towards a more inclusive and tailored approach to learning.

Please comment below.

We’d love to hear your thoughts, reactions, and questions.

Leave a comment

Show Links

• Odyssey Education

• Alternative Education Goes Mainstream

• Seeing Beyond the Mirage

• Iowa School Vouchers Program Exceeding Expectations

• Odyssey, a company founded and led by Joseph Connor ’16 J.D., is enabling parents to use Education Savings Accounts on a vast scale

• KIPP charter grads finish college at higher rates than their peers

Note: Odyssey Education is a portfolio company of Avalanche VC.