This is a guest post by Renee Fontenelle (full bio at end of post). Renee contacted me a few months ago regarding her concerns with Teachers Pay Teachers after reading some of my comments in the TPT forum. As I mentioned in my original post, I Removed My Products From Teachers Pay Teachers Due To Their Anti-Racist Agenda, Renee had done research into a number of different aspects of how TPT functions as a company and how the website marketplace itself functions. In her post, Renee explains how Teachers Pay Teachers is funded, who is running things, and what this means for the teacher-sellers who create the materials that make the company even possible.
Teachers Pay Teachers and Equity Funding
by Renee Fontenelle
As most teacher-sellers on Teachers Pay Teachers (TpT) already know, TpT was established as a private company by Paul Edelman in 2006. But what many teachers might not know is how distant TpT is from a simple LLC headed up by a former teacher.
Since 2014, TpT has been financed and controlled by several private venture and equity fund investment firms. Like most people, I’d heard these words, but had little idea what they meant in the real world. It turns out it’s not that difficult. In a nutshell, venture and equity firms invest money, usually quite a lot, in companies. They get that money from their investors, wealthy individuals who have money to invest and are looking for large returns. The goal in equity investing is simple: to dramatically increase the value of the investment and then to sell their stakes for large, and I mean large, profits. Also simple is how these firms define value: the definition is strictly financial (see here).
So, what’s the problem? I want to be clear that I don’t have a problem with people making money, and I have even less of a problem with people making lots of money. The problem I have, and I suspect the problem many others have, is with the nature of equity firms and what they do. The single and complete goal of equity firms is to increase investment returns. In other words, equity firms work to make money for their investors. The firms aren’t working, in the case of TpT, for teachers, parents, or students. Sure, they may say they’re working for these people. And a good equity firm will almost certainly insist that it’s impossible to increase returns if all stakeholders aren’t satisfied. But that’s simply not true. For example, subscription fees seem to me to be a model more suited to investor interests than to teacher interests. Subscription fees are the nicotine of the digital world: get buyers hooked into paying and paying while making sure that alternatives evaporate. In other words, manufacture acquiescence. All of which mean increasing returns for the investors and no-other-choice for everyone else. And that’s just one example. I’m not even going into the more significant practices such as moving production offshore, or, more relevant to digital contexts, outsourcing offshore, and so on, all enacted in the name of ‘value’.
So, back to TpT.
TPT RECEIVES EQUITY FUNDING
In 2014, TpT accepted 2 rounds of equity funding from three equity firms: Spectrum Equity, Tiger Global Investments, and True Ventures. The value of the first round is unclear; the second round was reportedly worth $64 million, although this amount seems low. Low or not, the money comes with strings. Equity firms are normally active, majority investors; they take the reins of the company they invest in so they can start their work of increasing value. For TpT, this control is visible in its six-member Board of Directors.
TPT CEO CHANGES
Before the 2014 funding rounds, TpT’s Board of Directors was headed by CEO John Yoo, who had been brought on board a year earlier in 2013. Yoo was in the education field, having previously worked as a classroom teacher and with Scholastic. Just one year into his new position, and just after the 2014 equity funding, Yoo was demoted to a vague ‘digital classrooms’ initiative. At the same time, Adam Freed was installed as TpT Board CEO, a change also announced by Spectrum Equity.
Freed is from GSV Ventures, another equity firm, specifically an early-stage venture capital fund. GSV invests almost exclusively in the digital education market.
Its homepage delights in observing that the Covid situation is expected to skyrocket digital education to over $1 trillion and that GSV is funding this “revolution”. Not even lip-service is paid to the human pain and suffering caused and endured… that’s how narrowly equity firms define value.
Also in 2014, Joe Holland was named COO and President of TpT. Holland had previously worked at WeddingWire (part of The Knot Worldwide) and Martha Stewart Living (which owned part of WeddingWire). The Knot Worldwide has received significant funding from Spectrum Equity (and here). Joe Holland’s background, then, is closely interwoven with Spectrum, and his forays into homemaking, weddings, and schools seem to be driven, not by a passion for love or education, but by his commitment to finance and equity investment.
EQUITY FIRM BOARD MEMBERS
Two more equity firm members sit on the TpT Board. Vic Parker joined the TpT Board as Director in 2014 just after TpT received its equity funding. Parker works with Spectrum as one of its Managing Directors, which pretty much means he’s the king of the hill. He’s one of Spectrum’s most senior members (and probably makes upward of $1 million a year, plus bonuses). Given Parker’s position in Spectrum, his role in TpT would be at the top decision-making level.
So far, Parker, Freed, and Holland represent Spectrum’s interests in TpT. The fourth Board member, Lee Fixel, represents the interests of Tiger Global. Until 2019, Fixel was a partner at Tiger Global, a hedge fund offshoot of Tiger Management. Tiger Management was founded in 1980 by billionaire investor Julian Robertson. In 2019, Fixel moved on from Tiger to create his own venture capital firm, Addition. He still sits on the TpT Board.
OTHER BOARD MEMBERS
The final two TpT Board members are Margery Mayer and Paul Edelman. Paul Edelman sits on the Board as TpT founder. His exact role is unclear and is probably largely symbolic, allowing Spectrum to present TpT as a business operated by teacher-individuals, with the founding individual still active and participating.
TpT’s sixth Board member is the newest. In 2018, Mayer joined the Board as an independent director. Prior to that, Mayer was the Executive Vice President at Houghton Mifflin Harcourt, the educational publishing company. This experience makes her the only Board member, aside from the founder, with a background in education publishing, albeit from a business perspective.
OTHER CHANGES
2018 also saw another important change. Holland, who had been TpT’s COO and had previously worked closely with other Spectrum investments, moved into the CEO role. That move displaced GSV Venture’s Freed; in response Freed took on the the newly created position of Executive Chair.
Of TpT’s six board members, then, four represent the interests of equity firms. TpT is run by investors, for investors. So if you think you’ve noticed a change in TpT over the past few years, you have. The TpT website claims that “TpT empowers teachers”. Maybe…maybe not. What is certain is that TpT enriches investors.
Renee Fontenelle is a Canadian educator who holds a Masters in Discourse Analysis and has partially completed a PhD, also in Discourse Analysis. She has taught at high schools and universities for almost 20 years, primarily English, ESL, and Applied Linguistics. Renee has taught not only in Canada but also abroad including Qatar, Turkey, and St Lucia.
Renee opened a TpT store in 2017, but closed it at the beginning of 2021 due to concerns over the future direction of TpT. She is currently working on creating a website for students of English.
Thank you for sharing with us. I was seriously planning on opening a shop in TpT to sell homeschool unit studies. I’m so glad you alerted me to their beliefs and the direction they are going in. I, too, have decided to not sell through them and to sell through my website shop. Who knows where this is all leading.
Hi Debbie,
I’m so glad we “met” on Gab and could discuss these situations. Perhaps things will change with TPT at some point. It’s nice to hope that it will. But hope isn’t a business strategy and I think you are making a wise choice to focus on your own efforts that can’t be thwarted by the actions of others.
Sallie
There were many things that struck me when I read Renee’s piece the first time. Obviously the insight she shared that I put in the banner pull quote was brilliant.
“Subscription fees are the nicotine of the digital world: get buyers hooked into paying and paying while making sure that alternatives evaporate. In other words, manufacture acquiescence. All of which mean increasing returns for the investors and no-other-choice for everyone else.”
What’s really ironic to me is at this very moment the teacher-sellers are literally pleading with TPT to provide them with direct deposit of their earnings. They have been steadily pleading for almost two weeks now and cannot get a straight answer. Sellers have been asking for direct deposit since 2013. EIGHT YEARS.
Right now unless you are an elite level seller, your earnings go through Paypal which creates all kinds of problems. Sellers lose hundreds to thousands of dollars per year due to fees. Sellers outside of the USA have all kinds of problems getting their money. And on and on and on. People have shared so many stories of the problems they have every month getting their money that they earned from selling their products on TPT.
Look at the timeline Renee has explained here. Sellers have been asking and now begging for direct deposit this entire time. Instead, investors have been getting their money through the equity firms.
I’ve said this to a few people since I made the decision to deactivate my products. Once you emotionally detach from TPT, you realize what an unhealthy relationship it is. When you look at it from a distance, it’s honestly like an abusive marriage. The abused person begs, makes excuses, accepts bad choices, and generally sticks around because she feels she has no other options – ESPECIALLY financially.
Think about it. I know I’m right.
There are a lot of sellers who now feel trapped by manufactured acquiescence.
If you want to know what someone fears, look at their actions and not only what they say.
TPT feared the sales tax uprising a few years back because for the first time they saw a viable competitor (Teacher’s Dojo) and saw dozens (hundreds?) of TPT sellers signing up for accounts and adding products. TPT acquiesced on the tax issue because they knew they were losing control. It was a real threat and they knew it.
Now a few more years have passed. Teacher’s Dojo sits unused even though it is a better site with better terms for the sellers. Significantly better. It has everything TPT sellers asked for over and over and over again through the years. Now instead of two healthy marketplaces, more people are entrenched in TPT.
TPT doesn’t feel threatened by the calls for direct deposit. They haven’t felt threatened by it as they’ve sat on that request and ignored it for EIGHT YEARS (while steadily getting THEIR paychecks without disruption every single pay cycle). The fact that they are kicking the can down the road three more weeks until another town hall online meeting where they say they will squeeze it in tells you everything you need to know.
The teacher-sellers think they are an important part of what happens at TPT. They are, in fact, human capital to be used by the equity investors. If some of the sellers leave, it doesn’t matter. The powers that be know that more eager people will come along and start stores.
It’s really sad to watch.
Thanks so much, Sallie, for inviting me to write this post… and for posting it. I really appreciate the opportunity to share my thoughts and ideas.
I’ve spoken briefly with you about the ethics behind equity investments… which is, I think, what’s really the problem with TpT, or anyone, accepting equity funding. It sounds awful to be critical of finance and investing, mostly because positions that are money critical can easily be construed as critical of profit and capital, more generally, and we all know where that position leads.
But very strong arguments against equity investing do exist. Many of them boil down to how value is defined and the ethics involved in making those kinds of decisions. You mention one good, and sad, example above. Teachers want to stop losing value by being able to keep more of their earnings for themselves instead of having to use earnings to pay PayPal’s (outrageous) fees. This expression of value seems to conflict with the equity definition of value since TpT/Spectrum hasn’t added other payout methods. I agree with you… in no way on earth does TpT/Spectrum feel threatened by that differing expression of value. TpT/Spectrum really is unconcerned with the teacher experience.
As a sidenote, I just quickly looked up Paypal. They’re a public company and 2 of their major shareholders are Vanguard and Blackrock (see Yahoo Finance) which are 2 of the world’s largest investment firms. For example, Vanguard has almost $5 trillion (yes, that’s a ‘t’) in assets. I’m going to guess that what Vanguard wants, Vanguard gets. I wonder how much money Spectrum might have invested in Paypal and in Vanguard. Just saying.
I have also republished this post for the reasons I outlined in this post:
https://sallieborrink.com/i-removed-my-products-from-teachers-pay-teachers-due-to-their-anti-racist-agenda