Teachers Pay Teachers and Equity Funding

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.