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Announcement – Mathnasium Online Learning Pilot

As some of you may have heard, Mathnasium has been experimenting with the online delivery of our program. By “online” we mean live delivery via a virtual classroom platform like Blackboard Collaborate or Adobe Connect. Over the last several months, we have taught test students and it’s been an interesting experiment. At this point, we have learned that online delivery is “technically” possible, but we need to learn much more.

Potential Benefits

Online delivery could have several benefits. For example it could enable us to teach children in less affluent neighborhoods—neighborhoods where it is not viable to build a learning center.

Online delivery could also be a first step to teaching children in countries that do not have a Mathnasium center presence.  Normally, it would take years to build a franchise infrastructure in major international markets, but if we can find a model that would enable us to move into these markets more quickly, we could reduce the risk of a competitor gaining strength in other countries… a competitor that could gain enough momentum to come to North America and substantially compromise the market advantage that we enjoy here.

And yes, online delivery could someday be an additional service for North America franchisees to offer to customers near their centers who can’t or won’t make the trip to the center.

Or it could act as a supplement to students who come in to the center some of the time and want to learn some of the time at home. However, such a possibility is likely years away.

Next Steps

Now that we feel comfortable with the technology component, the next and most important question to answer is whether or not the quality of online training would be worthy of our premium brand. Can we rise to the challenge of winning fans the way we do in our learning centers? This question—and many, many more—would need to be answered before we can seriously consider online as an additional delivery modality. The only way to find out is to further test online delivery and see what we can learn.

Starting this month we will begin a beta test of the service.  We will only conduct the test in states where no Mathnasium centers currently exist and no centers are scheduled to open. Customers in these states that search our website for a learning center only to discover that no learning center exists will be directed to a landing page dedicated to the Mathnasium beta test of online delivery. We’ll teach these students and see what we learn. It may be months before we reach conclusions we can be confident about. But when we do, we’ll share what we’ve learned!

Summary

As Andy Grove famously said, “only the paranoid survive.” In the near term, we don’t see on the horizon any serious risks to our franchisees from alternative models. We think parents will want to come to karate studios years from now and we also think they will come to math learning centers years from now. But our obligation is to be defensive and opportunistic. Pizza franchisors who realized years in advance that the market would shift from eat-at-restaurant to eat-at-home were able to manage a transition from local restaurant to local kitchen with delivery service.

We are committed to keeping you updated regarding our progress.

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14 Comments (Open | Close)

14 Comments To "Announcement – Mathnasium Online Learning Pilot"

#1 Comment By James Speer On September 8, 2015 @ 6:26 pm

This is Exciting!
I have 3 sibling that were with us for several years but moved to an area too far away (hours away) from the nearest center… They said that if this method was possible they would like the opportunity to participate.

#2 Comment By Susan Minushkin On September 8, 2015 @ 6:35 pm

How will you be testing? Are you doing a real trial with control and treatment groups? A rigorous evaluation of the pilot SHOULD be done. You would need to set up a control group from learning centers and a treatment group from the test areas. If you do this with the beta test, you will get results that can provide HQ and franchisees with reliable information.

#3 Comment By Max Sennett On September 9, 2015 @ 7:17 am

This sounds like good news for those higher up in HQ, but as an owner of a brick and mortar Mathnasium, this news actually concerns me greatly. If and when HQ finally rolls out this ‘online Mathnasium’ to all in North America, what’s to prevent Leads in our territory and currently enrolled students in our brick and mortar Mathnasiums from using the ‘online Mathnasium’? I’m guessing that the membership fee for the ‘online Mathnasium’ will be significantly lower than what we brick and mortar owners charge. We all know that you get what you pay for, but parents still compare prices. This ‘online Mathnasium’ has no territory boundary and will overlap with every brick and mortar owner’s territory, due to its online presence. This ‘online Mathnasium’ will now be another one of my competitors for students to fill my brick and mortar center.
So this news is good for those parents that do not live anywhere near a brick and mortar Mathnasium. However,parents that live right next to your brick and mortar Mathnasium will also have the option to use this ‘online Mathnasium’ instead of using your center.

#4 Comment By Brijesh Parekh On September 9, 2015 @ 7:42 am

I do have the same concern as Max. We at NY charge significantly more than many rather than few. Our rents our high, so is our marketing.

So if my enrolled students will have a chance to go online and do the same thing we are doing “The Mathnasium Method” (btw is Brilliant!); what is stopping them. What makes us Territory bound! Online Mathnasium would thus be a competitor as well… If We are getting this wrong, HQ please elaborate.

Hope HQ is also keeping this in mind.

#5 Comment By Vane Lucas On September 9, 2015 @ 8:27 am

I am less worried as I don’t believe this will ever be as good as an engaged Instructor working face-to-face with a student and responding to verbal and non-verbal cues from the student. Perhaps in a hologram-based virtual reality world.

Technology has not been “the answer” in education to date. Remember, Thomas Edison thought the phonograph would eliminate teachers.

That being said, it could be a supplement.

In addition to the scenarios mentioned in the article, here is another way it could augment what we are currently offering. Many of us have students who travel, particularly over the summer. This could be a way for a student to maintain enrollment, albeit in a less effective way.

Regards!

#6 Comment By Michael Bram On September 9, 2015 @ 8:36 am

This idea was mentioned when I was at training at HQ earlier this year. I voiced my concerns then and would like to take the time to re-iterate my concerns now.

I feel there is a benefit to having an online presence if done the right way. The concern is that what is being piloted WILL BE in direct competition with the brick and mortar (franchisees). I have the same concerns that were mentioned by Max/Brijesh previously. Mathnasium should never be competing against themselves especially at the potential impact to franchisees.

I feel that an online presence would be beneficial if it is rolled out as a SUPPLEMENT to current enrolled students at the brick and mortar Mathnasium franchises. This shouldn’t be rolled out as another option but an option that the BRICK AND MORTAR franchisees have to offer our students.
This then becomes a WIN-WIN for everyone (HQ and franchisees).

The other option to ensure that this is a WIN-WIN would be to have any students who enroll online then be part of the closest center location. This then provides higher enrollment at each center without having an ultimate impact to the franchisees (splitting financial benefits with franchisees and HQ).

A Brick and Mortar establishment will never be able to compete with online businesses for obvious overhead reasons (staffing, electric, insurance, rent, etc, etc). It would be a shame for Mathnasium to compete against itself.

I understand the theory of utilizing this for only remote locations. I believe it would be difficult if not impossible to distinguish who is truly remote and therefore anyone will have the ability to only use the online service.

Lastly, I believe we need to be careful on how we do things that might impact the Mathnasium name/brand. There are various benefits to coming to Mathnasium and coming to a Mathnasium center location. We should be concerned on how the Mathnasium brand would be perceived if we offer this as the online option as a “solution”.

I look forward to hearing from other franchisees thoughts on this topic as well as further details from HQ.

Best Regards,

Michael

#7 Comment By Doug Wolf On September 9, 2015 @ 8:54 am

Great points! I my area, in response to the Common Core, most schools are offering free after school tutoring. In addition to that, Kahn Academy is also a free option that I often hear people mention. I like Michael’s idea that the online option be offered only to those students currently enrolled and paying.

#8 Comment By Kapil Mathur On September 9, 2015 @ 10:19 am

What happened to the Pizza franchisees who had invested their time and money in a sit-down pizza restaurant when the franchisor moved to the kitchen-delivery model?

#9 Comment By David Ullendorff On September 9, 2015 @ 2:19 pm

All:
Thank you for your comments below. To be clear we are very early in the creation of this new program. At this point, more than anything, we need to prove to ourselves that there are customers for this service and that Mathnasium Online is a viable and high quality learning model for children, one that provides great value.

We’re not at a point yet where we can talk about how online would be implemented across our network. We are talking daily about the different business models that would be available to all of us should this testing be successful. We agree with your comments that we want this program to be a win-win for franchisees, parents, kids and for the Mathnasium brand.

We appreciate all of your comments and will include them in our discussions about the future of online. And, as previously noted, we’ll keep you updated.

#10 Comment By Michael Bram On September 9, 2015 @ 4:50 pm

David,

I want to thank you for the prompt acknowledgement and response to our various posts!

It is definitely appreciated!

Michael Bram

#11 Comment By Daryl Gage On September 10, 2015 @ 8:27 am

I thought Larry nixed the idea of online math instructing 20 plus years ago. It was my understanding the it was for lots of good reasons that still stand today. Did I get that story wrong? The temptations of the internet. It’s like an opiate.

#12 Comment By David Ullendorff On September 10, 2015 @ 9:55 am

Twenty years ago, in 1995, I would have nixed it too, but the technology has come a long way since then. Larry has taught online using the approach we are now piloting in States where there are no other Mathnasium Learning Centers. Larry believes that it is an effective way to teach children. We would not have proceeded without his blessing.
As I said before we are talking daily about the different business models that would be available to all of us should this testing be successful. I am listening carefully to your comments and want this program to be a win-win for franchisees, parents, kids and for the Mathnasium brand.

#13 Comment By Peter Markovitz On September 10, 2015 @ 6:07 pm

Some responses to questions franchisees have asked here or directed to me by email:

“I know that Mathnasium has new partners — an investment group. Are they motivating the online test?”

Not at all. We started testing long before Symmetric became partners. Symmetric endorses the online test as a defense to protect the company from potential competitors. But they have stressed that they want us to stay focused on getting better and better at executing our our traditional strategy. We have a great model and a fantastic market opportunity!

“Why test an online offering right now?”

While an online offering could have long term advantages to North American franchisees, the timing is about understanding in the short term how we should approach development of Mathnasium outside the US (and Canada).

Mathnasium has delayed entering major international markets much longer than other franchises might have done. Our plan has been to concentrate on the US market to develop the US operation so that it could serve the US market but also be an ideal model for what we would do in Canada and other countries.

Now we feel that while we need to continue to make the US and Canada our highest priority, we can’t continue to defer plans to enter major international markets. If we wait, a competitor could emerge outside the US — one that competitor create a foundation that could eventually threaten our US operation. We will soon be opening a learning center in the UK. That is a first step to what will need to be an aggressive international expansion.

Online delivery – if it passes the test of being worthy of our brand (big unknown) and can be delivered profitably (another big unknown) — would be an offering that might be executed in the US following proliferation of the learning center model. But should international expansion be different? By testing an online offering now we can determine if the best way to enter a market would be to offer online first, and only then follow with learning centers. We can keep more focus on the US if we are not pressured to open centers quickly in other countries. An online offering could precede the opening of centers abroad. In any event it could be the best way to enter new country.

Further note about focus: Our international operation has indeed leveraged our US infrastructure. For example we helped to develop a UK adaptation of our curriculum. But the purpose was to enable our US education leadership to advise future international resources on adaptation — not as a precedent that would lead our education department to morph into an international adaptation machine. We really are serious about evolving the US as a model by focusing our energy here. And we try to limit distractions. See below.

“Is spending time and money on online a good allocation of resources? At the very least isn’t this a distraction from US development?

The allocation of resources is to the online offering is limited. A couple of new people have been added to work exclusively on this project. David Ullendorff is testing the online offering “on the side” of our US operations. He is being careful not to divert existing resources. As for David himself, he is doing precisely what a founder should do as a company matures — testing and incubating new menu offerings on a project basis. He is helping to evolve the company of the future. Companies must be “founded” not once but repeatedly. As for whether this is a distraction…well yes a bit. For example consider the time we are spending now discussing a concept that may or may not have merit (Right now I’m supposed to be preparing for a board meeting!) But I’m pleased we are discussing the online test because to do so is in the spirit of our relationship e.g. being transparent. I care enormously about franchisee goodwill, and I know that the idea of an online offering — even a test — raises many questions in franchisees’ minds

“Parents that live right next door your center [could] have the option of [a lower cost, competitive offering] (Max Sennett)

Max is right that online offerings pose a threat to bricks and mortar businesses. We intend to test at least 30 miles away from existing learning centers.

“What makes us territory bound?” (Brijesh Parekh)

Brijesh is correct that if franchisees had online rights they could teach students anywhere — including those that reside right across the street from another franchisee’s territory. This is one of the reasons that the franchise agreement prohibits franchisees from teaching online. If an online offering is introduced, franchisees who would be permitted to present the offering would need to sign an addendum to their agreement agreeing to remain territory bound.

“Technology has not been ‘the answer’ in education to date” (Vane Lucas, with similar comments from Darryl Gage)

Vane (and Darryl) are thunderously right. In fact technology for teaching younger children (our sweet spot) has been a disaster. Would the outcome be different with live delivery when most others have used a software versus live “Skype style” approach? Did those who DID take the live approach (also) fail because they had not have a method? We think we need to find out. Note: even if we “succeed” in delivering value, our experiment will have failed if the quality of instruction is not worthy of our brand (see Michael Brand’s comments)

“The option to ensure a win-win would be to have any students who enroll online then be part of the closest center location.” (MIchael Bram)

I appreciate Michael pointing to the need for a “win-win”. Franchisors can’t win unless their interests are aligned with the franchisees. We can’t afford to lose goodwill. In our system that confidence is the fuel that propels our growth. More – it is who we are. As a franchisor we need to act both in the interests of both individual franchisor interests and group interests.

It could be that we learn that online has value as an offering for a franchisee but that it is complicated to execute and could be a distraction to a struggling operator. Personally I think this is a likely outcome. If a weak franchisee were to present the online offering they could hurt their chances for success with their traditional offering and hurt the brand for other franchisees by disappointing customers online. A solution could be to require franchisees to demonstrate a satisfactory level of success in teaching our traditional model AND require them to train and be tested (get certified) before they can offer an online service. If they can’t meet the criteria it might be better for the online offering not be offered in their area until they do qualify. This would be a pity especially if Michael Bram’s instinct is right that if online is viable it may be a supplement to bricks and mortar rather than an alternative to bricks and mortar. (Michael’s thinking is compelling. Further, in pointing to pizza restaurant versus pizza delivery, Kapil Mathur is choosing an apt analogy: will customers eat at the restaurant or choose home delivery — or some combination?).

I’m not sure how we will solve the various issues related to an online offering. It is complicated. But we will find a way to navigate a path IF online qualifies as a potential offering. Susan Minushkin’s point is critical: any online offering has to be measured against our present offering. We agree. David’s team is considering different ways to get reliable measurements.

#14 Comment By John Van Horn On September 16, 2015 @ 12:55 pm

I taught in a live on-line environment with highly motivated adult students for a couple of years. These students were from highly scattered locations including a couple of international students. We used Chalkboard as our platform. There were some significant issues then which included evaluating assignments and providing good immediate feedback.

In addition I am concerned with the distance learning aspect of such a model. Please consider how to keep the cooperative atmosphere we now have vs a competitive model that could easily fall out of the online model.

These are issues I hope are being seriously considered.