Getting diagnosed with a learning disability or attention disorder is crucial to getting students the support they need to be successful in the classroom, however, the assessments are extremely cost and time prohibitive. This week on Found Darrell and Becca are talking with Stefan Bauer about how Marker Learning is cutting the cost of learning disability assessments by conducting them remotely, how they’ve successfully worked with school districts to help them test their required amount of students, and the potential to take Marker Learning into the prison system to assess incarcerated people and provide them with tools to learn in a way that’s better suited to their abilities. We also say goodbye to Darrell as a regular host of Found this week, but don’t worry you can still catch him every Friday on The TechCrunch Podcast!
Getting diagnosed with a learning disability or attention disorder is crucial to getting students the support they need to be successful in the classroom, however, the assessments are extremely cost and time prohibitive. This week on Found Darrell and Becca are talking with Stefan Bauer about how Marker Learning is cutting the cost of learning disability assessments by conducting them remotely, how they’ve successfully worked with school districts to help them test their required amount of students, and the potential to take Marker Learning into the prison system to assess incarcerated people and provide them with tools to learn in a way that’s better suited to their abilities.
We also say goodbye to Darrell as a regular host of Found this week, but don’t worry you can still catch him every Friday on The TechCrunch Podcast!
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Darrell Etherington 0:01
Hello, and welcome to found this is the TechCrunch podcast where we bring you the stories behind the startups. And we talk to the entrepreneurs who build those startups to get those stories. I'm here with my co hosts,
Becca Szkutak 0:12
Becca scatec.
Darrell Etherington 0:13
Hey, Becca, how's it going? It's good.
Becca Szkutak 0:16
It's good new boy genius album drops when we're recording this at least. How are you? Oh,
Darrell Etherington 0:21
I forgot all about that. This is the greatest. This is the greatest day. This just went from a pretty good day to a terrific day. So we're gonna go check that out. That's some free advertising for boy genius. So they better remember this and do us a favor in the future a
Becca Szkutak 0:37
better rate and Ruchi
Darrell Etherington 0:38
Yeah, exactly. Yeah, get on that boy genius, the band. And just wanted to say upfront, this is actually my last episode, as host of this podcast of Becca, thanks. I appreciate the booing. It's the bullying means you care. But you know what, it's going to be great, because we have Don Midori Davis coming on to be the new full time co host, which is very, very exciting. I'm sure that does not earn a boo from you. But No,
Becca Szkutak 1:07
quite the opposite. Yeah, it's one of those annoying situations where it's like, you're sad, something's ending, but can see the bright light at the end and something good is coming. But absolutely, you kind of wish you could have both. But you can't?
Darrell Etherington 1:20
Well, I mean, you kind of can because we still work together and interact pretty regularly. So you know. So like, I'm going away. It's just unfound. Listeners, if you want to hear me, you can still hear me on the TechCrunch podcast, which I assume you all ready subscribe to. But in case you don't, you should. But I'm really excited about the future found. I'm going to continue to be a faithful listener, even if I'm not participating as host. And I'm really excited to see what you and Dom get up to Becca
Becca Szkutak 1:48
definitely will not talk about Canada Creative Writing Shopify, or poetry as often right. But I still I think it'll still be good.
Darrell Etherington 1:57
Yeah. And those things will still inevitably come up because they're just such a common topics of discussion forever, right? Yeah. All right. But today, we're talking to Stephen Bauer, who is the co founder and CEO of marker learning, which makes learning disability testing easier and more affordable for both schools and parents. This is a big problem that I didn't really even know existed. But Stephen is very familiar, both personally and professionally. And he's going to tell us all about it.
Stephen, how's it going?
Stefan Bauer 2:32
Great. Great. How are you?
Darrell Etherington 2:34
Doing? Very well. Thanks for joining us, we're really excited to talk to you today. And I would love if you could start us off by explaining to us and our listeners a little bit about I think Becca is already familiar, but I'm less familiar. And our listeners might not be familiar at all. Who knows? That could be very familiar. But what is your company marker learning do at marker
Stefan Bauer 2:53
learning. We do remote learning disability assessments, and we provide remote services to students with learning disabilities and attention disabilities. Right.
Darrell Etherington 3:03
All right. Well, that sounds like there's a lot more to unpack there. And we I'm sure we'll get to that throughout the course of this conversation. But did you want to also just give us a little bit of background about how exactly you got into this? Because I know just from looking at your LinkedIn that it wasn't necessarily your background previous Yeah,
Stefan Bauer 3:19
I just this is something that Lincoln, my LinkedIn wouldn't really show explicitly. But the marker story really goes back to me being in first, second and third grade, where I was sitting next to my brother, and we were in special ed. And we just couldn't read. We were happy kids, but just couldn't read and teachers told my mom we'd be lucky to graduate high school and something was wrong with us that really no and we were on a few year backlog to get evaluated for learning disability. So my mom thought we were brilliant as all parents do. I don't know if we're brilliant, but she went out actually and took a flyer and found something in the Yellow Pages and paid $8,000 Each for a private market evaluation for learning disability. And after that my brother and I were actually both diagnosed with dyslexia and she actually quit her job as a lawyer got her master's in Learning Disability Education and pummeled us with flashcards for the next 10 years of my life. So I have some PTSD of driving long car rides getting pummeled with flashcards. But we really have this have this huge swing of pretty much on track to fail out of school, to going on and catching up to grade level. My brother Jared, who lives across the hall from me here in New York. He went on to Johns Hopkins, he started a health care company called health recovery solutions and has a few 100 employees and I went on to Yale and worked at McKinsey for a few years. But unfortunately, my mom passed away before I graduated from Yale. So my brother and I just talked about every day how lucky we are she went to bat for us so much so that when I see people in the in the real world with a learning disability, I always stop them with like, tell me about your mom, tell me about your neighbor, because invariably there's someone that went to bat for them when they are at a young age and the statistics around, students with a learning disability are pretty shocking that one in five or 20% of kids have a learning disability, but only 4% are diagnosed. And the impact on your life is just incredible, where there's some studies out there that show that 50% of prison population have dyslexia. And this is just truly a societal issue that we try to solve. So to fast forward the beginning of marker, I was at McKinsey working on some digital strategies during COVID, and looked at the learning disability assessment market. Sure enough, nothing has really changed since I went through it 25 years ago, and the prices has only gone up. So it's about 10, or $15,000, cash in New York City for an evaluation, which is just totally out of the realm of affordability for most. So I worked for some Johns Hopkins psychologists, we developed an MVP product, had some early traction, both from school districts and from parents, and then decided to make a go out of it. And we were able to raise a seed round. And then our co founder, Emily joined us. And since then we've, we've grown the company to now we're about 50 people or so.
Becca Szkutak 6:11
It's great. You started the company you mentioned while you were at McKinsey, obviously this is sort of a long, it's actually a lifelong journey coming up to the point of launching the company. I know you mentioned looking into the market, is that really what pushed you to do it? Or what made you take the plunge to actually quit your job start this company? When you did? I think there was
Stefan Bauer 6:30
two things first, it was the fact that there was an opportunity out there to say, Okay, what would it look like if we were to be able to offer an a learning disability assessment for a 10th of the price? And would schools be interested in that? And would parents be interested in that? And would that be a viable product? And then I think the second element for me was, hey, if I spent my whole life working on this, and getting up every day and focusing on this, is this a worthy endeavor? And that for me was, you know, resounding yes. And so with those two things in mind, it was an easy decision for me.
Darrell Etherington 7:06
Wow. Yeah, cuz I listen to your story, I thought about how potentially you could go the other way, right? Like, potentially, you could say, like, oh, like, this is something that was such a challenge for me for a large part of my life, or whatever. And maybe I don't want to think about or touch that anymore, necessarily. But it seems like no, you were like, oh, like makes such a positive difference in your life, you have to make a positive difference in other people's lives.
Stefan Bauer 7:28
Yeah, that's a great insight, I think, for me, and it's actually came out to and when we are raising our Series A and we're so thankful to partner with Andreessen and Richard Branson in this past round. But when we're talking to investors, also in the seed stage reset, like, one of the typical questions we get is How come no one's done this before? Yeah, I think that gets to your point. And my question is, hey, the system is so kind of broken in some aspects. But the people who get out of this unscathed in the way are like a, they never want to think about this ever again. And then there's another group that didn't get through and didn't hit their potential and maybe got stuck in not getting a diagnosis or getting diagnosed when they were in high school. And they were kind of illiterate at that point. So it was I think there's a few people who got through and are, frankly, in the position to be able to raise and have a network to build a team around
Darrell Etherington 8:23
now about the house like so how did you realize these cost savings? And was it a case of like, there was a lot of easy things to do, because nobody had really paid attention to this space? Or was there a lot of hard technical problems to solve? And then on the other side, it seems like this would be the kind of thing where there's probably a lot of like, embedded, you know, legacy systems that are like resistant to change, or whatever. Right? So what were the kinds of challenges? And how did you go about solving them when you actually wanted to build this product?
Stefan Bauer 8:50
Yeah, we really took it as kind of like a quasi McKinsey approach to looking at a production line and figuring out what the true value is, and how to strip out some of the things that are kind of a waste of time. So at the onset of it, Emily and I are our co founder and I we spoke to maybe 50 Psychologists on how they, you know, look at learning disability diagnoses of dyslexia, ADHD, and dysgraphia, and other learning disabilities. And we really got 50 different answers or 50 different flavors of how they go about it. So that was certainly the number one insight where we said, okay, there's something here. So from that element, we developed a really a process that does three things. First, based on an intake form, we determine what the right assessment is to give to a student. We've noticed that right now, because costs just keep going up. There's no really efficiency. And when you walk into a psychologist to get one of these evaluations, a lot of times they throw everything in the kitchen sink at you where I am going through when I was evaluated, where you're getting assessed for depression, anxiety, other things where even though I was kind of going for reading challenges, So being able to be more targeted in that approach. And then secondly, there's a report writing component of the evaluation where at the end of the evaluation, you take your diagnosis and you take it to the school or the College Board, and it kind of says, Hey, these are the tests that were performed, and I need these accommodations to get me the right help. So we helped with the report writing element of it. And that's a lot of time savings there by using software to assist the psychologist. And then lastly, just being able to generate the best recommendations or to stop, please suggest them to our psychologists on the platform is a huge pickup, because a lot of the time, you know, a psychologist might learn a certain style when they got their PhD, and there might be new research out there that they just aren't aware of. And we're able to kind of consistently be building those recommendations into the process. So that's really how we're able to really reduce the time without reducing quality.
Becca Szkutak 11:00
And I'm curious, because you mentioned that you offer these kinds of evaluations, both on a private basis, and family could just come out to you guys directly, or through school systems that have reached out and seem interested. And I'm always curious, any kind of those like big, bureaucratic institutions like schools, public utilities, all that kind of stuff. What is it like breaking into that market, and working in a company where you divide between public good and private option kind of line?
Stefan Bauer 11:27
Yeah, I mean, happy to jump in there. And this is a unique product in the school side of the world, because there's an individual's a disability x, which actually stipulates that a school has to evaluate about 10% of their student population every year for learning disability. And if they don't, they're actually out of Legal Compliance, and they could get sued. So last year, schools were actually sued and fined for a billion dollars alone. So there's this huge need to do these evaluations in a certain period of time. So this ranks as a top three priority for the majority of school districts to be able to be in compliance. And there's a national shortage of psychologists, so they really can't keep up with demand. So when we have a conversation with the school district, most times they say, Hey, that sounds too good to be true, potentially. But be you know, there's a lot of times they say, When can you start because we have 100, students were really struggling to keep up with case loads, and our team is stretched out, we'd love some support. So it's a little bit different of a conversation because of these laws than maybe a traditional education, kind of nice to have product, that's a better way of maybe managing a homework management system or something like that, where if it doesn't get in the budget, not the end of the world, this is a if we're at a legal compliance, drastic action, such as the state might even take over the school district, which nobody wants that. So it's very much a partnership model we talk about. And then the second element of your question is how does that kind of work directly with families as well. And there's a lot of synergies between the two sides of the business. So we really have like a pool of psychologists and technology that we use. And it's almost like two different deployment channels, the family side of the business, it's like, great, yep, we can do an at home evaluation for a fraction of the price. And we have a two three week turnaround time versus the typical is six months to a year or less just the loans and we're able to service this customer and that side. And then on the school side, it's a little bit more like a production line of okay, we're gonna sign up for a few 100 evaluations and work through that every single day.
Darrell Etherington 13:38
Another question about that is you see a lot of times companies having to focus right having to choose one of those two things. And it seems like having the core technology behind the front layer is like a huge benefit for you. But a lot of times the problems and like the complication, is that surface layer, the interaction layer, right? Like how do you gear an organization to sell into enterprise or to sell into larger organizations? Versus how do you gear one to sell to private individuals? So do you feel any conflict there? Or do you find that that part you've also been able to realize sort of efficiencies,
Stefan Bauer 14:08
we definitely have to prioritize as we there's a lot of overlapping to your point of the back end system and the technology, but we do have to prioritize when we develop a roadmap. Our number one value is students first. So we always kind of say, Okay, well, what's going to impact the most amount of students and the decision has been easy thus far. But there's just also a lot of synergies, for example, where we often get a lot of leads from doing evaluations for families, because ultimately, at the end of the day, a school district has to read the report and kind of give them the accommodations and we've gotten some call ins to say this fantastic report kind of perused around your website. I want to learn more. Similarly, if we're seeing an area, this happened a few different states where we see an area that's really kind of blowing up on our maps in terms of people coming to us on the family side of the business. So we can say, okay, there must be a really big shortage of staff there. Right, let's, let's kind of focus our sales effort into that world. So, so far it's been it's a solid, like all encompassing strategy.
Darrell Etherington 15:11
Yeah, that's cool, actually, that your private individuals are actually lead gen for your enterprise sales, basically. Which
Becca Szkutak 15:17
doesn't happen very often. Yeah. And I'm curious, because you mentioned sort of the price part of this, especially on the private side is significantly less expensive than what you would get if you were to just go out and hire psychologists to sort of do this yourself. But I'm curious because the total hovering around $1,000, that definitely is a lot less expensive. But that still wouldn't be reachable for some families. And I'm curious if you guys think just based on how much it costs to actually perform the test pay the people to do so do you think 1000 is like the floor of how low could get? Or do you guys think about potentially working to see if you can make that reduce that cost a little bit? Or is that something that just isn't on the forefront for the plan right now,
Stefan Bauer 16:01
definitely not the floor, he wants to continue to invest in technology to bring that down more and more. And Darrell to your earlier point about some of the resistance to change, we don't want to cut too many corners, or even if it's not even cutting a corner, it's we know, we could not be as thorough and still get to the same answer. Ultimately, at the end of the day, the gatekeepers at the College Board or the MCAT, they want to see certain tests done. So we're kind of hammered by that in the near term. But as we continue to just invest in technology, we'll bring that down more and more. But to your point on affordability, it's definitely not where we need it to be. And we have payment plans. And we also are teaming up with the learning disability Association of America, which is a nonprofit, where they're essentially buying evaluations and then gifting them out to people for free to provide that subsidy. But that's really one of our biggest engineering focuses is how do we continue to get the cost down and make it more accessible?
Darrell Etherington 17:00
So some of you just mentioned there, because you clearly pay attention to like what's coming up and sort of the state of the art right? So how much do you feel a tension there, and how much of your work is like education, working with your partners on the school side to try to get them to pay attention to like the most recent and most up to date research, because I'm sure they get atrophied a bit, like not even from Alice, but just for like lack of resources, or whatever
Stefan Bauer 17:24
you're saying on how much are we educating our school sides on what's the best, the newest? Yeah,
Darrell Etherington 17:30
this is a new evaluative method, or this is like something that like all studies are showing is like much more efficient way to do something, or whatever. But that's
Stefan Bauer 17:38
also why I can direct to consumer channels great, because it's the tip of the spear and allows us to ensure the best things now. And then we also try to implement that at the same time with our school district clients. And most of them are like, Wow, that's great, let's implement it. But to your point, sometimes they're like, hey, we want to like we've got a million things on our plate, let's just put out the fires for now and start to implement some of these newer, also on the recommendation side, maybe we'll roll that out in the first half of next year. And we want to meet them where they are, and appreciate that. And I
Becca Szkutak 18:13
know you brought up fundraising a little earlier, but I wanted to ask you about that. Obviously, you guys have been able to find some success with fundraising. But when do you go to pitch investors? Is there an educational element there about how big of a problem this is? Because I know, knowing it was a problem. Definitely the first time you and I spoke the numbers shocked me. I didn't realize how prevalent this was, how just common some of these issues were and how underserved they were for those students. And I'm curious, do you come across that knowledge gap when you're pitching investors? Or does it seem like maybe other people can kind of understand the need for this relatively quickly?
Stefan Bauer 18:51
Yeah, and you're totally right. I mean, more often than not, they're shocked about the fact that 80% of kids have a learning disability, only 4% are diagnosed. And 50% of the prison population is estimated to have dyslexia that's like totally a lot of numbers that throw them all in different directions. Other elements to is special ed budgets represent 30% of a school's budget, despite the fact that it's around 12% of the school's population. So the spend per pupil is actually pretty high as well. And then you layer on some of the fines and the lawsuits and the sticks that go towards not being able to keep up with demand. It's nice to be able to present that story through numbers. But I think we touched on this earlier. A lot of people who are in these rooms haven't gone through the special ed world and haven't seen the inside of it and like wow, this is super broken. So it's on me and my co founder, Emily, who also has dyslexia to be able to paint the picture and convey that
Darrell Etherington 19:51
just a little bit more back into your like, personal journey here. When you were coming out and working at Morgan Stanley and McKinsey did you think oh Ultimately, I want to be an entrepreneur, like that's my actual goal. Or was that something that just happened later, as you realize the opportunity? No,
Stefan Bauer 20:08
it was always my goal. And another stat, I guess, is 30% of entrepreneurs are estimated to have dyslexia. And there's a few theories about that. But for me, I always see my brother, he started his company a lot earlier. And just the ability to think differently and try things out. I always envisioned myself doing these giving a good shot at it. But I did want to work at some of those companies to develop the skill sets to be able to add Morgan Stanley, I was doing sales mostly and then and McKinsey kind of operations and strategy. And so that when it came to starting a company, I thought that I had a solid foundation Nice.
Darrell Etherington 20:46
Yeah, I think we get we talk to a lot of entrepreneurs who kind of back into it, but it sounds like you're quite intentional, but like intentional, because there's the other version, where other people are very intentional. And they're like, Well, I'm going to be an entrepreneur, and I've always wanted to do it. And so they drop out of university or whatever, path, whereas you really went out and got this groundwork of skills, which is, I think, a little bit unusual in terms of the people that we speak to Yeah,
Becca Szkutak 21:10
definitely. And I'm curious, what would you take from those experiences? Since you did have those large organization, large scale operational experiences before starting this company? How do you think that does help you at the end of the day, compared to maybe some entrepreneurs who sort of just dive in, like Dell said, halfway through college, or just like they have the idea that jump right in? How do you think about your path there and what learnings you were able to take?
Stefan Bauer 21:35
Yeah, I mean, I think from Morgan Stanley, where I did sales, learning how to sell I think is one of the best places to start. And now when we're driving around Alabama, or Georgia, and you're stopping in with Panera Bread, and you're meeting at school district, those skills come up and selling is selling. So that was really great to do for a few years. And at business school, I think just getting that broad spectrum of being able to speak the language of accounting, finance, organizational design, supply chain, just understanding maybe the core components. And then at McKinsey, just being able to chunk out problems communicate from a top down perspective. And I think there's also just a flavor of industries that you're able to develop a certain amount of pattern recognition for different problems. So you're able to be hypothesis driven, and move as fast as possible.
Becca Szkutak 22:28
That's such an interesting point with that background, because I know speaking with startups and investors, sort of after what's happened with Silicon Valley Bank, something that's come up in a few of my conversations with people who come from like an investment banking background, or the like, were like, I was so surprised how little people knew about banking and finance in this industry. And so it's always interesting to hear someone being like, Nope, I did all the groundwork for literally years before this plunge, I know what I'm talking about.
Darrell Etherington 23:01
Can you tell us a bit more about first of all, how you like connected with your co founder and how that relationship developed? And then like, how that splits out when it comes to the company and how you arrived at that, like, well, who's gonna do what when you actually went to build it?
Stefan Bauer 23:15
I always joke with Emily, our co founder, we're on a device. And when I met her, I was actually a mutual friend. It was after I left McKinsey and it was working on this and mutual friend said, Hey, she had a rich experience. She started found a telemedicine,
Darrell Etherington 23:32
I know, I noticed that I was like, Wait, we still are named we might be due for trademark Mallesh.
Stefan Bauer 23:38
I'm sure they're good. They're, they're fine there. But she was really a telemedicine company got it to 60,000 users. And it was a really smashing success. So she my friend said, Hey, my friend, Stephen is trying this harebrained idea to start a learning disability assessment. Mark, can you just speak to him about your experiences? And the moment I met her, I was like, Emily has to work with me on this problem. So really, I have phrased all these questions. But really, I was just trying to sell her subtly. So we met kind of a weekly and then it became twice a week, three times a week. And I think it just started to dawn on her that this was a huge problem. Her story is very similar in that she has dyslexia but was diagnosed early then on to Yale undergrad and worked at Google and then got her MBA at Stanford, and then started found and was looking to really do something that was mission oriented. So it was really a hand in glove kind of partnership because I had a decent amount of b2b sales experience from Morgan Stanley and then just the I guess, or ops and finance chops to get by for the early days. And then she would focus on that DTC experience, and then that consumer experience as well as lead the engineering team. So that was the delineation of work. And I guess in terms of when it actually happened, our partnership, she flew into New York and we spent five De is doing a pre mortem, which is an exercise I learned at McKinsey, where you say, Alright, how's this gonna fail? Like, how is this deep like hammering that over and over like, this is not going to work out? Tell me why. So we mapped out every possible reason why it would fail between us in a relationship standpoint. And ultimately, it really got down to trust. And we both fully trust each other and our company's values we had and want to put those values first. And that's where we settled, and it's been awesome ever since.
Becca Szkutak 25:32
And since you mentioned it, this idea of potential failure, not saying you guys will fail, but I was thinking, especially with starting a company that is so personal to you, and so personal to your story, your childhood growing up. And same with Emily, how do you guys think about building in a space that is so intimately personal to your life? Does that affect how you guys take rejection? Or maybe investors not being interested? Or how do you sort of navigate trying to build a business when you have such a personal tied to the issue you're trying to solve? Yeah,
Stefan Bauer 26:05
I would say, maybe magnifies both sides, because pretty much every week, we have something called marker moments where we share feedback from our client. And it's a client usually calling me or Emily or sending a message with tears in their eyes saying, I wish you were around for my other son, and my son is now in this school, and he loves work a love school, and you're like, wow, that that is just amazing thing to focusing on. And then secondly, if things don't go your way, or even if a client is upset, and you're like, I'm trying to do the right thing here, I'm I understand that this is a problem that I want to solve that maybe you take it a little bit personally, but I guess that's okay, though. We have our hearts on our sleeves. And we're trying as hard as possible
Darrell Etherington 26:46
when you're looking at how to hire right, like, since you two both have those backgrounds that you outlined, was it important early to hire a lot on the research and science side? Or like how did you sort of fill in that part of the need for the company,
Stefan Bauer 27:01
we definitely focused on the clinical element of it. But luckily, because of COVID, there was all this third party research that looked at the equivalency of doing a lot of these assessments online, and then more or less prove that it was 99% equivalent in peer reviewed journals like the APA. So we were able to leverage that were three COVID, we wouldn't have been able to start this company, frankly, because we'd walk into a school district and saying we do this remotely. And that would say, well, that is intact. There's no proof. It's like saying your 300 weevil or and trying to go to a real baller and say like, I'm a great baller. It's like, yeah,
Darrell Etherington 27:40
yeah, that's a great.
Stefan Bauer 27:42
Few people did the legwork for us. But we continue to focus on research. And now our research is focused on our platform versus the status quo.
Darrell Etherington 27:50
Do you ever envision the company like the scope expanding? I know, focus is a big thing. But do you think about that? Have you thought about that? You know, there's just so much opportunity in education. It's one of those things where you're like, Oh, well, I could choke on the problem. Right? So how do you think about focus? And how do you think about long term goals?
Stefan Bauer 28:07
It was tough, because I think within a school, they're so stretched. And when you do a good job, they say, well, we also have this problem. Sure, never opened up you as someone who's trying to grow a business wants to say, Yeah, well, we'll also do your speech and language, we'll also do your, you know, physical therapy, but I think we want to be as laser focused as possible on this and make maybe go adjacent, but be very cognizant of any kind of scope creep. So too, we're just in the US right now. But this is a global issue. So how to balance that if say, okay, yes, schools need help, and it will continue to serve as schools versus one of the things we're excited about with our partnership with Richard Branson is he's probably the number one most well known dyslexic in the world and huge advocate. And I'm sure that we know the UK has very similar dynamics. So how to be able to enter those markets and kind of prioritize what to do when,
Becca Szkutak 29:02
and you know, you mentioned earlier sort of the statistic around how many people most likely have dyslexia who are in the prison system? Is that ever on the table for some an area you might expand to in the future? Because that obviously, would be quite a different approach, working with very different clients to our children.
Stefan Bauer 29:19
Yeah, I mean, actually, we would say maybe 30% of our clients on the direct to consumer side are adults, which was a huge shocking thing for us. And it's, frankly, pretty sad when you're dealing with those people because they could have been so much more in terms of their potential and maybe their job or just having better literacy skills and life skills. But yeah, we are actively trying to have contracts with prisons because just getting them the right support, being able to diagnose them and being able to help them we can do it all at him or company. So that'd be a huge win for us and would be just a great thing for society. I think
Darrell Etherington 29:59
this is a related question to my earlier one about the scope creep, but in a different way, just hearing you talk about that. Do you think much about the solution side? Or about how to productize that like, once you've got the diagnostic and then what our next step? Yeah,
Stefan Bauer 30:12
so we've actually rolled out downstream services for executive functioning, coaching, and literacy support and math as well. And this was really born because 90% of the time that after an evaluation happens, especially on the direct to consumer side, a family often is very grateful. And they said, what's next? Right and right, yeah, we might know that they're coming from a school that strapped for resources and not getting the help they want. So being able to say, Hey, this is what you should get from your school. But if you can't, we have this at a fraction of the price. So that's what we developed. And we spent the last six months developing, and we've rolled that out two months ago. So we have a downstream support element of our business, which has been really great to see because it has students first and is the way to get to that level where you should be and reach your potential.
Becca Szkutak 31:02
And I'm curious, because it sounds like so far, you guys have been able to reach a lot of these milestones, and the company is only a couple years old, what pushback Have you gotten, if any, are sort of like negative feedback you've gotten as you've gone out to build the searches, any sort of roadblocks like that, that have come up in your way,
Stefan Bauer 31:19
knock on wood on either side, we haven't received too many big roadblocks. The interesting thing about the dynamics of this market is there are gatekeepers on the direct to consumer side, where if you could assume extra time could help you with a test. So the College Board is more inclined to kind of decline an evaluation. But up until this point, we haven't had any evaluations not accepted and given the recommendations. So it's kind of like this third party checker on our work that exists in the market. And then similarly on on the school side of the business, 100% of our clients have renewed and actually done, increase their amount that want to do next year. And I would say half of our clients or new clients are driven by current clients. And they're just always like what promise me you don't forget about us? Because they don't want you to sign up with a big district. And they haven't done that, obviously.
Darrell Etherington 32:11
Yeah. Do you have any worries about the ability to scale? If you're getting that kind of thing? Or like, how are you able to do that? Is it pretty easy because of the model you have in place to scale to the larger customers? Yeah,
Stefan Bauer 32:21
you're talking to some of these big districts, and they're throwing big numbers out in terms of number of students needing help. And we want to be able to commit to saying, hey, if we say we're going to do 1000 evaluations with you, we'll get it done. Because I think the worst thing in the world is, if you don't right, think about it from their perspective, they think, okay, no doubt is gonna get evaluated next month. And then if you don't do a good job, or something happens, then they're out of compliance for Darryl, and yes, for a lawsuit. And they're like, Wait, like, and then everything grows around. So we have to have like, very laser focused precision when we're delivering because they're on a tight rope. And we have to meet them on the type row. And we can't be too sloppy about that.
Darrell Etherington 33:04
Also, just curious because you just brought up the lawsuit stuff again, because it seems like that's a big benefit for you. But then also, is there a liability element there? Like do you have to navigate that if like, could the school board just point to you, if anything like that ever happens and be like, no, no, sue them as well as? How does that work?
Stefan Bauer 33:21
Yeah, I don't know. I think we just take a partnership model where we're like, Hey, you're in it, you have to do 10%. So for example, Jersey City Schools is 30,000 students, they have to do 3000 evaluations every year. And you can look at their staff and say, Okay, how much can they reasonably do? And we can say, okay, we can do this. That's a good plan for the year. Let's go ahead. So it just hasn't gotten those competitions. Hopefully we never do.
Darrell Etherington 33:49
Yeah, knock on wood again.
Becca Szkutak 33:52
I think probably one of my last questions, we'll be thinking again, about the fundraising here, obviously, you guys were able to raise a round not that long ago. But looking at the broader venture investing trends, digital health, health, tech, stuff like that, even ed tech two were huge 2020 2021. But looking at the numbers now, they've sort of dropped off a little bit, it seems like maybe some investors who were only interested in that space at that time have backed out or there aren't as many people vying for these kinds of companies. And I'm curious if you think that may be a challenge down the road, or if you think you guys are sort of in that sweet spot where you have that very tangible problem you're solving or sort of the business model will help carry you through. But I am curious how you think about if there is sort of a softening of demand for this type of company.
Stefan Bauer 34:39
I think for us education spending is pretty Stable, and even counter cyclical in some instances. And as a business, we're pretty capital efficient were some of these contracts from schools are up on payments, and it's a Stable source of revenue. So thankfully, we were able to convey our story pretty well and show a strong track record. And we're thankful to partner with Andreessen and the recent investors as part of this round and will continue to stay capital efficient. I think maybe, as we talked about earlier, that's kind of part of my old school thinking of looking at these older companies and just saying, Okay, well, how are we paying the bills? And how's this flowing down to the bottom line has been like, really core to us from day one. So in a way that was especially appreciated in this last round.
Darrell Etherington 35:27
One more question, Stephen, about where where would you end up? If ideally, everything goes to plan? Like, how do you see the future of education shaping up like wearing, perhaps disability testing is just sort of like invisibly woven throughout and like, you know, these resources are readily available to all what does it look like for you if you achieve full mission success?
Stefan Bauer 35:47
Well, I always think like, you know, when our parents talk about growing up, and they were, you know, drinking and driving or driving without a seatbelt. Wow, that is absolutely crazy. Right? Smoking on airplanes. Yeah, exactly. I think I do truly think that we'll look at this generation and say, one in five kids had a learning disability, and no one knew how to diagnose them and or even treat them and you had to have like an amazing mother to get you through and have these heroic stories. So where we want to be in horror, I think the world will be, I hope we guide the world to this space. And we're the company that doesn't is that every parent gets their child for learning disability at a young age, no different than your measles and mumps shot because one in five kids has this and after that, so being a ubiquitous offering, that's, you know, 30 $40, potentially, or $100, wherever it lands, and then having a learning DNA, where you're like, hey, this is how you learn. And this is how you should progress on all these different cognitive milestones, not just, I'm going to take my third grade teachers word for it, that they're progressing, like it just measure so many other things in life, but then the school is kind of a black box in terms of measurement and benchmarking against every other student across the country and how you're doing that. It's very much a judgment call until it's almost too late in the game where you're in high school, and you're taking high stakes tests. And you're saying, Oh, wait, this is not going as planned. So that's the future of education, I think, in the special ed world. Yeah, we want to shepherd the industry there.
Darrell Etherington 37:22
Right. Well, I think that sounds like a very admirable and point to aim for. Yeah, we personalize and tailor all kinds of things. And we do it sort of effortlessly for so many other things. But education is still this kind of like roughly one size fits all model. Right? That makes very little sense.
Stefan Bauer 37:37
You ask others or middle schooler how their kids are doing in school, they're like, I don't know.
Darrell Etherington 37:44
We'll find out 30 years.
Stefan Bauer 37:49
Right now. Hopefully, that's that's where it all goes. Great. Well, thanks
Darrell Etherington 37:54
very much for joining us.
Stefan Bauer 37:55
Awesome. Okay. See me again, back end.
Darrell Etherington 38:05
All right, that was our conversation with Stephen Bower. What did she think Becca about everything he talked about? I thought one of the most interesting things was that stat he had, obviously we don't, in the moment, check the source of stats, but I believe that 30% of founders have dyslexia.
Becca Szkutak 38:21
Yeah, that's it surprised me on the one hand, because all of the numbers you throw out were a lot larger than I would have expected. But then again, as someone who doesn't have this learning disability, I feel like when you're outside of that population, it's almost always surprising how large it is. So hearing that a good percentage of founders are estimated to have learning disabilities just makes sense. I mean, founders kind of approach their businesses differently. Like they're the kind of people who don't want to work at the traditional companies, how things have been laid out, traditionally, so surprising, but then on a deeper thought. I'm like, Hmm, maybe that does make more sense than I'm giving it wait.
Darrell Etherington 38:56
Yeah, absolutely. Like entrepreneurs are a statistical section in many, many different ways. Right. So this is just another one that perhaps lines up with the rest of those not causal, maybe, but coincident, at least from like a statistician scientist perspective is how they would put that, but I did also think he's overall general population thing was interesting, too, that it's like, I forget what he said it was like one in five or something like that individuals? Yeah. One
Becca Szkutak 39:23
in five, like school aged kids. Yeah. And I mean, like, these aren't curable. So I mean, you can kind of guesstimate that that translates the broader population to
Darrell Etherington 39:31
Yeah, so both the actual like in practice testing, and then also the requirements from the board's lag significantly, like the in practice is lagging the requirements, but the requirements also lag the actual prevalence in society, right? Because I think they had to like test 10%, which is not one in five. I know enough math to know that.
Becca Szkutak 39:51
I know. It's always so interesting. So you, like hear these statistics about schools like oh, they're supposed to evaluate 10% And they don't and then like so Someone who went to a public school and like, yeah, you know, I wish that surprised me more,
Darrell Etherington 40:05
right? I mean, this is very long time ago now, but I don't remember, you know, almost any, like there was testing only an instance of like very severe fall back or whatever right? It would be like, oh, this person, like really can't get it. And then you would do a thing. But then the rest of it was like, Well, I think these group of people are just like, not very smart, right. But I think in in the course of actually testing, you would find maybe they are totally fine and just had learning disabilities. But back then it was fine to just characterize them as like, you know, these ones aren't the brightest ones. And they're fine, right? Well just kind of keep them in here with everybody else and doing the same stuff, right, which is our general failing in our approach to education, which also came up talking to Stephen right is that we don't really do any kind of personalization. It's very much like a one size fits all approach, even still, even with everything we know now versus 20 3040 years ago, or whatever.
Becca Szkutak 40:57
And that's why I think companies like this are so interesting, but also important, because companies that try to work with organizations like schools, it's always to me seems like a hard, it would be like a hard customer to sell to. But I found from talking to them. And I also talked to a couple of few months ago, the companies that are helping schools, redo like their bus routes and like redo, like transportation and stuff. They're like, No, no, no, schools are like bringing down your door. Like they just don't have the resources, but they actually want to find them. So I found that really interesting, because just over the last few months talking with different companies, because I definitely always kind of thought, Well, why? I don't know, like you assume they would just have better processes if they had access to them. But it does sound like there is actually that need and that want from schools and those kind of bigger enterprise customers, that still kind of surprises me.
Darrell Etherington 41:47
Yeah. Well, they, I think they have a couple of good things going for them for that, which is that they have constrained and they have increasing constraint, which is like a little bit sad societally? Because it's like, oh, well, that's because their budgets are being cut constantly. Right. But the upside for startups specifically is like, their whole thing is, well, we can do things with greater efficiencies have far lower costs, like at scale, right, which is exactly what customers like that are looking for. So yeah, initially, you're like, Oh, well, education. Like that's not a great market to sell into, but then you start thinking about it more, and you're like, maybe it is a good market to
Becca Szkutak 42:20
sell it to. Yeah. And I think I wish we had spent a little more time on that question you had asked about how to say a school starts using marker and they don't hit their like compliance. They don't hit the 10%. And you were like, would you ever be liable for that? And I like thought about it more after we recorded it. And I can't I don't know if I follow either way that I think they would be. But I just think that's such an interesting part of this, too. Like you're getting involved in something that's like a government mandate. So it's kind of weird,
Darrell Etherington 42:47
right? Yeah. So disclaimer, weird. Neither of us are lawyers. But yeah, it's a compliance requirement. And you're using it, you're saying no, we will help you meet your compliance requirements. And the assumption would be then that you shoulder some of the responsibility in exchange for that, right? Like the upside is, oh, this is highly in demand. And therefore we can easily sell into this. The downside is, you would assume like, the school is going to start pointing fingers if they don't meet their goals. It sounds like that's not a problem for Stefan. So that's lucky for them right now, I think because they've realized so many efficiencies, that they can just kind of, like, make this work so much more efficiently than the schools can using traditional methods. But it's the question for the future. And if regulations go up, if like the governing bodies start looking at the numbers and saying like, Oh, we should actually be testing one in five kids instead, Becca change to Yeah, so we'll see. Yeah, I think he's gonna go look at it. Now, based on his answers to us, I think he's probably gonna go ask their general counselor,
Becca Szkutak 43:45
I'm sure I'm sure because they didn't hire us as lawyers. They probably have smart lawyers who have written into the language with these contracts that they're like, not liable. I'm sure there are lawyers thought about that.
Darrell Etherington 43:56
Yeah, absolutely. Yeah. Well, yeah, that was a great chat, and I love learning more about marker learning, and I'm excited to see what they do in the future. Found is hosted by myself Managing Editor Darrell Etherington and TechCrunch plus reporter Becca SGU. Tech were produced by Maggie Stamets with editing by Cal Bryce Durbin is our Illustrator Alyssa stringer leads audience development and Henry pic of it manages TechCrunch his audio products. Thanks for listening. We'll be back next week.
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