The recent surge in the use of digital learning resources, spurred by the COVID-19 pandemic, has positioned educational technology as a prominent area for investment.

Having dedicated almost two decades to the edtech sector, one might anticipate I would seek to leverage this increased attention. However, I’ve made a surprising decision: I am transitioning from edtech to the gaming industry with my new venture, Solitaired.

My initial involvement in edtech began in high school when a colleague and I created EasyBib, a tool designed to simplify the process of creating citations for student papers. We recognized a need for a more efficient alternative to manually formatting citations. As we delved deeper into the business, we discovered numerous appealing aspects of both bibliographies and educational technology as a whole.

The education market is substantial. The United States alone has over 56 million students in the K-16 system, with a global total exceeding 1.3 billion. Combined spending by federal, state, and local governments on education amounts to 5% of GDP, not including the additional investments made by students and their families in learning materials and technology.

Furthermore, the education landscape is inherently structured. Students typically progress through a common curriculum, meaning they often encounter the same challenges simultaneously. Successfully addressing a problem for one group of learners often translates to a solution for the majority.

The challenge of citation creation exemplified this principle. By the time we sold EasyBib to Chegg, we were assisting four out of five students requiring bibliography assistance, representing over 30 million students across the U.S. Edtech companies focused on supporting students in subjects like math, chemistry, and providing homework help or tutoring can rapidly expand their user base.

Edtech solutions integrated into the curriculum also demonstrate strong user engagement. EasyBib users would spend nearly ten minutes per session constructing citations for their bibliographies. This behavior provides numerous avenues for monetization for edtech companies that operate on a direct-to-consumer, ad-supported, or subscription-based model.

Despite our rapid growth, our potential market size was ultimately limited. The very strengths of edtech can also present obstacles, particularly for a startup. Our user acquisition strategy centered on building relationships with schools, employing marketing techniques, and optimizing for search engines. However, once we reached the vast majority of students in the U.S., further expansion proved difficult.

We explored various methods to enhance engagement, such as encouraging more frequent citation creation, incorporating research and note-taking functionalities, and developing a Chrome extension for increased accessibility. These efforts, however, yielded limited results. Ultimately, the academic calendar dictated usage patterns, and our growth was constrained by the number of research papers assigned by educators.

While these hurdles are surmountable, we, as a startup, needed to determine whether to pursue expansion into related areas independently. This realization played a significant role in our decision to sell the company to Chegg, which possessed a broader user base and complementary product offerings that we could not replicate on our own. Chegg has since successfully accelerated the digital transformation within the edtech sector, as many observers have noted.

As we contemplated our next business venture, we kept these lessons in mind, which ultimately led us to explore the gaming industry.

The key performance indicators within the gaming sector appeared not only comparable to our experience with EasyBib but, in many instances, even more favorable.

• The market is expansive: While the U.S. has 56 million students, over 150 million individuals engage with casual games.
• Gamers dedicate significant time to their hobby. While EasyBib users spent an average of eight minutes on our site, studies indicate that gamers play approximately six hours per week.
• The market is consistently active: Unlike the constraints of the school calendar, there are no seasonal limitations on when and how often someone chooses to play a game.
• The industry demonstrates resilience: As recent events have shown, businesses that are not geographically dependent and leverage technology are better positioned to adapt to changing circumstances.

Naturally, we also identified potential drawbacks within the gaming landscape.

High Customer Acquisition Cost: Customer acquisition costs are increasing annually as more gaming companies launch and invest in paid advertising. In 2019, the average mobile gaming customer acquisition cost was $4, and has since risen by 16% year-over-year. Collectively, gaming companies spend over $7 billion annually on acquiring new users.

The Influence of Major Technology Companies: Apple, Amazon, Microsoft, and Google have all recently entered the cloud gaming arena. While still in its early stages, cloud gaming presents potential risks to game companies, as it further concentrates power in the hands of platform providers.

Questionable Practices: Gaming companies have sometimes employed questionable revenue generation strategies. In-app purchases in mobile games have been criticized for exploiting children's desires for game progression through excessive charges. While major tech companies now offer parental controls to mitigate this issue, mobile games often contain numerous advertisements, casino-style games, and other distractions.

Despite these challenges, we decided to proceed, combining our edtech expertise with the opportunities presented by the gaming market. While gaming carries inherent risks, the large and expanding market size, its robust economic model, and high engagement rates were compelling enough to outweigh those concerns. As a serial entrepreneur and TMV Venture Partner, I recognize the uniqueness of this combination.

Earlier this year, we launched Solitaired, a casual gaming platform that integrates card games with educational experiences and brain training exercises. While still in its early stages, the initial results are promising: Our average time on site is 30 minutes, more than three times that of our previous business. Furthermore, users demonstrate strong retention, returning on average more than five times per month. These metrics align with our expectations given our entry into the gaming space, and have exceeded our initial projections.

We have also discovered that the potential downsides can be mitigated. For example, high engagement has fostered strong viral growth, reducing our customer acquisition cost and accelerating our expansion. While in-app purchase abuses can be tempting for game developers, our focus on user growth KPIs discourages us from pursuing such tactics. Finally, the threat posed by Big Tech remains, but their attempts to gain traction have yet to resonate significantly with users. Crucially, choosing a market so vast that even individual tech giants cannot dominate is key: With a market of this scale, ambitious goals are attainable, even if ultimate success remains elusive.

As we continue to develop, we’ve come to appreciate that gaming possesses characteristics that make it exceptionally appealing, and also provides a valuable framework for evaluating new business opportunities across any sector.