Saxo Founder Jørgen Balle Olesen Talks EdTech

Portrait of Jorge Balle Olesen, Founder of Saxo
Interviewed by
Terkel Douglas
Investment Analyst

Hello and welcome to another episode of ‘The Expert View’. Today we are visited by Jørgen Balle Olesen. Jørgen is the former founder and CEO of the Danish e-commerce bookstore, before he exited the business in 2019. Jørgen is Scale Capital’s Social Ambassador and has a wealth of experience in investing and scaling educational technology companies. Welcome, Jørgen.

Thank you, Terkel.

So Jørgen to start us off – what do you define as educational technology?

Well, it’s a very short name ‘EdTech’, but actually, it covers over a relatively complicated set of things. For instance, we can see it from like the value chain or lifespan perspective, where you have preschool education, you have the traditional K12, “Folkeskole” in Danish, you have ‘Gymnasium’ or High School, you have University education, and then later you have like corporate training. And perhaps even, when you get closer to the workspace, how to get involved with the actual working space, hiring, integrate the workspace — all this, this complication on one hand, and then on the other hand, you have market perspective, which is like the local markets versus emerging markets where you can — I mean — the local versus global perspective. And you also have a lot of different business models involved: sometimes you have like a b2c way of selling something, could be directly to a parent or to a student, or it could be traditional, what we in Denmark you know, have that governmental sale, in K12. area, or you have like the b2b game where it’s a corporate buying, for instance, courses for their employees. So there are a lot of different elements. So in reality, it’s a short name, but it’s a very complicated area.

There’s a lot of buzz going around the industry about ESG, impact and financial performance and whether they all go hand in hand. So I would say EdTech has an obvious impact angle, but it’s also an investable industry, or it is more of a nonprofit sphere?

My basic belief is that if you can solve some of the biggest problems in the world, you also have the opportunity of the biggest profits. So ‘pain and gain’ usually will go hand in hand. But I still think that, we in EdTech, we’re talking about early days, because I think that the digital revolution will be a key player in this area in terms of bringing the cost of education down, democratizing on a global scale, and all these big benefits you have. But on the other hand, it’s also.. We’re Still, I mean, it has been emphasized by the corona epidemics. But still, it’s so early days, so we don’t know the actual models going forward, how to combine digital and physical worlds. And we still have some, like, there’s no doubt that the biggest potential would be in the global world where you have like the population is increasing, especially in the Far East. So you will have this development, as you have already seen in some countries like India, China, that has been moving with very high investment levels in that area. So you have this basic need on a global scale.

But still, there’s a lot of problems, for instance, the infrastructure, still early days, many places you you don’t have any infrastructure that we consider is completely commodity here. You can see me on video and things like that. You don’t have that in many countries. But of course, it’s coming I can’t wait to see Elon Musk having rolled out his Starlink project. So we have satellite communication in most foreign areas of the world, because that will be- that’s a necessary driver for being able to bring this technology out in these areas.

So from a financial perspective, what I see this area is like a big potential, but still early days, you could perhaps in a way compare it a little to FinTech, where Denmark, let’s say 5–10 years ago, it was very early stage, but now you can see a lot of money being poured in and also a lot of high valuation coming out and almost daily basis, you have a new- new unicorn in this area. And you can say that in Denmark, we had some of the early like, adopts like economics in addition, these these companies and they were like “lighthouses” you can say, for some of the next generation FinTechs that we now see, like do Pleo, and all these different startups.

And yet, I see, you know that educational space we have in Denmark, some of the basics, we are a highly digitized country, we have some pedagogical methods in place, we are highly trust full country believing in each other. And it’s not a coincidence that LEGO or like you know, “play and learning” and things like that has been coming out of this, well this country. So I think we have a lot of like the basics in place. So we could claim a legitimate role in this rollout of EdTech. But still, we have to look into models where I mean, the education system as we know it today is perhaps some 100 years old and based basically on how we could make soldiers in the industry; very schematic and very like robotic kind of view. Which is quite different from the people that we need nowadays in the new world where creativity and critical thinking and other, like ‘soft’ skills are much more in demand. And we need to see how can technology and this new knowledge about education, how can that go hand in hand to, let’s say, provide future solutions. And they will come. So what I see is like, it’s early days, but we have to position ourselves to take advantage of these enormous challenges and enormous gains that will be obtained in this area.

You’ve been involved in a number of EdTech Companies. What are some of the trends and technologies that excite you the most in the industry?

To mention some of these, I could say that now you can obtain knowledge everywhere. I mean, it’s hard to be better informed than Google on any kind of subject. So the role of the teacher will be changing. And what I think is that this mobile device that more or less all of us will have, even on a global scale, they become cheaper and cheaper and, and more, more available. And you have like, all this kind of knowledge and technology, just in your hand. Your mobile phone will be your education tools also. So it will be very personalized, you will be educating yourself in the train, on your way to work, in different situations — so that’s one of the big trends. Also, the scalability. So there’s a lot of different things going on where digitization can help us, but also where we need to find, you know, the right balance between sitting still and learning, and movement, being out in nature, and being absorbed in the mobile phone, but also being able to be sitting around the bonfire and socializing with your friends. So these are some of the areas we have to explore going forward.

So how do you measure performance and results in EdTech?

That’s a big question, because when we talked about like, say ‘hard’ skills in the old days, you know, it’s not so difficult to measure if you’re good at mathematics or not. But when you talk about some of the more like more important ‘soft’ skills like: creativity and critical thinking, how do you actually measure that? I think there must be ways and we can speculate on that. That’s some of the challenges we have in front of us. I’ve just came home from a visit to Nepal, where I’m part of an NGO called “Human Practice Foundation”, where we work with schools, constructing schools, aid these schools in Nepal, and Kenya, up to date. But I can see that some of the KPIs we’ve been looking up so far has been very much centered around schools, for instance, dropout rates, and attendance rates, or average grades in English and other subjects, things like that you can say, in a way, is easily measurable, and where you can actually see that this NGO has done significant impact. But if we want to change, let’s say the focus from the schools to quality education in order to say: Okay, what is it that a child needs going forward to be able to have a good job, to have a good life and to contribute in an effective way to the local community? The so-called ‘21st-century skills’, then we need to focus on the child, and what about that child? and that’s things like I mentioned, creativity, critical thinking, communication skills, all this — how can we measure that? and that will require a new framework formation, which is different from this, you know, measuring the schools. So I’m sure that we can come up with things, but still, it’s also early days, but we have to be creative here. That’s, of course, an exciting challenge.

That’s very insightful. So in most countries, the education sector is primarily run by the government.
Do you have any tips on how EdTech startups can effectively collaborate with governments that in many instances are a bit slow and bureaucratic?

That’s a fact all over the world. Also, here in Denmark, I mean, you could say that the model that we have rolled out for education, as I mentioned, a few 100 years old, this imperialistic model, we also try to impose that on, let’s say, the English model in India, for instance, and it without any big success, you could say, what we see now is that the system is even more, let’s say, ‘fixed’ here. It has been running for so many years, in the Western World that, it has become increasingly difficult to change the system, because the teachers are very much aware of the old roles. And I mean, these are just very bureaucratic systems that are very hard to change. But in the New World, where its early days, perhaps they would have a bigger opportunity of changing, because, I mean, they have not done significant investments yet. And the systems that are out there, are obviously not functioning very well. So it will be easier to change. That’s one thing, but I think, what I can see from experience in Nepal, where we work with public schools, I think the road ahead is actually to be able to make like model schools where you can innovate and try different things rapidly and then be like a model for the government so they can see that: okay, these things actually work and we can scale them up, these things they don’t work, so we cut them out again. And we need much more this innovation, not just in these emerging markets, but all over the place also in Denmark.

We’re spending so much in this system in Denmark. So why not have a much more trial-error approach to different ways of trying you know, properly oriented learning: being out in nature, combining ‘play and learn’, and you know, all the elements that we know and finding new ways on how to combine digital and physical learning and different forms like a fit classroom or whatever, we need to make so many experiments that we get wiser and wiser. And I think that will be the approach to how we can persuade governments to say, Okay, this is actually working, could we try to put some of this curriculum that we now have developed, we try to let that influence the national curriculum, that’s the way I think, you know, the good results by bringing the KPIs and good results forward. That is the way we can address governments and perhaps speak to and have a talk with different performance system that is deciding on this.

So now, we’ve spoken a lot about education for younger children and students, but with the world migrating to new ways and structures of working, do you think EdTech will play a larger role than in corporate for training employees or other purposes?

Sure, I mean, for once, I mean, it will be much cheaper than the traditional ways. I mean, when I was in corporate many years ago, I was- I mean, you went to these very, very expensive IBM courses, time management, different courses that cost a lot, you know, but you could question you know, what the benefit was, but I think now technology makes it possible to have corporate education and sharing of knowledge in totally different ways. And here, I mean, this always on mobilized, mobile way of training has also come. And the thing that you have employees that actually can decide on their own, what kind of topics they would like to dive into, and then make that available from a corporate perspective, I think that is something that will gain terrain.

That’s all been very, very insightful Jørgen, but that is it for this time on the Expert View. So Jørgen, as always, it’s been a pleasure. So thank you for joining.

Thank you for having me.

Jørgen Balle Olesen
Jørgen Balle Olesen is a Scale Capital ESG advisor, and the founder of Jørgen holds an MBA from Copenhagen Business School and is a prominent impact and edtech investor.
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