How the Internet of Things (IoT) Will Revolutionize Education

There is no doubt that the internet has revolutionized the way that educational content is delivered. From online courses to virtual reality, the internet gives students and educators the ability to connect with other people and access more content than ever before. Moreover, with the advent of the Internet of Things, the ability to customize and enhance learning content and processes is set to improve even further.

For those not familiar with the term, IoT is a network of computing devices that allows individuals to connect with, collect and share data on everyday objects and environments ubiquitously via sensors and RFID technology. But what does that mean for education? From a learning perspective, its purpose is to allow students to manipulate physical objects with which a virtual object is associated. Imagine studying the inside of a human heart or rocket engine through a virtual object instead of from a textbook! As a result, the student’s ability to understand the physical object itself, how it works or how it is made, is vastly improved due to the reality the virtual object creates. The data collected in this learning process can then inform the student’s mastery of a concept while personalizing related topics for further study.  While applicable in the K-12 classroom setting, IoT is likely to more profoundly affect students studying for undergraduate or postgraduate degrees. Virtual reality learning techniques are particularly relevant to fields of study that favor experiential learning over lectures, such as medicine and STEM subjects.

Furthermore, the expanding network of interconnected devices will give schools and universities the ability to collect actionable data that could assist both educators and administrators in improving academic performance. Wearable IoT technology such as headbands or watches may be used to track brain activity during lectures to understand individual students’ learning patterns with minimal disruption. Instructors may subsequently utilize this data to track and assess student progress and resolve learning issues, in addition to designing smarter lesson plans and improving access to information.

IoT solutions also promise to reduce costs for schools by automating day-to-day business operations that would otherwise require substantial time and effort, such as keeping track of resources and monitoring energy usage. For example, a number of Ohio schools have slashed costs by approximately $128,000 a year by using an IoT-type system that controls all mechanical equipment inside campus buildings.* Schools may also consider using IoT’s tracking functionalities to determine the presence or location of students on campus, thus eliminating the need for manual attendance tracking and augmenting school security measures.

The implications of IoT in education are numerous and apparent: by promoting a collaborative, adaptive, and efficient learning environment, IoT will inevitably become an integral part of daily learning methodologies. Though much of the technology that is needed to utilize IoT to its full potential is not yet available, many schools have already begun to implement the infrastructure (computers, Wi-Fi, etc.) that will be needed to capitalize on these tools once they are more widely accessible. The International Data Corporation suggests that the market for global IoT solutions is expected to exceed $7 trillion by 2020. IoT is well positioned to transform the education model as we know it in addition to other areas of everyday life.

* Business Insider: “How IoT in education is changing the way we learn”

The “Changing” Landscape of Diapers

Over 3.8 million babies were born in the United States in 2017, according to the National Center for Health Statistics, and with most babies using four to twelve diapers per day, depending on age and other factors, diapers are big business. Parents change thousands of diapers a year, and at an average cost of $0.20 – $0.50+ per disposable diaper, costs can really add up, reaching thousands of dollars before a child reaches potty-training age. Beyond costs, however, the environmental impact of the significant volume of diapers generated each year and the safety of the materials used to manufacture disposable diapers are increasingly on the minds of new parents and influencing purchasing decisions in this massive market.

The market for diapers continues to evolve as caregivers balance diaper costs with the desire to be more “green.” Diapers are one of the most significant contributors to landfills nationwide, with approximately 49 million diapers thrown away every day in the United States, according to the Clean Air Council. Cloth diapers have long been the favored environmentally conscious diaper option (although they do require energy, water, and detergent to wash). However, increasingly, consumer products’ companies are offering biodegradable and eco-friendly diaper options. Brands including Honest Company, Earth’s Best Organic, and Seventh Generation market diapers that include naturally derived and/or sustainably sourced materials and are also often touted as better for baby – hypoallergenic and free from harsh chemicals, fragrances, and dyes.

Some of the larger players in the traditional diapers’ space have also recently focused on developing more eco-friendly and natural diapers, such as Proctor & Gamble’s Pure line, which debuted in 2018 and offers disposable diapers free of chlorine bleaching, fragrance, parabens, and latex. Amazon also recently made a push back into the market for diapers in 2017 (which it had previously exited in 2015), offering the Mama Bear line of disposable diapers, and just recently introduced the “Amazon Exclusive” Earth + Eden brand, made with sustainable-sourced fluff and non-toxic inks to compete with Honest and other natural, eco-friendly brands.

It remains to be seen how the introduction of numerous eco-friendly diaper brands and Amazon’s recent re-entrance into the disposable diaper market will impact competition in the space, which for many years was dominated by Pampers (Proctor & Gamble) and Huggies (Kimberly Clark). Regardless, it is clear that the increase in the number of diapering options available bodes well for new parents focused on the health and well-being of their children and for the planet too.

How Core is Core Curriculum in Higher Education?

Once upon a time, every college in the U.S. had a core curriculum that every student was required to complete.  Today, most universities still implement a core curriculum for all students irrespective of major, but it tends to include courses offered across a broad set of topics.  Comprised of the first 30 to 45 undergraduate hours, subject areas typically include history, humanities, mathematics, physical sciences, creative arts and politics.

Advocates for core curriculum suggest that it is imperative to student development, the establishment of a common base of knowledge and communal dialogue.  They believe that core curriculum provides the appropriate amount of direction and structure to students who are still discovering their individual interests.  Many students discover subject areas that excite them, which allow them to pursue interests beyond a single, focused major or field of study.  Beyond a well-rounded understanding of the basics, these core courses are meant to cultivate a critical and creative intellectual foundation meant to be employed long after college.  Each institution selects the specific courses it will offer to fulfill the core framework, and universities tend to pride themselves on their particular offerings.  Such variety within each university results in flexibility and choice for students, while also providing a sequence of somewhat correlated courses.

Core curriculum skeptics think of core curriculum as a dilution of academic standards and a stifled approach to discovering one’s interests. Naysayers view core curriculum as overly fixed and potentially outdated during a time when the educational journey should be more personalized and relevant to the 21st century.  The broad collection of core courses adequately distributes enrollment across the major academic departments, but does it support what students really need to know?  Imagine, for example, if general education requirements were shifted away from basic subject areas and replaced with domains such as media literacy, data fluency, communication in the digital era, the economics of information, and social and personal finance? Would students graduate college more mentally and socially prepared for the “real world?”

A reality in higher education is that increasing tuition, juxtaposed with declining employment rates for college graduates with certain degrees, poses a threat for those majors and their respective educational departments.  ThinkAdvisor reported the majors with the highest unemployment in 2018 included mass media, fine arts, English, liberal arts and philosophy.  With that in mind, do the benefits of these areas of knowledge outweigh the expense for students when they are required coursework?  The responsibility lies on university administrators and educators to determine whether these courses continue to impart critical skills for a career in today’s job market and therefore deserve priority as fundamental to higher learning.

Think Advisor. “10 Worst Majors for Getting Hired.” Bernice Napach. May 2018 (https://www.thebalance.com/college-graduate-salaries-expectations-vs-reality-4142305)

If the Eco-Friendly Shoe Fits…

Consumers, especially Millennials, are clearly increasingly focused on the environmental and social impact of their purchasing decisions, and the fashion world is no exception. The demand for sustainable and ethical fashion products continues to grow, with new entrants into the apparel market trying to balance consumers’ desires for eco-friendly clothing and accessories while also creating beautiful, wearable products.

Companies such as Rothy’s, which manufactures women’s and children’s shoes, including flats, loafers, and most recently, sneakers, primarily out of recycled water bottles, are at the forefront of the movement toward popularizing eco-chic fashion. Not only are the shoes made out of recycled materials, but they are also durable and machine washable, ensuring longevity of the product. Allbirds is another example of a hugely popular footwear line that has seen exponential growth over the past few years, in part due to the use of natural fibers (primarily wool) and a focus on comfort. Beyond sustainability, other companies, such as Everlane, are focusing efforts to ensure their fashion products are ethically sourced from factories that pay fair wages and maintain reasonable hours and working conditions.

While these companies have met with success marketing fashion items that are either sustainably or ethically sourced, rather than relying on these attributes to sell their goods, these companies have also had to ensure broad aesthetic appeal for the consumer. By remaining tightly focused on relatively limited core product offerings (a few lines of shoes in the case of Rothy’s and Allbirds and “everyday basics” in the case of Everlane), these apparel companies have been able to hone their product lines into offerings that look and feel good to the consumer. Notably, many of these companies are initially utilizing the direct-to-consumer model to build their brands and develop a loyal customer following – disrupting not only the types of clothes and shoes being marketed, but also the way in which they are marketed to the consumer.

The apparel landscape will continue to evolve in the coming years, as consumers demand more than just fit and function from the brands and retailers they shop, a trend we are keenly following as a consumer investment bank.

Private Equity’s Emerging Interest in Autism Therapy Companies

Private equity investment in adolescent behavioral therapy has skyrocketed in recent years. Both investors with a track record for partnering with healthcare companies, as well as generalist funds, have come up to speed quickly with an interest in adolescent behavioral care. Numerous attributes of adolescent behavioral health companies align with private equity’s interests and experience, and recent M&A in the space suggests that market opportunities exist for the first-movers that can build large platforms for providing care nationwide.

Investors have been most active in autism therapy and applied behavioral analysis (“ABA”). ABA therapy is a differentiated approach to early-intervention autism treatment that in recent years has been widely recognized as one of the most effective avenues to generating meaningful and positive behavioral change. ABA therapy is administered by Board Certified Behavioral Analysts (“BCBAs”), ensuring that the administration and education of caregivers is governed by consistent standards.

Financial sponsors have accelerated the pace of investment in autism therapy due to a number of converging factors:

  • Private equity’s access to financial capital enables consolidation of the fragmented industry as it exists today. Many autism therapy companies are small, employing fewer than a dozen BCBAs in many cases. Investors looking to acquire, or “roll up,” a number of small practices stand to benefit from significant increases in efficiencies that accompany greater scale, as well as lower costs. Additionally, potential operational improvements abound in smaller companies, and experienced industry experts that often partner with private equity funds are standing at the ready to help the funds’ portfolios improve operations.
  • Private equity investors have tracked reimbursement trends that, state-by-state, have refined the approach to reimbursing providers for therapy services in favorable ways.
  • There is an enormous market, as well as an unmet need, for autism treatment in the U.S. MHT Partners estimates that approximately 1.1 million children in the country experience an autism spectrum disorder, and over $16.5 billion dollars in direct costs of treatment are required annually. The vast impact of autism in the U.S. requires expanded access to treatment, and improved efficiency for the delivery of care is badly needed.

Recent transactions involving autism therapy companies include LLR Partners’ acquisition of Autism Spectrum Therapies, FFL’s acquisition of Autism Learning Partners, and KKR’s creation of Blue Sprig Pediatrics, which this week acquired The Shape of Behavior. In the middle market, platforms such as Behavioral Innovations and Florida Autism Center, both acquired by Shore Capital Partners, represent regional beachheads with significant opportunities for growth.

Such investments are not without their challenges, however. Some uncertainty in regard to state-level reimbursement policies, sellers’ high valuation expectations, and a nationwide shortage of BCBAs are several factors that require investors to develop a strong investment thesis.

MHT Partners’ healthcare investment banking services represent founders, owners, and entrepreneurs undergoing M&A transactions. If you would like to learn more about MHT’s experience, please e-mail Taylor Curtis (tcurtis@mhtpartners.com) or Alex Sauter (asauter@mhtpartners.com).