How Instructure’s leadership monetizes student data to maximize shareholder value

This post is adapted from 35 tweets I made on December 6th, 2019.

On December 4th last year, Instructure (the company that makes Canvas) announced that they had entered into an agreement to sell the company to a private equity firm (Thoma Bravo) for two billion dollars. Every owner of Instructure stock stands to receive $47.60 per share if the sale is approved by shareholders on February 13th.

Shortly after the sale was announced, the educational technology community began to debate what the private equity firm was buying, exactly, for two billion dollars.

Were they buying a market-leading Learning Management System company with many loyal subscribers? Yes. Were they also buying data? Well, yeah. But was it worth anything?

Instructure sold software AND data, both of which have value. How much value is dependent on a lot of things, especially privacy law, but the data is worth a fortune. It is a plain fact.

I have followed Instructure closely this year. Canvas is the #1 most used learning technology I support. If you want to know what they believe about the financial value of data, read on.

2019 began with a transition of leadership at Instructure. Dan Goldsmith, a new CEO, began on January 2nd and got to work maximizing shareholder value. Data was an area of focus this year.

UBC’s student newspaper, The Ubyssey, did good journalism covering what data, specifically, is at stake. The Ubyssey: Canvas is tracking your data. What is UBC doing with it?

This was a very significant article, and includes coverage of UBC alum Bryan Short and his determined journey as a student to opt out of data collection.

In July, Instructure’s CEO gave a “conversation” interview to EdSurge, an ed tech industry news site. There were some statements in this article that were very alarming to the ed tech community. Edsurge: Instructure’s Age of Adolescence: A Conversation With CEO Dan Goldsmith

Laura Gibbs raised my awareness and led a lot of conversation about this interview. Nobody who follows her is unaware of what Canvas thinks about privacy.

The BC Freedom of Information and Privacy Association is also raising awareness in multiple communities, and FIGHTING for our privacy rights. Bryan Short continues his privacy advocacy as Program Director.

Here in BC we take our privacy seriously. Our privacy commissioner took Facebook to court and found our strong privacy law, FIPPA, was essentially worthless as a deterrent to rich tech companies. Facebook broke the law but told the Canadian government it didn’t agree — with zero consequence. The New York Times: Canada Says Facebook Broke Privacy Laws With ‘Superficial’ Safeguards

A few weeks after the EdSurge interview, Instructure’s Jared Stein (VP, Higher Education Strategy) published this post about data rights and usage on the company blog. Instructure Blog: Power to the People with Canvas Data and Analytics (Can You Dig It?)

I’m not sure if this post was supposed to assuage privacy concerns, but it got the community TALKING again. Instructure asserted they could use disaggregated learning data for making other products, which is NOT OK. It is commercializing data that does not belong to them.

At this same time, they were planning to take Bridge, the corporate LMS they make that is not Canvas, to the next level of shareholder value. An AI driven LXP, using Canvas data.

You know how much data they have? So much! In August, their Chief Financial Officer started to brag about it. 1 trillion records in the largest database of student activity in the world.

It was right about this time that Canvas shipped an AWFUL set of changes to the Gradebook. This article by Nancy LaChance in the Canvas Community goes over the debacle. Students were not able to see grades! Canvas Community: Canvas Release — Sour Notes

It’s almost like leadership was thinking about something else this summer. The product was no longer the most important thing at the company. It was shareholder value.

Everyone was getting ready for the auction.

I learned almost everything about the Instructure business auction from @PhilOnEdTech. On October 29th he wrote about Instructure’s business statements about the LMS market. Phil On Ed Tech: Did Instructure Refute LMS Market Slowdown? It’s a matter of semantics.

It was exactly this time, on October 28th, that Instructure posted changes to their privacy policy. I wrote a little about the significance of these changes, their first in almost two years.

Then, they announced that they were considering sale options for the company. Phil On Ed Tech: Instructure Considering Sale Options

Then, they sold the company for two billion dollars. Phil On Ed Tech: Private Equity Firm Thoma Bravo to Acquire Instructure for $2 Billion

One of the narratives that is being told about this sale is that this money was being spent to purchase a Learning Management System company. But the leadership hasn’t been talking about making the best LMS anymore, or about making technology that enhances learning.

And that makes sense, because almost none of them have education experience. Phil On Ed Tech: Seven Things We Mostly Know About the Planned Instructure Acquisition and Three We Don’t

What Instructure’s leadership has been talking about is how to monetize all that private data they have. Remember what the CFO said? One trillion records. About 30 million people.

Nobody knows what is planned, and over the next 34 days while the sale finalizes, nobody from the company is going to say very much. Phil Hill linked to these company “internal FAQS” in the previously-linked post.

The only way we have to know what is most likely is to look at what Thoma Bravo, the private equity company buying them for the two billion dollars, does with companies it buys. Phil writes about this. Phil On Ed Tech: Seven Things We Mostly Know about the Planned Instructure Acquisition and Three We Don’t.

Buy and build. Buy a smaller product company, find a way to make it more valuable using Instructure’s resources, then sell it off or build a profit engine.

Instructure is already saying it will spin off or sell its other LMS product besides Canvas: Bridge. Bridge is a corporate LMS. Corporations usually don’t hire instructors, or teaching assistants. But, hey! They have all this student data from Canvas…

So what if they are working to launder the student data from Canvas using “machine learning” and “artificial intelligence”, then transfer the magical “learning algorithms” back to Bridge before selling it off.

The student data in Canvas is now a shareholder value multiplier.

The stage has been set in all of 2019. I’ll summarize my thread.

We are here, educational technology community. We can still make a difference. KEEP TALKING ABOUT THIS. THEY ARE SELLING THE DATA.

Steps #5? 6? 7? Forever? (and I’m spent) – Buy a company – Multiply value using student data – Sell the company Now WHO thinks the data does NOT have value?

Let’s talk about this as a community.

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