Learning is a historic practice. Humans have been attending institutions to educate themselves for thousands of years, but for the most part, that traditional model has long sat dormant without much innovation.
Top Hat is a platform that allows educators to bring interactivity into the classroom by assigning course work that involves communal participation or games and quizzes. Smartphones and laptops become teaching tools, not distractions, engaging students and keeping them interested. Along with this, the Top Hat Marketplace puts the textbook tool solely into the hands of teachers, letting them create homework, augment curriculum on the fly and even share in the profits if their work becomes widely adopted. Students can stop buying expensive tomes every year and simply subscribe to Top Hat instead.
Mike Silagadze and Mohsen Shahini came together in 2009 and agreed that the classroom needed fixing. Mike worked with software tech outlet Miovision for two years before he and Mohsen decided to found Top Hat out of their apartment near the University of Waterloo. It makes sense, as it was the school Mike attended for electrical engineering and the experience he credits as the inspiration for starting the company.
“Walking into the classroom was like stepping back 100 years,” Silagadze says. “None of these new technological advances had any impact on a student’s experience.”
Silagadze saw that the graduation rate among university students in North America was less than 50 per cent and that they paid thousands for textbooks with barely any new information in them. Something had to give.
After securing over $20 million in funding from investors and winning startup of the year in 2016, Top Hat is now used at 75 per cent of the top 1,000 colleges and universities in North America. Millions of students engage the platform every day and save money while professors pocket royalties from their own work. The company has scaled to over 250 employees and taken over a huge new office space in Toronto.
The post-secondary education space is archaic and traditional—read textbooks, study, test knowledge, repeat. Was it daunting to try and enter that well-guarded field?
My co-founder and I were both really naive and we didn’t even think about it honestly. If we had a better sense, we would have looked at it and said: “Higher education is an incredibly difficult space to build a company and hardly anyone has succeeded.” We didn’t know any of that and didn’t think about it. The extent of our analysis was, “Wouldn’t it be cool to use smartphones for learning in class?” We talked to a few professors and they said, “Yeah it would be cool” and we went with it.
Since founding Top Hat, have you done a lot of research into other companies in the space?
For sure, but the companies that succeed are on a very short list and the vast majority fail. Typically what happens in education is that companies get started, raise a bit of funding, then fold. Maybe a company pops up with a great idea and they solve some big problem in the space and are able to raise a small seed round to keep them going for a year or two. They then build a product, try to get it going, then die.
Other companies might get one or two customers so they get to maybe a million or two in revenue, then plateau and get acquired, or flatline for years. Legitimately, only a handful—like 10 out of thousands—reach a meaningful scale, including Chegg [a textbook rental company], 2U [a company bringing degree programs online for schools], and Top Hat. Really, there’s so few that managed to break out. It’s tough because the main reason is not a lack of products or ideas or even motivation from teachers.
Every case of failure is the inability to make a real business model due to the nature of every educational institution’s risk aversion and unwillingness to change.
Top Hat had a pretty traditional way of scaling the company in the beginning. Tell me about the bottom-up growth approach.
When we first started, we did the logical thing—we have software that helps institutions, so why not go to them and ask them to buy it? We tried that for six months and closed a few small deals, and even that was pulling teeth. These schools would spend $100 million on a building, but somehow spending $20,000 on software that helps their students learn is a non-starter. It’s obvious why though, as the school gets no credit for buying someone else’s product. They do get credit for putting up a big building and running a big research grant. Generally speaking, no one cares about the quality of teaching, which is pretty depressing to me.
We tried to go to institutions and sell software. We found no interest, so we had a crossroads in front of us: do we fail or throw a Hail Mary and do something weird? We said, “Let’s sell the software like textbooks are sold,” by going to the professor directly. He then assigns Top Hat to the students, they pay a small subscription fee and get the software.
On the professor side, there’s a small sliver of the free market as they have control over what tools they use. That’s where a lot of this innovation will happen. Almost all change around education and teaching has happened around that little sliver of freedom professors have and that’s where we were able to get a foothold.
We had no choice otherwise. Thankfully we got some traction early on and convinced ourselves there was something there. Over time we learned the sophisticated process of getting into a university, then working with the institution to roll out over the campus.
Top Hat values the interactive approach; quizzes, tournaments, games and more. How did you come to that conclusion that interactivity is indeed the best way to learn?
If you ask anyone, “You have all this tech around, how do you use it in a classroom? ” most people will converge on an idea eventually.
There was certainly a vision to reimagine the course experience in a modern context. Instead of watching someone lead a class and read out loud for hours, let’s engage with the material. We did that.
Homework should not be passive, where you sit there on your own struggling. It should be collaborative where you work with fellow students and be adaptive, presenting material within a context as you move along. So we did that.
Textbooks are boring, it should not be based off technology that existed 300 years ago. It should interactive with embedded videos and games. So we did that.
The way textbooks are made, it’s an ancient process with publishers running a multi-year cycle to produce a book and hand it down every three years with shuffled page numbers. Well, clearly that doesn’t work. Professors should update it daily with feedback and direct access to students. So we did that.
All of these things, combine them and see that it’s obvious what a modern learning experience should look like. The vision was always there and over the years we built up the platform to make it all possible.
Why did the model of creating educational content have to change, and why would an authoring platform become appealing to educators?
Historically, the way content has been made is very centralized. That’s almost how you had to create work years ago because there was no other way.
In industries like transportation, taxis ran the centralized system. In hospitality, hotels owned these big buildings with a process to book people in. Then technology became commonplace, so you didn’t need a dispatch system for taxis or hotels, you had Uber and Airbnb to open up inventory that was previously unavailable. It becomes efficient and that newly generated wealth goes back to the creators—the drivers or the owners of the rooms.
You see these transformations happening everywhere. The exact same thing has to happen with publishing. It’s obvious. You need a P2P system where professors create content, collaborate over a platform then deliver the content directly to students. That’s a transformation that has to happen, with the upside of most profit going into the pocket of the professors instead of a centralized publisher.
It’s a win-win: students get better content and professors get more money.
What Top Hat is providing is a tech platform that gives professors a way to adopt this open source content at a fraction of the price, or maybe or even free.
If I’m a professor, Top Hat seems to make it easier and more appealing to create my own work. Was this uptick in original content an intended consequence of the platform’s adoption?
Totally. Some people might be surprised by this. When a publisher goes to a professor, their pitch is explicitly this: “Listen, you’re not going to make any money on this book. You’re going to spend three years writing it and we’ll give you 10k for that, then you also get a bullet point on your resume.” Then the publishers collect hundreds of thousands of dollars as these professors essentially work for “exposure.” This is the norm.
Now there’s an incentive. Even if professors only use it with a handful of course, like if they write on niche subjects such as physical geography or GIS. There are only a handful of courses in North America covering these, the professors can work with those and produce a compelling book and make enough money to make it worth their while.
When most of the revenue goes back to professors, things get better for them.
There are educators on Top Hat that have made hundreds of thousands of dollars on the platform. Now I like to say they’re no longer professors, they’re Top Hat authors who like to teach on the side.
Have you been surprised at all by how quickly Top Hat has scaled and been adopted by some of the biggest institutions in North America?
I’ve actually been bummed out it hasn’t happened faster. It’s so much better, it’s just so much better. Top Hat is cheaper and more interactive than anything else. Why isn’t everyone using this yet? We’re growing quickly but I feel like we should be in every classroom by this point.
If it was only up to the merit of the product, we’d be everywhere by now. It’s just all the bureaucracy and practical difficulties of getting something deployed.
Are there any goals outside of post-secondary, maybe relating to K-12 or other private or even governmental training systems in Top Hat’s future?
Post-secondary is the focus right now, as we just started expanding internationally. We just opened up our Australian office. In terms of K-12, certainly the product could easily be applicable there, but it’s even harder to get a business model, as the student pay model doesn’t work there. You are stuck selling to districts and school boards which is basically impossible. Remember how I said only 10 companies made a real business in higher education? Well, there’s zero in K-12. It’s pretty much a dead end.
For other goals, mid to long term, the plan is to dominate publishing space and build out the marketplace. We want everyone to use and collaborate on content within that space. We’ll expand internationally and do some work with analytics as well.
This interview has been edited and condensed for clarity.