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Suddenly Knewton was in demand, raising $33 million from investors in October 2011. Among those who bought in: the Founders Fund, a venture-capital firm whose partners include the founders of PayPal and Facebook's first president, and Pearson, the world's largest education company. The investment round valued the company at over $150 million. In a separate deal, Pearson contracted Knewton to provide the adaptive technology for part of its higher-education digital textbooks. Since then, Knewton has become the platform for math and English products Triumph Learning designed to align with the new Common Core public-education standards, and it has dipped a toe into the English-as-a-second-language market through deals with international education companies. Last month, Knewton reached an agreement with Houghton Mifflin Harcourt to incorporate its technology into products used by some 10 million U.S. students. Not one for modesty, Ferreira expects Knewton will eventually be part of the HMH products used by nearly 60 million students around the world.
These deals have allowed Ferreira to turn Knewton into the company he intended it to be. Though the math course it built as a calling card is still used by 14,000 students and earns the company about $1.24 million per year, Knewton is no longer in the business of creating courses. Just as Mark Zuckerberg famously said he didn't want to build a Facebook phone--he wanted Facebook to be on every phone--Ferreira is convinced Knewton can be the infrastructure for the emerging field of adaptive-education technology. "We're not building applications that we can sell to schools. That's what everybody else is doing," he says. "The whole point of Knewton is that it has got to be a platform that anyone else can work with."
Working with Knewton costs clients a one-time integration fee between $100,000 and $250,000, depending on the organization's needs. That's not spare change--and Knewton's algorithm improves with every user it adds--but it isn't enough to sustain a growing company and pay off those investors. For that, the Knerds are hard at work on a second platform. By the beginning of next year, Knewton plans to release a retail edition that will allow any small business or tutor to make a course, content or product adaptive.
"Everybody is going to produce adaptive applications one day--everybody," Ferreira says. "Every school will. Every publishing company will. There will be thousands of them." If Knewton can be the engine powering many of those, well, then you're starting to talk real money.
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