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In Perspective: An Interview with Citi's Tom Singlehurst

Updated: Apr 28

Our Head of Research, Rhys Spence, sat down with Tom Singlehurst, Head of European Media Equity Research and Global Head of Education Research at Citi, to discuss our shared interests in emerging education and learning trends and ask him about what he’s watching now and expecting post-covid.


We covered:

  • The ‘edtech gap’

  • Citi’s 6 areas of opportunity

  • IPO trends

  • Trends in emerging vs. developed markets

  • Excellent book recommendations!

Watch the highlights here, or read the interview in full below



Brighteye: Tom, thank you so much for joining us. Would you mind giving us a summary of your career to date?


Tom: It’s great to join you.


I started my career as a media analyst in equity research at Goldman Sachs. I moved to Citi in 2004 and have been doing media equity research the whole time. Education is a sizeable part of my current role and it has been an expanding area of interest for me and Citi since 2017. We had initially focused on publishing but we are now considering the whole of the sector. Our core question is: where’s the value in the sector? And ultimately, what does this mean for private capital? At the end of the day, I am an equity analyst and that’s what I am trying to find out for my clients!


Brighteye: It’s great to hear that your interest and coverage of education and learning technology is expanding! How are you defining edtech as an organisation?


Tom: We use edtech, online learning and e-learning interchangeably- this includes content (open educational resources, digital courseware, language learning apps, personalised learning apps, etc.), digital certification (online program managers, collaboration with MOOCs, bootcamps, etc.), assessment and proctoring tools, learning management systems, recruitment and admissions tools, basic hardware (servers, user devices, etc.), smart classrooms and furniture (displays, remote classroom access, digital teaching assistants, etc.) and next generation tech (AR, VR, AI and robotics, etc.).


For us, the main groups within this set are content and certification.


You can see the full definition in this report


Brighteye: One of your most high-profile recent reports is “Education: Fast Forward to the Future” which refers to the ‘edtech gap’. Can you explain this to us?


Tom: We get the strong sense that we have seen this movie before.

As a media analyst, I have spent the last 20 years, analysing business transformation as a consequence of digital. The background to the ‘edtech gap’ is actually a famous chart by Mary Meeker, a legend in the industry, who created a similar chart on media usage. She made the observation that there was a disconnect between media usage and media revenue, such that if usage of newspapers and other traditional media transitioned to online, revenue would follow. So the ‘edtech gap’ is partially a homage to Mary Meeker but also making a serious point that despite some inertia in the education sector, it is not immune to these changes- they are just happening in a slower and more orderly fashion.


“We get the strong sense that we have seen this movie before…there was a disconnect between media usage and media revenue, such that if usage of newspapers and other traditional media transitioned to online, revenue would follow…education is not immune to these changes.”

At present, 50% of education time is digital while digital spending is only 5% of total spending. This gap presents an opportunity worth north of $2.7trn (based on estimated education market size in 2019).

I feel extremely excited by this trend as its continuity feels inevitable. If organisations are bold in embracing online as rapidly as possible, they will do extremely well, as will the companies and investors that support them…

The same is happening in education. We can expect a rebalancing between spending on traditional vs. digital learning, as time spent on digital learning continues to increase…

We have recreated the edtech gap chart, courtesy of Citi’s analysis, for your reference. The original can be found here. $2.7trn reflects Citi’s 2019 education market estimation.


Brighteye: You mentioned ‘inertia’ in education. What’s the key driver of this inertia? Is it because you can’t ‘move fast and break things’ in the same way you can, or perhaps could, in media?

Tom: There’s Inertia for a number of reasons, some of which are human and others are budgetary. There’s also the more thorny, controversial issue of politics.


“Before the pandemic, a lot of the technology that was on offer was seen as a ‘nice-to-have’, rather than a ‘must-have’. Education is a sector where it’s not immediately obvious that there are savings to be made, given often sizeable upfront investments required for purchasing hardware, software and courseware.”

Education is an area in which people have an innate perception of what counts as a good system or good process, because they’ve lived it and participated in the system. In one report, we quoted Baroness Nicky Morgan making that point: she said that it’s really difficult to discuss and make decisions in the sector because everyone has an opinion informed by their own experience. You don’t tend to come across this issue in other policy areas or other markets.

And on budgetary reasons: before the pandemic, a lot of the technology that was on offer was seen as a ‘nice-to-have’, rather than a ‘must-have’. Education is a sector where it’s not immediately obvious that there are savings to be made, given often sizeable upfront investments required for purchasing hardware, software and courseware. This reminds me of the famous instance of Pearson winning a contract with Los Angeles school district to provide courseware for ipads in a deal worth $1.3bn, when the entire US textbook market was worth $3bn! The scheme failed quit publicly, due to disagreements over the quality of the curriculum content. Pearson’s stocks were hit quite hard. It’s no wonder there is inertia after that experience- from both the districts and the education companies!

Brighteye: What edtech/learning opportunities do you think investors should be focusing on at the moment?

Tom: Firstly, the market is massive. We are speaking about a $6trn+ global market (based on our 2019 estimate), expected to grow to $10trn by 2030. While massive, it’s not monolithic. The more you scrape below the surface, the more sub-sectors you uncover and each has its own opportunities and challenges.

The same is true when viewing the markets geographically: in most developed countries, education participation rates are high and access is good, but productivity, value for money and lifelong learning are typically poor, while in the developing world, the focus is necessarily on access. The focuses are entirely different.

With this in mind, we are most excited by 6 different areas:

1. International private K12 schools- this speaks to the access gap in the developing world that I mentioned a moment ago, but we are also interested in private K12 schools in the developed world, particularly the expansion of bilingual schools.

2. Supplementary services and particularly after school tutoring in the developing world- this is particularly the case in sizeable markets where children require more support in order to get the most out of the state education system, such as in China.

3. University services in the developed world- there is a big opportunity to boost productivity in the university sector in the developed world, which should enable broader access to university for different demographic groups and particularly those less likely to attend university.

4. Higher education in emerging markets- addressing access asymmetry.

5. English language learning market- this is more of a developing market overlay and about maximising earnings power.

6. Professional learning in the developed world- this speaks to the huge challenge of automation and the need to reskill populations so they can fill the roles of the future. There is certainly increasing recognition from major corporates that consistent learning and developing is an expectation of today’s talent - you have to offer more than a regular pay packet.

Brighteye: You phrase these 6 opportunities as things you’re “excited by”. What does this mean?

Tom: The role of capital markets is to connect the holders of capital with people that need capital. Underpinning this is a firm conviction that private capital can make a difference to business and therefore customer outcomes- of course there is a requirement to make a decent return and we shouldn’t be embarrassed about that. Governments have shown over generations that addressing some challenges centrally, such as education, doesn’t work. There is increasing investor interest in education as a focus for responsible investors.

It’s therefore increasingly important to consider the available evidence on outcomes associated with given products and interventions so that investment is made where the societal returns are significant. I think it would be really interesting to produce a financial and societal return on investment guide for different verticals. I’m sure this would be of great interest to many investors, both individuals and institutions.


Brighteye: Where are you seeing the greatest acceleration in edtech and learning tech investment by geography?

Tom: Diving back into the 6 areas, I find the higher education opportunities particularly exciting because of the enormous wall of demand we see in the developing world. We speak here today as people that attended university with friends that also attended university- because it’s normalised, we don’t necessarily associate our relative affluence with attending university. But in areas with lower access and attendance, we would probably have a very different perspective on the value of tertiary education. A lot of our work builds on this principle.


“…incremental demand for student places out of three markets (China, India and Brazil) over the next 10-15 years is equivalent to the entire US and UK university footprint.”

We have undertaken a lot of survey work in the developing world to consider this more closely. One of the statistics that jumped out is that incremental demand for student places out of three markets (China, India, and Brazil), over the next 10-15 years is equivalent to the entire US and UK university footprint. The demand is there and we expect to see similar trends in sub-Saharan Africa in the coming years, given similar demographic profiles. Assuming supply expands to accommodate this demand, we will see enormous increases in university attendance in these markets. This might include private universities and online pathways. It’s a massive opportunity.

Brighteye: You have just outlined some geographies you are particularly excited about, as well as higher education as a market of particular interest. Are there other markets that you would like to discuss in further detail?

Tom: The other area I am particularly interested in is lifelong learning and by extension, consumer-facing edtech.

Consumer edtech is clearly private in the main. Only a few companies have nominally cracked the consumer market- such as Chegg, Byju’s, and some of the publishing companies.

Consumer edtech remains a small part of the $6trn in education spending- total edtech spending represents only around 2.6% of that figure and consumer edtech is a small part of that 2.6%. There are still only a large handful of companies that are producing more than $10-15mn in revenue. This is the dog that hasn’t barked. It will change. But it does return us to the fact education is a non-monolithic market in the sense that there is much less willingness to pay for education in the developed world and even less willingness to pay for supplemental services. But there are many really fascinating companies in that space, companies that haven’t yet barked.


Brighteye: More and more edtech-focused companies are going public. Please tell us what you are seeing. Do you think this is covid hype or are there structural tailwinds that would make the recent pattern of IPOs a more common trend for the future?

Tom: Inevitably it helps if you’re coming off the back of a significant uptick in demand for your your product and it coincides with increasing investment interest. If you are trying to be cynical, you might think that this increased demand is a flash in the pan and expect demand to return to pre-pandemic levels. But my personal view is that this is not the case.


For example, universities are going to offer online programmes in the near future as they are no longer a side-dish, they are becoming a main course. Some will view this as a threat to make their current operating model redundant, while others will see this as a significant opportunity to give students what they want and to improve access. It’s my opinion that the genie will not be going back into the bottle.


“If you are trying to be cynical, you might think that this increased demand is a flash in the pan and expect demand to return to pre-pandemic levels. But my personal view is that this is not the case.”

It’s not necessarily a surprise to see more capital flowing to education. But going public won’t suit all companies. Entrepreneurs and investors need to ask themselves if they would rather be in the full glare of public scrutiny or funded by private equity where there might be more tolerance for risk and more ability to focus on growth and not worry about short term results.

This said, strengthening ESG focuses suggest that public market capital is becoming more patient and willing to wait for the structural change that helps these companies to grow and more to enter the markets.


“…going public won’t suit all companies. Entrepreneurs and investors need to ask themselves if they would rather be in the full glare of public scrutiny or funded by private equity where there might be more tolerance for risks…”

Brighteye: Given the fact most of your investors are involved in public markets, can you share which areas of edtech they’re finding most interesting?

Tom: To summarise the conversations I have with public market investors, there are two areas of most interest.

The first is professional learning - because enterprise is such a huge potential market, given that companies are currently spending $360bn annually on L&D. In aggregate, this market is not necessarily growing quickly, but a big shift is happening in the underlying modality. For instance, when I started my career, training tended to only be for the most senior people. But budgets are now being reallocated to provide more digital and democratic access to all staff members. It’s now seen as a potential point of differentiation for companies when attracting talent. It’s now possible to provide high quality learning experiences in an asynchronous way. It’s clear from conversations I’ve had with Citi’s Chief Learning Officer that there is clear passion to help people progress and develop their skills. Of course, there is a selfish element to this (improving the workforce and boosting retention) but I think there is a genuine altruistic focus too, to make sure employees have the skills to adapt to their changing working environments.

The second is higher education in the developing world, for the reasons outlined above.

Brighteye: Because many interesting people read interesting books, what have you been reading?

Tom: There are 3 books I would mention:

1. The first is ‘Teachers vs Tech?’ by Daisy Christodoulou. Daisy is really focused on tech interventions that work. She is also helpfully candid and realistic about what she thinks tech can and can’t achieve and therefore believes it’s important to define what should be done by teachers and not by tech, such as pastoral care. She stresses that everything should be about outcomes. It does seem to me that one of the main differences between really high quality companies and those of lower quality is their focus on proving the impact of their product.

2. The second is ‘The State of independence- key challenges facing private schools today’ by David James and Jane Lunnon. This book is an excellent summary of the outlook for independent schools. One of the many interesting things I took from the book was its analysis of education as an exportable product for the UK, particularly bilingual schools.

3. The third is ‘A University Education’ by Lord David Willetts. The book, focused on England and Wales, provides fascinating insights on what makes a good and practical higher education system. It stresses the need to address each aspect of a university’s operation to improve the overall level of the university and student outcomes, including culture, policy, teaching, and pastoral care, among other strands.

You asked earlier about my career to date and education as an area of focus in my work. It seems to me that to truly mark yourself as a deep thinker you have to write a book…maybe that’s what I’ll do in the next 6-12 months!