Acquired by Netflix CEO in 2010, the educational software company plans to introduce new products with the infusion of cash.
Netflix CEO Reed Hastings
Netflix CEO Reed Hastings is pouring more money into online education software start-up DreamBox Learning.
Hastings, a former ninth grade math teacher, bought the Bellevue, Washington-based start-up for an undisclosed price in April 2010. When the deal closed he kicked in another $10 million to the company.
Hastings and Silicon Valley venture capitalist John Doerr this month led an $11 million round for the five-year-old company, Hastings through his Charter School Growth Fund and Doerr through his private investment fund, not Kleiner Perkins.
Dreambox, started by former Microsoft executive Ben Slivka and Lou Gray, former president of software company UIEvolution, plans to use the investment to expand the product and curriculum and increase distribution. Since fall 2010, half a million elementary school students used Dreambox to view more than 11 million lessons. According to an independent study done by nonprofit researchers SRI International, students who used Dreambox for four months improved their test scores by about 5 percent.
Slivka and Gray launched the company with $7.1 million from angel investors and began selling their $13 per month elementary education program in 2009. Their initial product targeted kindergarteners through third grade students.
Though Microsoft board member Hastings has ties to the Seattle area, he stumbled upon DreamBox while visiting a school in San Jose, Calif., that happened to be using the software and was "wowed by how kids were engaged because it has some entertainment built into it," he told the Seattle Times.
Hastings recalled struggling to figure out a lesson plan for students at different levels.
"I never knew what lesson to present to which group of kids," he said. "What this software does is really adapt to put the right lesson in front of each kid at their level. That's why it's really personal for me."
So he called up DreamBox to see if they were open to investment and then "got so excited I ended up acquiring it," he said.
Hastings is thinking big both for DreamBox and for the beleaguered Netflix.
Tuesday the slightly humbled CEO spoke at a UBS investor conference in New York, sketching his longterm vision for Netflix: To be selling Internet video subscriptions at prices starting at $8 per month in most markets outside of China.
"If you fundamentally believe Internet video will change the world in 20 years, we are the leading play on that basis," Hastings said. He quickly added: "As long as we don't shoot ourselves in the foot anymore."
Inc. contributing editor COURTNEY RUBIN was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.