Wow. I realized today that I’ve spoken with hundreds of people over the last 2 weeks about the $10m investment in Kuali. Customers, employees, prospective customers, peers, analysts, media, colleagues, friends, family, and even competitors have reached out with congratulations, excitement, and, in some cases, anxiety for where Kuali is going.
As the swirl has calmed, I have been reflecting back on the last 3½ crazy years.
Kuali is a unique beast. A community, a foundation, and a company working together to give higher ed something new. What we’re trying to do is unusual, very innovative, and so very needed in higher ed. This investment, from a firm like Owl, is validation that we’re making progress.
For those who are unfamiliar, the Kuali community began, unofficially, in 2004. Several brave higher ed leaders got together to hammer out a vision. They wanted alternatives to the big, complex, expensive software traps that had dominated. Open source enterprise higher ed software was a dream and a herculean task.
Over the next decade, the Kuali founders were joined by other universities and colleges, who together were successful in building software and a strong community to support it.
Kuali’s second decade needed a change to expand the breadth of institutions that could benefit from the Kuali products & community while increasing the amount of money available to invest in product development. Kuali aimed to increase the speed of product development, improve the quality of product design, and expand toward a full enterprise higher ed suite. The community chose to do this by investing in a company which would be self-sustainable.
The change sparked excitement for the future and also some concern about what commercial involvement would mean. Some institutions chose not to continue with Kuali, others waited, and many have adopted the new Kuali products.
Today, there are more universities and colleges using Kuali software than ever before. The last three and a half years have been fantastic and bumpy and what we hoped they would be and more.
Kuali has taken over development of the feature-rich software initially developed by the community and is hosting it in the cloud. A huge portion of the software has been completely re-written with more code being re-written and deployed each day.
Kuali has also developed five new multi-tenant modules from scratch: Kuali Curriculum Management, Kuali Catalog Management, Kuali Research Conflict of Interest, Kuali Research Protocols, and Kuali App Builder. Our customers get the benefit of the current feature-rich code and also the new multi-tenant modules, as they work together tightly.
One can see examples throughout higher ed where customers are paying tens or even hundreds of millions of dollars to implement and maintain big, huge ERP systems. The Kuali vision was to build a complete suite of higher ed applications, which we are doing module by module. And customers are rolling modules out one at a time, as they wish. For example, Kuali Research is a full administration suite, but some customers choose to just use our new Kuali Conflict of Interest module.
We built the first module of our student information system, Kuali Curriculum Management, in 2016 and dozens of schools have already implemented it. We built the next module, Kuali Catalog Management, in 2017. Design partners for that product rolled it out last year and we’re now implementing more customers every month. It is our goal that customers have the choice and the control to roll out modules like these and be able to use them indefinitely, without feeling like they have to move to an entire suite.
We will continue to build out important higher ed modules. In 2019, you’ll see our course offering, enrollment, and academic record modules for Kuali Student. You’ll also see a major update to the Kuali Research Proposal Budget module and a new Kuali Institutional Biosafety Committee (IBC) module. For Kuali Financials, you’ll have better visibility to account activity and increased system flexibility and extensibility. We are not currently working on HR or Library modules and don’t have concrete plans to work on them in the immediate future. We may also partner on future modules.
Since we started in 2014, we’ve grown to support over 160 customers. We’re also attracting great employees by focusing on our company culture. In 2017, we were named the best small tech company to work for in Utah for the second year in a row.
All this was built from a small investment from myself and the Kuali Foundation. We always knew that, if we did well, we’d likely need more funding to speed things up and power us to the next level. Brad Wheeler, chairman of the Kuali Foundation at the time, talked about this in the introductory blog post about this pivot.
“To the extent that university investors in specific projects wish to aggregate their resources to achieve certain software outcomes, they can continue to do so through the means described above. To the extent that capital investors—quite likely university foundations and other sources of patient capital—invest in software enhancement to serve higher education, the broad audience of 3,000+ institutions of all sizes also gains a new voice in feature requirements. Collectively, these dual approaches enhance the Kuali software for all.” -Brad Wheeler
Last year, we took a hard look at Kuali’s performance and promise. We had proved that the business model worked and we had grown responsibly. We were stable and self-sufficient, but we wanted to be able to grow faster and stronger.
That’s the ideal time to take money. We didn’t need to seek investment to survive; it was time to put gas on the fire. The Kuali Board of Directors and the Kuali Foundation Board both gave the go-ahead to seek funding.
We clearly wanted to avoid an investment route that wasn’t aligned with the Kuali vision. That route is common and easier to find: An investor buys in, takes over the board, pressures the company to cut costs and increase profitability, and then flips the company to make a quick profit and move onto something new.
I addressed that position head-on in a 2014 blog post, saying “Investors will not be private equity, venture capital, or other investors who would be interested in ‘flipping’ the company or in an IPO.”
We had hoped to take investment from university foundations, but we talked to several and they just don’t invest in small companies. They invest in funds which invest in small companies.
We would only consider investors who align with our mission and values. Who care about education. Who focus on the long-term. We talked to over 45 investors, from university foundations to individual angel investors to venture capital to growth equity to private equity. After narrowing down the field, we considered offers from five investors who were good fits and chose Owl.
The Owl partners are experts in education investment, are focused on long-term success, and are experienced business professionals. Several university foundations are invested in their fund. They are aligned with our mission.
This investment is in their wheelhouse. Owl will join our board, without a controlling interest in the company. After our first board meeting together this week, it’s clear that they’re going to be great partners.
As Kuali products and cloud hosting have evolved, they have become much more viable and attractive to more institutions. Yet we know that a majority of today’s campus decision makers haven’t yet heard of Kuali or still think of us as purely an open source community. We need to change that.
For me personally, Kuali is about happy higher ed customers and happy employees. We think we’re making big strides in both of those areas. This investment is going to help us do it better and faster.
We’re inspired and energized. I can’t wait to see what Kuali accomplishes!