Brother back in business, expanding into AI

Education Perfect co-founder Shane Smith. PHOTO: SUPPLIED
Education Perfect co-founder Shane Smith. PHOTO: SUPPLIED
It was an audacious business idea.

And when they won the Audacious Business Challenge back in 2007, it gave brothers Shane and Craig Smith the confidence — and a small amount of cash — to take a year out of their studies to pursue their startup Language Perfect fulltime.

In 2013, Education Perfect was launched, as a spin-off from Language Perfect, and eight years later, global investment firm Kohlberg Kravis Roberts (KKR) announced it would take a majority stake in the Dunedin-founded edtech business to the tune of $445 million.

The company recently featured on the Sir Paul Callaghan 100 Report which highlights innovative and impactful businesses driving New Zealand’s economy. The report said it was transforming the educational landscape by maximising every student’s potential.

Reflecting on the success of Education Perfect, which has a global reach of about 1million students every year, now Sydney-based Shane Smith said Dunedin was a very supportive environment for a startup.

Citing the likes of Timely — which was sold in 2021 in a deal worth about $135m — and PocketSmith, Mr Smith said the Dunedin tech circle had been "incredibly successful".

Education Perfect was just one example of a variety of successful edtech firms which started in Dunedin, a fertile ground for startups for a variety of reasons, including the University of Otago and Otago Polytechnic providing a consistent flow of talent.

Every year, Education Perfect’s Dunedin office hosted summer interns and some of those had gone on to join the company after completing their tertiary studies.

Mr Smith reckoned the city’s winters were also an "almost perfect environment for people to really knuckle down and to try and start something", while the city was of a size that there was space for people to get to know each other.

"It’s a wonderful place to really dig in and really focus on a goal and go and achieve something," he said.

There was also the angel investment scene which, although Education Perfect was not directly involved with it in its formative years, all of those factors helped, he said.

Education Perfect also had various Dunedin-based mentors who were generous with their time and advice, including Scott Mason — a cheerleader for startups in the South — who was part of the entire journey with the brothers.

Their story was a classic startup yarn, the pair working "incredibly hard" in the basement of their parents’ home 24/7, but while it was work, it was also fun and that was something that made it very enjoyable, Shane Smith said.

"Something I’ve always enjoyed about both startups and tech more broadly is the ability to take an idea, go away [and] spend a couple of weeks, maybe months, building something, and put it in front of people and see their reaction and joy when they use it," he said.

Sometimes, there was a "sinking feeling" so then it was about making improvements, and again that was a process that he enjoyed.

In some ways, those early days had been replicated over the past 12 months with Shane returning to the Education Perfect fold and particularly focusing on AI. His role did not have a job title as such, but he was there to "help out in whatever way" he could.

"That goes from exploring new ideas, to coding up prototypes, to taking those out to our customers and getting feedback and everything in between — it’s a really varied role and enjoyable role.

"When I came back into the business, I was very deliberate about how I approached it. Fundamentally, the senior management team is in charge. I’m working alongside them and supporting, but it’s their journey that I’m really helping to supercharge," he said.

Then science and innovation minister Steven Joyce pictured with Shane and Craig Smith of...
Then science and innovation minister Steven Joyce pictured with Shane and Craig Smith of Education Perfect in Dunedin in 2016. PHOTO: GREGOR RICHARDSON
He acknowledged the two brothers had different skillsets, personalities and visions; Craig was the one with the "stratospheric" long-term vision while he "just really loved building things that people [liked] to use".

Craig had very much driven the startup and business side of things while Shane was more product- and tech-oriented.

After such an intense decade, they hit a point where they wanted to "go out and be more balanced human beings for a while", stepping back from full-time positions in the company, while remaining shareholders.

It was in the last 18 months that Shane Smith had been reinvigorated and became passionate about what was possible with AI in the edtech space, technology that did not previously exist.

It was fun to work with the Education Perfect team again, particularly as he had been involved in hiring many of the staff, or they were quite junior when he was last there fulltime, and it was great to see them grow and mature.

Earlier this year, Education Perfect launched an innovative feedback tool powered by AI. The project was one that Mr Smith was extremely passionate about, taking it from inception to working very closely with the team building it to deliver to customers. Much time had been spent talking to teachers and students to understand both their needs and concerns.

Previously, in the education system, the first exposure some students had to AI was using ChatGPT to write essays to cheat on their homework tasks. Now, teachers and principals were acknowledging AI was a reality — it existed whether they wanted it to or not — and looking beyond the immediate uses, there were a whole lot of exciting possibilities.

AI deployed thoughtfully and built specifically for the education sector had been shown to have very positive benefits for learning, Mr Smith said.

Since its launch, about 35,000 students had tried out the AI system and about 700,000 sets of feedback had been given.

Looking back even five years, it was a "pipe dream" to say an AI system could reliably and accurately give high quality feedback to students. Now, he reckoned they were only just getting started with the possibilities.

When it came to the overall success of Education Perfect, Mr Smith likened himself to a proud parent and that was on a variety of fronts. There were the metrics — serving a million students a year — and having gone from a basement to grow to that scale, and also the growth of the people in the company.

While it might be the company management team’s "baby" now, the two brothers still cared deeply about it and the stakes were still high — it was all about building new technology and bringing it into the classroom, ensuring it worked and had a positive benefit for teachers and students, and that as many people as possible had access to it.

Craig Smith had taken a break; he was passionate about marine conservation and spent time helping a marine conservation trust in Fiji, and enjoyed travelling.

He was enjoying having more freedom than that of during startup life, while Shane Smith said it was "wonderful to be able to go out into the world and be a balanced human being".

sally.rae@odt.co.nz