Steven Schragis expects to be spending more of his working time in Woodstock and less in his New York City office. Like many other American executives, Schragis is already living a hybrid life. What’s the reason for the anticipated changing proportions of his work between New York City and Woodstock?
About a month ago, the 64-year-old long-time Woodstocker sold the adult education business he had founded, One Day University (ODU), to CuriosityStream, a much larger media firm with ambitious goals and substantial capital. By contractual agreement with CuriosityStream, Schragis will continue to direct the enterprise he has headed since he founded it in 2006.
The new ownership and Schragis will be looking carefully at who should so what in terms of organization. As he and CuriosityStream sort out how Schragis’ leadership role in ODU can be the most effective, Schragis expects to need to make less frequent trips from Woodstock to attend to day-to-day business at his Manhattan office. He’ll be looking at broader issues and opportunities.
The word went out on the evening of May 11 that CuriosityStream, which describes itself as “the leading global factual streaming service and media company,” had acquired One Day University. The acquisition of ODU, explained CEO Clint Stinchcomb in a release, complemented and enhanced CuriosityStream’s offering of premium factual content and provided additional long-term revenue and promotional opportunities by connecting directly with new audiences in new formats.
“We really could not be more excited about this transaction, as the synergy between CuriosityStream and One Day University is enormous,” Stinchcomb was quoted as saying. Digital learning and edutainment services are increasingly popular. The addition of ODU would “fortify and enhance our long-term consumer proposition.”
Never to be outdone in enthusiasm, Schragis expressed his own excitement about the transaction. “Sometimes when businesses get very lucky, one plus one equals three,” he said. “In this case, they equal four.”
Perhaps not by accident, the quarterly results of the Nasdaq-listed CuriosityStream (CURI) were announced the same day as the ODU deal. Failing to meet investor expectations in terms of revenue growth, CURI stock, with a market capitalization of about a half-billion dollars, plunged sharply. The company has $178 million in cash, and is in a position to withstand operating losses as it picks up subscribers and sponsors. CuriosityStream now reaches 16 million homes and charges subscribers ten dollars a year. By comparison, OSI, likely to be a premium add-on to CURI, has about 40,000 members who pay about $100 annually for their subscriptions.
Schragis says the purchase negotiations with CURI took only about a month and were extremely amicable. CuriosityStream is one of OSI’s sponsors, and Schragis had called to talk about renewal of that relationship.
The two companies held similar values. The exchange of compliments led to a proposal. Would Schragis consider a non-disclosure agreement where Curi would look ODU over for purposes of acquisition?
Schragis said he hadn’t expected such a proposition, but it made sense to him. He responded positively, and the talks began. After further conversations and three days of due diligence, an all-cash deal was struck. The sales price has not been disclosed.
A digital business model
It was clear at the beginning of the pandemic in March 2020 that millions of face-to-face American businesses would soon go extinct. And they did. Federal Reserve Bank research tells us that almost all the enterprises that closed their doors hoping to reopen have already done so. Only a small fraction of the rest will ever come back. The remainder are gone forever. Most estimates put the loss at about a quarter of all American businesses.
Last year, Schragis was concerned about the fate of his One Day University. What pivot could he make to ensure the continued survival of his innovative and hitherto successful national adult education enterprise?
He had one inescapable problem. “…. A world where large crowds couldn’t gather was a world that couldn’t support our business,” Schragis wrote recently. “Or so I thought.”
Americans had been finding ODU a refreshing addition to the world of adult education. Its events business had been growing, frequently grossing a pre-pandemic million dollars a month. ODU’s offerings included lectures on a wide variety of subjects from over 150 professors chosen for their skills at communicating with their audiences. Though expensive to stage, its in-person productions had attracted an impressive 90,000 students in all – many of who have now signed on to digital membership..
The education and the entertainment industries were both pulverized by the pandemic. The remnants of both rapidly shifted to digital mode in order to survive. Large parts of these industries will in the future exist only on-line.
Digital lifelong learning has established itself as part of the new normal. For Schragis, who has been involved in adult learning for more than 25 years, that transition was the pivot he had to make.
Transforming his high-revenue-per-customer business model to virtual on-line had seemed risky. But there was no good alternative. For the entire “edutainment” industry, there could be no going back.
“We’ll certainly reactivate that division when we can,” Schragis had predicted earlier this year about his then-abandoned business model, “but likely with fewer events in fewer cities than we targeted previously.”
With the economy escaping the previously inescapable, Schragis now expects to produce large-group ODU events this fall in several large cities.
Ownership is dead
A subscription-driven business is not without its advantages. Ask almost any surviving newspaper. People reluctant to put the big bucks on events are often more than willing instead to spend a smaller amount on subscriptions which can be renewed or dropped – an impulse buy, often available at an initial discount or with a special offer.
With his library of lectures a considerable asset, Schragis has pursued subscription opportunities. By partnering with other organizations, including notably AARP and Business Insider, ODU has been able to add tens of thousands of potential adult subscribers to its contact list. A Schragis-written article in Business Insider touting his switch to digital drew more than 2000 new ODU subscribers, he said. His goal has been to double his subscription membership this year.
This business model that ODI and CURI have in common requires initial capital investment. Costs initially go up and revenue drops as new subscription-based customers are brought on board the digital vessel. After the costs of acquiring the customer have been recovered, however, the model predicts, costs will go down and revenue will come back up. Because the customers are on a subscription cycle, frequent small transactions can easily be automated.
That’s the model. The marketplace contains numerous examples of its success. It’s also littered with doleful cases where revenues failed to take that upward bump into profitability which had been expected.
For Schragis as for so many others, the federal government’s Payroll Protection Program proved a godsend, supplying a good part of the capital ODU required for its transition to digital. Schragis said he borrowed about $200,000 in PPP funding. He doesn’t know much about other government programs, he said, but that one sure fulfilled its intended purpose of continuing to pay ODU staff. The firm presently employs 15 people.
A pivot to the subscription model transforms the world of business opportunity. The relationship is defined not by the seller’s products but by the relationship between buyer and seller. Once the new relationship is established, transactions through a payment service can be endlessly diverse. The seller can effortlessly set aside a few dollars for the charity of the subscriber’s choice. Or a special offer can entice increased subscriber spending.
After the relationship is established, the seller gives the subscriber access to goods and services. In ODU’s case, that has meant access to its rich and ever-expanding digital video library of lectures on a vast number of subjects.
Usership, not ownership. Content-driven subscription businesses can grow very quickly during moments of high demand. The pandemic accelerated the migration to contactless transactions. Younger people in particular adopted the new financial technology. Older folks, not so much, but they’re coming around to it.
For the edutainment business, a larger number of committed subscribers is important in two ways. One is of course the income the subscriptions generate. The other is the additional revenues that usership can bring through subscribers responding to related offers and enticements, and accelerated by the new tools by which small transactions can be handled.
Taking the business model a third step, moreover, companies managing digital data may offer licensing arrangements exclusive to individual subscribers. This fast-growing trend creates additional income stream for on-line platforms.
Schragis as publicist
Through a company called Carol Management Corp, the Kaskel family a couple of generations ago ranked among the richest 400 families in the country – right up there with Fred Trump. Alfred Kaskel accumulated enormous real-estate and hotel holdings in New York City and other large metropolitan areas. Steven’s father Alvin Schragis, who worked as a top executive with the Kaskels, had a considerable presence in Westchester and Dutchess counties.
As a young man, Steven took Carol Management into publishing, forming the Carol Publishing Group, Inc.
Steven Schragis was born with a silver spoon in his mouth. Educated at the elite private Riverdale Country School in The Bronx and at Tufts University, he moved easily at an early age among the movers and shakers of Gotham. In the 1980s, he provided money for the funding of Spy Magazine, and became a co-owner of that popular satirical publication. He bought several minor publishing houses, including that of Lyle Stuart, an outspoken and controversial renegade ex-journalist unafraid to take on the legal risks that major publishers avoided.
Schragis swears by the value of publicity, While most publishing houses strove for ever more “important” books to build their brands, Schragis took a different path, engaging in attention-grabbing activities that made him a convenient target for the New York media. In 1992, New York magazine derisively dubbed him The Happy Hawker for his genius in “promoting schlock,” specializing in lowbrow celebrity biographies. Other New York media followed suit.
Schragis makes no apologies. His celebrity books bought Carol Publishing the publicity it needed to build its brand. “Celebrity gossip accounted for ten percent of the business and 90 percent of the publicity,” Schragis likes to explain. ”We built our company from publicity.”
The Schragis formula, as he expressed it to a New York media reporter decades ago, was simple. “Develop a winning attitude, persona and image — then market that for all it’s worth.”
The publishing business wasn’t entirely successful. When a much-weakened Carol Management couldn’t pay off a six-million-dollar bank debt in 1999, it was Steven Schragis who had the unenviable job of representing it in court. The company was liquidated.
Sophisticated edutainment
By 2001 Schragis was national director of New York City-based The Learning Annex, an ambitious adult education company founded by an entrepreneur named Bill Zanker in 1980, sold in 1991, and re-bought by Zanker and others in 2002. Some of its titles included “Intro to Pole Dancing,” “How to Write a Book Proposal That Publishers Can’t Refuse,” “How to Talk to Your Cat,” “How to Buy Foreclosed Property,” “Discover Your Past Lives – Who Were You Before?,” “How to Make Your Own Soap,” and “How to Marry the Rich.”
Though Schragis diligently applied his publicity, marketing and editorial skills to the job, he and The Learning Annex’s owners never quite saw eye to eye.
At a Bard College event in 2004 Schragis, whose local residence is less than a mile from Woodstock’s village green, was captivated by a small collection of faculty presentations. He realized that many adults would feel as he did, and that a collection of well-communicated lectures by quality faculty could attract a significant adult audience. Edutainment at a sophisticated level, it could satisfy a need in adult education that previously had not being adequately met.
Two years later ODU was founded.
Because Schragis was then working for two organizations, ODU’s initial offerings were folded into The Learning Annex catalog. Later, they were separated out again, and ODU was finally sold back to Schragis and his group of investors.
Community enlightenment
Every nation has its own unique pattern of education based on its geography history and state of evolution. All are struggling to meet the demands of ever-accelerating economic development in a competitive world economy. In that context, national institutions form a support network for a lifelong process of learning.
In 1727, Benjamin Franklin, then 21, formed the Junto, a Friday-night discussion group in Philadelphia of “like-minded aspiring artisans and tradesmen who hoped to improve themselves while they improved their community.” The Junto was a combination of a forum for philosophical inquiry, a chamber of commerce, and a pressure group for civic improvement.
A century later, Alexis de Tocqueville shared shrewd observations about American education. “The observer who is desirous of forming an opinion on the state of instruction amongst the Anglo-Americans must consider the same object from two different points of view,” the visiting French aristocrat wrote. “If he only singles out the learned, he will be astonished to find how rare they are; but if he counts the ignorant, the American people will appear to be the most enlightened community in the world. The whole population is situated between these two extremes.”
Almost two centuries after de Tocqueville, United States president Joe Biden’s six-trillion-dollar federal budget for 2022 has proposed an overall increase of $103 billion, or 41 percent, in the federal Department of Education’s discretionary budget. Other budget initiatives would affect all levels of American education: pre-school, kindergarten through twelfth grade, and institutions of so-called higher learning – among other things to invest $189 billion on increased spending on research (mostly at higher-education institutions) and $109 billion to make all community colleges tuition-free.
Other nations are making investments of a similar scale, some in technology education or basic literacy, others in apprenticeship programs or ever-higher-level training of knowledge workers.
Where does adult education of the kind offered by ODU and CURI fit into this expanding marketplace? The streaming at low cost of a formidable library of factual documentaries and professorial lectures is an attractive educational asset. Steven Schragis and his new Curi partners are sure there’ll be a very significant place for it in the education industry’s next pivot.
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