Blackboard has upended its corporate strategy and structure

Correction: An earlier version of this story incorrectly spelled Adrenna, the learning management platform. It also incorrectly stated how many people are employed at Blackboard. This version has been corrected.


Jay Bhatt, chief executive of Blackboard. (handout)
January 26

Blackboard has upended its corporate structure and strategy behind closed doors since chief executive Jay Bhatt took over the private company a year ago with a mandate to reinvigorate one of the District’s oldest and most recognized technology brands.

The changes come after years of eroding market share for Blackboard, a pioneer in online learning management software. Bhatt said the changes made in the past year provide a foundation on which to grow the business.

“If you’re not an innovative company, I don’t think you’re going to be able to sustain your leadership position. I don’t know you’re going to be able to be a high-growth company,” he said.

Blackboard today is completely reorganized, compared with a year ago, a process that required layoffs in some departments and new hires in others, Bhatt said. The company counts roughly 3,000 employees to date.

Employees who were once divided among Blackboard’s individual products are now grouped based on the company’s target markets: higher education, K-12 education and international education.

The goal, Bhatt said, is to better integrate Blackboard’s software offerings so that customers will be inclined to purchase them as a bundled unit.

“This whole concept of the integration of the tools is meant to unveil the holistic nature of the portfolio, and you’ll see that in the coming months and years,” Bhatt said.

That approach also allows the company to box out competitors who offer alternatives to just one or two software programs, said Trace Urdan, a research analyst at Wells Fargo Securities. Universities that get a comprehensive suite of software from Blackboard may find it too cumbersome to switch to competitors.

“They have an advantage if they can bundle everything together and sell it as a unit rather than an a la carte menu that colleges can pick and choose from,” Urdan said. “They’re trying to maximize the revenue from each of their customers.”

That’s become increasingly important as Blackboard faces competition from companies touting comparable software at cheaper prices.

“You could argue that it’s a commodity market at this point, and what academic institutions are evaluating them on are things that are intangible: Do they like the company? Is the price effective for their budget at a time in which they’re struggling in many ways?” said Stephen Gilfus, the chief executive of Gilfus Education Group and one of Blackboard’s founders.

Gilfus’s investment group in October acquired Adrenna, a learning management platform that aims to rival Blackboard.

Blackboard’s latest effort to expand its product suite is the acquisition last week of MyEdu, an Austin-based start-up that helps students to map their path to graduation and create profiles that boast their skills to potential employers.

“We don’t sell to the student, but they are the consumer, and how they interpret our technology and how useful they find it is very important,” Bhatt said.

The purchase continues a strategy at Blackboard since before Bhatt arrived of acquiring competitors and promising young technologies in an effort to preserve the company’s market dominance.

“The new products that they’ve come up with, both the ones they’ve invented and the ones they’ve acquired ... they know their market really well,” Urdan said. “They grew to be dominant in what is a market that’s fixed in size to a certain extent.”

Bhatt aims to push the boundaries of that market by ramping up Blackboard’s international business. Blackboard collected roughly 17 percent of its revenue outside of North America when Bhatt took the helm, a number he aims to grow to 25 or 30 percent over the next several years.

To that end, many of the company’s new employees are based at offices in Brazil, Singapore and the United Kingdom, including executives to head up Blackboard’s expansion efforts in each of those regions.

The decision to go private in a 2011 sale to Providence Equity Partners allows for these changes to happen without the typical scrutiny of analysts and the public market. Blackboard’s revenue figures are no longer public and it is not required to report material changes to investors.

Still, Urdan said that industry dynamics have not shifted in the company’s favor.

“Anecdotally, it feels very much what we’ve continued to see from these guys is an eroding [market] share. There are other alternatives and more colleges are willing to experiment with competitors,” he said.

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