Computerized Teaching Program a Hit for Firm

A computerized “teaching machine” by which a student can work through a class curriculum at his or her own pace has been a long-held dream of educators. Now, a fast-growing Sorrento Valley company called Education Systems Corp. is helping the dream materialize.

Founded less than three years ago by two college educators, ESC sells a curriculum software system sold in tandem with a network of personal computers that is typically installed in a school’s learning laboratory. The product supplements, but does not replace, a traditional textbook-based curriculum.

Students advance in the ESC curriculum only as they master the previous lessons. Points are driven home through the system’s colorful graphics and voice feature. Based on evaluations performed every 10 lessons, the system constantly generates reports on the student’s progress and prescribes future lessons based on results of those tests.

Sales at the closely held company are mushrooming. After less than one year on the market, the company’s software systems for kindergarten classes through 8th grade have been installed in 50 schools nationwide and will be installed in 300 schools by the end of this year, President John Kernan said.

Revenue hits $500,000

After booking $500,000 in revenues last year, ESC sales should reach $14 million this year, and double to $28 million in 1988, he said.

The company has attracted a roster of high-powered venture capitalists who by the end of next month will have invested $15 million. Investors include the Bank of Boston, Chemical Bank of New York, Accel Capital of San Francisco and Geocapital of New York.

The man responsible for advancing the company from the conceptual stage to a viable business is Kernan, 42, who joined the firm in September, 1985, after returning to the United States from a short-lived “retirement” in Venezuela. He had gone there after making a small fortune from the sale of his stock in Deltak, a computer-based adult training company, to publisher Prentice-Hall Book Co.

But Kernan said he became bored sailing his boat around the Caribbean and soon returned looking for a new challenge in the United States.

ESC was just such a challenge. When Kernan joined the company at the insistence of one of its venture investors, the company, led by educators Cecil Hannan and Burl Hogins, had a “great idea but no management and no money,” Kernan said. After coming on board, Kernan quickly found investors willing to pitch in $3.5 million in additional funds. He hired, among others, Greg Bestick as vice president for development and client support, an executive with whom Kernan had worked at Deltak.

Market Base Widened

Luckily for ESC, advances in computer technology in the mid-1980s were making its curriculum systems more affordable to a broader market base. Most important, said the firm’s vice president for systems and technology, Jack Johnson, was the development of affordable network devices that tie as many as 40 computers in an ESC system together so that they can access common resources.

Also essential was the development of CD ROM optical disk-based computer memory, which lowered the cost and eased the management of the course work software. The dramatic drop in semiconductor prices made the construction of powerful computer work stations possible, increasing the options and independence of the students using them.

Also important, Kernan said, was the development of cheap voice simulation, a necessary feature for the systems that Hannan and Hogins envisioned.

The $15 million in venture funds that will have been invested in ESC by next month demonstrates the high cost of developing the ESC system software. The company employs 100 full-time programmers and educators--18 of whom hold Ph.D.’s--involved in the development of ESC lessons.

ESC rents its software systems to schools for $36,000 per year, a price that includes the salary of a “lab attendant,” usually a parent, hired by the company. The computer hardware necessary to drive the software typically costs schools about $60,000, Kernan said.

Despite the high cost, Kernan said the systems are attractive to more and more schools because they “leverage” the skills of the teachers.