Cognitive ToyBox – Transition: Overcoming Barriers to Market Entry

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Responding to Market Challenges with a “Land and Expand” Approach
In Kwan’s experience, some states only review new assessments every 7 years and provide minimal (if any) notice when these windows open up. In response, Cognitive ToyBox has employed a “land and expand” approach. The team brings on early customers who are excited enough about the product to use it without a compliance benefit. Then, these providers advocate on behalf of the company to encourage state agencies to conduct a review.

 

The early childhood market is highly fragmented among public and private providers at district-based programs, Head Start programs, licensed childcare homes or centers, and other types of facilities. Initially, Cognitive ToyBox primarily targeted publicly funded early childhood programs, which tend to be larger school districts or community-based organizations.

More recently, Cognitive ToyBox began supporting smaller providers, helping them satisfy licensing requirements to qualify for certain subsidies. To meet these requirements, the company formed relationships at the state level to understand the landscape and identify key decision-makers for ECE. These decision-makers could be housed in the education, health and human services, or workforce departments, or across multiple agencies.

For Kwan, state policies are the biggest barriers to entry in the market. Every state has requirements or guidelines for ECE, and each state’s policies are different. This variation presents a range of challenges that often favor the status quo and large, established providers.

“We are in the business of changing hearts and minds around assessment approaches.”
— Tammy Kwan

When asked what she sees as the company’s primary competition, Kwan cited “the status quo of early childhood assessment: observational assessment.” Because Cognitive ToyBox provides timely formative feedback from a combination of direct observation and assessment, it entails a change in philosophy and practice for many early childhood educators. “We are in the business of changing hearts and minds around assessment approaches.”

With Cognitive ToyBox, teachers only need to designate 5 minutes per child to do an assessment, changing how they plan their day. Instead of two to three times a year, they can look at the data weekly, which can help them respond to student needs much more quickly.

Finding Transition and Partnership Strategies

Responding to Two Key Factors in Licensing Deals
Sales staff typically work on commission, so they tend to focus their energy on selling larger dollar, more established products. Entrepreneurs need to understand these incentives and consider ways to increase incentives for selling their products.

Mission fit is an important factor. Instead of finding a distribution partner for sales capacity alone, prioritize synergies between assessment and curriculum. Take the time to find the right fit.

To grow Cognitive ToyBox, the team expanded the product to cover math as well as early language and literacy and to provide holistic assessment. Yet offering an assessment system as a stand-alone product is not enough to satisfy early childhood educators.

“We know assessment goes hand-in-hand with curriculum,” Kwan said. Cognitive ToyBox pursued several strategies to address this need. One was to obtain curriculum goals from districts and to align the product based on those goals. For example, in Texas, the team was able to provide an alignment between the leading early childhood curriculum and Cognitive ToyBox assessments. Providing this complete solution was key to the company’s product growth.

Another challenge is large-scale sales and distribution. Licensing deals can seem appealing for a start-up company without a large sales force, but there are some key factors to consider.

“We took time to find the right fit.”
— Tammy Kwan

Kwan had been actively looking for the right partner for several years, seeking a way to grow beyond direct sales. She prioritized synergies between assessment and curriculum and wasn’t interested in a distribution partner for sales capacity alone.

Recently, Cognitive ToyBox announced a partnership with their first curriculum provider. The curriculum has been fully integrated into their assessment system, and the partner company will be responsible for selling the bundled product.

“We took time to find the right fit,” Kwan said.