Why Stanford lecturer start investing in Education

Sergio Monsalve built his career on the transformative power of education after immigrating from Mexico City to the US at age 13 without speaking English. That journey took him from studying industrial engineering at Stanford to executing Wall Street M&A deals at Morgan Stanley, eventually becoming a venture capitalist focused on human enablement. Recognizing early on that rapid technological change requires lifelong adult learning rather than traditional childhood schooling, Monsalve backed online learning platform Udemy and served on its board for nearly seven years through its public IPO. Today, as Founding Partner at Roble Ventures and a lecturer at Stanford, he teaches founders how to align learning science with scalable business models. In this interview, Monsalve explains why generative AI will force education to elevate uniquely human capabilities like empathy and adaptability, how to invest in the multi-trillion-dollar education market, and why diverse teams are the ultimate predictor of startup success.

Hello, my name is Sergio Monsalve. I'm a founding partner at Roble Ventures, and I'm also a lecturer at Stanford University. I think the future of education and education technology is incredibly bright if we're able to do one thing.

ChatGPT came out, and it has attracted more than a million users. It impressed the University of Minnesota Law School by earning a C+ average on its final exam. What is education going to be like if people don't need to write for their jobs? Today, the New York City school district announced that it would prohibit the use of ChatGPT by any student, which is impossible, because they can use it anywhere.

But this is exactly what I'm talking about. How do we elevate education to focus on the things that humans are equipped to do? You know what happened with the calculator and the word processor. Spelling and arithmetic became less of an issue and less of a thing you focus on. Of course you need to know how to do them, but at the end of the day you probably will not ask a prompt that is very basic, something ChatGPT can answer. You probably will have to go deeper and use a lot more of your humanism to answer those things and get credit for your assignment. So I could see education moving in a way where we elevate humans to be much more abstract, using more of their human skills, empathy, courage, things like that.

The changes are inevitable. I just don't think you can fight it. You have to elevate the student. We're no longer in a luxurious place where we could take a job for the next two years, inch our way up the ladder, retire, and call that it.

You're going to have multiple careers. There's going to be multiple reductions of force and increases of force. There's going to be a lot of things happening a lot faster. You have to be adaptable to those changes. This is why you need to focus on human capabilities faster and more iteratively than we did before. This is why we cannot afford having people just go to school from 5 years old to 25 years old. They have to be going to school for life.

This is why I love education. If we can rearchitect some of the ways we teach and focus much more on that future, then I think we have a very bright future.

My personal story is that I was born and raised in Mexico City and came here when I was 13, not knowing any English at all. Education for me became not a nice-to-have but a must-have. So I ended up here at Stanford, where I studied industrial engineering. I've had to muster a lot of resilience during my years at Stanford. I really got enamored with mergers and acquisitions and the financing side of engineering and business, so I ended up working on Wall Street for two years at Morgan Stanley, where I did a lot of M&A as an analyst, and later on I actually became a venture capital investor.

One of the things that I really focused on is just doing the things that I really wanted to do and was really curious about. One of my really close friends was from Finland and grew up in a time when we still had this thing called the Soviet Union. To me it was very interesting to have very deep discussions with him about the value of capitalism versus what other systems offered. He had obviously been a neighbor to the biggest non-capitalist society, so I became very intrigued about what capitalism can do for people, and also the threats of capitalism if it goes awry, meaning socioeconomic inequities. To me that was the beginning of why I'm doing Roble Ventures, frankly, because I understand that capitalism is not perfect and we need to approach capitalism with a purpose. I became pretty interested in education.

A lot of investors at the time had said education is the worst place to invest, because that's how everybody has lost their money. Thinking about the way they saw it, I would say, okay, I agree, because K through 12 and higher education had an incumbent that was unmovable, which is the government, basically. But what people didn't realize, and what I started thinking about, was this.

We learn formally from age 4 or 5, in kindergarten, all the way to 18 if you finish high school, or 21 if you finish college, and that's it. Then what do you do from 25 to 100? You're not formally learning. You're actually working, and most likely not going to be formally trained by your employer. That was okay when industry innovation was moving very slowly, but in today's economy things are moving exponentially fast, and in that world human capabilities have to catch up much faster. You have to upload information, knowledge and skills to humans much faster. So I thought we needed to have this new industry called adult learning.

We started looking at a lot of different companies, and the one that really caught my attention was Udemy. I really thought that they had a way to create high-quality content at a very affordable price. The supply side of the marketplace was thriving and happy. They're making a good income for themselves, so you're enabling humans to make more money as teachers on Udemy than outside, and on the flip side you're actually making courses that are very affordable for anybody in the world. To me that was a perfect model, and so I invested in it, and after six and a half or seven years of being on that board, we ended up taking it public. It was a very fruitful investment for us.

To me, capitalism without purpose is not necessarily the way I want to live my life. There are many ways to see it, and frankly one of my biggest teachers was being on the board of Udemy. Understanding that business allowed me to think about one profession that should be revered as heroes in society, which is teachers. They don't get paid or viewed as heroes, because they're not viewed as being at the center of capitalism. It's odd. We're such a rich country, yet our most important contributors to society are not being valued that way. To me that's an aberration of the system that we've created, so technology offers a way to change it, and Udemy showed me that. Some of the instructors on Udemy are making over a million dollars a year, so that's great, and that's human enablement. That is what made the work really enriching, when you see the faces of people you've actually helped because of the funding that you've given and what the founder or entrepreneur has been able to build and grow, and you were a little part of it.

Think about how big K through 12 and higher education is in terms of market size. You're talking about trillions, so there are probably a few industries that are bigger, but not many. Maybe financial services, maybe energy or government, but that's it. Education just comes right behind. It's probably one of the top five, if not the top three industries in the world, and that's only counting K through 12 and higher ed. I think the future of education and education technology is incredibly bright if we're able to do one thing, which is to really teach how to be better individuals, more emotionally aware, and to develop soft skills that will enable us to essentially collaborate with the prowess of computing rather than compete with it or try to topple it.

At Roble Ventures, we have a playbook on how to assess companies. In fact, the reason I started this class at Stanford on entrepreneurship and education technology is because of what I saw in the world of investments and the mistakes that were being made, both by the founding teams and by the venture investors in education. You need to bring the educators, entrepreneurs, and engineers together, so that learning science, technology, and business all work together. It's a very inclusive way to build a company in education. It didn't work that way, because a lot of people thought they knew education because they had been educated themselves. I started the class with the thesis around how to properly diligence these companies.

The most important thing, to net out what we look for, is that it goes back to people, and this is why we call it human enablement. The theme itself is also about how we enable our own entrepreneurs. Team and market are probably the most important things. The reality is that a lot of companies pivot, so it's not about the product, it's about what it says about the team and about the market.

The commonality among the greatest companies, the ones that have succeeded the most, comes back to a great set of people that work well together. So this is why I focus on their roadmap for a team, but also, just as importantly, on how they are going to build their investor base and their board composition. You need to be bringing a diverse set of people from the beginning onto those boards, creating a real independent and diverse group of people. That has to happen at the board level, at the executive level and at the CEO level. I think it's about people, and that's why I spent a lot of time thinking about this human enablement theme, because it has a strong people component in the name itself, both in what we invest in and in how we work with our companies.