Pod Insights Equity Podcast Why a16z-backed Wonderschool is acquiring EarlyDay About this episode This is our interview show, where we sit down with guests, think about their work, and unpack the rest. This week, Wonderschool, a startup that works with individuals and local governments to spin up more childcare businesses by providing software and other support, has acquired EarlyDay. EarlyDay, another venture-backed startup, operates a early childhood educator marketplace.
Alex caught up with EarlyDay’s two former CEOs, Emma Harris and Melissa Tran, and their new boss, Chris Bennett at Wonderschool, to chat through the deal, what’s ahead for their sector, and more.
Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.
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Transcript 0:11 Speaker 00 Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and the nuance behind the headlines. My name is Alex and this is our interview show where we sit down with a guest, or in this case, guests, think about their work and unpack the rest. Today, we are talking to three entrepreneurs who are combining their efforts to solve staffing shortages in childcare. In one corner, we have Wonderschool CEO and co-founder Chris Bennett, and in the other, Early Day co-founders and CEOs Emma Harris and Melissa Tran. Everybody, welcome to the show. Chris, hello.
0:46 Speaker 01 Hello, hello.
0:47 Speaker 00 Emma, hi. Hi, Alex. And Melissa, hey, good to have you here.
0:51 Speaker 02 Hello, hello.
0:52 Speaker 00 There we go, perfect. So, we don't usually do acquisitions because people don't usually want to talk too much about them. But in this case, we have all three of you, which I'm very glad about because I feel like deals of this nature do happen, but they don't get explored enough. So, I was hoping we could just start by talking about the deal and then we'll back our way into the market because I do think that the world you guys operate in is of supreme importance, especially today when childcare is so expensive. But, first of all, we have two companies that are joining forces and, Chris, Wonderschool is buying Early Day. And so, just to start us off here, when did this deal begin to percolate?
1:30 Speaker 01 You know, I came across the Early Day team in a news article, maybe about 18 months ago. And then, one of our investors let us know about Early Day, probably about six months ago. And I think we started the conversations about five months ago.
1:44 Speaker 00 Okay, so actually, a relatively quick turnaround then. And then, Mel, on your end, I'm curious how this deal kind of started, same pattern?
1:52 Speaker 02 Yes, so obviously, being in this space, we had been following Wonder School for a while. And so when we had the chance to meet Chris about five months ago and started talking about this partnership opportunity, it just made a lot of sense and things got moving from there.
2:09 Speaker 00 And I want to talk about that it makes sense element of it because you guys do have some overlap in the businesses, certainly a shared focus on childcare and early child education. But Chris, on the Wonder School side of things, it seems that you guys are trying to help people stand up and then run and operate their own child-focused businesses. Fair enough?
2:28 Speaker 01 That's exactly right.
2:29 Speaker 00 Okay. And then on the early day side, you guys are more focused on the staffing angle of ensuring that businesses that do work with kids have enough staff. Fair enough?
2:38 Speaker 02 Correct.
2:39 Speaker 00 Okay. Now, when I think about this, I can see the overlap, but I'm kind of curious why you guys didn't decide to like fight it out, if that makes sense. Like, why is this a better together situation versus a better to compete? Because, you know, business is all about winning, I'm told. So, Chris, why join forces?
2:56 Speaker 01 Yeah, for us, it felt very obvious. When I started the company, I actually started a couple of childcare programs myself to learn the entire motion of starting a childcare program. And once you get to about three kids enrolled in the program, you need a recruiter teacher. And then it became a thing where, you know, every one of our childcare providers needed help recruiting teachers. We sell a lot to governments and a lot to employers. And one of the things we kept hearing from governments in particular is that they were having a really hard time getting teachers into childcare programs. There's this huge teacher shortage. It's all over the press. You know, when I met Mel and Emma and spent some time taking a look at the early day product, it just felt like it was an obvious opportunity to partner.
3:34 Speaker 00 Interesting. And then, so Emma, on the early day side, you guys are trying to help businesses find the talent that they need. And I want to get into why the deal made sense for me here. And but first of all, is this an issue in which it's hard to connect talent to the businesses that need to hire them in the childcare world? Or is there just a shortage total full stop of people who are qualified, ready and willing to work in that particular space?
3:56 Speaker 03 Well, there's both happening. So there is a shortage of childcare teachers, which is obviously spoken about a lot. But really, the crux of the issue is that it is hard for childcare centers right now who are hiring teachers, which is most centers, to actually find and match with those qualified teachers that need to be credentialed in a specific way in order to be in their classroom. So this is a highly credentialed and qualified industry, which varies state by state and sometimes city by city in terms of the requirements that are needed to be in a classroom, which by the way, then has staff ratios from staff to student ratios. And so right now, before early day, there really was no great solution for childcare
4:38 Speaker 03 centers to go online and find a place where there were already pre-screened and qualified teachers that would match the exact requirements that they needed in order to fill that space in the classroom to then open a classroom to have more families come in and enroll in their center.
4:53 Speaker 00 So it's a combination of it being hard to find talent, it being hard to credential talent, it being hard to handle local regulations, which differ very much from geography to geography, and trying to navigate that as an individual person who may be better with kids than with the complexities of credentials in business is just incredibly hard.
5:10 Speaker 03 Yeah.
5:10 Speaker 00 Well, that's not an easy challenge to take on. Why did you guys choose this of all the things you could have built a business around? It sounds darn difficult.
5:18 Speaker 03 That's a great question, Alex. I think that Mel and I both like challenges, for one. For two, we've built marketplaces before. So this is the second tech marketplace that we've built before. And when we started with this idea about early day in 2020, I was pregnant with my son. It was my first pregnancy. I've had another kid since then, so now I have two.
5:36 Speaker 00 Congratulations.
5:37 Speaker 03 Thank you. And I was personally trying to figure out childcare. How was I going as a woman in the workforce, going to have a child, bring it into this world, and then figure out where they were going to get care, what my options were? I was honestly completely confused and overwhelmed trying to figure it all out. And so we started digging into the childcare space as a whole to figure out what opportunities of marketplaces specifically we could bring into this industry. And very quickly, after speaking to lots of daycare and preschool owners and directors and understanding their challenges in our research process, we quickly realized that talent was the largest issue that was essentially daunting the industry at the time. And so we decided to take on this large challenge and try to figure it out, which we have.
6:20 Speaker 00 All right. So Mel, given that you guys made a lot of progress, raised venture capital, built this business, why go team up with Chris and his crew? Why not keep running solo? Because, you know, if you guys are co-CEOs now and you're being sold to a different company, you're going to lose at least some control that founders do always love to keep in their hands.
6:37 Speaker 02 Since we launched three plus years ago, we received numerous inbound inquiries from centers around the country, North Carolina, California, Kansas, asking, when is early day coming to their city?
6:48 Speaker 00 Yes.
6:49 Speaker 02 So we're in New York and Texas right now. So we had heard firsthand that hiring is one of the most universally difficult challenges about running a center, regardless of where you are in the country. So when we started learning more about the work that Wonder School is doing with local estate governments across the country, this just was a light bulb moment. We knew that we could expand the reach of our product way faster by joining forces from Wonder School.
7:14 Speaker 00 I want to dig into that for a second. Chris, on the Wonder School side, I know you guys have a partnership with, is it Nevada?
7:20 Speaker 01 Yes.
7:20 Speaker 00 To help expand?
7:21 Speaker 01 We do have a partnership in Nevada. That's right.
7:23 Speaker 00 Okay. Can you explain that just so we have some more context for the listeners out there?
7:26 Speaker 01 Yeah. So we have a number of products we sell to governments. It's actually around 15 products. And three of them that we're selling to Nevada are, we're helping existing childcare providers. We provide them technology and then the technology we provide them helps them manage their business and we provide business coaching alongside of it. Another thing we do in Nevada is we help start childcare programs. So we start two types of childcare programs. We start centers and we start home-based childcare programs.
7:51 Speaker 00 Is a center just a larger business essentially?
7:54 Speaker 01 Oh yeah, that's great. So a home-based child, it's a non-residential program essentially. So it's in a commercial building. It's what most, when people think of childcare, oftentimes they think of a center, but there's a large number of home-based childcare programs that are in America today.
8:09 Speaker 00 And just to ask kind of the silly obvious question, but we're going to need centers and home-based care providers if we're going to resolve the current childcare crisis in this country. So this is a all of the above thing, not one is better than the other.
8:22 Speaker 01 Oh, that's exactly right. We don't argue one is better than the other. We actually also work with outdoor programs, our forest schools, and those are, those are very popular. And as you can imagine, they were very popular during COVID when parents weren't very confident putting their children in a enclosed space. But we're agnostic. But we do say, when we're working with a childcare provider, it's often best to start in home because you don't have to pay for the commercial space, and you don't have to pay for an administrator. The teacher is the administrator, and the home is the space. The costs of entering the market are very low, and it's the best way, in our opinion, to get started.
8:58 Speaker 00 Got it. No, that makes a lot of sense. And the software that Wonder School provides does actually work for even the smallest home-based provider out there with a couple of kids and just one caretaker.
9:07 Speaker 01 Yeah, it works with one child, and it works with hundreds of children. It scales up to multiple programs.
9:12 Speaker 00 Okay. Now, when you have Early Day fully tucked into the business, what does that unlock for Wonder School? Does this increase your ability to grow? Does it improve the overall services you can offer? I'm curious what the core thing you're hoping to get out of the deal as a business is.
9:26 Speaker 01 Well, when we were talking at Early Day, the clear thing to partner on is more of our government partnerships. So Nevada is one of our partnerships, but we actually have eight of them. And all of our partners are asking for support in recruiting teachers. And then when we talk to other states, cities, counties, we consistently hear that there's a need to recruit teachers. So when I was spending time with Emma and Mel, I was telling them about all these opportunities we're seeing, and we all got really excited about partnering together to work on them together.
9:53 Speaker 00 Then that's because Early Day today is in Houston, Dallas, and New York City. And I was going through your guys' website earlier. That's the only three markets you guys are currently available in?
10:03 Speaker 02 That's correct.
10:03 Speaker 00 Okay. How many markets do you guys expect to be in, in say, a year from now, post the end of this acquisition cycle? Mel?
10:11 Speaker 02 That's a great question. I think the sky's the limit. Our tech is built in a way that's very scalable, so it takes less than five minutes of an engineer's time to be able to launch a market. So we will go where governments want us to go.
10:26 Speaker 00 Is the government side of this a benefit to your business? Or is it a general market impediment? Because often when I talk to people who are building tech companies, the government regulation and I mean, even just credentialization credentials can be viewed as things that slow business down and make people have to move a bit more slowly and kind of fulfill more red tape. Is that the case in your market? Or is it actually more of a benefit that these governments want to work with you? And that supersedes or takes away the sting of regulation?
10:59 Speaker 03 It's a benefit. It's a way for us to be able to scale into so many more centers and support all of the centers that are hiring, right? So if we sell into a state, we're then able to support every center in that state. If that's what the deal consists of, to allow them to have access to our product to be able to support their hiring efforts. Whereas right now, or previous to the acquisition, the early day strategy is that we were selling center to center and we love all the centers we work with. We love supporting them, but we were going door to door, selling center to center. And our whole mission comes back to being able to provide support to every center across the country. And through WonderSchool's vision of selling to governments, it's actually a huge unlock for all of our partners and potential partners.
11:44 Speaker 00 Okay. Now I want to dig into the deal itself. So I'm curious, Chris, is this cash and stock, a pure stock deal? How did you guys structure it?
11:52 Speaker 01 So when we were spending time working on the deal, we went through a number of different options. We've decided that it's best not to disclose the terms of the deal.
12:01 Speaker 00 Boo. Hiss.
12:04 Speaker 01 But that's the best I could do, Alex.
12:06 Speaker 00 Okay. The company was sold for nine Coke bottle caps and three vintage Pokemon cards. You heard it here first, everybody.
12:13 Speaker 01 It was significantly more valuable than that, actually. You know, significantly more valuable.
12:19 Speaker 00 I'm sure, but I part of my job is to ask the rude and maybe slightly awkward questions, but I was going back through each of your company's fundraising history. And on the early day side, the last capital that I could see that the company raised was in late 2022. And if you look at where we are today, thinking about roughly an 18 month ish timeframe for each capital raise, was the early day team kind of in a look, we're either going to go out there and raise more money, or we are going to partner up with a different company? Was that kind of the choice you guys were facing?
12:47 Speaker 03 No, actually, this was quite opportunistic for us. As you mentioned, we had just raised money in 2022. So it was really an opportunistic opportunity.
12:57 Speaker 00 That's totally fine. And this is why it's good to ask, because on paper it looked one way, but you know, inferences and general trends don't always hold up in the individual cases. So that's helpful. Okay. So not disclosed, but when do we think this deal is going to fully be locked, loaded, and everything's signed and done?
13:12 Speaker 01 Oh, the, the deal is, yeah, it's locked, loaded and done. It's a, it's happening. We are building together. Let's go.
13:18 Speaker 03 Mel and I are Wonder School employees.
13:21 Speaker 00 I thought this was still.
13:22 Speaker 03 Chris Bennett is our boss.
13:24 Speaker 00 Well, now that changes the whole flavor of this interview. I should have flipped this around entirely from the beginning.
13:29 Speaker 03 Alex, make us look good in front of our boss, please.
13:31 Speaker 00 Sorry. I shit, I should have worn a tie. Okay. So then maybe the right question would be is when did this close? When was the final date in which everything was signed?
13:41 Speaker 01 Probably a couple of weeks ago. I don't remember the exact date, but it was probably two to three weeks ago.
13:45 Speaker 00 Okay. All right. I want to put the deal down and talk a little bit more about the market and why the childcare issue is so hard to solve and the part that startups might play. But before we get into that, a very short break.
14:01 Speaker 00 Now, we've talked about the deal and the companies. I want to talk a bit more about the market because folks who don't have kids might not realize a couple of things. One, how expensive childcare is, period. Two, in how many markets getting on the waitlist to get access to childcare can be longer than a year. And also some COVID money ran out. In 2023, leading to what was called very ominously the childcare cliff in many media reports. There were concerns that up to 70,000 individual childcare providers were going to go out of business. So my first question to really any of you three is, has the market been as bad as people have expected in the last six months since some of those federal
14:43 Speaker 00 programs did run their course and we're now back to a less supported from a federal level childcare market?
14:50 Speaker 01 So I haven't seen it be as bad as what we were reading in the press, but it definitely has slowed things down for the investment we were seeing in childcare into childcare programs. So, you know, we have heard anecdotes of childcare providers who aren't able to take on additional kids because they're not getting the funding they were getting from government. But one thing we are seeing, so there was a lot of one-time money from the federal government to states to invest in childcare, but it's really served its purpose in helping states realize that they need to increase their investment in childcare. So what we're actually seeing is oftentimes states don't have much of their budget invested in childcare. It's a lot of it's from the federal government, but we're seeing a lot more investment from states, from cities and from counties and doubling down on the
15:35 Speaker 01 funding that they're getting from the federal government because there's just a very, very big, clear need to invest in childcare. And also the dollars that the states were able to receive helped them realize the benefits of investing in childcare.
15:48 Speaker 00 Emma, how is it at all possible that states weren't aware of the need to invest in this? Because to me, it just seems like a screaming, obvious issue. And yet, by what Chris just said, it sounds like this was almost like a wake-up call for these states. So how is there such a disconnect between market need and what the government was able to see through its own eyes?
16:07 Speaker 03 I would imagine the government sees it and knows it and hears it, but it's never been a focus in our country, right? Because I think that a lot of these childcare related issues were COVID essentially brought light to a lot of these issues because it was impacting the economy, because parents couldn't go to work because their childcare wasn't working. And that impacted the economy. And so then there was this big spotlight on all these issues, which in fact, if you really dig deep and go back in time, a lot of these issues have really always existed. It's just that a really wild time brought a spotlight basically onto them.
16:40 Speaker 00 So Mel, does the landscape feel more, I don't know, attractive for people to start businesses in this space and kind of work in it? Because it sounds like if there was such a need for early data to help people find workers, that it's still a pretty hard place to build a business inside of. So I'm curious, has there been like a sentiment shift?
16:57 Speaker 02 I think one of the things that a lot of people may not be aware of about the childcare industry is that the teachers who work in this industry make a significant amount less than elementary school teachers. So the average salary is 23,000 per year. So we've always made it a core feature of our site to force all employers to put salaries and benefits on job postings. Even just a small bump in hourly wage can make a huge difference to them. And that's another reason why for our teachers, this opportunity to join forces with Wonder School makes a lot of sense. Through the Wonder School product and tech, we can show teachers that they can make the next step in their career and become a center owner themselves.
17:40 Speaker 02 So they can take what they've learned as a teacher, open their own center, enroll their own students, and ultimately triple or even quadruple their income. And so hopefully that's an avenue that we're also opening up for educators who've been passionate about this field, not sure if they can take that next step or really make money.
17:59 Speaker 00 So this brings up one thing that I've always been slightly confused by. So I was prepping for our chat today, and according to a 2022 Care.com survey, 51% of parents say they spend 20% or more of their household income on childcare, which is a fifth, which is one out of five dollars, which is a lot. And yet, when we talk about how much people who are working in this space make, Mel, it does sound like often salaries and just overall pay structures are very low. And I've never understood how childcare can cost my friends so much, and yet my friends who work in childcare make so little. Is there some sort of fundamental disconnect in how the money gets from parents to the people taking care of the kids? Or is this just a business with high overhead costs that consumes
18:42 Speaker 00 quite a lot of the overall tuition or fees that parents are paying?
18:46 Speaker 03 It's the latter. This is a low margin business. There are high operational costs in order to run the center. Like I mentioned earlier in this conversation, there's really strict ratios. So even the amount of people you have to have on your payroll compared to the number of students in a classroom, it varies depending on the age and location. But this is like, it's an expensive business to run. It's not like these centers are, you know, rolling in it. They're doing their best to maintain and operate great businesses. But at the end of the day, most of the owners of these centers are people who really love children and want to help serve the families so that they can offer childcare to them.
19:21 Speaker 00 All right. Then Chris, this brings us back to the wonder school point because I'm curious what the company can do to, is it lowering overhead costs that can make the overall childcare market more financially attractive for providers and maybe also for parents? Or what's the key thing that as a benefit you can bring to the market to make this relatively tough situation for parents, educators and kids work better for everybody?
19:44 Speaker 01 Yeah, I'm going to sound a little bit like a broken record, but the answer is home-based childcare. Keep saying it.
19:50 Speaker 00 No, no, no.
19:51 Speaker 01 The two biggest, two biggest costs for a childcare provider, if you own your own business, are your staff and your real estate. The person who makes all the money is the administrator. So that's the person who's actually seeing like the majority of the profit or that's doing well. We really encourage folks to simply become their own administrator. Go start your own program and start it out of your home and cut out those real estate costs that you normally would have to pay if you were running a center. What we find is that folks who start home-based childcare programs are able to pay their staff more. They're able to charge parents less. And they're able to make more than they would if they were working at a childcare program. So it's a very, very like clear win-win when people start home-based childcare programs.
20:35 Speaker 00 Okay. I have a pitch though. So one thing I keep reading about is commercial real estate is in a separate crisis in which no one wants to go into the office. Early Day, by the way, is a remote company. So they're part of the problem as I am calling in here from my home office. What if we took all the commercial real estate that we don't need anymore because everyone's at home and put kids in it? It seems like a win-win.
20:56 Speaker 01 Alex, I think that's a brilliant idea. Right now, a lot of the regulations for operating childcare programs in a commercial real estate can be very cost prohibitive for folks to enter that market. But government leaders control those regulations, right? And so there's a lot of opportunity to take a second look at those regulations and to work with folks looking to start childcare programs or to work with employers to figure out ways to make it a good idea essentially and to lower the barriers of entry for folks to start these programs. I often say, you know, there are a lot of empty conference rooms all across America right now that are ripe for childcare programs. And so, so
21:38 Speaker 01 that is actually something we work with employers on. And we have an employer component of our business and it's a conversation we have. But right now, the thing that gets in the way are regulations.
21:48 Speaker 00 Okay. So there's been an interesting shift, I think, in technology and venture capital as well in the last probably 10 years is the right timeframe. There used to be this ethos that technology does its thing over in Silicon Valley, DC does its thing over in DC, and never the twain shall meet. We don't cross the Mississippi, essentially. That's very much changed. People talk a lot about Andreessen Horowitz, for example, lobbying the government on crypto regulations, just to pick an example about this. So for all three of you, does wonder school have a, not a moral need, but almost like a, like a business requirement? To go and influence for the better, hopefully, government regulations that may be holding back some things that could make your market bigger and more attractive for the small business owners that we're talking about.
22:30 Speaker 01 I'll touch on this briefly. Right now, we work with a number of lobbyists. We're backed by Andreessen Horowitz.
22:36 Speaker 00 I know.
22:36 Speaker 01 I spoke at the American Dynamism event this year and the year prior. And we find that lobbying can be really valuable when working with governments. But we also work really closely with government leaders to provide them data. That's one of like the core components of Wonder School. So we can share with a government leader, hey, this is why childcare programs are having a hard time opening in your state, city, or county. This is why childcare programs are closing because we have such rich data. And then we will actually work with jurisdictions to change regulations. We just recently changed a law with our lobbyists and with our team there in Idaho to not allow for HOAs to block home-based childcare providers from operating. It's actually a big component of our strategy. And now that the early day team has joined Wonder School,
23:21 Speaker 01 we're now going to have a lot more visibility into the credentialing component, into the teacher component. We just want to make things better. And so our goal is not actually to force certain regulations. It's just to allow for transparency and data and operate with the idea that, you know, our policymakers are rational people. You know, I find when you present folks with data and the data goes against their goals, they're open to change. And so that's something that we're really focused on. Visibility, transparency, and data to government leaders so that they can make the best decisions.
23:53 Speaker 00 Okay. Well, I mean, honestly, that's the most optimistic thing I've heard in a while. And I'll take it seriously. No, I mean, no sarcasm, no BS. I mean, hearing that policymakers are willing to change their mind and follow the data is kind of what you would hope in a high functioning country. And sometimes I feel like we're more aspirationally on that path than having reached the destination. So I'm glad that we can still keep making progress. I want to talk about one more thing, though, which kind of ties into this. So regulation is not anathema to me as a consumer. I'm kind of in favor of it for a lot of stuff. But on the early day side of things, when you guys were working with helping people. Connect to providers who had credentials and so forth. You probably had a pretty good look into how hard it is to get those credentials and so forth.
24:36 Speaker 00 And there's always to me kind of a balance between providing the best care you can for kids and also ensuring that the rules and laws are as stringent as they need to be, but not more. And I'm trying to back my way into asking the question of, is there ever a balance in your guys' business and operations between growing the company and making choices as a business that are always, I mean, 100% kid friendly? Because we're not selling software to oil companies. We're trying to provide better and more care to kids. And so I'm curious if there's ever a tension between your target demographic and running a business, if that makes sense. Mel?
25:15 Speaker 02 Leaning into the data point that Chris had made before, we try to give both sides of our marketplace as much information as possible to make a better and faster decision. So for instance, when we onboard teachers onto our platform, we ask for all of their education and work experience. And what we do differently from other platforms is that we use AI to add data tags to the teachers' experiences, which not only identify, does this person have experience working with children? But we actually go down to the level of what type of setting was it? Was it an after-school program, a camp, K-12, childcare center?
25:57 Speaker 02 What type of educational philosophy was used, if any, within a Montessori program? Was it a bilingual Spanish program? And then also, what classroom type or age of children was in that classroom? And that data then feeds back into both the recommendations that we make to both sides of the marketplace, as well as the search filters that can be used on our site. And so it's up to the employer, the schools, the centers to then zone in on the type of teacher that they would want in their classroom. And so that's the kind of data that we're looking to kind of present on our site and let folks make their own decisions based off of it.
26:31 Speaker 00 So going back to Chris's point about data and people making rational choices, there's probably less tension between business and
26:39 Speaker 00 Good care that I'm thinking, because it sounds more like what you guys want to do is ensure that everyone in the employment transaction has enough data to make the best choice they can. But the choice they make, how they compensate that person, et cetera, that still remains entirely in their hands.
26:53 Speaker 01 Yeah. That's right.
26:53 Speaker 00 Okay. Okay, Chris, same question over to you. Growth versus caring for kids. Does it ever come into like tension or conflict at Wonder School?
27:02 Speaker 01 One of the things we focus on, this can sound sometimes a little crude, but we help childcare providers make money. And that is, I think that that still can be a little grating sometimes when I'm talking to childcare providers, because oftentimes they don't think of themselves as entrepreneurs. But what we've learned is that one of the biggest reasons why we're in the middle of a childcare crisis is because a lot of the childcare providers aren't operating their businesses with the best business practices. And that was actually like the big unlock for me when I started the business. You know, I went to a home-based childcare program. The woman who started the program is still running it today. She grew it into a center. And she's an incredible businesswoman. And when I met a lot of childcare providers, they weren't talking about money. They weren't talking about their tuition effectively.
27:44 Speaker 01 So just really found that there was like a really big opportunity to help them be better business folks. One of the clearest things we found is if you operate a high-quality childcare program, you can make more money and you will have a waitlist, like a waitlist you cannot even manage. And so there's all of these like clear, clear benefits to both investing in yourself so that you're a better childcare provider and investing in the quality of the childcare program. And so for us, we found that the two are aligned, which is great. There's nothing going against that. It's just more helping everyone realize that the two are aligned.
28:20 Speaker 00 So essentially, if you can help these businesses operate better as businesses, it will lead to higher quality care, which will in turn, because parents talk, oh my God, do we talk.
28:31 Speaker 01 Oh, yeah.
28:32 Speaker 00 You ever watched a two-year-old try to swing? It gets boring in 15 seconds. All you have left around you is parents. So you talk and you talk about where you're getting childcare, where you're buying stuff, and then you get a longer waitlist. So essentially, there isn't a tension, it sounds like, between business goals and The core end product, which is childcare, which is great. That's lovely to hear because I'm, I understand capitalism. I'm a fan. I also understand childcare. I'm a fan and it does seem that they might butt heads, but it doesn't sound like in your guys' case, that's too much of an issue, even given regulation in a tough market. That's great. That's actually very encouraging. That's the second time on this call I've been encouraged. Gosh, guys, that's more than a week usually. We should do this again sometime.
29:10 Speaker 01 Yeah, I can go, I'll add in a couple of other things. Yeah, if you have a higher quality childcare program, you can pay your teachers better. You can attract better teachers. You attract better teachers. You can charge more. I always say, um, you want to be of the Harvard or Stanford of your local community of childcare. Cause Harvard and Stanford don't spend a lot on marketing. They, they are ready, are just, they're a magnet for talent. They're a magnet for people wanting to enroll their children in there. They're a magnet for individuals wanting to get a college education from there. Same thing with childcare. If you have the highest quality, best program in the community, or if you're perceived to be the highest quality, best program in your community, you really won't have to market. And you have higher retention. It's just better all around.
29:51 Speaker 00 So I, for listeners out there, there's a slight correction coming in now because Chris just mentioned the Harvard or Stanford of childcare. What he meant was the University of Chicago of childcare. Sorry to my, my sister who went to both Harvard and Stanford, but
30:06 Speaker 01 I didn't go to either. I didn't go to either.
30:09 Speaker 00 Well, no, I, I have particular beef because I'm the only one of my siblings who didn't get into Stanford and I had to keep going to Stanford commencements after they rejected me. And so I have a lifelong beef against the farm, even if their women's soccer team is the biggest feeder team for the NWSL.
30:25 Speaker 01 I've got nothing to add.
30:26 Speaker 03 Now, as a Harvard alum, do you have anything to say?
30:29 Speaker 02 Go Crimson, that's all I can say.
30:32 Speaker 00 I mean, when my sister got her MBA from Harvard, I had to go and kind of look around and I was like, oh, it is nice here. Okay, fair enough. Now, there are some competitors out there to wonder school, Bright Wheel, Lilio, ProCare Solutions and others. My last question for you guys is this, are there enough startups out there right now working on this issue? Or is it a bit like the climate tech space in which the more the merrier? I hope everyone dives in and gets busy.
30:55 Speaker 03 I personally hope everyone dives in and gets busy. There is so much work to be done in childcare. There are lots of companies that are building for K through 12, and it feels like childcare in many ways has been forgotten about. That's honestly one of the reasons that Mel and I got so excited about wonder school when we started speaking to Chris, because it's just such a big and exciting home for us for early day. And I just hope that there will be more entrepreneurs that continue to build in the space because there is a lot of opportunity for everyone.
31:22 Speaker 00 Excellent. And then actually, Chris, one last final question before we go, which is wonder school IPO 2026 Q3, I think.
31:30 Speaker 01 We were thinking Q4.
31:32 Speaker 00 Oh, okay.
31:32 Speaker 01 Yeah, but that's, it's not on the immediate horizon, but it's definitely the ambition. That's what we're building towards.
31:40 Speaker 00 Good. Well, I want to bring you guys back on in about a year and talk about what's changed in the market and how people are doing, because this is an interesting business story, but also it's a thing that impacts everyone who has kids, which is a lot of folks, not everybody, but many, many people. And I hope that there's a way under our economic and political system to also take care of parents who have kids and provide a little bit more support, because I don't think as a society, we're doing enough. And I'm hoping that companies like wonder school and combined entity now and your competitors can ameliorate through market forces, just the life that people live, because it's hard out there. And, you know, if people want us to have more kids, well, a bit more support wouldn't go amiss. Well, we will count down for the S1
32:22 Speaker 00 until it finally drops. But Chris, Emma, Mel, thank you all so very much for coming on the show. And if you liked this episode, well, there's always more equity where that comes from. We are out Mondays and Wednesdays and Fridays. We also drop interview episodes whenever we can fit them in. And if you need more from the equity crew, we are equity pod over on X and threads or techwinch pods over on TikTok. This is Alex. This is equity. We'll talk to you soon.
32:48 Speaker 00 Equity is hosted by myself, editor in chief of TechCrunch Plus Alex Wilhelm, and TechCrunch senior reporter Mary Ann Azevedo. We are produced by Teresa Loconsolo with editing by Kel. Bryce Durbin is our illustrator and a big thank you to the audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thank you so much for listening and we'll talk to you next time.
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