Lock, Stock and BlackBoard

Not that long ago I mentioned that BlackBoard has representation on their board from the Carlyle Group, an investment bank controlled by mostly former political figures from the Reagan and Bush administrations, including Carlucci and Baker. The Saudi royal family is also nicely represented. The first President Bush had a rather cozy arrangement with them allowing him to claim not to be a partner by doing speaking engagements for them and then funneling the rather significant honoraria back into Carlyle as investments. A useful, lucrative fiction. For some money is more important than dignity it seems, and they do think that you can't be too rich.

Carlyle specializes in investments where governments have an undue impact, such as military contracting and heavilly regulated industries. If you are a former high-level defense chief, even if you don't actively influence policy you do have a Rolodex and knowledge that allow you to pretty much guarantee that your bullets and bombs will get purchased. Education, which is also largely a government activity is also a place Carlyle can work the phones because even if it is local it is still highly regulated. Your Rolodex therefore counts for a great deal.

Even if I don't have the evidence to prove this I'm sure also that BlackBoard used government contacts to get that exclusive e-learning deal in China last year. It is also certain that evolving standards such as AICC and SCORM will be a big part of military and Homeland Security training, and of course that means software from a company like BlackBoard. Carlyle can make a killing if they position product to get the lucrative contracts for this, but then there are also the huge state university systems and extension programs to get as well, many if not most of which have trustees who are current or former politicos. Again, Rolodex Power.

So is it any suprise that last week when BlackBoard went public the price went up 40%? I think not. The product really isn't all that good, and much of it is even based on open source, but who cares? BlackBoard went as far to kill the Prometheus project a number of years ago by buying it and shutting it down for all practical purposes. Open source is at a disadvantage because they can't buy the university CIO lunch or a round of golf and, of course, they don't have the Rolodex.