ModelChoice decision tree · Education

EdTech Platform Launch Decision

Build an online learning platform, partner with a university, run a marketplace, or not launch?

Complexity: ★★★★★
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From the model’s decision tree

Best first decision: Marketplace Model

The expected value of each first option when every later decision is also made well (the tree rolled back).

First decision	Expected value
Build Full Platform	$652,750
Partner with University	$1,232,500
Marketplace Model	$1,900,000	✔ best
Don't Launch	$0

Measure	Value
Expected value of the best strategy	$1,900,000
Chance of a loss on the best strategy	10.0%
Best outcome on the best strategy	$5,200,000
Worst outcome on the best strategy	−$650,000

The best strategy: chance of each outcome or less

S-curve (cumulative probability) of Marketplace Model from the saved simulation.

The decision

An education technology company is planning to launch an online learning platform for professional development. The market is competitive (Coursera, Udemy, LinkedIn Learning) but the company has identified an underserved niche in industry-specific certification programs.

Objective

Maximize expected 3-year net revenue. This model shows how build vs. buy vs. partner decisions involve tradeoffs between control, risk, and speed.

The options

Option 1: Build Full Platform ($2M): Custom-built platform with proprietary content, AI-powered learning paths, and interactive assessments. Development risk is significant: 30% on time, 45% delayed (+$500K), 25% major technical issues.
Option 2: University Partnership ($400K): Partner with a university to offer co-branded certificates. Lower cost and credibility boost, but dependent on partner quality and revenue sharing.
Option 3: Marketplace Model ($800K): Build a platform where independent instructors create content (Udemy model). Success depends on recruiting quality instructors.

The decision tree

The tree has 2 decisions, 9 chance events and 26 outcomes. The best path is open: at every decision the best choice is marked, and the expected value beside each branch counts every cash flow from the start. Open any other branch to see what follows it.

DecisionChance event+$ cash flow on the branch

Decision: Platform Strategy

Build Full Platform −$2,000,000expected $652,750
Chance: Development Outcome
- 30% On Time & Budgetexpected $2,520,000
  Chance: Market Adoption
  - 15% Viral Growth +$12,000,000payoff $10,000,000
  - 45% Steady Growth +$5,000,000payoff $3,000,000
  - 30% Slow Adoption +$1,500,000payoff −$500,000
  - 10% Market Rejection +$200,000payoff −$1,800,000
- 45% Delayed 6 Months −$500,000expected $65,000
  Chance: Market Adoption (Delayed)
  - 10% Still Strong +$8,000,000payoff $5,500,000
  - 40% Moderate +$3,500,000payoff $1,000,000
  - 35% Weak (Competitors Moved In) +$1,000,000payoff −$1,500,000
  - 15% Too Late +$100,000payoff −$2,400,000
- 25% Major Technical Issuesexpected −$530,000
  Decision: Technical Crisis
  - Rebuild Core −$1,000,000expected −$530,000 ✔ best
    Chance: Rebuild Outcome
    50% Successful Rebuild +$4,000,000payoff $1,000,000
    30% Partial Recovery +$1,500,000payoff −$1,500,000
    20% Still Broken +$100,000payoff −$2,900,000
  - Pivot to Simpler Product −$300,000expected −$1,000,000
    Chance: Pivot Outcome
    40% Pivot Finds Niche +$2,500,000payoff $200,000
    60% Pivot Mediocre +$500,000payoff −$1,800,000
  - Shut Down +$50,000payoff −$1,950,000
Partner with University −$400,000expected $1,232,500
Chance: Partnership Negotiation
- 25% Top-Tier Universityexpected $2,940,000
  Chance: Top-Tier Partnership Results
  - 45% Strong Enrollment +$5,000,000payoff $4,600,000
  - 40% Average Enrollment +$2,500,000payoff $2,100,000
  - 15% Poor Enrollment +$600,000payoff $200,000
- 50% Mid-Tier Universityexpected $1,170,000
  Chance: Mid-Tier Partnership Results
  - 30% Strong Enrollment +$2,800,000payoff $2,400,000
  - 45% Average Enrollment +$1,400,000payoff $1,000,000
  - 25% Poor Enrollment +$400,000payoff $0
- 25% No Deal +$50,000payoff −$350,000
Marketplace Model −$800,000expected $1,900,000 ✔ best
Chance: Instructor Recruitment
- 20% Star Instructors Join +$6,000,000payoff $5,200,000
- 45% Good Content Mix +$2,800,000payoff $2,000,000
- 25% Mediocre Content +$900,000payoff $100,000
- 10% Quality Problems +$150,000payoff −$650,000
Don't Launchpayoff $0

Change the numbers. Open the workbook with ModelChoice, change a probability or a cost in the tree, and the best decision updates at once.

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Key assumptions

Assumption	Value	Notes
Full Platform Dev Cost	$2,000,000	Engineering team, content, infrastructure
University Partnership Cost	$400,000	Legal, integration, marketing
Marketplace Cost	$800,000	Platform build, instructor tools, marketing
Delay Overrun	$500,000	6-month delay carries $500K extra cost
Rebuild After Tech Issues	$1,000,000	Core architecture rewrite
Viral Growth Revenue (3yr)	$12,000,000	15% probability - network effects
Top University Partnership	$5,000,000	25% chance of landing top-tier partner
On-Time Development	30%	Industry average for custom platforms

The figures are illustrative: the companies and numbers are invented for teaching.

Try it in ModelChoice

Strategy Table. Compare build vs partner vs marketplace with risk-return frontier
Sensitivity Analysis. How does development risk affect the build option?
Risk Profile. Is the partnership's lower variance worth the lower ceiling?

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An illustrative example: the figures are invented for teaching. Last updated 9 October 2026.