Call Summary: National License Secured, Pivoting to US School Partnership Requirements

Overview

Sherman called Gary with critical updates on the China education project, announcing successful acquisition of the national-level license from Beijing and outlining new strategic requirements for US partnership. The conversation revealed significant regulatory changes requiring all-Chinese investment and the need for a high school diploma-issuing partner, as Alpha School only serves grades K-8.

Key Topics Discussed

National License Achievement

• Historic Success: "We got the national license, which is extremely important because now it's no longer local, it's issued at the national level from Beijing"
• Rarity of Achievement: Sherman emphasized this is "almost impossible to get"
• Meeting Locations: Recent government meetings in Suzhou and Shanghai
• Investor Progress: "We are slowly securing our investment here, which is all positive"
• Investor Meetings: Scheduled for Tuesday and Thursday of the following week

New Investment Regulations

• Critical Change: "All the investment has to be classified from China. For educational purposes, there cannot be external investors out of China."
• Strategic Impact: Eliminates possibility of US financial investment in the project
• Name Recognition Focus: "We're not expecting any money from the U.S because we can't. The name, though, is basically the important thing."
• Full Chinese Backing: "We have the money, we have the government backing"

Advanced AI Education Platform Development

• Technology Innovation: "We're creating avatars that are becoming virtual teachers versus the... archaic approach"
• Avatar-Based Teaching: Virtual teachers delivering common core curriculum
• Beta Timeline: "We'll have our beta version ready by the end of the month"
• Technology Superiority: "What we're doing is like 10 times... at a much higher level" than Alpha's current system
• Platform Designation: Described as "2.0" compared to current Alpha technology
• American AI Programmers: Using US-based developers for the platform
• Willingness to Share: "We would be willing to share our technology platform with Alpha"

US High School Partnership Requirements

• Diploma Necessity: "We have to have an American entity to be able to issue a high school diploma"
• Alpha Limitation: "Alpha only goes up to grade eight. They're not a high school yet."
• Dual Certification Strategy: Students will take Chinese gaokao AND receive American high school diploma
• Student Options: "The students have dual options. They can choose to go to Chinese university, or they could choose to go to a non-Chinese university"

Texas Charter School Backup Plan

• Alternative Strategy: "If Alpha refuses... what we would like to do collectively is just open a charter school in Texas"
• Sherman's Experience: "I've done it before in Texas" - has previously established charter schools
• Diploma Authority: Charter school could directly issue high school diplomas
• Strategic Flexibility: Prepared to move forward with or without Alpha partnership

Alternative US School Partnerships

• Cranbrook School: "Monday night I'm talking with Cranbrook, which is based out of Detroit"
  • Described as "top ten private school"
  • Cultural significance: "Referenced in Eminem's movie Eight Mile... in his final rap scene"
• Cornell University: "Professors from Cornell University. We're talking with them Monday night as well"
  • Sherman stated: "I'm 100% confident professors from Cornell are working with us already"
• James's Wife Research: Currently visiting the new Alpha School in New York as a lawyer to assess partnership potential
• Open to Suggestions: "If you have another idea, we are willing to listen to ideas right now"

Gary's Role Definition

• American Liaison: "You would be the American liaison... we'll figure out your percentage of the big picture"
• Team Member Confirmation: "James and I both consider you're just the American counterpart of the team, in essence"
• Partnership Loyalty: "I never cut people out. You helped us in the beginning, and we really appreciate it."
• Equity Stake: Sherman promised to determine Gary's percentage ownership in the venture
• Charter School Partnership: If Alpha falls through, work with Gary to establish Texas charter school

Technology Platform Superiority Claims

• Advanced Development: Creating technology "far more advanced than what Alpha's currently using"
• Unique Innovation: "We actually are developing a whole new style of AI education"
• Sharing Strategy: Will share beta version with Gary by end of month
• Marketing Tool: Technology platform can serve as key differentiator
• Re-energize Alpha: Hope advanced platform might renew Alpha's interest in partnership

Strategic Communications and Next Steps

• Gary's Consideration: Sherman asked Gary to "enjoy your time in Italy, kind of think through what I just said to you"
• Information Request: "Think through what do you need from us that either opening the charter school or working with Alpha"
• Presentation Delivery: "After my investors meeting, on Friday, your Friday, I'll send you our finalized presentation"
• Bilingual Materials: Presentation available "in English and in Chinese"
• Follow-up Timeline: Plan to reconnect the following week after Gary returns to US

Project Status Summary

• Three Key Assets Secured:
  1. National license from Beijing
  2. Investment lineup (all Chinese)
  3. Government backing
• Missing Component: "We're just looking for the right connection to the U.S."
• Flexibility on Partner: "Whatever school it is is okay with me as long as the students are able to get a high school diploma"

Key Quotes

On National License Success

• "We got the national license, which is extremely important because now it's no longer local, it's issued at the national level from Beijing"
• "It's almost impossible to get the license... but we got the license"

On Technology Innovation

• "We're creating avatars that are becoming virtual teachers versus the... I would like you use the word archaic approach"
• "Based off of what I've seen so far from Alpha, what we're doing is like 10 times... at a much higher level"
• "This profile is like 2.0. Let's put it that way"

On Partnership Strategy

• "I never cut people out. You helped us in the beginning, and we really appreciate it"
• "James and I both consider you're just the American counterpart of the team"
• "We have the money, we have the government backing. We're just looking for the right connection to the U.S."

On Flexibility

• "If Alpha refuses, which we respect because we actually are developing a whole new style of AI education, then we would want you to work with us to set up that charter school"
• "Whatever school it is is okay with me as long as the students are able to get a high school diploma"

On Dual Diploma Value

• "A kid graduates from the school in China but gets an American diploma"
• "The students have dual options. They can choose to go to Chinese university, or they could choose to go to a non-Chinese university"

Action Items / Takeaways

Immediate Actions for Gary

• Review and consider Sherman's proposal while in Rome
• Think through requirements for either Alpha partnership or charter school creation
• Await finalized presentation after Sherman's investor meetings
• Consider potential US school connections that might be interested

Sherman's Deliverables

• Beta version of AI platform by end of November
• Finalized presentation in English and Chinese after investor meetings
• Percentage/equity structure for Gary's involvement
• Continued updates on investor meetings and progress

Strategic Decisions Needed

• Whether to pursue Alpha partnership given their limitations (K-8 only)
• Feasibility of establishing Texas charter school as backup
• Which alternative US schools to approach (Cranbrook, Cornell, others)
• Gary's level of involvement and time commitment

Project Requirements Clarified

• Must have US entity capable of issuing high school diplomas
• All investment must come from Chinese sources (regulatory requirement)
• US partnership valued for name recognition and diploma authority
• Technology platform can be shared with US partner school

Strategic Context

Regulatory Environment Shift

• Move from local to national licensing represents major bureaucratic achievement
• New investment rules eliminate possibility of US financial participation
• Chinese government wants US brand partnership without US investment

Technology as Differentiator

• Sherman's team has developed proprietary AI education platform
• Avatar-based teachers represent next generation beyond current Alpha approach
• Platform could become bargaining chip or standalone product

Partnership Dynamics

• Sherman maintaining loyalty to Gary despite project evolution
• James King and Sherman united in considering Gary as American counterpart
• Flexibility to work with multiple US schools simultaneously

Market Positioning

• Chinese investors and government fully committed
• US partnership needed purely for credentialing and brand value
• Dual diploma strategy appeals to Chinese families seeking optionality

Notable Insights

On Project Evolution

• Project has evolved significantly from initial Alpha-centric approach
• Technology development has proceeded independently and surpassed original model
• Chinese side now holds all financial and operational control

On Educational Innovation

• Avatar-based teaching represents significant leap in AI education
• Common core curriculum delivery through virtual teachers
• Beta testing imminent with potential for rapid deployment

On Strategic Flexibility

• Multiple pathways to success (Alpha, charter school, other partnerships)
• Name recognition more valuable than financial investment from US side
• Technology platform can be leveraged across different partnership structures

On Gary's Value

• Positioned as essential American face of the project
• Trust and early support recognized and rewarded with equity stake
• Bridge between Chinese operations and US credentialing requirements

Post-Call Context from Gary

After the call, Gary reflected on the request for help finding US school partnerships, noting his connections in the education space through his Rome conference attendance. He expressed openness to exploring the charter school option and helping identify prestigious high schools that might be interested in a no-cost partnership providing access to the Chinese market with exchange program possibilities.