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Online education and cloud computing collide in T.O. startup

Every once in a while, industries collide and create immense opportunity. It happened a few years ago with smartphones, when increasingly more powerful computing was enhanced by the explosive growth of the wireless industry.

Dennis Kavelman has seen these collisions firsthand. He joined Research In Motion when it had only 20 employees, and he helped it become a global smartphone giant, 15,000 people strong. As COO at yet another fast-growing tech company, he may be about to see it again. Desire2Learn Inc., Kavelman says, is staring into a "perfect storm" of two industries converging: cloud computing and the enormous technological revolution taking place in the education sector. "We have a really hot market, at a time when it's going to explode," he says.

D2L has become one of the largest global providers of advanced software and mobile applications for the education industry. The Kitchener, Ontario-based company reaches about eight million people around the world every day with programs that allow students to submit assignments online, mobile applications that enable them to stream lectures, and tools that make it possible for teachers to return assignments with audio criticisms attached to the electronic file. This feedback from teachers is often faster and more useful for the student than a written comment.

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The company is also moving quickly into tablet apps, letting professors pull class assignments offline to read and mark on their iPads. The pace of change explains D2L's growth rate: Offices are up and running in Toronto and Melbourne, Australia, and others are scheduled to open in the United Kingdom and Brazil in the new year. D2L recently accepted a venture capital injection of $80-million, one of the largest VC investments in Canadian tech history, to help accelerate its expansion.

The southwest corner of King Street West and Spadina Avenue in downtown Toronto provides a snapshot of the company's progress. A metal plaque bearing D2L's name is fastened just to the left of a dusty entranceway still cluttered with building materials. Planks lean up against the wall. Some of the stairs are bare concrete, awaiting their covering. By the second-floor entrance, James Beer, a vice-president at D2L, is waiting in a crisp blue-and-white checked shirt. "We are growing like nuts," he says, leading the way into a loft-like 15,000-square-foot office.

Though there are only a half-dozen people scattered among the empty cubicles on this Friday morning, there will soon be about 50. D2L had 350 employees worldwide at the start of 2012 but recently passed 600; it still has about 160 unfilled job postings on its website. Growth is so out of control at the company's Kitchener headquarters that D2L has temporarily resorted to stationing some new employees in hallways.

The Toronto office gives D2L access to a different pool of talent–including, but not limited to, the city's mobile developers. "We don't want to just snap up [University of Waterloo] and RIM people," Beer says, noting that it's also easier to meet clients here.

Of course, D2L isn't the only fast-growing technology firm. And it does have competition, including industry behemoth Blackboard, which was taken private in 2011 for $1.64-billion (U.S.). What's more, the firm's client base in the education sector is still hugely reliant on government spending. Sales to the kindergarten-to-Grade-12 segment are "not really there yet," Kavelman concedes.

But what matters to D2L's CEO John Baker—at least the way he tells it—is having the opportunity to transform the way the world learns through technology. Students can, for example, stream lectures before they arrive in class, say on the bus with their iPhone, so they can spend class time engaging more deeply, personally and productively. That's Baker's personal vision, and a motivating factor for others in his firm, but it could also have wider implications for smaller tech companies looking to emulate D2L's success. Tech for tech's sake may be fine, but if you can use it to better society, your business might just take off.

"I think that is the future of business," Baker says. "You can't just have a balance sheet that says profit and loss. You need to show the impact you have on the world around you."

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