EdTech Online or Offline?
We dig deeper into the recent debate about Indian EdTech firms going offline - with a multi-pronged approach | An operator's view with custom illustrations
For those following Indian EdTech, there has been a lot of debate recently around Indian EdTech firms going offline (and opening offline centers) while Tech and Disruption were a part of their premise.
Before we dig in let’s reflect on some of the narratives against it.
There is a lot more on Twitter and a lot of it makes me chuckle. That’s the real synergy why Elon wants to buy it, in my guess.
Let’s also dig in on some of the media narratives around this. The Morning Context calls it “seemingly bizarre” and goes on to say that the unthinkable has happened and those who always promoted online education and wanted to kill offline are now going offline.
The Ken goes a step further and asks “Was edtech just a fool’s errand?”
There are various conclusions behind the move (of going offline) including the funding winter, a lack of outcomes (for EdTech), growth slowing down, the pandemic effect fading away, and EdTech unable to change the mindset of parents among others. Unacademy, Imarticus Learning, PW, and Byju’s seem to have gone offline among others.
Interesting choice of # by PW. From PW’s website - they have gone live in 16 centers; they call it PW’s Pathshala and define it as “Pathshala is an engaging blend of traditional and online learning for giving students best e-learning platform in this new normal.”
Unacademy is live in Kota and claims to be going live in 8 more cities soon. Jaipur, Bangalore, Delhi, Chandigarh, Pune, Ahmedabad, Patna, and Lucknow. Interesting Unacademy has created quite the stir and quite the counter stir.
Teacher Wars: Unacademy Seeks Police Protection For Teachers After Kota-Based Allen’s Stern Warning | Inc 42
And finally, on the narrative and market updates, Action and Reaction are equal and opposite? Newton’s third law of motion
Allen Career Institute launches its digital arm, Allen Digital Pvt Ltd (ADPL) - Financial Express
As per the Allen Digital website, they offer “Career Oriented Academic Excellence Now at a click of button”
Shot's fired? Everything that sounds like a shot isn’t a gun and sometimes it’s just firecrackers. While the Ken thinks that “An interesting game is afoot, though. Backed by Lupa Systems and with a valuation of US$600 million, Allen can also play the high-burn game now, both online and offline.” I dig further - some this time and more in the next edition of this post.
On looking at the internet archives I find the below images (not perfect renditions due to crawling limitations) from 4th December 2021. To be fair, Allen Digital seemed to be pretty raw at that time as the website used Lorem Ipsum placeholders but I have also found traces from as early as 2020.
So what is it then? A fitting response to Unacademy in just a few days? Old wine in a new bottle? Or the perfect PR strategy? Only time will tell.
In EdTech B.E.T. we try to create our own long-form narrative by assessing what’s going on in the EdTech industry based on the 3 key pillars of Business, Education, and Technology. The blog attempts to go beyond the narrative of both mainstream and digital media by bringing in the view of an operator. So let’s try to form our own narrative on what’s going on?
Narrative 1: Revenue
There is no denying that as the Funding Winter sets in companies that are well-capitalized will need to focus on profitability even at the cost of growth. What’s not talked about much is that if you try to become profitable at the cost of growth sometimes your unit economics become even worse as while marketing costs go down, your delivery and other costs don’t go down in a commensurate manner. Also, let’s not forget that startups need to attract capital to keep the momentum going and deliver returns to their investors. In an ESOP-driven world, it’s also important for employee morale.
So what choices do CEOs have when faced with this situation where they want to focus beyond just cost-cutting?
With some timely advice, Vijay Govindarajan (VG) {Fanboy Alert} and Anup Srivastava talk about “How Companies Should Invest in a Downturn” in this HBR article. They mention that companies should emerge as winners from downturns, expand while other competitors are scaling back, and accelerate Digital Transformation.
Or go the opposite of digital? There is no wonder that companies will be forced to give up on their swimlanes and try to compete with others as they try to increase market share and profitability. Is it on point on their original investment thesis? No. Is it something new? No. Remember so many e-commerce players opening offline plays? Warby Parker, Amazon (with Amazon books, Amazon Go) internationally, and Myntra, Lenskart, Caratlane, and many others in India.
Narrative 2: Outcomes and preferences
Let’s try to uncover the indirect business outcomes that lead to the business outcomes of revenue. First of all, parents raise your hands, close your eyes, and picture April 2020. If you are back, take a deep breath and have a glass of … well, water.
Remember your reaction when schools opened? I remember attending the Orientation for Parents in April 2022, when a teacher was telling parents don’t worry we will take good care of your children and a mother, replied you can keep them. If nothing else the pandemic has taught us the true value of school.
Test prep is not very dissimilar. Youngsters want to step out and in many cases go study in a proctored learning environment with others. There also is the case for a human connection with other learners.
So, a preference for physical learning is sending students to offline centers which is why players are going offline and Byju’s is opening centers across the country. Let’s also not forget the higher revenue opportunity (ARPU - Average Revenue per user) this brings for EdTech players.
But let’s also inspect another interesting sub-narrative. Meet the humble flywheel. Read more on Hubspot.
What do test prep firms need the most? Any guesses?
Source: Allen Website
The test prep flywheel is simple. You get the top students who get the ranks and you get more students. Rinse and Repeat. Hence, the scholarships and the test prep tests to identify the brightest. Did you know that there was a coaching class available for getting into Vidymandir classes?
So going offline might just not be a choice any longer.
For next time - what does going offline entail? And will the players be able to meet the new challenge? Read Part 2 of this post