Edtech in India. Read this before you start another edtech startup

Key factors to consider before starting an Edtech company

Ranjith JN
9 min readJan 17, 2021
Photo by Ian Schneider on Unsplash

This is not an article about the problems of the Indian Education system or the problems of the companies that are out there to solve the problem. This is an attempt to stop more friends from quitting jobs to start Edtech companies without understanding the backdrop. I’ll share some of my learnings of being one among them and urge them to save themselves from burning their fingers at it.

The first thing about starting up is to understand the nuances of human needs before jumping to build products. Study the market, find a problem of its users, and figure out what you can do to make it better. It all boils down to the core human needs in simple terms, either you’re providing resources for someone, like food, shelter, internet, entertainment, etc. or you’re creating a network for humans to collaborate and thrive. We all know these basic instincts but somehow our emotions sometimes override our basic thought process. I’ve seen this happening again and again with founders in the Edtech space.

Why do you say so? Education is a unique space where everyone was a user once. Unlike health tech or eCommerce or fintech where we need to understand the user’s needs and market nuances first, education is a space where everyone knows the problem, and also, unfortunately, everyone has a solution that they think is the right one to fix that problem. This is very evident when you see everyday on average 2 Edtech startups getting registered in India.

More companies are definitely not bad given the state of affairs but everyone jumping straight to building a product that they think will solve this, is the problem. What is more worrisome is that a lot of young professionals quitting jobs because it’s not fun to work and ending up with an edtech product as they think that’s the best place to be in right now with the given funding spree. If it was any other field, they would ask a hundred questions on what they will do, whom will they target, why they think it makes any difference to them, what is the competition scene, etc. But with education, irrespective of competition, we all know the path to fixing the problem. And all that’s stopping you from revolutionizing the education system is, to put your papers and register a company and launch the product.

With the context, I’ll share some of my learnings from the K12 segment

  • Don’t assume every student wants to study. You might have been studious while studying but that wouldn’t have been the case with your last bench friends, especially when they are made to attend tuitions in addition.

The majority of the students study because of their parent’s pressure and school/tuition’s push. Given this, don’t assume that students will come flocking to your app to study. They would do that for PubG or Snap, know the difference in why they do so. There are exceptions, where you are helping them with shortcuts to score marks or finish homework. Yes, they do come and scan the question and find answers for their homework in a few seconds so that they can go and play post that.

  • Given the interest of students towards learning, the majority of the decisions are taken by parents. So if you want to make revenues from the product that student uses, you should consider it selling to the parents. Unless you want to include ads, where, eventually, Google will start showing game related ads to your students, what else will a student purchase online?
  • There is an enormous difference between what a parent wants and what a student wants, finding the overlap is the sweet spot. The majority of the parents don’t want their kids to use the phone, of course, the pandemic has left no chance for parents. Parents know that their kids are smart in figuring out ways to trick them to play games on the pretext of studying. Byju’s even used this on their TV ads where parents are seen spying on the kid’s phone. This is one of the reasons Byju’s and others succeeded in the beginning. They gave a tablet where you can only watch curriculum-related content and nothing else on their tablets. A big headache for parents solved, they want their kids to be updated but not at the cost of getting lost in their phones.
  • The motivation for paying parents is way too high. To give a context, Education and the Health sector are the ones where expensive is perceived as good and superior quality to cheaper alternates. There are exceptions where Khan Academy is free and parents who know about it agree to its good quality. But every parent will have dreams about their kids' future and most end up spending whatever the amount, however difficult it is to buy them. We have heard of many cases where auto drivers or coolie workers have ended up subscribing to Byju’s and struggling to meet their ends, sacrificing for the kid’s brighter future. Once they buy the (expensive) solution out there, they think they have done their (best) part and it's now all left for the kid to study.
  • When going about solutions, don’t try to straight away apply your personal study methodologies or what had worked for you, most of us didn’t have Instagram or Snapchat when we were studying. So, understand the student’s context if you want to build something today and then validate if it is still the most efficient way.
  • B2C or B2B or B2B2C- If you think selling to parents is difficult, try selling to schools. Of course, there are 1.5 million schools in India and if you penetrate to 0.1% also, you will have 1500 schools and it will change your fortunes. But before concluding that, try getting an appointment to meet the principal to pitch about your product. You will know how lengthy and time consuming it is (god bless if you don’t have an IIT tag), just to get an entry into a school, forget selling. Most often, the principal is not even the one who can make a decision, it is the owner of the school who will either be a businessman, politician, or a philanthropist. In most cases, their motives won’t match. Even with all this, you went ahead and sold to a few schools, due to its inherent seasonality, you need to wait for a year to see results/repeat. For an academic year starting in June, schools will freeze any changes to how they operate by December itself. This helps them to start their next year's admissions and fees by January or February.
  • If you think you have connections to get inside schools and think everything is great, recall a company called Educomp? Every 90s and 80s kid would remember those smart classrooms. The company went bankrupt when schools didn’t pay. Payment collection from schools is a notorious business in itself. And if you think you will try approaching teachers and make their life easy, no one in the school administration has got time to that.
  • The left-over piece in this whole drama is the tuition centers. Everyone thinks tuition centers are craving for digital solutions and all you need to do is offer them a product to complement their offline teaching. Partially true but If you try calling a tuition center and start pitching about your product, you will get the same reaction as to what a bank telecaller would get while pitching insurance or loans to you. They are bombarded with numerous startups with their apps. What we need to understand here is, why tuitions exist in the first place. One major reason why parents send their kids to tuition is to keep them indoors avoiding grounds (apart from the board exam parents). Tuitions are the best place which also has the added advantage of improving outcomes in exams. By chance, if a student enrolls him/herself in a tuition center, it can be sheerly due to peer pressure. Or there are also chances that the student has to attend tuitions since the same school teacher is teaching in the tuitions. You have no option but to attend to get good marks in the exams. The takeaway is, tuitions play a lot of different roles and not just make the student learn better. So, if you are complaining about tuitions and think you will replace tuitions with your app, hard luck.
  • Then there are those who give reference to Taare Zameen Par and say every student is different and my product will understand their capabilities and improve them from where they are currently. I’m not challenging the tech but your understanding in understanding the student’s capabilities. They will never come to you to share their problems. Mostly they will be in their own hideouts like in the movie.

What I’m trying to convey is, building a product is the last thing you should worry about. Focus on the students & parents, their motivations and needs, their goals and values, method to track the learning outcomes of the students (which almost no one is doing currently in the market), distribution channels, etc. Decide to startup after talking to kids. To do this, you can either become a part of an NGO or teaching foundations and get exposure to understand students first. Dedicate and spend time with kids, watch what they do outside class, what they talk about, what influences them, and what are their perceptions. It doesn’t help with your product directly but you will understand what they care about. Incorporating it into the user experience can be a game-changer.

I was surprised to see my nephew recently having some free version of Netflix on his phone. Not just games but they consume media content as well, you name any show and they would’ve watched it. If one student knows how to do it, the whole class will know too. It’s almost like building a reputation for oneself by figuring out the hack and gaining friends/followers. It’s an evolutionary trait that you cannot change. Game your product for such a network effect where they tell their friends about it.

With all this backdrop, it might be very hard to comprehend the crazy funding that edtech is getting. There is a problem for sure but understanding before building a product is required. Definitely, Covid has accelerated a lot of things since students are not going to school. Parents are getting to see how bad the teaching is. Still, out of the overall 2.2 B$ funding, Byju’s, Unacademy, and Vedantu together have more than 1.7 B$ to themselves. Clearly, the gap between the big players and the rest is growing but investors have been bullish about a lot of new entrants in the market as well.

If you’re targeting outside India, a lot of players have proven that it can work too. NRIs outside India also suffer the same FOMO and want to get the best product in the market for their kids. Whitehat Jr is one of those cases where revenues from the US is far outweighing the Indian. More such players include Quizizz, etc. Keep a clear understanding of which market your product solves. If it is a model B2C on a global level, understand the importance of identity play. What a new age identity creation can do and how it helps to differentiate from the crowd to excel in the modern world.

Conclusion

I might be looking like a pessimistic person here with all the ranting. Nonetheless, the idea here is to share what goes into building a truly loved product in the Edtech space, with all the young millennials who are ambitious, full of energy, and with that hunger to win. Understanding all the different decision-makers involved and placing your solution apt to the problem that you are solving. Given the context, I have huge respect for those founders who crack it. I’ve profound gratitude for those who are not even directly linked with exams, test prep, social sectors, and still make it big in the game. The only cautionary tale is to focus on the learning outcomes and improving the students at the end of the day.

Hope this helps you to steer clear from getting your fingers burnt and make a better-informed decision before you plunge full-time into your startup. Reserve your flesh to put off the fire at a later stage for a bigger and better outcome.

--

--

Ranjith JN

A rational optimist & a curious detail-oriented mind with a penchant for solving problems. 2X Entrepreneur