1M/1M Strategy Roundtable: Online Education Startups

- By Sramana Mitra

Today’s roundtable was organized in collaboration with TiE Delhi, and had a special emphasis on the online education sector with three out of the five entrepreneurs presenting education businesses.

Ankur Mehra and his associate Aditya started off by introducing GuruVantage. Ankur and Aditya have determined that training managers at various Indian companies need help with vetting the quality, methodology and infrastructures of various training institutes, training vendors and such. In response to that, they are proposing a solution to do just that, both pre-hiring and post-hiring. Prior to hiring, for example, training managers need to assess where candidates have been trained, and what is the quality of training that they provide. In addition, there are additional training needs post-hiring, which training managers address often by hiring training vendors. The key question that Guruvantage needs to answer is whether training managers are willing to pay for the solution, or not. If the answer is yes, then the next question is how much are they willing to pay? What this leads us to is first, value proposition validation, then business model validation, followed by pricing model validation. Each stage of validation helps enhance the valuation of a company. And in 1M/1M, we always emphasize the best practice of building as much value, validation and valuation upfront.

In addition, we had a specific discussion about segmentation alternatives – based on size of company, vertical, and geographical. Guruvantage has a large vision of doing this kind of training assessment for a wide variety of sectors ranging from engineering to business to the arts. All very well, but they have to pick a segment to enter through. As I told them, by trying to cater to everybody, you end up catering to nobody. You HAVE to go segment by segment.

Devesh Verma was up next to present ARROW, a finishing school solution that helps college graduates become employable. Devesh addresses the issue that a large portion of the Indian college grads are not employable because of lack of essential skills, especially communication. Devesh has three colleges that have told him that they are willing to pay Rs. 150,000 for training 30 students on ARROW. He expects to be able to deliver a 30-student session within Rs. 130,000. Not bad. Now I want to know whether Devesh can find 100 colleges – tier B and tier C colleges, since the tier A colleges tend to have their own offerings – who are willing to pay Rs. 150,000 for ARROW. If he can, then there is a business worth building here. And pay attention to the segmentation of who is adopting vs. who isn’t … it will provide great cues to where the highest velocity entry points to the market are.

Devesh asked me, “Is the Indian education sector ready for something like ARROW?” My answer is: “A sector’s readiness is a function of the customers’ readiness. So by answering the question – will more colleges buy? – you will also be able to answer the broad question.”

Then Rahul Jain presented Global Experts, a community of business experts who will be tutoring, coaching and mentoring business students. Rahul has assembled a lot of content on business and management curriculums, and wants to use that to attract potential customers who will then pay to access more personal engagements with experts. In essence, he is proposing a Freemium model whereby he uses content to draw in users, and then try to convert a % of them to paying customers in the US. Well, the paid content model in the US has really imploded, so I have some skepticism about the viability. There are some competitors who seem to have validated the business model to a degree. [http://www.studentoffortune.com] So Rahul’s next step is to SEO-optimize the content he has put together and harness a group of users, and see if he can convert a % of them [average Freemium conversion rate is usually 2%] to paying customers. If Rahul can get to about 5,000 paying customers, paying $250/year, then he can get to the $1M mark. The question is, can he attract 250,000 students with his free content and then convert 2% of those to paying customers @ $250/year?

For these three and other online education entrepreneurs, I would like to take a moment and point you to some online education case studies on my blog. Take a look at Apex Learning, Archipelago Learning, KC Distance Learning, Revolution Prep, and Global English.

Next Vikas Hazrati and Narinder Kumar discussed Intelligent Monitoring. Vikas and Narinder have identified an interesting pain point that IT managers seem to have: a large volume of alerts from various IT monitoring systems without the ability to actionable correlation analysis. They have feedback from 3-5 IT managers, including one that is willing to pay them to build a solution. To them, my advice is to leverage as much of the “consulting” money that clients are willing to pay to solve the problem, and use that cash to bootstrap the business. I love this kind of customer intimacy through working closely with customers, and getting paid for it. If they can talk to 100 IT managers in the SME segment and get 10-15 to pay up, the entire product design and development process can be financed by customers! I referred them to the Bootstrapping To Billions case study in Entrepreneur Journeys, Volume One.

Up last was Hasnain Zaheer for Simplogy, who wants to offer marketing strategy and execution services from Australia. My advice to him is to zero in on specific marketing processes that can be offered in a remote mode, which could be email marketing, or SEO, SEM, web design – all those being highly competitive areas – but strategy consulting cannot really be sold online.

I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million (1M/1M). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ Methodology which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. In addition, we are offering entrepreneurs access to investors and customers through our recently launched our 1M/1M Incubation Radar series. You can pitch to be featured on my blog following these instructions.

The recording of this roundtable can be found here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies, writes a business blog, Sramana Mitra on Strategy, and runs the 1M/1M initiative. She has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her Entrepreneur Journeys book series, Entrepreneur Journeys, Bootstrapping: Weapon Of Mass Reconstruction, Positioning: How To Test, Validate, and Bring Your Idea To Market and her latest volume Innovation: Need Of The Hour, as well as Vision India 2020, are all available from Amazon.