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Insider diagnostics on what (f)ails an education startup

Vrunda Bansode
9th Feb 2016
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India—with its largest young population on the planet—has to be on the radar of any aspiring entrepreneur brimming with ideas for making education better. I have heard everyone, from the 20-year-old graduate, to the seasoned unicorn founders, get starry-eyed about the education sector and the opportunity it presents. I do agree there are more than enough number of problems to solve and more than enough number of children to educate.

I dug my heels in, too, for close to five years, and observed closely what happens to startups in the Indian education sector. Not a pretty sight, I must say. I am sure most other sectors present the same picture when it comes to the startup success ratio, but the picture in the education sector is made grimmer by the emotional losses.

Educational-Startups_Cover_Yourstory

Education is a tremendously passion-driven sector. Most education entrepreneurs, when they start up, are driven by the urge to make a difference, create an impact and, of course, build a great business success story too, for, isn’t the Indian education market, after all, huge? Sadly, I saw too many of such dreams shatter – startups struggle, they pivot and meander into different areas, they struggle, they close if they can. So what ails an education sector startup leading to failure?

In India, the school education system is primarily built to provide a predictable average outcome. That is, perhaps, necessary, given the size of our country and population. Let’s face it – it is not going to go away anytime soon. So if you are building a startup to serve K-12 i.e. school-age children in India, keep the system in mind and work with it, instead of hoping for a radical change tomorrow. Ask yourself these six questions:

Do you know what is ‘needed’?

You may be very passionate about something and believe that skill to be crucial to a student’s development – for example, classical music, Vedic math, sports, critical thinking, arts, public speaking, creative writing and so on. But does everyone else think that it is really the need of the hour? Or is it just another interest-based hobby for them? If it is not really a critical necessity, selling is going to be hard. Finding your target audience is like trying to hit a moving target, because children’s interests change every summer!

Do you know the size of your competition?

It is not just a fight for the share of a parent’s wallet, but more importantly it is a fight for the child’s time today. Today’s child is busier than ever before. She may be quite interested and willing to buy your offering, but may have absolutely no time for it! So you are competing against not just other classes/pursuits but also family time, entertainment, homework, friends and chatting and what not! You are up against some serious competition there to grab a sustained share of the child’s time and mind-space.

Do you know who it is you need to delight?

Marketing theory is great, but in practice, parents and children are two different generations with a real phenomenon called ‘Generation Gap’! Parents are the ones paying for your offering, so they are the customers. But your offering is actually consumed by the child and his feedback matters to the parent. And these two generations are at times expecting two different things – parents want serious education with a tangible result, children are naturally suspicious of everything ‘seriously educational’! Can you find a sweet spot balancing the expectations, the actual experience and the end result?

Do you know how you will be able to utilise your resources optimally?

Say, your early adapters are very encouraging and you can see a great potential in this business. So you set up a place and hire a team as dedicated as you are. Great! Now what exactly will they all do through weekdays for eight hours a day? Children are in school during the day, you are competing for their time in the evenings and on weekends with a million other attractions. The time window available to you for any interaction with your audience is a tiny hole in the busy wall. Can it generate effective sales, effective execution of your programme and keep your resource utilisation ratio optimal?

Do you know what it takes to work with schools?

Based on my experience, it takes nerves of steel, tremendous patience, almost irrational faith and extreme perseverance. Schools are unlike any other business that you may try selling to. Schools are supposedly non-profit-making institutions in India and they are exempt from many taxes. Assuming you are a commercial enterprise, you are a profit-making institution and have to pay unreasonable amounts and varieties of taxes. Schools have an unfair monopoly-like hold over their customers – parents.

You have no such advantage – you are competing with a million others to get a meeting with the school management. The stakeholders in the decision-making process are too many and scattered – teachers, parents, coordinators, principal, management committee, and owner. Payment cycle is too long and opaque. The available sales-time window is too short and opaque – just like the admission process! As far as any business-to-business transaction goes, I have not seen two entities on more unequal ground than a startup and a well-established school!

Do you know which piece of the puzzle you solve?

Typically, your biggest customers – schools – will want to see a tangible outcome from your product or service, because they are answerable to their customers – parents. So does your product improve the academic performance of their students? Be prepared to answer that. Or does it help the teacher remarkably in some way? Is it easy to adapt or will it disrupt the set system in the school? Will it add to someone’s workload or lighten it? Will the parents be okay with something being outsourced by the school to you? Do you comply with the CBSE/ICSE/State Board regulations? If you decide to operate on a business-to-consumer model, instead, do you have a place to fit into a child’s daily routine?

With five years of highly involved experience in this sector with B2B as well as B2C models of operation, my advice to aspiring edu-preneurs is – don’t call it a ‘startup’! Accept that growth and value creation will take time. The moment you define your venture as a ‘startup’, you start thinking about scale, exponential growth, venture capital funding, 10X returns – all of which are extremely difficult to achieve in today’s Indian K-12 age-group market for education-related offering.

Unfortunately, the only offering that works is creating a parallel education system in the form of online tuition, test prep materials to guarantee high scores and marketplaces for tutors and students to connect – all of which aid in subverting the existing ailing school education system. So, unless you are one of these parallel universe players, set your expectation right – you are an education entrepreneur because you care about the outcome, not the income!

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