Why some EdTech startups are less likely to fail

I was recently listening to this podcast by Tim Feriss where he asks Luis von Ahn, the founder of Duolingo, some really interesting questions about Duolingo - who uses it, their motivations, and the mission that keeps motivating them to do what they do. While there are some incredible takeaways from the conversation, I remember one particular data point shared by Luis that surprised me. Looking back, I do think it's my ignorance that caused the surprise.

Luis talks about bucketing Duolingo's learners into two major segments - English learners and non-English learners. Users who learn English constitute 50-60% of the users, while the rest are learning languages like French, Spanish, German, and Korean (Yes, Korean!. But more about that in another post). In fact, "English for Spanish speakers" is the most popular course on Duolingo. This was surprising to me but that ignorance stems from living in India - where the majority of Urban India is fluent in English. Duolingo has always been a hobby app in my circle. This circle includes my friends and people I follow - all those who have no need to learn English, but rather use English to learn Spanish and French! A new season of Narcos can cause interest in learning Spanish, while a season of Emily in Paris inspires a new cohort of French learners.

Now to the interesting bit. The English learners are on Duolingo not to pursue a hobby or an interest in learning another language. Learning English means a better tomorrow. It allows them to get ahead in life. They can do the same job and get paid more - just by doing it in English. It's that simple, and it's that measurable. English helps you get ahead in life by giving you better pay and social standing. On the other hand, the other 40% learning a new language as a hobby would be totally fine without Duolingo. They even say that they would go back to scrolling Instagram if there was no Duolingo when they woke up the next day! A very important number to look at is the percentage of active users on Duolingo who buy the subscription, and that tells you the story. Only 3% of the active users even buy subscriptions - which means even the people who want to get ahead in life would rather watch ads and learn, than pay to learn seamlessly. This is a key insight to determine which platforms will thrive, and which clearly won't.

English learners have a high intent and a measurable outcome to aspire for. This is exactly the case with EdTech platforms that help users get ahead in life. The platform wins in the short term and long term because its users have a high intent to change their course of life, and have a measurable outcome to look forward to (Better rank, better college, better job, better status etc).

Now let's compare it with EdTech platforms offering non-vocational courses, which popped up in plenty during the pandemic as people had time to kill (and take every opportunity to make a Reel). Courses were either free or priced really low at $2-$4, and they had takers. But the intent was low as the outcome was not measurable. Almost all the platforms offering these courses have either shut shop or have cut down drastically. Masterclasses by celebrities helped grab eyeballs, but it was not enough for the learners to derive value. There was not much social status at play here either as it was just money that was blocking access to these celebrities and not caliber.

Let's take the example of Scaler academy. They are a tech learning company that helps people get higher-paying programming jobs. Let's take a quick look at their home page.

A very clear 126% Avg CTC hike is right there - driving hope, aspiration, and a measurable outcome. Scaler is valued at $710 million and is already operationally profitable.

I also love how Unacademy is operating in this space. They were an "ExamTech" platform primarily where their learners had a clear outcome in sight. As they scaled, they experimented with a slew of courses and masterclasses. But over the last 12 months, they have consolidated and how. Take the example of their product Relevel. They teach you some skills, help you to write a standardized test (that they've created), and share that score with their partner companies. Companies have a new standard to discover and filter candidates. Doing better in a Relevel test means better pay and better organizations to work for. They also have courses that will help you ace these tests. Why will this work? Simply because the candidates have a very measurable outcome to look forward to.

"Working at India's finest companies" is the outcome of Relevel. The partner brand logos define what "finest" means. And the "90+ crore worth of jobs delivered" is the quantifiable outcome. For example, the Number of people who got a 50% raise in the last 1 month might be a better number to showcase.

Unacademy also recently launched Compete, a gamified version of taking tests where you battle 1:1 with someone random and take tests together. You know you are getting closer or farther from your goal, and you can also win something, and have fun at it while doing so. Measurable outcome. They have consolidated all their offerings to help their customers get ahead in life. This is why I believe they will win in the long term.

A quick look at Compete's website is a good TL;DR of what we are talking about. The user is expected to pick a Goal first, compete and find where they stand. The gamification helps them come back to the platform and improve their rating. The eventual goal of improving ratings is to earn a better rank in competitive exams.

Unacademy still does run Graphy that they have pivoted multiple times - and they seem to be closer to figuring out that they are in the business of helping creators upskill, use the creator tools they offer, and help Creators make money. They will probably give you tools to build distribution, but not just hand distribution to you on a platter. The distinction is very important for the long-term success of Graphy and Unacademy. Creators are just like any other learner at Unacademy, just being trained to use Unacademy's product to build a Creator career. There is a measurable outcome for Creators. May not be for the learners yet. The long-term success of the platform will depend on the kind of creators they are able to onboard and retain, and the measurable value they bring into their lives.

There have been a bunch of EdTech players like FrontRow, BitClass who witnessed initial success but have failed to retain the interest. It's very similar to the non-vocational learners on Duolingo - they are okay if these platforms don't exist. They have probably gone back to scrolling Instagram. But these platforms have built a good product, solid teams, and an engaging marketplace. It might be a good time to go back to the drawing board and focus on creating learning experiences that will help their users upskill in a way that helps them earn that raise or promotion or rank.