As a serial entrepreneur I am always looking for new ideas and asking myself “what value and solutions can I bring to a problem that no one else has attempted nor succeeded at?” The hardest part about being an entrepreneur isn’t coming up with good ideas, it’s having the ability, courage, determination and persistence to lead a market and bringing an idea to fruition.
There are really only two types of entrepreneurs: ‘leaders’ and ‘followers’. Entrepreneurs who create “me too” products or services tend to be followers who enter the market after seeing proof of market acceptance. Many venture capital firms tend to also be followers which creates one of the largest challenges entrepreneurial ‘Leaders’ face when pioneering new ideas. Aside from peers and business associates with doubts and uncertainties, ‘naysayers’ in the investment community have the greatest impact on start-ups because unless they see a proven market, generated revenue or other large investment groups participating, they tend to sit passively by. What we need are more visionaries both in business pioneering and from the investment world who see beyond immediate revenues and towards value creation.
When I come up with an idea, one of the first questions I always ask myself is “How easy is it to duplicate this business?” In today’s global economy, entrepreneurs need to be rethinking how they develop their businesses in order to remain competitive because there are now a significant number of global followers. In the past, entrepreneurs could comfortably focus on building a solid business foundation, growing their revenues and market footprint at a reasonable pace. Today’s globalized landscape however, is competitive and fast-paced. We are seeing entrepreneurs from all around the world now having access to localized markets. These global entrepreneurs, through social and traditional media, are now able to hear about and gain access to opportunities once limited or unthought-of. The growing challenge with global competition now is that these entrepreneurs can significantly disrupt the opportunities traditionally built by local leaders. This is exactly what happened in the Ed-tech industry between 2004 and 2012. As a result of significant Silicon Valley investments and overhyped media on the value potential of Ed-tech opportunities, global entrepreneurs oversaturated North American Ed-tech markets.
Building Future Ed-tech Value
In order for entrepreneurs to create sustainable Ed-tech businesses in this new global environment they need to be focused on building additional ‘value’ into their business models and avoid relying on technology as a safety net. While many investors might emphasize that revenue is critical to the validation of a business, entrepreneurs must also understand that if their company has not been properly developed with inherent value outside the ‘lines of code’, thereby making it difficult to duplicate by future competitors, they run the risk of being knocked off by the ‘followers’. Many years ago simply developing software itself would have been seen as a barrier to entry that could prevent most competition, but with tens of thousands of technology companies operating in this space today, developing technology in general is one of the last things start-ups should be focused on. When I see Ed-tech start-ups spending time and money trying to build a better technology ‘mouse trap’ it tells to me that they have not really understood the value chain for their business or the industry they are entering into. The same theory can be applied to investment groups. If a venture capitalist is more on the Ed-tech as a barrier to entry, it’s a good indication that the VC is probably not well informed or prepared to the shift in the global Ed-tech market and are most likely following the leading investors instead of being innovators themselves.
Entrepreneurs in the technology space must identify what their value drivers are going to look like before they start building their company. If they want to build value that will be difficult to compete with, an entrepreneur must identify the hardest areas of business for a competitor to duplicate and plan out how they themselves will secure them. I call these areas ‘pillars’ of business. In the case of my company betterU, which I have been building for the last four years, I realized that there were four key pillars that I needed to set up in order to be successful in securing my company’s future position as a leader. I knew my vision was ambitious, and if I was able to successfully build it, I could create a company that would change the world for the better. My goal was to create an Ed-tech business that could help provide access to top quality education from around the world to people in emerging countries.
Focusing my efforts in India, my vision for the ‘equalization of education’ stemmed from a deeply rooted passion from my own history of struggling with education. My aim was to provide access to a lifetime of learning across all industries and verticals of education. Out of all the Ed-tech companies that I have seen through my many years of research, I have not found one company that has tried to build an Ed-tech marketplace with the ability to reach an entire country with a population as enormous as India. I would bet that most entrepreneurs would never dream of attempting to build this type of business because it seems impossible and success would be unattainable. All of the VCs I have met have felt the same way and would ask me “Why hasn’t anyone else already done this?” They would then convince themselves that it must be because there isn’t a market opportunity, that it will be too costly to build or that the total addressable market was an unrealistic proposition. They would conclude that a guy like me, standing alone with ideas of grandeur and limited funds, could never accomplish what seemed to be the impossible.
Establishing betterU’s Future Value
In building betterU for the emerging markets, the four key pillars of business that were required to build included: ‘Operations’, ‘Technology’, ‘Content’ and the ‘Network’. In a country like India, establishing ‘Operations’ was critical in order to be able to transact in local currency. This first step would prove to take time and patience to set up, but it was a much easier task to duplicate so this became a background administrative activity. Even though this was not a key priority from a value creation standpoint, in the end it would add to the value proposition of betterU because almost all foreign educators were unable to transact with the mass consumer market in India.
When I looked at each key pillar to determine what was the hardest to duplicate the ‘Network’ stood above the rest. If my goal was to educate an entire country, it would mean that we would need to be able to communicate with everyone on a constant basis. This was not an easy task and would prove to be very expensive since India is so vast; with a population of over 1 billion across various territories, languages, technology and financial constraints. To ensure that we had inherent value within our ‘Network’ pillar I had to look at what we would need to do to ensure that when competition entered the market they would have a much harder time competing and duplicating our model. The solution to staying ahead of any possible competition was to remain at the forefront of media visibility. In order to give our marketplace and our content partners a stronger position we needed to have a partner that communicated across the country each day and we needed to get them to become an integrated partner to betterU.
In 2014, I met with the Times Group to discuss this very idea. The Times Group is the largest media conglomerate in India so securing a partnership was a key factor to future success and would provide betterU with mass marketing across the country on nearly a daily basis; definitely limiting the number of competitors trying to duplicate our model. By mid-2015, after a year of meetings and significant due diligence, Bennett Coleman & Co. Ltd (Times Group) invested 150 crore or approximately $30 million into SKILLSdox India Private Ltd. (betterU India). This investment would now help secure and ensure that our pillar for ‘Network’ development and growth would include inherent future value.
With our ‘Network’ pillar value in hand, our focus turned to building value within our ‘Content’ pillar. In 2008, when I entered the Ed-tech market, it was apparent to me that there was an overabundance of content providers and Ed-tech companies around the world fighting for market share, for investment attention and for shrinking revenue opportunities. With our vision to provide access to all levels of education across a country, leveraging content leaders and Ed-tech companies from around the world we were able to stand out from the ‘me-too” Ed-tech companies who were solely focused on building content or technology. We would now be able to focus and achieve greater success with our asset light model by creating the ability to add, remove and scale content offerings much more quickly than any other educators in the world.
It is important to emphasize that our ‘Content’ pillar was a critical pillar to the success of our company as without content, we would have nothing to offer India. To attract leaders in the global education space we had to have an inherent value that they could not otherwise realize on their own, hence why I focused on securing our ‘Network’ value as our priority. I knew that if we could secure the network opportunity, content partners would see this value’s future potential and would be willing to join our education marketplace. With the Times Group secured, the value proposition to content partners had now increased. What this meant for betterU was that we could then start to bring together the top education leaders across all levels of education from around the world onto one platform. No one anywhere in the world has done this before to the extent that we were going to do with betterU. In the beginning of 2016, we had only a couple hundred courses and by the end of 2016 we were closing in on 10,000 courses across KG-12, Exam Preparation, High School Support Programs, College/University Level Programs, Skills Development, Self-Interest and much more.
There becomes a tipping point in the development of a marketplace whereby the more quality content partners we have, the more interest the market itself will take in our offering and the cycle grows. As our content partners grow, our business model is able to grow into other areas of opportunity such as corporate programs, employment opportunities and the creation of an education to employment ecosystem which becomes much harder to duplicate. The following is an example of our marketplace model.
There are many examples of businesses that have focused on building value into their key pillars in order to secure their future value. Facebook and LinkedIn are two good examples that focused on building their ‘Network’ as a priority. If Facebook had only developed their technology without onboarding students, would it have built its future value? If they would have focused on generating revenue, would they have built out a network as large as they did? It is so important in the building of your business pillars to identify which of the pillars would add the most value to your future business. From there you can then build value around that pillar which will help ensure that your business would be hard to duplicate by future competitors. When you look at all the key value pillars of these companies the most critical pillar that they needed to secure was their network of users. While it no doubt took time, it is what secured their future value. No matter how great their technology was it could be duplicated, which many other companies have tried after they saw social media succeeding. The reality is however, that Facebook and LinkedIn had built enough value in their key pillars that even after competitors tried duplicating their models they simply could not directly compete. Of course, as years past, there were many other types of social media companies that succeeded, but these two leaders remained as leaders throughout the growth of the industry.
In today’s Ed-tech space, building value into a company’s key pillars is very difficult to do because there are so many players already jockeying for market share in the shrinking North American markets. In 2008 however, I already knew that there were going to be too many future Ed-tech companies getting lost in the noise, so my focus and energy turned to the emerging markets where most seemed to be ignoring. My research showed that India could end up being the leading emerging market by 2015 so I began my journey across the globe. Having access to a total addressable market of over a billion people, and a country with a projected growth in technology presence and internet access, this decision made more sense to me if I wanted to position my future company as a leader. Unfortunately for potential competitors, most Ed-tech companies in 2008 were focused on revenue generation and not on securing their future value leading to significant problems for many of these companies today. betterU however, is now positioned to become a dominant player within India.
It takes significant time and money to build a business while remaining focussed on future value. Most start-up entrepreneurs do not have the financial resources to be able to support this way of building a company, so they are forced to jump into revenue generating mode or to try and seek funding which can be frustrating, often pulling efforts away from building the business. When entrepreneurs are forced to compromise building pillar value for revenue generation, it becomes very easy to lose sight of future security. Over the years of building both traditional and tech companies myself, I have been through the fund raising process many times with traditional banks, entrepreneurship banks, angel investors and venture capitalists and the one thing that has stood out for me the most was the blind value most put on revenue as the key business pillar. I believe this to be an old school way of thinking and is not right for today’s global environment. While I agree revenue is critical for sustainability, the difference between a billion dollar company and a million dollar company is the time and effort put towards the upfront pillar value creation that will position and help secure the company’s future. While investment obviously helps, if these pillars are not set up properly, the company will struggle with securing and maintaining its growth leadership. From personal experience, I have built many companies in my lifetime and the last two succeeded in generating millions in revenue. However, I was never able to build them to the potential opportunity to be the next billion dollar company because I simply did not have the time to build the proper value into my pillars and I found myself always chasing the next sale. This all changed for me in 2011 after I sold my last Ed-tech company and had my own funds to able to dedicate my focus to building betterU.
Solving Real Global Problems
There are many ideas that could solve significant global problems, but for the most part they present too many challenges, risks, costs or uncertainty, so the ideas stay unrealized. In addition, most investors unfortunately shy away from the unknown or from the entrepreneurs pioneering these initiatives. For me on the other hand, in 2008 when I saw an opportunity within the Ed-tech industry to build a company that could provide access to education into the emerging markets and help solve one of the world’s largest problems, I stepped up to be that leader.
When I entered this space, most Ed-tech companies were focused on building their solutions for markets like North America, Europe and Australia – all markets that already had relatively easy access to quality education. Their businesses were not about solving real problems, or changing the world, or providing education solutions that could help the needy get access to education, they were chasing revenues or investment opportunities because of the increasing number of large investments being made by VCs across the USA. The majority of the Ed-tech companies I saw entering into this space, some financed, others not, were for the most part short-sighted and blind to the much larger opportunity that could not only change the world, but had a real potential to be the next billion dollar company.
My vision to equalize education for countries that were in need of quality education like India meant that I would have to build value into my business and forgo a focus on revenue generation. I knew that the path I set my sights on was going to be a difficult road ahead, but I told myself that if it were easy, everyone would be doing it. My longer term vision and focus meant that I would likely be unable to get investment capital from traditional VCs or banks. Investors tend not to invest in uncertain markets, especially ones like emerging markets that have many significant barriers to overcome. Investors would look at my vision as a ‘pie in the sky’ idea and suggest that if no one else had already done it, it simply must not be possible. As an entrepreneur, I tend to follow my gut and I knew that what I was going to build, would be big. While it would take many years to put in place, I knew that my vision and determination would result in a business that could equalize education for all and position us to become a global leader. As Gandhi said “Be the change you wish to see in the world”.
There are many large corporations and charities supported by the likes of Microsoft, Facebook, Google, etc. that have Corporate Social Responsibility programs in place to help support the education of the emerging markets and while I agree that these are so important, they could be doing so much more. The problem is that they are not thinking large enough, not envisioning how to educate nations and then making it happen, not leveraging their immense funding pools to put in place what is required. Instead they tend to focus on smaller sectors, territories, or age groups, which limit the scope of their potential. This is really only a limitation to their experiences as a corporation because they might not have the vision of an entrepreneur.
My expectations in the development of betterU is that once the visibility of our marketplace takes shape, these leaders will be inspired to see how they too can make a global difference across all levels of education, all ages, all classes, genders and the multitude of languages and not be limited to servicing smaller segments. A close friend of mine, Praveen Varshney, once told me that “while alone you might be able to move fast, together we can go much farther”.
We can collectively make a huge global difference in the equalizing of education!
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