March 23, 2021 11:16:05 am
Into its fourth year as a startup that provides digital tools to educational institutions for admission and marketing, ExtraaEdge had a clear roadmap when the new financial year began in March 2020. By the middle of the month, the plan was in shreds. The pandemic had changed the world and, for ExtraaEdge, the way education was consumed in India. Yet, as the world marks the first anniversary of the pandemic, this Pune-based education focused martech has money in the bank, having just concluded a round of investment, doubled its customer base, which includes on-boarding two international educational institutes, and is planning to explore the international markets widely. What did Abhishek Ballabh and Sushil Mundada, co-founders of ExtraaEdge, do right? They look back at the year just ended and the one about to start:
As you are in the business of providing software to the education industry, what is your assessment of how education compares with other sectors in adopting technology?
Abhishek Ballabh (AB): There are some industries, such as fintech, consumer tech which adopted technology very quickly. Others, like real estate, are slow-moving in terms of technological adoption. Education is not considered a business In India —more a philanthropic activity on the part of the government — despite approximately 95 per cent of higher education being private —owned by either a business or a proprietary firm — and only approx 3 per cent-4 per cent is owned by government or public undertaking. The technological adoption by educational organisations has been relatively slow. This resulted in two main kinds of problems — how do you teach a child who is not physically coming to the educational centre, and how do you smartly position your institute online to a child, parent, millennial or Gen Z client so that they can take admission in your institute. It was not only in India; universities across the world were facing these problems. The result of the pandemic—which we call a black swan event — is that the education industry was forced to accelerate their technological upgrade by 10-15 years.
Of course, there were also instances such as the groups that were run by second generation owners in the age group of 30-45, who were adapting very quickly. In Maharashtra, MIT Group was adopting tech quickly even before COVID-19 struck, thanks to their visionary leadership from the top. AhaGuru, which is one of the leading edu-tech companies in Chennai, adopted almost every technological innovation we have. Ed-Tech firm myPAT is another excellent example wherein they adapted technology very quickly.
How did you respond to the pandemic?
Sushil Mundada (SM): As a close-knit team, we were always used to work physically close to each other prior to pandemic. This used to be useful to us while we solved urgent and complex customer issues while sitting next to each other. With the pandemic and the Work from home norm, it became pertinent that we generate new methods of communication to continue to deliver at same speed. In fact, because our customers were also working from home, their expectations and demands were continuously increasing. It was difficult initially and led to a lot of challenges. Once we accepted that the pandemic was here to stay, we found more and more ways to increase our productivity, and also have some fun sessions while being online.
AB: We had a very big customer that was using our mobile app to go door-to-door to parents, and that product line got scraped because that business did not exist any more during the lockdown. In response, we built a technology such as video counselling. Today, a lot of universities start a video using our product and parents and counsellors can see one another, chat and complete the formalities without meeting face-to-face. We launched a WhatsApp-based tool to help students fill the form on WhatsApp itself. Now, approx 4,000 admission officers are using our products from home and with success. We built these small tools in 45-60 days, beginning March 2020, and never in our four-year history had we worked so hard as we did in the first three months. We started to power these education admission teams with tools they needed, which is why, during the pandemic, we acquired 80-90 customers. We made consistent MRR ( Monthly Recurring Revenue ) growth month after month.
So, we had clients such as a coaching institute in Kota, who had been paying us Rs 5 lakh pre-pandemic, saw their business going down to zero because they had a complete offline model. We had to write them off. On the other hand, we had a lot of customers, who approached us from places such as Indore, Ujjain, Kolkata, Guwahati, Chandigarh and Dehradun, with requests for technical support because they wanted to do admissions digitally this year. We closed those deals over calls on Zoom, which was incredible for our growth team.
Have foreign institutes responded differently from Indian educational organisations?
AB: Foreign universities are more aware of the gravity of the situation. In every UK and US university, almost 50-60 per cent students come from India and China. What has happened with the pandemic is that the 25-30 per cent that comes from China has gone down to almost zero because of Chinese regulations and I don’t think people are going to be travelling for two more years. Where will students come from? Now, foreign universities are finding innovative ways to approach Asian countries that have a high density of GenZ and millennials, to prospect students. We have two international players that we onboard during COVID, BIT Pilani, Dubai, and Manchester Metropolitan in the UK.
What kind of curses and, consequently, jobs is the new generation moving towards? Is it still doctor, engineer and civil services or will we see more designers, startup entrepreneurs and teachers?
SM: I clearly see a trend on “Skills” rather than “Degrees”. So, students today want to do a B.Tech. in Data Analytics and AI rather than B.Tech. in Computer Science. Even as employers, we are valuing colleagues who are highly skilled in a particular area rather than a person with good academics and low skill. I believe courses, which are much more practical oriented and push students in becoming productive quickly, will become popular in the near future as employers will not have the patience to train new students for making them employable.
As you plan to expand internationally, how do you see the VC and funding scenario?
AB: This is an opportune moment that we will expand our global horizons, which means that our products and service and customer success has to be of international level. It is a challenge that we are working on. In terms of funding, I believe that good businesses with solid numbers always get money. VCs have had the money all this past year and, now, they will be looking at solid businesses with strong unit economics to deploy the money. VCs have looked at education investment with scepticism because historically the bets did not return a net IRR of 30 per cent across the fund cycle , which is what they want. However, with several ed-tech companies acquiring startups , thereby giving a lot of exit(s) for investors, there has been a confidence boost in the private funding space. There is a possibility of a good outcome — double, triple or 10x the investment — in the next few years in the education industry. In the next five to 10 years, you will see more bets and investment in education, especially in B2B SaaS, which is the subscription space, where we are present.
The pandemic has created a major problem with employment. How are startups creating a change in the job infrastructure?
AB: What has happened is that the longevity of businesses has shrunk. If somebody raises money from investors, they would want to return the capital in the horizon of five to eight years. As a result, you have to hire people who are hungry, who do not look back, who are ready to get the job done and ready to put the hours and make it happen. When we hire, we see that people want to work in a startup but they do not understand the economics of it. They want all the perks associated with an MNC i.e. easy hours, less stress, designations, perks and other material facilities, but they want to work in a startup. It is not possible because your economics has shrunk and you have to work extremely hard, beat the competition, take the market & move fast to get there. What I am saying is it’s more like a career choice. It is, however, immensely rewarding today to be in a startup & relationships along with the skills that you build compound over time. The learning curve and growth that people in their twenties and thirties are witnessing could not have been possible in an MNC.
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