The future of education markets would be about data driven decision making. Therefore the performance data of students will hold the key to future growth.
(This post is written by Naveen Mandava and Varun Kumar, co-founders of Xamcheck — India’s only education company providing school examination services and personalized content)
Life in India can be a huge battle. Hence many see Education as a possible ticket out of this battle. But the irony is that the education system has remained largely unchanged and is struggling to survive and adapt to the changing needs of the world today.
The following is our story of bootstrapping and reaching a point where we can dream — dream to re-imagine and re-define the education system.
This journey started in 2009 when Naveen, a disillusioned Doctoral Fellow in Public Policy Analysis from RAND Corporation (PRGS, Santa Monica) met Varun, a restless IIT Kharagpur engineer with supply chain and project management experience.
Naveen had an interesting career graph. He did his undergrad in engineering but went onto work on policy issues for a market-oriented public policy think tank. Through his stints in India and US, he gained exposure to education related public policies, education markets, work of non-profits and for-profits in education space and the methods used by them to develop and evaluate their services. Varun, after completing his engineering degree, went straight into a hardcore operations role managing large scale supply chains, manufacturing projects and production. Working with large organizations was a learning experience, but he felt that he was missing on the winds of change out there. He resigns and travels for more than 140 days across the length and breadth of India visiting more than 100 grassroot projects.
We met through common friends and realized that we had a similar restlessness about what is missing in the world. We believed that the right information to the right person at the right time is the key to empowerment. But it happens only if the nature of the information is actionable and the suggested actions are in line with the behavior and the goals of the user. We decided to bootstrap and use our existing skills and networks to get consulting projects in the education sector. The intent was to create value for the client and also continue our search for that important, unsolved, scalable, profitable problem in the education space. We focused on finding the problem as compared to spending time on ideation. The Problem belongs to the user whereas ideas are onlypart of the journey to solve the problem.
Phase I — Impact Evaluation and Design Research (2009- 2012)
By mid-2012, we were established as a well-known Education Impact Evaluation company in India. We worked with renowned national and international organizations like Sesame Street, American India Foundation, Johns Hopkins University, IL&FS Education, Pearson and ICICI Foundation, among others. We were profitable and also developed a deep understanding of executing large scale assessment projects by working across 11 Indian states and conducting over 100,000 assessments in this period.
But the background reality was our struggle to get the real pulse of the market. We were a cost-effective for-profit garage startup in the field of policy research working with the not-for-profit sector. Being a for-profit was a conscious choice to ensure that the organization and products we build treats students not as beneficiaries but as customers. We would also take projects which could help us learn new aspects of the sector, which sometimes meant dropping well-funded projects for low budget / pro-bono interesting projects. We would hire the best experts even if it meant having to draw very low salaries ourselves. Again, the intent was to have dramatic exposoure to better ideas.
During this period we also consciously grabbed projects that helped us better understand stakeholders. We worked on studies involving teachers, parents and students to identify their key behaviors. We worked with the best UX designers and brought them in the field to design an information dissemination product for low income communities. We adopted low cost techniques to conduct our studies, e.g. we played ‘Pictionary’ with users to understand their mental models about schools. We conducted customer journey mapping, shadowing, appreciative inquiry etc., to really understand the motivation and needs of the various players involved in the sector.
All of this was great because we were producing results, getting repeat projects and all the while acquiring deep sectoral learning. Our search of a business model was being funded by our clients.
Phase II — Piloting the business model (2012–13)
Phase I gave us the experience of doing assessments, data analysis and operations. We also developed a strong understanding of the education sector and had some surplus to try new ideas. Somewhere around August 2012 our thoughts started to converge on the problem we wanted to tackle. The following key points were emerging –
1. The future of education markets would be about data driven decision making. Therefore the performance data of students will hold the key to future growth.
2. Schools in India conduct 6 to 7 internal assessments during each academic year and all the stakeholders involved have incentives to align. School assessments take up massive academic and administrative efforts and consume ~20% of the time.
3. Teachers and students usually don’t have any incentive to perform dip-stick assessments conducted by external agencies.
4. Based on mapping the granular performance of a student it should be possible to provide personalised remedial material. Teachers lack the institutional resources to create this personalised remedial material.
Looking at this, we came to the conclusion that we could partners with schools for their examination process make mass customisation of content a reality. We researched the market further and realized there was no one addressing this need. So we had to figure out the viability of this solution.
Over the last few years we were strongly influenced by Steve Blank’s ideas of Customer Development, the lean startup, MVP, prototyping andrapid iteration. We jumped at the opportunity and made a quick prototype solution. We also made a commitment to ourselves that for any pilot we would do, the user should be able to see enough value to at least cover the cost of operations. That would signal us the willingness to pay for our service. We incubated the new product internally and our meagre internal accruals helped us to recruit a few committed individuals to work on the product.
We were able to convince a school chain of 30 schools run by a foundation in Hyderabad to pilot the product at cost for three rounds of assessment. We conducted three assessments for 6,000 students across three subjects — English, Mathematics and Science. We not only checked the operational viability of the model, but also figured out the answer-script evaluation mechanism. Everyone told us that it would be a nightmare to evaluate essay type answers, but we came up with an assembly line evaluation method where we broke down the process into multiple discrete steps. A team of 120 teachers evaluated 18,000 answer-scripts in under four hours with three rounds of quality checks. Even internally, our team members grew more confident after seeing the efficiency of the process. Learning from this experience, we built the first version of the product and started reaching out to schools. XAMCHECK was born!
Phase III — Product Market Fit (2013–2014)
These couple of phases were very humbling for us as entrepreneurs because of the trust put in by the XAMCHECK co-founding team. We took bets on individuals based on their drive to punch above their weight class. People left stable careers, taking on uncertainty (as well as lower salaries) because they believed in the vision we laid out.
Aditya, who intuitively understands sales dynamics took on the challenge of roping in early customers for the product. Saraswati, a talented youngster from IIT Kharagpur, rolled up her sleeves and took care of all the early operational requirements of the business. Anuradha, an industry veteran with experience in content development and program implementation, worked on the product integration. Pankaj, an IIT Kharagpur graduate and an amazing software developer, single-handedly built the back-end automation for the product. Sailaja, an assessment expert, contributed to ensuring the content meets specifications as desired by the market. Nitya, Santosh and Karunya supported in content development and operations.
In 2013–14, we sold XAMCHECK to 11 schools covering over 3,000 students. Schools paid us about Rs.1000 ($20) per student for the service of exams, personalized workbooks and report cards at the end of each term.
Even though we had a deep understanding of the sector, working directly with schools for the first time was quite challenging. Schools function like a factory where teachers are the floor engineers. Teaching is a significant but a limited role which teachers play and even that is done like clock-work; the syllabus should be covered, workbooks should be completed and everything evaluated. We realized that you cannot simply plug a standalone / piecemeal solution into the school system. Integration with existing behavior and practices is the most important factor contributing to the success of any product in the school market.
We also learnt lessons in price elasticity; as there were some features we provided that schools didn’t see enough value to pay. One major feature we had to drop was answer-script evaluation. Schools wanted the feature, but were not willing to pay additional Rs. 300 per student for that. We are now working on tablet based evaluation software to re-introduce that feature. Apart from this, sales velocity was slow, as we were doing concept selling. We needed to grow fast to be able to build a critical mass of student performance data to demonstrate market traction. For higher sales velocity, we needed to target the existing budget line items of schools.
Combining these insights, we came to a conclusion that we needed to use a ‘whole product’ approach and take complete ownership of the learning process. We started building the complete product of ‘Digital Content — Text Book — Resource Material — Personalized Practice Material — Assessments — Personalized Remedial Material — Extracurricular Activities — Report Card — Teaching Support Material’. We hit the market with this approach and planned to carefully roll out each feature based on their traction. Any part of the product which did not make immediate sense to the customers was removed to retain the competitiveness of the product package.
By April 2014, we were in 56 schools with about 20,000 students. The next two months were hell — we had to finish the product while building experience in book printing and distribution. We also didn’t have enough money in bank to deliver material to these schools by the first week of June, as required. It was a bumpy ride and although a few delays happened, we came out of it without losing a single school. Everyone, including the team, vendors, friends and family supported in various ways.
The last piece of the puzzle was ‘personalization’. Very few schools believed that it was possible to have printed workbooks personalized for each child. But we did it! During the 2014–15 academic year, we conducted 360,000 assessments and we had more than 10 million data points. We delivered personalized workbooks for English and Mathematics, where each class had at least 32 possible combinations of material. Product-Market fit — check!
Phase IV — Funding and Dreaming (2014 — now)
Only after achieving all this did we feel that we were finally ready to dream. We wanted paying customers to be our first investor and we had achieved that. Now we needed to ensure that we had enough funds to take the next leap. We met a few investors and our priority was to find a partner who understood what it takes to build a business in India. Building a modern education company in a way that combined offline realities and digital infrastructure. Aspada Investment Company (equity fund backed by globally renowned George Soros), led by Kartik Srivatsa, understood our motivations and concerns and believed in our way of building the company — a company no one else was building in the Education sector.
After successfully raising funds, we were able to find and recruit the right people who could dream along with us and build the company further. Janardan, an ISB graduate with 12 years of industry experience across education, automotives and hospitality, is now leading the complete business operations in India. Sharad, an NID graduate with 8 years of industry experience in UX design, leads our product building. Naren, an IIT Madras and Olin Business School Graduate, leads the effort to build content partnerships. Mohit, an IET graduate with 6 years of audit experience is handling finance and working to build scalable systems and processes. Nihit, an IIT Kharagpur graduate with 3 years of experience is managing the back-end Supply Chains. Indra Vikas and Radhika, both IIT Kharagpur graduates with 3 years of experience, joined the Tech team to build the product. Many senior Education content experts have also joined the team to strengthen the content development.
As we are writing this post, we are about to cross 100,000 students signed up (annual revenue — $2 Million) for the academic year 2015–16 across five states in South India. We have retained more than 80% of our clients from the previous year which demonstrates the strong stickiness of the business model. We now have 5 offices across 3 cities and more than 80 people working with us full-time.
We believe that one has to go through hardship and struggle to reach a point where you can truly understand the concerns of all your stakeholders — teachers, parents and students. Education is not a single touch point — single transaction environment. It is a very complex eco-system where change takes time and you have to patiently integrate the product you are building with existing school system. We have written further here about our point of view on the education ecosystem. But these steps once achieved can allow you to take truly remarkable strides in reconfiguring the learning experience, which is currently broken everywhere.
As Steve Jobs puts it best –
When you grow up you tend to get told the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money.
That’s a very limited life. Life can be much broader once you discover one simple fact, and that is — everything around you that you call life, was made up by people that were no smarter than you. And you can change it, you can influence it, you can build your own things that other people can use.
The minute that you understand that you can poke life and actually something will, you know if you push in, something will pop out the other side, that you can change it, you can mold it. That’s maybe the most important thing. It’s to shake off this erroneous notion that life is there and you’re just gonna live in it, versus embrace it, change it, improve it, make your mark upon it.
I think that’s very important and however you learn that, once you learn it, you’ll want to change life and make it better, cause it’s kind of messed up, in a lot of ways. Once you learn that, you’ll never be the same again.
Overall, the most important lessons for us have been on the culture and team-building front. Clarity of values held; enabling collaboration and resolving conflicts; sensing whether a person may fit or not; matching the organisation structure with the products to be developed in the future — all these lessons make us confident of possessing the right DNA for building a truly modern and global education company.