a16z Podcast: Lessons Learned from Chinese Education Startups

0:00:02 >> Hi, this is Frank Chen.
0:00:04 Welcome to the A16Z podcast.
0:00:08 This episode is part two of a series called
0:00:10 “What’s Next for Education Startups?”
0:00:12 It originally aired as a YouTube video,
0:00:19 and you can watch all of our YouTube videos at youtube.com/a16zvideos.
0:00:21 >> Hi, this is Frank Chen.
0:00:23 Welcome to the A16Z network.
0:00:26 I’m very excited today to share a conversation I had with
0:00:29 Connie Chan, one of our general partners.
0:00:33 Connie is one of the world’s experts on trends,
0:00:36 especially consumer trends in China and tech.
0:00:40 Today, we’re going to talk about the future of lifelong learning,
0:00:46 and she’s going to share a few examples of very awesome startups in China.
0:00:50 She’s super interested in what’s happening with Gen Z consumers.
0:00:56 She’s very interested in real estate and how people are finding homes,
0:01:01 preparing their homes to be listed on Airbnb, renting homes, so on and so forth.
0:01:06 She’s also very inspired by things that entrepreneurs are doing in China
0:01:09 that might have applicability here in the United States.
0:01:15 She helped us find our investments in line and Pinterest,
0:01:20 and I think you’ll really enjoy this conversation that I had with Connie.
0:01:23 I have to tell you a funny story before we get started,
0:01:26 so we did not synchronize our sweaters.
0:01:31 We’ve known each other so long that we just knew to come in the same color family.
0:01:34 So Connie was my first hire at Andreessen Horowitz.
0:01:37 The Adam Rifkin introduced us to Adam at one time,
0:01:40 and may still be the most connected person on LinkedIn,
0:01:43 and his whole heart and mission is to connect people,
0:01:45 and so when I told Adam,
0:01:48 I was looking for the best ideal partner ever.
0:01:49 He went and found Connie,
0:01:53 and I’m so thrilled that you’ve been here for so long,
0:01:57 and now are a general partner looking to make investments, so welcome.
0:01:58 Thank you.
0:02:04 So today, we’re going to continue our series in education
0:02:06 and talk a little bit about ongoing education,
0:02:10 and we’re so excited about the things that we can do as adults
0:02:12 to continue to learn new things,
0:02:13 and for those of you that know me,
0:02:16 like learning a new thing is my favorite thing in life,
0:02:18 so I’m so excited about this episode.
0:02:20 So Connie, why don’t you set the context,
0:02:23 and let’s talk a little bit about the things that are working,
0:02:25 especially in China,
0:02:29 and I thought maybe it’d be good to just anchor on how much money
0:02:32 and how many users people spend on ongoing adult education,
0:02:34 because this is very surprising.
0:02:37 Yeah, I think about education and learning
0:02:40 in a way that goes well beyond K through 12.
0:02:44 So I’m actually hyper-focused on education for adults, people.
0:02:46 Once they’ve graduated college,
0:02:51 how can they use online education for self-improvement, for example?
0:02:53 And if you look at the dollars abroad,
0:02:57 I do a lot of studying what’s working in China and working in Asia
0:03:00 to give me inspiration for ideas here in the States.
0:03:02 It’s a massive market in Asia.
0:03:03 It’s massive in China,
0:03:06 and I think it’s because China has developed
0:03:08 all these online education platforms
0:03:10 that are specifically made for mobile
0:03:13 that unlock all these other new features and benefits.
0:03:16 And in terms of how big it is,
0:03:18 iResearch says that right now,
0:03:23 online education in China is 150 million users
0:03:28 and expected to grow to nearly 300 million by year 2020.
0:03:31 It’s a $40 billion industry,
0:03:33 expected to grow to $70 billion.
0:03:36 Of course, this is a very broad categorization
0:03:37 of what counts as education,
0:03:40 but what’s interesting is the way
0:03:42 that these research reports break it up.
0:03:44 The largest group is not K through 12.
0:03:47 It’s not even college students.
0:03:49 The largest groups of students
0:03:52 who want to do self-improvement in online education,
0:03:54 they are 26 to 35.
0:03:56 – Yeah, that’s super interesting.
0:03:58 So you would expect sort of the Asian cultures
0:04:01 that the parents sending their students
0:04:03 to after school enrichment programs,
0:04:05 and so you think that’s where all the money is going,
0:04:07 but you’re saying, look, it’s after they graduate college.
0:04:08 – Right, right.
0:04:11 And I think that’s because if you take the word education
0:04:15 and you expand it just to self-improvement, self-learning,
0:04:17 then it greatly increases the demographic
0:04:18 that you can address.
0:04:21 And yes, a lot of people just say China education,
0:04:25 it’s huge because parents spend so much money on tutoring
0:04:29 and so forth because of the way the college system works.
0:04:32 But most of that money is actually going through
0:04:34 post-college graduates.
0:04:37 – It’s really interesting ’cause in China,
0:04:39 what’s already happening is what we sort of expect
0:04:42 to happen here, which is today we have this system
0:04:44 where sort of you go through K through 12
0:04:45 and then a subset of these people go to college
0:04:49 and then basically at age 22, you’re done.
0:04:50 There’s no more formal education
0:04:54 and now it’s basically the workplace’s job to train you.
0:04:55 They’ll send you to classes and so on.
0:04:57 And we know that’s gonna change.
0:05:00 We know that the world is so dynamic now
0:05:02 that you can’t learn everything that you need
0:05:05 to be a productive worker or a citizen by age 22
0:05:07 and you’re gonna have to learn ongoing.
0:05:10 This is sort of a big part of our investment thesis
0:05:11 behind Udacity.
0:05:14 – And there’s a bunch of courses that a college curriculum
0:05:16 would likely never include.
0:05:18 How to conduct yourself at a meeting,
0:05:23 how to speak publicly, how to sleep train your kid.
0:05:24 That counts as education.
0:05:26 Parenting courses, that counts as education.
0:05:29 You would never cover that stuff in college.
0:05:31 – And in addition to sort of the evergreen stuff
0:05:33 that you mentioned, everybody needs to be
0:05:34 a good public speaker.
0:05:36 Everybody needs to know how to do it.
0:05:39 There’s also sort of topical things that emerge
0:05:41 as marketplaces emerge.
0:05:43 So I’m thinking about the Taobao sellers, right?
0:05:45 So Taobao was like eBay here.
0:05:49 And what happened in Taobao was there were sellers
0:05:51 who were experimenting with the system
0:05:54 and they kind of figured out what was working for them
0:05:57 and they would share online and in videos
0:05:59 and Taobao saw this happening and they’re like,
0:06:01 oh, let’s actually get behind this and push, right?
0:06:03 Let’s set up Taobao University
0:06:05 where we can take our very best sellers
0:06:08 and actually have them make money from their content,
0:06:10 not just their markets.
0:06:11 – Yeah, completely.
0:06:13 – Yeah, so awesome.
0:06:16 So why do you think this is happening already in Asia?
0:06:17 Why are they ahead?
0:06:22 – I think Asia is in general much more mobile first
0:06:26 and mobile only of an environment than the States.
0:06:29 Meaning that if I asked you to go buy a pair of shoes,
0:06:32 you might naturally flock to your computer
0:06:34 to get the best user experience.
0:06:36 But in Asia, you’d pull up your phone
0:06:39 and you’d open the T-Mall or the Taobao app.
0:06:41 And the idea that your PC and phone
0:06:44 are completely interchangeable
0:06:46 and you can completely rely on your phone
0:06:50 to give you everything you need is more prevalent in Asia.
0:06:52 There’s also more mobile payments
0:06:54 and the idea of paying on your phone
0:06:56 is very natural and common to people,
0:06:59 not just interior one cities, but across the country.
0:07:03 But I think there’s three core breakthroughs and insights
0:07:04 that Asia has really figured out
0:07:06 that has propelled its education market
0:07:08 so much more forward.
0:07:12 The first one is that they rely on artificial intelligence
0:07:17 and machine learning in a much more interesting way.
0:07:21 So that allows them to unlock products and features
0:07:24 and just ideas that I don’t see here in the States.
0:07:27 So for example, there’s this company called Lingo Champ
0:07:29 and it teaches you English.
0:07:32 And typically when you look at a language learning app
0:07:35 here in the States, it’s very flashcard driven
0:07:39 or it’ll give you a sentence and you can read it.
0:07:42 But in Asia, they realize that people want to learn English
0:07:44 not just to be able to read and write,
0:07:46 but more importantly to have conversations
0:07:48 to be able to visit the world,
0:07:51 to interact with other people.
0:07:54 And so they use the mobile phone and the microphone
0:07:57 to allow you to speak directly into the app
0:08:01 and read out sentences and actually carry on conversations
0:08:04 with a computer that will speak back to you.
0:08:07 And that kind of scoring using machine learning
0:08:09 and artificial intelligence allows people
0:08:14 to learn pronunciation with a standalone mobile app.
0:08:16 And I think that’s a fantastic example
0:08:18 of like leaning into artificial intelligence
0:08:21 and machine learning to dramatically reduce the cost.
0:08:24 This company, Lingo Champ, their gross margins
0:08:28 are over 70% because they don’t have the teacher cost.
0:08:30 – Right, so nobody has to sort of say,
0:08:32 “Oh, that’s a terrible accent.”
0:08:34 My funny story on this is when I was learning
0:08:38 Chinese Mandarin, my Mandarin teacher asked me one day,
0:08:39 “Are you from Hong Kong?”
0:08:41 Which, for those of you that don’t realize it,
0:08:43 is probably the most grievous insult
0:08:45 that you could hurl at somebody trying to learn Mandarin
0:08:46 ’cause it’s so bad.
0:08:50 So you’re saying, look, they didn’t have to have a teacher
0:08:51 listening to you and then getting guns.
0:08:53 They’re using the machine learning to say,
0:08:55 “You don’t sound like a native and here’s where.”
0:08:58 – Right, and because their gross margins are so high,
0:09:00 their price point is so much lower
0:09:01 than having a real-life tutor
0:09:05 or even an online course instructor tutor.
0:09:07 Their price point is so affordable
0:09:11 that people all around the country can access it.
0:09:15 And that same concept of leaning into machine learning
0:09:19 is also true in music as another category.
0:09:24 There’s this company in China called BIP, Peilian.
0:09:28 And Peilian in Chinese translates to
0:09:31 they will practice piano
0:09:34 or practice an instrument alongside you.
0:09:37 And what it is is a mobile app, which is a piano teacher.
0:09:40 And this app, you put it on the stand
0:09:42 and you attach it to your piano.
0:09:47 And this teacher can help your kid age five through 16
0:09:48 learn an instrument.
0:09:49 They do piano, violin,
0:09:52 a bunch of classical Chinese instruments.
0:09:55 But again, it’s that price point that they’re able to unlock
0:09:58 because for a lot of these music instructors,
0:10:01 so much of that cost is in their travel time
0:10:03 or because you’re living in a city
0:10:06 where the cost of living is just so high.
0:10:11 But now in China, my teacher doesn’t have to live in Beijing.
0:10:13 They don’t have to live in Shanghai.
0:10:15 They can live anywhere in the country.
0:10:18 They don’t even have to live in China, right?
0:10:19 And then not only is that the case,
0:10:21 they use the machine learning aspect
0:10:24 to help the teachers with scoring the kids
0:10:26 and scoring the performance.
0:10:29 Because with music, just like with language,
0:10:31 there is an actual pitch.
0:10:34 There is an actual tempo and actual rhythm
0:10:36 that you’re supposed to play, right?
0:10:39 So they can take the composition score
0:10:41 and then hear your actual performance
0:10:42 and give you a grade,
0:10:44 which then allows one teacher
0:10:48 to teach two or three students at the same time,
0:10:50 which then unlocks even more cost savings,
0:10:54 allowing more parents to give their kids these music lessons
0:10:56 that they would typically not be able to afford.
0:11:00 – I’m flashing back to my piano learning days
0:11:03 and I’m hearing that too fast, too fast, right?
0:11:06 So now we can do that with machine learning.
0:11:06 – Right, right.
0:11:10 And imagine being able to do that during practice sessions,
0:11:13 right, and having that information feedback to the teacher.
0:11:15 There’s just a lot more we can do with machine learning,
0:11:18 especially when it comes to language and music
0:11:21 that is still, I think, very untapped here in the West.
0:11:26 – So let’s talk a little bit about sort of the efforts
0:11:27 that we’ve sort of seen here
0:11:31 and sort of how you think we get from here where we are.
0:11:33 So we have learning platforms like Masterclass,
0:11:34 we have learning platforms like Udemy,
0:11:36 we have learning companies like Udacity,
0:11:38 one of our portfolio companies.
0:11:41 What’s sort of missing from those
0:11:44 that sort of the next generation of ed tech startups
0:11:46 you’re looking for, you think we’ll have?
0:11:51 – Yeah, I think the answer is one word, it’s mobile.
0:11:56 And the reason is because mobile only is in a society
0:11:59 that I think is inevitably in our future.
0:12:00 And when you have mobile,
0:12:03 that allows for all kinds of different things.
0:12:07 It allows, again, for microphone input as an example.
0:12:09 Everyone has a camera, a front-facing
0:12:11 and a back-facing camera on their phones,
0:12:13 which allows for different kinds of input
0:12:15 and interaction with the platform.
0:12:18 Mobile allows you to have these bite-sized snacks
0:12:21 rather than opening your Instagram news feed.
0:12:23 Maybe you can take a three-minute class,
0:12:27 a five-minute class whenever you have downtime.
0:12:31 And also mobile allows people to not feel like
0:12:33 you have to be confined to a video format.
0:12:36 And I think this is really critical
0:12:39 because a lot of long-tail expertise
0:12:42 doesn’t always naturally suit video.
0:12:44 For example, you can be a math teacher
0:12:47 and, yes, you’re writing formulas on the board
0:12:49 or you can be a philosophy teacher, right?
0:12:51 And you can be sitting there giving a lecture,
0:12:53 just sitting there.
0:12:56 Or that same kind of content
0:12:58 can be also conveyed through a podcast,
0:13:00 through an audio format.
0:13:02 And once you’re focused on mobile,
0:13:05 you’re not thinking like it has to be video,
0:13:07 it has to be full-screen immersive.
0:13:10 It now can also be a podcast that you listen to
0:13:13 when you’re driving to work, when you’re walking to work.
0:13:18 And again, I think that that expansion of formats
0:13:21 is really obvious once you make something
0:13:23 that is mobile-centric.
0:13:26 – So we haven’t seen the class of mobile-first edtech
0:13:27 that you were expecting to see,
0:13:29 which is pretty surprising, right?
0:13:32 It is sort of an obvious insight
0:13:34 once you say it out loud like you did.
0:13:40 – And I think the reason is because so much of edtech
0:13:43 has been either you pay this one-time
0:13:44 very expensive tuition,
0:13:48 or honestly it’s ad-based, right?
0:13:52 Like YouTube is the biggest university in the world.
0:13:55 And most of the creators are monetizing
0:14:00 through advertisements, but because it’s ad-based,
0:14:02 a lot of the content on YouTube
0:14:04 can’t go to the depth of absurdities
0:14:06 that you need to really make a big impact
0:14:08 on your life or your career.
0:14:11 Because the creators, they have these incentives
0:14:14 to have to create content that gets lots of clicks.
0:14:17 And the reality is a lot of self-improvement
0:14:21 lifelong learning content is not all clickbait content.
0:14:25 And to go into that depth of what you need to know,
0:14:29 an ad format is not the best way to compensate
0:14:30 these creators.
0:14:31 So for example, if you’re buying a house
0:14:34 for the first time, you need to understand
0:14:36 how to think through that transaction.
0:14:38 But it doesn’t make sense for someone
0:14:40 to create these ad-based videos
0:14:42 because one, they’re not gonna get all the clicks
0:14:45 they need to justify their time and expertise.
0:14:48 But I mean, imagine a platform where someone
0:14:50 could package that in 20, 30 courses.
0:14:53 It could be a mixture of audio, a PDF,
0:14:58 video, a live stream Q&A, a paid one-on-one consultation
0:15:00 and put that all in one format
0:15:03 where that creator now can make much more money
0:15:06 and have the right incentives to create deeper,
0:15:07 better content.
0:15:09 – Yeah, so that makes perfect sense, right?
0:15:12 Which is it takes a lot of work to create this content.
0:15:14 And if you’re monetizing with advertising,
0:15:17 that means only the top 1% are gonna even break even
0:15:20 or barely break even on all of that effort, right?
0:15:22 ‘Cause you need to attract tens of millions of people.
0:15:26 – And ads reward production value, right?
0:15:28 So you need the great videographer there.
0:15:31 You need to spend an hour on your YouTube thumbnail.
0:15:33 And that’s nuts, right?
0:15:35 Because honestly, a lot of these great experts,
0:15:37 a lot of these professors, these doctors,
0:15:42 these nutritionists, they are not media experts.
0:15:44 And the fact that they have to go hire videographers
0:15:47 buy very expensive equipment, cameras, lighting,
0:15:50 what have you, learn how to edit videos themselves
0:15:54 for the first time, that’s not long-term,
0:15:55 I think, going to work.
0:15:57 Because these creators are being underpaid
0:15:58 for their knowledge.
0:16:03 So, as I think about my own sort of ongoing education
0:16:06 habits, YouTube has definitely become one of them.
0:16:08 Which is to say, I’m watching TED Talks,
0:16:09 I did something over the holidays,
0:16:13 which I’m very proud of, which is I replaced a doorknob.
0:16:15 And I’m proud of this because I’m the least handy person
0:16:17 I know, and so I watched a YouTube video
0:16:20 and went to Home Depot, and in Law’s house,
0:16:21 I replaced the little doorknob mechanism.
0:16:24 I was like, yes, I did it.
0:16:27 And so you were saying, look, I know,
0:16:28 I shouldn’t be that proud of myself.
0:16:30 But I was like, giddily proud of myself,
0:16:31 because I’m a software person,
0:16:33 and that was definitely hardware.
0:16:37 So anyway, thank you for indulging my burst
0:16:39 of enthusiasm for myself there.
0:16:41 So you’re saying, look, that type of content,
0:16:43 that’s fine for YouTube, because that’s super easy, right?
0:16:45 It’s a fine video. – And it’s visual.
0:16:48 It’s visual, you need to see which part to change out,
0:16:49 which nail to take out.
0:16:51 – So ads, for that makes sense,
0:16:53 but it doesn’t make sense for this sort of
0:16:56 highly produced package where I’m teaching you something
0:16:57 that’s a more serious life skill.
0:17:01 – Right, I mean, TED Talks are fantastic intro courses.
0:17:03 It’s a first great lecture,
0:17:05 but there should be 10 lectures
0:17:07 beyond that for every topic, right?
0:17:11 And a lot of things that are skill-based, in particular,
0:17:15 I think deserve having 10 courses,
0:17:17 20 courses, 30 courses, so on.
0:17:18 And there’s a lot of things
0:17:20 that I would be willing to pay for.
0:17:22 I would love to pay to figure out
0:17:23 how can I improve my voice.
0:17:25 I would love to pay to see
0:17:27 how can I improve parenting and so forth.
0:17:30 And there aren’t great platforms right now
0:17:34 that make it as easy as creating like a Shopify website
0:17:37 for these creators to monetize their knowledge.
0:17:39 And these creators, typically,
0:17:41 one, they’re not media experts,
0:17:43 two, they’re not technologists,
0:17:46 so they don’t have time to build their own blogs
0:17:48 or their own websites and integrate PayPal
0:17:50 or credit card payments into them.
0:17:54 And the biggest problem is they’re truly underpaid right now
0:17:57 for the knowledge that they’re freely sharing on YouTube.
0:17:58 – Yeah.
0:18:00 If you think about sort of an example
0:18:02 that is in this ecosystem,
0:18:03 you think about masterclass, right?
0:18:06 Where the entrepreneur’s doing a great job
0:18:09 of sort of hoovering up all of the top experts
0:18:11 in their fields.
0:18:13 And I think part of the reason he went top down
0:18:15 is sort of the same reason that Elon Musk
0:18:19 went to the Roadster first and then the X
0:18:21 and then the, or the S and then the X and then the three,
0:18:23 right, sort of he’s working his way down.
0:18:26 And I think part of that is because
0:18:29 I wonder if there’s enough cultural support
0:18:34 in the West for paying for education of this kind, right?
0:18:35 So it sounds like in China,
0:18:36 you already have that cultural support.
0:18:39 So like what is education amongst household expenses?
0:18:41 Is it like number three or number four
0:18:43 after housing and medical, right?
0:18:48 So you have this inbred sort of support, cultural support.
0:18:50 Like of course I’m paying for education, right?
0:18:54 And so once mobile sort of content sources sprung up,
0:18:56 the money just went, right?
0:18:58 And so what do you think is gonna happen here?
0:18:59 Do we need more cultural support?
0:19:01 How does that interaction happen?
0:19:05 – I think the way that we Silicon Valley
0:19:08 and platforms can help encourage this shift
0:19:10 for more lifelong learning and self-improvement
0:19:14 is really breaking away from just the ad-based model
0:19:16 and finding the right incentives for creators
0:19:18 to be able to monetize.
0:19:20 Because I think a lot of creators,
0:19:23 when they have an ability to make a significant amount
0:19:26 of income from sharing their expertise,
0:19:28 they will create better content.
0:19:30 And as there’s better content out there,
0:19:33 users will say, hey, this is a fantastic way
0:19:38 to put a small investment into myself, right?
0:19:40 And right now the platforms, I think,
0:19:44 are not doing enough to help these creators monetize.
0:19:46 And for a platform that doesn’t just mean
0:19:48 changing their business model,
0:19:51 it also means monetizing their own brand
0:19:55 and becoming a mainstream app, a mainstream website.
0:19:58 And that’s really important because for a lot
0:20:02 of these platforms, they shouldn’t have just one teacher
0:20:03 teaching you how to sing.
0:20:05 There should be 20, 30 teachers.
0:20:07 And then there should be rankings based off
0:20:09 of student reviews or based off people
0:20:13 who actually completed the course, right?
0:20:14 And repeat students and so forth.
0:20:18 And all those things should help bubble up the best teacher.
0:20:21 And these platforms need to do a lot to invest
0:20:23 in building out their own brands
0:20:24 to become mainstream in order to do that.
0:20:28 And I love the master class content.
0:20:32 I think once they expand, they’re gonna have to include
0:20:33 more teachers for the same categories.
0:20:34 – They sort of go down in market.
0:20:36 It doesn’t have to be Steve Martin teaching you
0:20:37 how to do comedy.
0:20:39 It’ll be your local comedy genius.
0:20:41 – Or it could be all of them together, right?
0:20:44 And they could be priced at different price points.
0:20:47 And then when you go the level beyond Steve Martin,
0:20:50 you can have them ranked differently, right?
0:20:52 And I’d love to be able to figure out
0:20:55 what are the rankings of the classes that people finished?
0:20:56 What are the rankings where people gave
0:20:58 the highest reviews, right?
0:21:00 What are the rankings based off price?
0:21:02 What have you, right?
0:21:08 And all of that kind of data is totally presentable right now.
0:21:12 It’s just not being surfaced by the platforms.
0:21:15 – Another sort of age old challenge in sort of building
0:21:18 these pervasive education marketplaces in the past
0:21:20 has been you sort of have very broad categories
0:21:21 of education.
0:21:23 There’s sort of, let’s call it hobby entertainment, right?
0:21:24 I’m learning the piano.
0:21:26 I want to sing better, right?
0:21:28 And then there’s sort of business self-improvement.
0:21:31 Like I want to learn how to use Excel better
0:21:33 or I want to be a better offer up seller
0:21:34 or something like that.
0:21:37 So do you think that there’s gonna be one platform
0:21:39 that sort of wins both?
0:21:41 Do you think there will be more specialty things
0:21:42 that sort of cater to each of these
0:21:44 ’cause it feels like they have different dynamics?
0:21:46 – I think it’s possible.
0:21:50 But it’s unclear how the future will shake out.
0:21:51 I mean, for example, I think there’s a lot
0:21:54 of great workout apps today already.
0:21:56 That put a bunch of fitness instructors
0:21:57 or nutritionists up against each other
0:22:00 and you can choose which instructor you want.
0:22:02 And they have that category down pretty well.
0:22:05 But I also think it’s very possible
0:22:07 if there was a platform that created the right tools.
0:22:11 I know that’s like Shopify in a box where I can say,
0:22:14 here are my podcasts, here are my blog posts.
0:22:18 These are the times where I’m gonna do a live stream Q&A.
0:22:22 This is the PDF of the book I’m willing to sell, right?
0:22:24 If it gave creators these options
0:22:27 to just turn on these modules
0:22:31 and create their own knowledge store,
0:22:32 I think it’s possible also
0:22:36 to have one major platform as well.
0:22:39 It serves both sort of the hobbyist entertainment market
0:22:42 as well as the serious self-improvement market.
0:22:44 – And it’s possible that it’s not a new startup.
0:22:47 It could eventually be something that YouTube goes into
0:22:48 or something that Twitter goes into.
0:22:50 Twitter has a ton of influencers too
0:22:52 and lots of long-tail experts.
0:22:56 But I think the opportunity is still there
0:22:59 and still so early enough that a new startup could take it.
0:23:02 – Great.
0:23:06 If you were to give, if you had one or two pieces of advice
0:23:08 that you have for entrepreneurs in this space,
0:23:09 what would it be?
0:23:15 – This is probably a contrarian view
0:23:18 even in Silicon Valley, but I would build for mobile first.
0:23:21 And I would build your app before you build your website
0:23:24 because it will drastically unlock different ways of thinking.
0:23:28 You’ll be able to use your GPS, your microphone,
0:23:30 you’ll be able to use the camera.
0:23:33 And if those new additions of features
0:23:34 don’t help you brainstorm new things,
0:23:37 then that’s a problem actually.
0:23:40 You’ll be able to use in-app payments, right?
0:23:42 You might be able to use Apple Pay and so forth.
0:23:45 So I think one big thing I would say is
0:23:47 if you’re building for the future,
0:23:50 consider building this platform first on mobile
0:23:52 even before you go to the PC.
0:23:55 And now I know that’s a very contrarian view
0:23:58 ’cause a lot of investors will also say
0:24:00 go to the PC first, get your brand
0:24:02 and then go to the app.
0:24:05 But I think when you start at least brainstorming
0:24:07 at the very least on a mobile platform first,
0:24:09 it unlocks this idea,
0:24:11 how can I use a microphone differently?
0:24:15 And then now that I have microphone and audio input,
0:24:18 how can I use machine learning differently, right?
0:24:21 And that allows you to unlock ideas
0:24:23 like the lingo champ for English learning
0:24:25 or like Paylian for piano teaching
0:24:28 that honestly someone building for a PC
0:24:30 would never get to that insight.
0:24:31 Right, right.
0:24:33 And then presumably your next piece of advice
0:24:36 would be experiment on the business model, right?
0:24:38 So we’ve got mobile, we’ve got machine learning
0:24:40 and now it’s like let’s do something other than ads.
0:24:43 Yeah, for sure, for sure.
0:24:48 I am not a fan of strictly ad-based models
0:24:52 mostly because the ones that do succeed,
0:24:53 say like a Facebook or Google,
0:24:55 I mean the reason their ads succeed
0:24:57 is not because of the massive page views
0:25:00 it’s also because of all the information
0:25:01 they have on that user.
0:25:04 So the ads are highly targeted, right?
0:25:06 And if you’re a platform where you don’t have
0:25:10 such detailed information on your end users,
0:25:11 your ads are not as valuable
0:25:14 and they’re not gonna convert as well.
0:25:17 So focusing on just building up page views
0:25:18 and hoping they’ll monetize with ads
0:25:21 to me is a scary strategy in general
0:25:24 for any consumer app.
0:25:27 Yeah, but I think business model experimentation
0:25:29 in the education space is huge
0:25:31 because I mean a lot of these categories
0:25:33 like your skills for doorknob, right?
0:25:37 Maybe it could sell you a similar doorknob.
0:25:38 They should have sold me the doorknob.
0:25:40 They should have sold you other doorknob.
0:25:42 They should have sold you other home projects
0:25:43 that hey, if you take this course
0:25:46 buy the components for it at a discount
0:25:49 and that can be a partnership with your local Home Depot
0:25:52 ’cause geographically they know the local Home Depot
0:25:54 is only two, three miles away from where you are.
0:25:55 Right.
0:25:57 And those ideas are very possible
0:25:59 and not being implemented today.
0:26:02 Kind of thinking if this person learned this course
0:26:06 what else can I sell them beyond just another course?
0:26:09 What physical things can I sell them?
0:26:11 What other services can I sell?
0:26:12 Yeah.
0:26:15 It seems inevitable that as we continue into a world
0:26:18 that rapidly changes, therefore needs new skills
0:26:22 all of the time that the spending pattern here
0:26:24 on education will flatten, right?
0:26:25 Which is the way I think about education spending
0:26:28 over a lifetime today is kind of like
0:26:30 there’s an elephant inside a python, right?
0:26:31 Which is you spend a lot of money
0:26:34 and then you get to college, right?
0:26:36 Where you have the 529 plan, right?
0:26:38 To help subsidize, right?
0:26:40 Tax deferred dollars to go to university
0:26:42 and then basically it drops to zero, right?
0:26:45 It’s sort of like a very small proportion
0:26:47 of the population spends money on ongoing training
0:26:49 and if you spend it, it’s mostly like,
0:26:52 oh, work had me do it and then I expensed it, right?
0:26:54 But it’s nowhere approaching college tuition.
0:26:56 So it’s sort of this big sort of college expense
0:27:00 in the middle, it feels like as we move into a new world
0:27:01 like we want to flatten that out, right?
0:27:05 We want to give access to piano teaching for kids,
0:27:06 smooth it out earlier in life
0:27:08 and then we sort of smooth it out later in life too.
0:27:12 And that’s gonna require this business model experimentation.
0:27:14 Business model experimentation
0:27:17 and just making that information more accessible.
0:27:21 Like if I told you you could spend $15
0:27:23 and get 10 courses on how to improve your voice,
0:27:24 would you consider it?
0:27:28 I am looking for voice instructors right now, right?
0:27:29 – You would do it, right, right, right.
0:27:31 – I’d pay far more than that.
0:27:32 – Right.
0:27:35 – But I feel like so many of these ideas
0:27:38 or these instructors, people oftentimes just forget
0:27:42 that they exist because it’s not so in their face.
0:27:45 And it’s not also done in bite-sized stacks
0:27:48 on their own schedule, on their own timeframe, right?
0:27:50 And when you’re on a mobile platform,
0:27:52 when you’re doing these bite-sized lessons,
0:27:55 you can do it every morning.
0:27:56 – Yeah.
0:27:58 Well, I personally can’t wait for a lot of this stuff.
0:28:00 As I mentioned, I love learning new things
0:28:03 and I can’t wait to have very compelling products
0:28:05 that are teaching me new things
0:28:08 a little more sophisticated than how to replace a doorknob.
0:28:10 Maybe a little less sophisticated than how to do it.
0:28:12 – A platform should have also sold you services
0:28:14 of a handyman nearby in case you failed.
0:28:16 – That’s true, right?
0:28:17 – Luckily.
0:28:19 – There’s just so many ways you can monetize
0:28:21 a simple video like replacing a doorknob
0:28:22 that’s not being done today.
0:28:24 – Yeah, yeah, totally true.
0:28:27 – Like all these how-to home fixes,
0:28:30 a good chunk of people who attempt them can’t do it, right?
0:28:32 And they’re willing to pay for the local
0:28:34 handyman to do it. – Surrounded by an explosion
0:28:35 of tools, right?
0:28:36 Oh, I give up.
0:28:37 – Right, or I may be missing this part,
0:28:39 maybe I’m missing this wrench or hey,
0:28:41 the power tool, right?
0:28:42 You could have done this in half the time
0:28:44 if you had this power tool.
0:28:47 These ideas aren’t being thought of right now
0:28:51 because it’s a business model innovation, right?
0:28:54 Think about not just selling them the next course
0:28:56 and stuffing more ads into your course
0:28:58 and then therefore making your video much longer
0:29:00 than it needs to be, which is the game
0:29:02 that a lot of these influencers have to play.
0:29:05 They’re being forced to play that game right now.
0:29:07 Give them better ways to monetize what they’re selling.
0:29:10 – Yeah, and that business model would be good for,
0:29:12 ’cause another age old problem with these education markets
0:29:14 places that try to get broad, right?
0:29:16 I want to have all of this content
0:29:19 is that the repeat usage is never as good
0:29:20 as the entrepreneur hopes, right?
0:29:24 So you kind of hope that I sell you the piano playing class
0:29:26 and then you’ll come to me for filmmaking
0:29:27 or whatever it is.
0:29:29 And it turns out in a lot of these
0:29:33 that you’re almost capturing that customer again
0:29:36 for the first time, even though they bought a class from you,
0:29:37 right? – Yeah.
0:29:39 And to this point is actually,
0:29:42 I wouldn’t say I’m never a fan of subscription models,
0:29:45 but for this category,
0:29:48 I don’t think subscription is necessarily the best model.
0:29:51 Because for me to sign up for a subscription,
0:29:54 I have to think I’m gonna take more than one class, right?
0:29:57 I mean, why not instead let me pay per course?
0:30:00 And for other courses, if you want to push discovery,
0:30:04 allow me to sample the first 10 minutes of a class for free,
0:30:07 right, or do some other kind of incentive
0:30:09 to get me to see the value.
0:30:11 And then maybe after two, three courses,
0:30:13 then sell me something like a subscription.
0:30:14 Or I’m like, yes, for sure,
0:30:17 I’m gonna use this multiple times over.
0:30:20 But the idea of jumping from day one
0:30:21 to push you a subscription, I think,
0:30:24 is a hard business model for this category.
0:30:25 – Yeah, it’s hard.
0:30:26 You have to capture the people
0:30:28 who would pay upfront for health clubs, right?
0:30:30 Which is the sort of, it’s the aspirational me
0:30:33 that will go to the gym all the time, right?
0:30:34 – Right.
0:30:35 – Well, thanks for joining us.
0:30:39 We’re so excited for the future of EdTech
0:30:41 that is mobile first and AI enabled
0:30:43 and isn’t just advertising,
0:30:44 ’cause I wanna learn new stuff,
0:30:45 I wanna learn it all the time.
0:30:47 The next thing I think in our house
0:30:48 will be clearing clutter.
0:30:51 And so it’s funny, Marie Kondo
0:30:52 has that series on Netflix now.
0:30:56 And so maybe I should watch it
0:30:58 and maybe there will be a tailor-made startup
0:31:00 for that type of stuff.
0:31:02 They can offer me help when I get stuck
0:31:04 clearing my own crap.
0:31:06 So, all right, thanks, YouTube.
0:31:08 We’ll see you next episode.
0:31:09 If you liked what you saw,
0:31:13 go ahead and comment and subscribe on the bottom.
0:31:14 And we’ll see you next episode.
0:31:15 – Bye.