Posts By: Satya
CCD Siddhartha and the learnings :
Let’s go beyond hanging the convenient villian
The tragic episode of Siddhartha of CCD is very tragic, indeed. I recall meeting him for
the first time almost 15 years ago when he was taking-off as an entrepreneur and he
has always come across as one with a lot of energy and creative ideas.
An episode like this could be very tempting to find the most convenient villain of the
piece. Greater wisdom lies in soul searching and introspection by each stakeholder as
the shifts have to be made oneself and not just stay prescriptive towards other
stakeholders while absolving oneself entirely.
Entrepreneurs need to stay firmly grounded and be guided by the wisdom towards long
term value creation and also be smart enough to separate noises from the true,
valuable music. Success, fame and wealth are unavoidable outcomes of impacting the
society and delivering value on a sustainable basis. No success anywhere in the world
has escaped this fundamental rule of entrepreneurship. Of course, funds, board
members, mentors, technology etc all are important enablers. However, they are just
Unfortunately, far too many entrepreneurs including successful ones fall prey to the so-
called pressures somewhere along the way. I meet a dozen a week who fall in this
category. I try my mite with them and I also helps me in my own journey.
Investors are going to be abused for a few weeks beginning today. In my own view,
there are as many rogue investors as entrepreneurs. Not more. Not less as they all
come from the same society.
At the same time, both kinds of investors (whether with or without experience of having
built business hands-on) need to be humble about what limited purpose capital can
achieve or enable. Capital is not a Panacea. If any, it could even be a distraction or
nuisance if wisdom and clearer thinking are in short supply. Also, practices based on
IRR guarantees, side letters, backseat driving belong to a different era and is rearely
found in the practices of truly great investors.
Government and government agencies have their own reflection to do. India, as a
Startup economy, is still in her adolescence. If we need to to build a society with a
million entrepreneurs and with each giving jobs to about a 10 or 100 or a thousand
youngsters, we need to embrace 21 st century governance models in a hurry. If we
dream of solving the problem of the society through innovation and education,
education, the government systems need to wake up and reboot once again. Wealth
creation through creativity, entrepreneurship and innovation can only be aspired for by a
government that practices these on a day to day basis.
Finally, I would only pray for the family of Siddhartha. May god bless them with enough
courage and wisdom to deal with the loss of a dear family member and also to deal with
the challenges on the business front.
Cloud and Voice are the next big things that are already here. The tech giants are betting big on this. Amazon, through AWS and Alexa, has bet big not only in these two technologies but in education / professional reskilling as a segment.
Here at seattle at “AWS Imagine” conference that has leaders from education – corporate leaders K12/Higher Ed, EdTech and policy makers.
Andrew Ko, MD-AWS and Teresa Carlson, VP-Public Sector lead the conference.
Cloud degrees and Voicetech transformation are beginning to see traction. Are you cued into this shift in education?
What is Voicetech ?
Voice will replace typing are keyboard led interaction between man and machine that is the core hypothesis of voiceTech Revolution. Google, Apple, Amazon, Alibaba are leading the multibillion-dollar investments into this future innovation.
Every day mgmt of customer / student life :
Information about products/servuces/ programs, info on all aspects of consumer engagement are some of the interfaces that are moving into an Alexa or Siri or OK Google interaction.
This is called the Voice enabling of everyday management of a customer’s life.
Every company, brand, university have to enable these information using voice technology or chatbot on their websites.
Help me learn:
The next stage of voice Tech is in the area of ‘help me learn’. How do you perform better with a product, – are the next level of applications that are being researched and developed by this technology Giants.
You can join these movements and innovate along with the world. Or stay cued in, at least.
The world is transforming infinitesimally every moment 🙂
Fascinating, to say the least 🙂
What are Cloud degrees ?
Students or professionals enroll for courses on cloud from a variety of universities, collect credits, aggregate that into a degree with certificates in various areas.
Internships/real world experience will be on cloud with touch points on the ground.
Industry accepts these degrees and participate in a placement process that is tech-enabled with f2f touches where needed.
This movement is gathering momentum. Amazon web services is working on building this cloud university with courses from top universities or professors.
Are you wanting to host/offer a course or two from your company / campus or dept or a biz leader ?
Are you wanting to recruit from this cloud univ world shortly ?
An interesting question !
The link between academia & industry is a broken one, not just in India but across the world. In fact, it never was built consciously in the first place, not even in the developed nations over the past many decades. Hugely inter-dependent and evolved sub-systems can surely be seen as in Boston/Massachusetts, California, Tel Aviv, Seoul, Tokyo, Beijing, Bengaluru, etc. However, those are mostly specific to an activity or two, such as innovation or start-up funding etc. These, in addition, have been cases of gradual evolution than an outcome-by-design.
Revisiting the academia-industry strengths:
Supply of young talent, nex-gen start-ups, cost-effective infra for research, development & training and high quality researchers are some of the riches that are available inside the academic institutions while the funds, demand for talent and innovation, cutting-edge knowledge relevant for new courses and an ability to commercialize knowledge are in abundance on the industry side.
Given these strong inter-dependencies, one would expect that a slew of collaborative activities such as student placements, industry internships, new course updation or launches, innovation collaboration, research funding, start-up conversations in a seamless and abundant manner, etc. However it does surprise why no one has been able to build a platform play for such a strong and potent opportunity. A bit of deeper thinking, conversations with stakeholders and on-ground observations throw up some interesting cause-effect debate.
The US reality and a chance for India:
Unlike in India, there is no real concept of campus placements in the US in that formal a way. Most of the heavy lifting is done by the students themselves with facilities and pointers available institutionally in various forms. Such a strong need or activity could have given birth to a start-up that could have gone on to scale it using technology over the past decades, much like other tech-giants of today.
Let me read the tea leaves and think aloud on what is likely to shape up in our own future!
Test-Prep & Training Modules:
In the current form, most assessment companies focus only on assessments. Only 5-15 percent of the aspirants get placed as they are seen as good enough by the recruiters. The rest of the aspirants are left to their fate even as the recruiters return empty handed and perpetuate the truth that there is no hire-worthy talent.
In such a context, adding booster training modules to help aspirants prepare for the tests is as critical as aspirants preparing for GATE, CAT, GMAT kind of programs. Training partnerships are beginning to emerge between assessments and training companies to make this happen.
The new world order in academia-industry collaboration will be aided by three other critical shifts over the next few years.
University on the Cloud:
The time has come. This is one place where the world is truly and undeniably flat. Indian, Chinese, Korean and American markets are all discovering this compelling need at the same time. Some others are well underway in their journey of discovery. Most will follow suit. The success of AWS and the waking up of all the tech-giants including Microsoft, IBM, Apple, Google etc. will make this a hotly pursued sector. During the process, Ux-SAAS becoming a reality is something I would punt on. Some exciting pilots are underway across the globe. Coursera, Udacity, Udemy, 361DM, ed-Cast, etc. are having a go at it in their own ways. A couple of them or who knows, even someone else, as yet unknown, will emerge a winner here.
Open innovation platform:
Democratised open innovation platforms that help students, researchers, founders, corporates etc. to collaborate seamlessly by staying in their respective places across the globe is the third disruptive movement whose time has come. WAIN-Connect, arguably, is the only platform doing this in a scaleable way with over 80,000 innovators, corporates, funders and mentors live today. Some parts of this effrt is being aided by initiatives such as start-up bootcamp (9 global locations), Y-combinator, TIE (The Indus Entrepreneurs) etc. But the end-to-end seamless tech-driven open collaboration is missing.
If one contrasts that with India, every higher education institution is measured hugely by her ability to deliver jobs as a part of her “campus placement” outcomes. The IITs, IIMs, NITs and other leading tech-institutes and b-schools lead this massive effort. Hence you also find some start-ups and other linked services such as e-litmus, co-cubes, aspiring minds, formistry, Tata-ion have taken birth over the past decade. Tata-ion is emerging as a compelling leader with the resources of TCS available to invest and scale. Ion NQT test has had over 280,000 test takers in 2018. That was about 150 percent higher than in 2017. Upon aggregation, if this number scales a million, it should surprise none of us.
If played right and across industry verticals, the branded NQT might become ubiquitous, not just in India but across countries around the globe. It could disrupt many micro-testing exercises that are sub-scale for many years now.
With a million jobs and more on offer in the IT and related sector alone and an equally large need from the other sectors such as auto, finance, consumer, infrastructure etc., India is likely to build out a world beating solution that will be a global highway between the institutions and the industry.
In sum, an integrated solution:
U-on-Cloud, Student skills training, placements and research/innovation collaboration are the four legs upon which the nex-gen higher education universities will be built over the coming decade. Over a hundred nations where the GER and university systems are fledgling will partner with a scaled-up movement such as this and leapfrog into the 21st century higher education architecture. This story will play out similar to the landline-mobile or bank-mBank generational change which played over the past decade at a blink-you-miss speed. Africa, Central Asia, Asia and Lat-Am will be the greatest beneficiaries from the game-changing innovation that is underway.
Stay cued in and watch the play.
The year 2017-18 started with our getting listed on March 31, 2017. Needless to say, this was—and will remain—one of the most cherished milestones for all of us at CL Educate. The team had toiled long and hard to cross this milestone that is a fantasy for any entrepreneur or founding group.
A new phase of entrepreneurship: ‘A public start-up’, referring to CL being listed while having the enthusiasm and energy of a start-up, is how I see the year gone by.
The end of life as a private-company entrepreneur also marked the beginning of a new chapter in our lives. As they say, you need to die to go to heaven. In a similar way, if we need to get to the nirvana of a large and respected listed company, we needed to go through the journey of the past one year.
During that period, the attributes, parameters, way to view the business have changed significantly in my mind. In many ways, we are getting healthier and stronger by the day. The focus on asset-lightness, ROCE, growth, etc., is of a different order now. Yet, we also are very mindful of the fact that in education, it is a medium- to long-term business. India continues to present a very significant opportunity for an education-services player, who has some of the above-mentioned attributes. I sincerely look forward to this challenging journey as a listed entity to make it a rewarding one for all, including the shareholders.
Some of the big rocks of 2017-18 were:
Big test prep segments added:
Together, GATE, CA, and Civil services add up to a market size of almost 2.0-2.5 million aspirants. The current mainstays of CL test-prep (MBA and Law), in comparison, add up to a market size of 250,000 (or 0.25 million). That’s one big rock we have moved in the past year.
Post IPO, we added three significantly large segments of test-prep, including GATE (ICEGATE), CA, and IAS (ETEN). These acquisitions occurred at various points during the past year. The business and culture integrations on the ground, optimization of costs, including that of manpower, technology, and Go to Market, etc., have taken longer than what we had planned for.
The ETEN business has now been consolidated under the common Network Business Head; and all redundancies removed. We are also moving towards adoption of newer technologies, thus reducing bandwidth requirements and costs. With operations and network attrition having stabilized, and a rationalized operating structure in place by integrating the existing network and ETEN network under a common Business Head, we are looking towards cost rationalization, too.
On an annualized basis, these acquired businesses have aggregated to about INR 20 crore of revenues in 2017-18, of which only about INR 10 crore has accrued to CL (timing of the deal and minority adjusted). On the other hand, all the investments have happened as envisaged, whose benefits are likely to be visible over FY2019. In short, the above-mentioned test-prep acquisitions were in investment phase in three significantly large market segments. If executed well, these could turn into net cash-generating products in a year. At worst, two.
Over a three-year perspective, these three have the potential to overtake the revenue contribution by MBA and Law. More interesting ways of bulking of revenues and profits are a distinct possibility in the super-fragmented market that test-prep is.
Focus on tech-led, scalable products
We increased our stake in Accendere from 51% to 100%, invested in tech backbone, and taken this research collaboration platform to about 35,000 innovators now sourced from over 100 universities and a dozen corporates. The version2.0 of wainconnect platform was launched. This platform has already begun to contribute to margins. The growth of wainconnect will add a significant business size, as well as not-easy-to-replicate moat around our business. The implementation of National Institutional Ranking Framework (NIRF) by the Government in 2016 has added a compelling factor into the behavior of colleges and universities. This business adds to our reach into the universities even for the core business.
The institutional and corporate business is looking more and more robust with continuous expansion of the client/customer base, and addition of many 1st time large & strategic customers. Our continuous endeavor for the past few years, of making investments in creating new technology products and owned IP property, has now started paying off. During the last year, we created two new properties: (i) Inquizitive Minds — one of the largest quiz shows in the country, with a reach to over 1000 schools and colleges; and (ii) Melting Pot. We continuously work towards enhancing our customer base and product offering to enable a robust and profitable growth over the next couple of years. For corporate business, we have expanded to 2 more international geographies, with opening of offices in Dubai and the US.
How does the future look?
Three factors that continue to augur well for a company like CL are:
1. Rising disposable incomes and focus on education
India’s GDP is expected to double from US$ 2.5 trillion in 2018 to US$ 5 trillion in 2025; and per capita income would move from about US$ 1900 per person to about US$ 3600 per person. With such a dramatic increase in income, the disposable income for a large segment of the population would rise even more significantly; resulting in far greater spend on education and education-related services.
Consumption of educational, or test-prep, services will continue to rise in the light of more disposable incomes across various strata of the socio-economic pyramid. This spans both urban and rural geographies. The fact that education is culturally valued is an added sweetener for a consumer-driven company like CL.
2. Broadband and internet penetration
In June 2018, India had an internet penetration of about 500 million people, out of which about 60% was claimed to be broadband with 3G or 4G connectivity. The number is expected to rise to about 830 million people with internet access by 2021; with a larger proportion of population being on 4G by 2021, and some selected population even on 5G.
In such a scenario, the ability to launch a program and take it to the consumers in different formats (at CL centers and into homes and mobile devices) becomes an easier proposition. These two segments (@center and @home/devices) are independent customer segments; and CL will stay focused on catering to both these groups with equal vigor and customization.
3. Rapidly evolving career landscape
Newer courses, newer careers, newer exams, emerging professional certifications which may be termed continuous education/skill upgradation are all white spaces that will see sustained action over the next few years; as India grapples with challenges, such as, employability for the youth and continued employability of professionals. This is an opportunity for CL Educate by staying close to her knitting or strengths namely (i) understanding of subjects/exam patterns, (ii) pedagogy, (iii) delivery (physical and digital), and (iv) data analytics for better outcomes.
In sum, I would urge you to look at China as an economy, and the emergence of giants in education, such as New Oriental, TAL Education, VIPKID, etc., over the past decade. My belief is that India will also see the rise of such successful listed education-services companies over the coming 5-7 years. That might be a long perspective for a short-term investor. However, for a company like CL, that’s the perspective that weighs heavily on my mind, when I am taking decisions on a day-to-day basis. At the same time, we are absolutely mindful that we need to win the battle every year to be able to see our progress to such heights.
Satya Narayanan. R