At a time when the ed-tech industry sees several layoffs and the shutting down of companies, Ronnie Screwball, chairperson and co-founder of up Grad, says that a “maturity in the industry was a long-time coming”. As the world faces uncertainty because of multiple macroeconomic factors, Screwball says it is time for the right models to emerge. Excerpts from an interview.
As things return to normalcy, what kind of changes will the ed-tech industry see, and what are the challenges before it post Covid-19? How do you see things pan out in the foreseeable future?
For anyone understanding ed-tech, it cannot be under one broad sweep, not just in terms of consumption patterns but also in terms of final outcomes. The K12 sector had its hockey stick and a very strong uptake during the pandemic. There has been a sharp correction there, also in terms of learning outcomes, which is difficult to be measured in augmented learning. On the flip side, in higher education, where up Grad has been, unless you can show outcomes, nothing really happens. Most of our learners are late-college learners, early-working professionals or late-working professionals and in each of these categories, the target is a job placement or promotion or appraisal or job change. So in higher education, we saw that people didn’t want to invest since there was job insecurity and appraisals were on hold. They didn’t think it was the right time to invest nine months to a year or Rs 2.5 to 5 lakhs for a course. This kind of decision requires a fair amount of interaction between our counselor and student, which was a challenge. So, while we did flow 100 per cent during Covid, we didn’t really see that.
Some companies may have overinvested or deep-focussed in their expansion and now have to pull themselves back in terms of consolidation or had investors who loved the high growth story where burn is not really looked at. But the tune has now changed, and quite predictably so. This isn’t a new thing, it happens quite often. I have (seen) three cycles like this; where you have investors who put in top dollar and want to see top-dollar growth and have a market leadership position. So I think a lot of money was spent in over-hiring, diversifying into areas that are not core for everyone and third, marketing. Now, most people think marketing is brand building. I would say not so, the only way to build a brand is if the customer comes back to you, not if you find a first customer. That’s where we are seeing a sharp correction for lack of focus. Inclination towards high burn, plus an overall expected market correction. Everyone knew there is a time when this would happen. I think it’s good for the right models to emerge.
There, has been a lot of upheaval in the last few months; the industry news doesn’t seem to be very encouraging. We have seen companies shutting down, massive layoffs happening across the board. Did the industry not plan for what lies ahead? Was there a lack of foresight?
In the K12 sector, maturity was lacking and foresight is a sub-sect of it when you’re running a business. But when you’re in that hoopla, you don’t necessarily know, and you plan for the best. When you sit with a board of directors, and you are a 35-year-old entrepreneur or a 55-year-old entrepreneur, but you haven’t had the experience of running a business and seeing these cycles, then what you hear from investors or people in your inner circle is the cue that you will take, thinking this sounds like a long-term plan and not a short-term plan.
You said that higher education consumption is very different and that learners actually pulled back during the pandemic due to uncertainty. In terms of the higher education sector, post-pandemic, will it benefit then from things getting back to normalcy or will the global economic climate affect it adversely?
No, we are seeing an upswing, and it goes against the trend. College learners today feel they need to be ready for jobs earlier, and just a degree is not enough, we are seeing an acute need right from an early stage. Job-ready programs, short programs; we are seeing a massive upsurge. The two-year doctorate is massive in India. To have a degree is one thing, but to say I have a doctorate is something else, and we are seeing a massive demand for them. And to speak of the global perspective, we are operating in Vietnam, Indonesia, Middle East and the United States; we are seeing a greater demand for online learning since people are able to get a high-profile US or UK degree at one-fourth the cost without one having to go to campus and spend onboarding and lodging or being displaced for a year.
You must be logged in to post a comment.