Waliullah Bhuiyan, Co-founder & CEO, Light of Hope Ltd. explained the concept of an Ecosystem company and how Elon Musk's work with Tesla and SpaceX inspired him to develop a new model for his education startup.
People often get confused by the work that we do at Light of Hope Ltd. Are we an ed-tech company, are we a non-profit? We are providing teacher training, we also own after-school centers, we develop creative content, we have a hardware solution called Sputnique that's actually a solar-run school in a backpack, and so on. We also work with Govt, INGOs, and NGOs working in the education sector. Why are we doing so many things despite being a startup?
What category of company do we belong to? B2B or B2C?
I think finally I have a word: Light of Hope Ltd. is an Ecosystem Company in the education and learning industry for children.
Fancy word? Let me clarify. It's easy to compare with an existing entity from a different industry.
What do you think of Tesla? Is it a private car manufacturing company? Then why Tesla is manufacturing trucks? If it's a car manufacturing company, then why Elon Musk is targeting Uber's market by deploying Tesla's Autopilot Software with 1 million Tesla cars? Why Tesla has its own battery manufacturing unit which is the world's largest Li-ion battery producing factory? If it's a car company then why Tesla brought SolarCity - one of the world's largest solar companies?
To understand Tesla's work, one needs to understand the mission of Tesla as a company and Elon Musk's personal vision. Tesla's main mission is to reduce carbon emissions from the transport industry by improving the overall efficiency of the industry and by producing cars that run on renewable energy. Tesla is not a car manufacturing company, it's an ecosystem company in the transport industry.
That's why manufacturing electric car is not enough, Tesla needed to ensure that all of its customers live in houses that have solar panels. So that Tesla cars can be charged from the solar panel. That's why Tesla brought SolarCity. And there is a similar connection to all of Tesla's activity with its main mission - slowing down the climate change effect by reducing carbon emission from the transport industry. And interestingly, despite being an automaker, Tesla generates revenue from Environmental Credit for producing pollution-free electric cars.
Here's Tesla's Ecosystem Business Model (2015). This is more complex in 2019. As you can see despite being an automaker company, Tesla generates revenue from various sources. The reason Tesla is a disruptive company because of this particular model. Take this model out, it's simply another automaker company that happens to produce electric cars.
Take another example of Elon Musk's company - SpaceX. Do you think it's a rocket company? On its mission, it simply says Colonize Mars to ensure human civilization is a multi-planetary species. First off, what's the business model of SpaceX? Who is the client? SpaceX didn't have a client until NASA gave a $2 billion contract to SpaceX after Elon successfully landed Falcon back from orbit.
If it's a rocket company, why SpaceX is launching Starlink - SpaceX’s plan for providing worldwide high-speed Internet access via a mega-constellation of as many as 12,000 individual satellites? Starlink is starting with 60 satellites initially as a test case. The $10 billion projects will give SpaceX an estimated net profit of 30-50 billion every year by taking out the revenue from the Telecom Industry by providing low-cost internet connectivity around the world including the most remote areas.
So, SpaceX is basically moving into the B2C market from the B2B market by diversifying its offers. But it wouldn't have been possible unless SpaceX figured out the first piece of the puzzle: develop the reusable rocket.
So, SpaceX is a rocket company? A telecom company? A B2B company?
So what I learned from Elon Musk's companies and how I'm building my own company?
The first thing I learned is how to apply First Principle Thinking in solving big problems. If you don't know about First Principle Thinking, take a few minutes from my interview here.
Back in 2016, we realized that one of the biggest challenges that we are going to face as a civilization is to make sure we prepare our future generation to cope with the 4th industrial revolution. According to the World Bank, 70% of primary-level children in the world are going to end up in a job that doesn't exist today. And we need to ensure that we prepare these children with future skills like creativity, problem-solving, emotional intelligence, and human values. Right now, in the world, there are 1 billion children at primary level education and in Bangladesh, it is 30 million. And these kids are going to be the future of the world in 20-30 years.
A quick heads up 40% of graduates in Bangladesh don't have jobs. This is 2019. And you can imagine the situation from the Year 2035 and beyond.
The mission of Light of Hope is to prepare 30 million children in Bangladesh and 1 billion children around the world for the future with the right skills. And this mission can't be accomplished by making an app, or just touching one or two things in the whole education and learning ecosystem.
So, we structured Light of Hope as an ecosystem company in the education and learning industry.
Consider a scenario like this: 30 million children between 3-12 years old in Bangladesh are part of an ecosystem that helps them to learn future skills like creativity, problem-solving, emotional intelligence, and moral values. An ecosystem that helps children to acquire these skills at an early age of their lives so that they can cope up and even flourish in the 4th industrial revolution.
What that ecosystem would look like? These 30 million children go to 100,000 primary schools where 1.5 million teachers teach them every day. 20 million parents take care of them at home.
To prepare these 30 million children you need the following: a content ecosystem that produces and distribute contents (book, e-book, audio-visuals, games, toys, app, etc.) to improve future skills, a group of 1.5 million properly trained teachers, a mechanism to aware and educate 20 million parents to take action and put resources to improve future skills to their children, a low-cost and efficient technical solution that can connect every school to deliver the contents, and a continuous effort to measure the outcome and improve the whole ecosystem.
What does it take to create that ecosystem for a startup? That was the question we had in mind 3 years ago when we registered our Light of Hope as a private limited company - the first of its kind in Bangladesh.
In the last 3 years, we tested out various products, services, and solutions. We put back all of our revenue to grow further.
Right now we operate through 6 brands each taking care of one building block: creative content production and distribution (Goofi), training of teachers and awareness of parents (Teachers Time), physical space where children can work collaboratively to learn new skills (Kids Time), help the schools to deliver better outcomes (SDP), work with big players like Govt, INGOs to facilitate large-scale change (eduLab), and technical solution that brings contents and training to the most rural remote schools and areas (Sputnique).
To date, we got the opportunity to work with more than 500 schools and impacting the lives of over 200,000+ children, trained over 10,000 teachers, educated hundreds of thousands of parents, distributed and sold hundreds of thousands of learning contents to develop creativity, problem-solving, emotional intelligence of children.
This is just the beginning. Building an ecosystem company has its own Pros and Cons. And one of the biggest Cons is to make investors understand the company's mission.
Investors nowadays, ask typical questions like user growth, customer acquisition cost, customer lifetime value, month-over-month growth, etc. I call it the 'App Symptom'. In the age of Uber, Snap, Instagram that rippled down to Bangladesh too with popular startups like Pathao, Shohoz, Sheba - I am getting these questions too.
But as an ecosystem company, many of these questions don't apply to us and I don't have answers for all of them, and often it's difficult to understand the entire model itself.
So, this article is an effort to educate other founders like me who are in an unusual situation. But most importantly, to educate potential investors about the 'ecosystem business model' and 'ecosystem company'.
Amazon, the most valuable company in the world is actually an ecosystem company - not an e-commerce company.
I don't know whether people are paying attention enough - Shohoz, Chaldal, bKash, Sheba, etc. are expanding into an ecosystem model compared to its initial start.
Light of Hope is an outlier and weirdo among the education startups in the world. But, it's great to be a weirdo. After all, Elon Musk is a weirdo too. 🙂
