Online education in Bangladesh is in the early days of a boom with the addressable market pegged at ~42 million students across primary, secondary, and tertiary levels. With some 90 million people below the age of 30, lifelong learning offers equally lucrative opportunities. As the world of education and work transforms under the pressure of technological shift and edtech becomes one of the hot verticals post-covid, a group of startups are experimenting with different approaches to building an early lead in the market.
Dhaka’s edtech scene has changed completely over the last year. The vertical has more believers today than the skeptics. It has a lot to prove, but the perception has changed.
At least three online education companies have raised meaningful capital from leading global VCs. Shikho from Learn Capital and Wavemaker and 10 Minute School from Sequoia Capital India. We have seen several interesting acquisitions and acqui-hire moves such as Shikho acquiring Bohubrihi and Mainly Coding. Companies across camps are pushing boundaries. Look closer, there are apparently two camps of companies. One camp is trying to bundle, aggregate, offer a wide range of courses and solutions. Another camp is playing the niche game, unbundling — going deeper instead of building wider. This trend, however, is not ed-tech specific. You can find it across verticals. Companies looking to win it all and companies that want to focus, build one thing at a time.
It is hard to say which camp will eventually win. So far, companies that are building across verticals have received greater attention from both investors and users. 10 Minutes School is a good example. The company does a dizzying array of things. Shikho has gotten down that path as well and seen success. It makes strategic sense.
However, examples of success can be found in both camps. Both camps have certain advantages and disadvantages. Although I’m a bit biased. I think early-stage startups should focus on one product at a time and expand accordingly. And never at once. However, offering many things has its upsides. It means you have a bigger market, you potentially have a stronger moat making it hard for others to compete and your users have more reasons to stick with you. At times necessary for achieving numbers, one product might not offer the scale necessary for attracting serious investment. Moreover, dynamics in education make all-in-one strategy tempting. Users should not have to use several apps for courses on different subjects or classes. Byju’s come to mind. However, there are excellent companies being built in niches as well. Treehouse, Codecademy, Whitehat Jr (acquired by Byju’s), and many others come to mind. Smaller players are sometimes acquired by larger ones. But who can say that is a bad outcome.
Premature aggregation has several disadvantages. While going wider allows you to expand and have a footprint across verticals, it also puts additional pressure on your execution. Your marketing efforts hurt. Your focus suffers. You get resource intensive. As an organization, you get bulky and can't run as fast as you would like. More importantly, most things follow the power-law or 80/20 rule where your few best courses generate the highest revenue, etc.
Contrary to that, doing one thing at a time means you can run faster, go deeper and execute far better than the ones who are doing many things at once. There are exceptions, of course.
One major challenge for any edtech company in Dhaka is differentiation. When you are teaching math for K12, it is hard to do anything too different. It is more so when you are teaching everything.
This is why product extension is such a tricky thing for startups. Premature expansion can be disastrous. Nonetheless, as I mentioned, both strategies have merit, but I am not convinced that Bangladesh is yet ready for an all-in-one-ed-tech company. It makes more sense when you realize that the market has yet to produce a clear winner in any niche.
This, however, does not mean that playing in niches has no downsides. I already mentioned it has. But when you are doing fewer things, you are resource-light and enjoy greater flexibility. However, the market is dynamic, and trying to predict a competitive market accurately is akin to lying on Procrustes' bed.
To that end, Roots Edu has been trying to play a different game. Roots Edu positions itself as a test prep edtech company. The company announces out of the gate that it wants to serve the test prep market and excel in it. It does not mean that it couldn’t or wouldn’t expand into other verticals of online education. It can and my guess is that it will but the company says it wants to focus on test prep for now and it has been doing a good job at that.
The company claims it has served some 400,000 live learning minutes, 10 million video views, and its users spend on average an hour daily on its app. The company says it has been doing $100K in ARR with 40% of students having successfully cracked the targeted exams. In competitive exams, the success rate matters. Students want to see which coaching centers have a greater success rate. Roots come from an offline background. It understands this sentiment well and has been trying to take advantage of it.
Roots Edu has built a marketing funnel riding on free content. The company publishes long-form video content on its Youtube and social channels. It runs one of the largest Youtube channels among edtech companies with some 130k subscribers with 6.77 million video views. Its average lecture size is 1.5 hours. In a social media post Roots founder, Tahir Hasan writes: “We believe in detailed concept cracking videos rather than byte-sized contents to prepare oneself for any competitive exam. We've covered the entire SSC and HSC syllabus (national curriculum) completely free in this channel.”
The free content has allowed Roots to reach a large audience for free, except for the content production cost, and content usually generates RoI for a long time. Roots have successfully used these free contents to convert users for its paid subscription.
Every edtech company in Dhaka runs on some form of a subscription model. But mostly, pricing is per course basis. You get access to entire class nine math for a course fee and so on. There are crash courses and exam-specific courses but they come in different formats.
Roots Edu says it runs on a distinct freemium subscription model and says the response has been very good with an excellent retention rate. The company says it does not sell courses, it sells subscriptions for the entirety of its course catalog aptly named ROOTs Plus Subscription. If a class nine student purchases a Roots subscription he can access all the contents for class nine students. Instead of offering individual courses such as math or biology, the company offers subscriptions for the entire class or exam. For instance, it offers two courses for SSC students: SSC crash course and SSC academics. Both courses cover everything in the SSC syllabus.
The company roughly charges $10 dollars for a monthly subscription. It has different prices for several other courses as well. Along with recorded courses, it also offers live classes, doubt solving, performance analytics, etc.
“We made the subscription model simple for students with the tagline ‘Single Subscription Unlock All,” Tahir explains. “Whereas many edtech platforms sell courses, we sell time, just like Netflix. In a single subscription, a student can access multiple courses from multiple teachers and on multiple subjects. Students don’t have to pay for subject/topic/teacher-wise courses. Students choose what he/she wants to learn, from whom he/she wants to learn, in which batch he/she wants to join. Students loved it so much that they called our app ‘ROOTFlix’.”
In this, Rootsedu’s strategy resembles the model of MasterClass. MasterClass, however, works with world-class experts and celebrities and has been able to build a positioning in the market as both an excellent learning opportunity and entertainment. For Rootsedu, doing that in test the prep market probably makes sense but doing it across classes and verticals is uncharted territory.
Apparently, Roots has built an excellent business. The company says it has a growing subscriber base and its business is sustainable. Focusing on a single vertical allows the company certain advantages.
However, the company suffers from execution challenges. As the competitive pressure grows in the vertical, Roots has to ramp up its execution to build a category dominant business in the test prep segment. Test prep is a big market. Every edtech company already has some operations in the vertical. The competition is only going to intensify.
So far Roots Edu has room for improvements. The company’s classes are hardly differentiated. Video quality is not always up to the mark. Pedagogy has little differentiation to show. Its tech has a long way to go. Overall experience lacks quality. To leverage its existing market power and create an effective moat, the company will have to change its modus operandi and build a superior product and execution strategy.
Online education in Bangladesh is in the early days of a boom with the addressable market pegged at ~42 million students across primary, secondary, and tertiary levels. With some 90 million people below the age of 30, lifelong learning is also drawing a lot of attention. As the world of education and work transforms under the pressure of technological shifts, we are going to see more demand for and initiatives in online education.
Education has always been a big market. Everyone needs education. It is the main driver of social mobility in a country like Bangladesh. According to several industry insiders, the test prep alone is probably a several billion-dollar market offline. Unofficial sources estimate the serviceable online education market today at $250 million. Many insiders expect the market to become over a billion-dollar opportunity by 2025. You can play the overall economic reality of Bangladesh in favor of everything as well as edtech. For instance, with all the economic growth, the middle class is going to be wider. The country has been predicted to be one of the fastest-growing consumer markets in Asia.
Online education has limitations. There are unanswered questions. But the segment has been growing. After the coronavirus pandemic, nobody now really questions the viability of online education. You can question the model and potential scale. But the fact that online education has a future is now beyond question.
This, however, is not going to make it any easier for edtech companies. Currently, most companies offer homogeneous products and low-quality teaching. To break into the market companies will have to upgrade their modus operandi.
