Vriti: a player in Online Exam Prep

“India is a land of examinations. We have 600 of them every year”. That’s how Swapnil Shrivastav described the potential of his business, Viti. Viriti is a player in the examination preparation business in India and Mr. Shrivastav was talking to me at 9 PM over telephone. Hard work and exam preparation comes easily to Swapnil. He is an IIT alumni and so are his co-founders. This is his second venture the first being SeekNet, a company which had developed a desktop based search personalized agent.

Vriti is trying to create an online educational community: students, experts and content providers. The core of the technology is a hosted platform which provides community support and an assessment engine. Vriti’s technology is developed in-house on a J2EE platform. The statistics are impressive: at peak loads it handles 115 million users monthly and 20000 concurrent users. I asked Swapnil whether he had considered any open source LMS like Moddle and he said that existing implementations did not have a rich community integration which they desired.

The community is a key part of Vriti’s strategy. There are 1 million students who are a part of the community and about a million questions answered in the database. There are about 300 individual tutors and 300 content providers participating in the community. That is a rich source of guidance to a student entering the bewildering world of career choices. Virti’s strategy towards communities is based on segregating them into sub-sites for each exam (goiit, gocbse, pmtprep, lawcorridor, gobskool, gonift…). The Engineering and CBSE communities are the most vibrant at this point. Vriti’s revenue model depends on commissions paid by content providers (such as Brillant Tutorials, Pearson Education, Aakash Institute …) and from subscription fees paid by students. The basic community participation is free: students pay for taking assessments.

The Indian test prep market according to the CLSA report on the Indian education sector is about USD 1.7 billion. The CLSA estimate engineering, medical, civil services, business school entrance examinations and is based on an average of 4 lac students spending Rs. 25000 on exam prep every year. These are realistic estimates (CLSA accounts for the exam prep for CBSE separately). Career Launcher (investor: Gaja Capital), Catura Systems (investor: DFJ India) are the other relatively early stage companies in this area. Vriti’s Series A was funded by Intel Capital. Needless to say, there are several well established brands in the more traditional distance education and bricks and mortar modes of test prep services (Brilliant Tutorials, Rau’s Study Circle …)

There is scope to create strong businesses in this area based on a track record of consistent success and low cost of delivery leveraging Internet technologies. However, the idea behind Vriti could be potentially far bigger. To understand why, think of the category of Learning Management Systems and Performance Management Systems. Most large enterprises use some variation of these systems powered by “best of breed” vendors such as SumTotal Systems & Saba, pure SaaS players like Learn.com & SuccessFactors or ERP players like Oracle and Saba. What is the broad functionality they provide? At the highest level, they help manage the skills and competencies possessed by individuals with that required by jobs and help employees bridge the necessary gaps.

Consider the individual student at the cross roads of career choices. The solution that she is looking for is an ongoing assessment of knowledge and skills and help to prepare for career choices. It is possible to create a disruption by focusing on the technology platform that allows for the following:

• A strong assessment engine that allows students to assess their learning needs and career potentials
• A skills and knowledge library that helps students understand the requirements of various competitive examinations
• A social networking layer to allow students seek guidance from peers and mentors
• Integrations with web conferencing tools to allow for online tutoring
• Integrations with content providers to provide for delivery of both off-line and on-line content

The key thing is to focus on the platform and that is why I feel that Vriti might be poking around a big thing. Think of the platform from the standpoint of both the student and the content provider. A strong assessment engine and strong assessment content would enable students to make correct choices. But you can also potentially open up the platform for content providers and experts to run their own assessments. That way they would be able to target their learning interventions to the specific student needs. They would be able to deliver the learning in current “chunks” and also leverage outside teaching help. The platform would generate value for the content provider that would be difficult to create from their own web delivery sites.

“Get to know what you are good at and work hard at it”. That is what the preacher told Rabbit “Harry” in John Updike’s Rabbit Run. If stated this way, the exam prep market is a far bigger game. And it will be fun to see companies take a crack at it.

Indian Education Market: Manipal K-12

I have been interested in the Indian educational market and this is the first of a series in which I will write about companies in this space. In this post I am profiling Manipal K-12.

Manipal K-12 , a player in the Indian K-12 school market, has been promoted by Manipal group, a leader in higher education in India. and TutorVista, a global online tutoring company. TutorVista is promoted by K Ganesh, who had earlier founded, along with Meena Ganesh one of India’s early BPO companies CustomerAsset which they sold to ICICI OneSource. Meena is the CEO of Manipal K12.

TutorVista’s online tutoring focus is largely the US market. The company, which had raised VC funding from Sequoia Capital, Lightspeed Venture Partners and Silicon Valley Bank in 2006, entered the domestic Indian market by acquiring Edurite Technologies in late 2007.

Edurite Technologies (it still maintains a separate website) was set up in 2000 by Srikanth Iyer and over the years has developed an impressive library of multimedia content in the Indian K-12 segment. Srikanth is the COO of the company.

I must mention that in the late 1990s there was considerable interest in creating educational multimedia content. In 1998 I had co-founded Aesthetic Technologies with the same broad business objective. We too had developed content for the K-12 market but for schools in Singapore and Malaysia.

The strengths of the various partners brings a certain uniqueness to Manipal K-12. The flagship product targeted at schools is DigitALly™ a PowerPoint enabled multimedia tool consisting of hardware (interactive whiteboard or plasma TV) and software (the multimedia learning content developed by Edurite over the last several years). The digital solution enhances the quality of teaching and effectiveness of the teachers. Manipal K12 also targets the coaching segment of the market with Edurite Tutorials (physical centers) and TutorVista (online presence).

The key proposition is simple enough: use technology to deliver top quality standardized learning at low cost independent of the physical location of the student. It is a thought that has been at the core of technology-aided learning. There is considerable interest in this market. Educomp with its Smart class, Everonn with its ViTELs, NIIT with its Interactive Classroom and IL&FS Educational & Technology Services are direct competitors. Smart class accounted for 60% of Educomp’s Rs. 145 cr (USD 29 mil.) revenue in the quarter ended Dec 09 (source: website).

How scalable is this business? Consider the following facts.
India has about a 1 million schools out of which 75,000 are private schools. The private schools are further classified into:
• Approx. 30,000 Government aided schools with an average monthly fee of Rs. 450 (USD 9).
• Approx. 30,000 un-aided “standard” private schools with an average monthly of Rs. 750 (USD 15)
• Approx 15000 un-aided “premium” schools with monthly fee upwards of Rs, 1250 (USD 25)

At this point, the key addressable market is the 45,000 private unaided schools. According to a IDFC-SSKI report the reach of the key players is about 1000 schools each for Educomp and NIIT and 1000 schools for Everonn and IL&FS combined. That leaves a lot of room for growth.

It does, in my opinion, for the next few years. However, schools are investing in ICT infrastructure, often with the help of these same companies. In a few years time, it is possible the private unaided schools would want to be free to buy content from any publisher and not bound to multi-year contracts that are the norm today. At that point, I hope, the market would move to the public schools. It is in this market, which cannot attract decent teachers, that technology can really create a disruption. To enable this to be possible Public Private partnership paradigms will have to be established and/or companies like Manipal K-12 will have to have working relationships with educational NGOs. Most importantly, costs would have to be driven down.. At this point, Educomp charges Rs. 150 per student per month. This is 12% (or less) of the average tuition costs in a private premium school but is 33% of that in an aided private school. At current costs, these companies will find it hard to get the scale that India’s large population warrants.

Manipal K-12 will potentially be able to drive down costs given its in-house content development expertise. Its other approach is to set up its own brand of schools either directly owned or managed. The idea is to bring in good learning content, trained teachers and efficient academic management processes. The K-12 market size in India is large. CLSA estimates the total size to be USD 20 bn. (based the reasonably conservative annual fee assumptions indicated above). Can organized players emerge in this sector? Manipal K-12 does have the advantages of the brand and the technology infrastructure. Having said that, the success of a school in India is based on board-level examination success and it does take years to build reputation. Good schools in India and elsewhere are built by dedicated teachers and principals and therefore the question that I am mulling is: how can an organization like Manipal K-12 create a cadre of great teachers?

Perhaps the answer lies in the other market that Manipal K-12 is trying to target: the tutoring market. CLSA estimates that the market size to be USD 5 bn. (and this does not include specific tutoring for competitive exams and for specialized skill training). However, the market is fragmented, and likely to remain so. Tutors will come from a variety of backgrounds: young students, experienced teachers and patient mothers. However, this may provide Manipal K-12 a very wide recruiting ground for future teachers.

Success of organizations like Manipal K-12 will ultimately depend on execution. There are three key components of an execution strategy: customer (student/parent) satisfaction, entrepreneurial management of individual schools (while using standard processes and technology) and teacher talent management (motivating the ultimate knowledge worker). The business of education is that of people building people. Technology and facilities help to a point.