Why this edtech company won’t easily take VC money

This article is from an episode on Disrupting Japan. This is heavily revised from the original show transcript. For the full episode, go here.

Not everyone approaches startups as an exercise in business model design, where you have a system of interacting components that need to be optimized in underserved markets. In fact, some founders start out with a vision of what they want to do before figuring out how to backfit a sustainable business model onto it.

This is exactly what Peter Galante, a podcaster at Japanese Pod 101 and founder of edtech company Innovative Language Learning, has done. Not only did it lead to the success of his business, but it’s also preventing even well-funded competition from entering the space.

Here’s the interview.

What initially brought you to Japan?

When I was in high school in the early 1990s, we had a Japanese exchange teacher who came to stay in our house. I’m from New York, and this was when Japan was becoming the new No. 1 economy. Meeting someone from Japan, spending time with him up close, learning about the culture and language, and more importantly, making a real lifelong friend, was the main reason I became interested in Japan. So when I went to university, I chose Japanese as the language to study.

My Japanese teacher said to me, “You should go to Japan.” So I interviewed for something called the Japanese Exchange and Teaching Programme, but I didn’t get it.

So I made it a goal to come to Japan. I wound up coming as an English teacher, then I entered Hitotsubashi University for a master’s program. I made it to the doctorate program, and about two or three years in, I started the business.

What does your company do?

We provide about 10- to 15-minute lessons primarily on the Japanese language that are usually centered around a conversation. The conversations feature two voice actors speaking Japanese. We break down the conversation and explain the nuances of the words, vocabulary, and grammar.

Japanese Pod 101 acts as a platform for the sample lessons, then people can come onto our site to subscribe to the whole package. We offer a freemium model where the lesson is free for two weeks. Currently, the platform supports 34 languages.

What led you to start the podcast?

I think it was passion. All of my institutionalized Japanese learning tended to involve a middle-aged person who taught very formal Japanese. They were all great teachers, but when I got to Japan, I met crazy people like me who like to joke, laugh, and go out on a Friday night. And they used a completely different language than what I learned in the classroom. So I wanted to find a clever way to give Japanese language learners a head start, which I never had.

I definitely did not envision it as a company at first. In fact, I did not even know how to do a podcast or anything about audio content, but I just knew that I wanted to do this.

We first started in December 2005. We had a few hundred downloads a day, and then somebody in Apple put our podcast on iTunes’ front page, which boosted our downloads to a million a month. Luck factored into that for us.