The uncommon story of an edtech startup that caught elusive profitability by the tail

Springboard team. Photo credit: Springboard.

“We have not been flashy and all over the place. We have been quietly building. Now, we are in a good place and turned profitable months ago.”

A tiny “wow” escaped my lips when I heard Parul Gupta, co-founder of Springboard, say this as I don’t know many startups in the online learning space who could make this claim. And it was just a little over a year-and-a-half since the edtech startup on a mission to “help millennials advance their careers through self-paced, mentored courses” announced its seed funding round of US$1.7 million.

“We hit US$6 million in annualized revenues and are growing. We have had students from 70 countries now. But almost 75 to 80 percent of them are from the US and Canada,” Gupta adds.

Changing the way people learn through technology has been a long time coming and not yet arrived. That’s because it needs a shift in perspective for all stakeholders – teachers, students, parents, and others in the education space. It’s not easy, as many edtech startups that plunged into online learning discovered.

Despite US$15 million in funding and a seven-year run, for example, iProf never found a sustainable model and had to shut down. There have been others like Purple Squirrel who burned through millions in funding without ever finding the elusive keys to monetization and profitability in edtech. Carnegie Mellon University engineer Shabnam Aggarwal said after closing Kleverkid that she “came up short” when she tried to answer the question why it was “not making enough money fast enough.”

Having a price point which actually factored in what we paid our mentors and our operational and marketing costs made sure that we proved the right market.

So what worked for Springboard?

One of the most important decisions Gupta and co-founder Gautam Tambay took in the early days of their startup was to charge their users. In December 2014, they came up with their first paid learning programs. One course was priced at US$300 a month, and another at US$400.

“Having a price point which actually factored in what we paid our mentors and a reasonable fraction of our operational and marketing costs made sure that we proved the right market. You could heavily subsidize it and sell those at US$100 to begin with but later when you actually raise the price to US$400, you might find that there are no takers for it,” Gupta explains.

If they had launched the courses at a much lower price, they might have signed up more students and miscalculated the market to be much larger. Remember this was in the time of ‘irrational exuberance’ in 2014 and 2015. “We might have gone down the wrong path, building something which wasn’t viable,” Gupta says.

“Instead, we proved that there are people who are willing to buy this offering at the pricing where we can be economically viable.”

A lot of consumer-facing startups in India went on a customer acquisition spree and made the mistake of luring in users with discounts. “While the discounts lasted, consumers flocked to them. But when they rolled back the discounts, people became less interested in buying those offerings or shifted to other platforms which were offering discounts,” Gupta says.

The triple play

The experimentation phase

Lean, mean startup machine

Edtech landscape