Sramana Mitra: The concern is that it is complicated and expensive to build these programs. Then, if everybody wants everything for free, how do these businesses sustain themselves? That’s the real question that I’m extremely worried about.
Katya Andresen: I think no one ever jumps to the opportunity to pay for something, right? If it is incredibly hard to build, it’s a big investment, and if you’ve invested in high-quality learning that is not equally replicated, that has a lot of value and people do pay for it. I don’t know what the amazing, fabulous, and free learning experiences are out there that are as good as those other ones.
Sramana Mitra: Khan Academy is good.
Katya Andresen: Khan Academy is great, but it’s videos. It’s not a personalized enrichment program. I love it. When I’m helping my daughter with Physics homework, I go to the page.
Sramana Mitra: But it’s of a very high quality and it’s for free. Somebody has basically decided a long time ago to do this. Not very many people are willing to do such things for society’s good. This is a very high-caliber MIT engineer who decides not to monetize. That’s not the kind of decision that you expect very often.
Katya Andresen: Right, I agree. There are very few of those. This goes back to my argument. We have a problem. Our kids need to be educated in a certain way to succeed, given where the world is going. The pain point that educators feel – and it’s a global phenomenon – is the old way of learning. That is of memorizing information, and of passively taking in what people put in front of you. That is ineffective.
Sramana Mitra: You are absolutely preaching to the choir on that.
Katya Andresen: The people who can solve that in a meaningful way are addressing a real need and providing a real service. That has real value. There are many ways to get people to pay for it. There are many ways you can build different business models. If you’re about providing the learning experience that changes from the old to the new experience, which goes from passively consuming someone else’s content to creating your own, those are the companies that will be successful in my mind because they are addressing a real need.
A lot of startups come up with an idea or something that doesn’t necessarily solve a big pain point or that is easily replicable. Before I joined Cricket, I worked for a non-profit that we transformed into a for-profit. The way we did that is, we solved a real pain point that people had. In fact, our customers were all non-profit. A lot of people would argue, “Non-profits are not going to pay for anything.” We actually built a solution to help non-profit organizations to successfully raise money and process donations. We met a real world need. We didn’t just provide technology. We wrapped it around a learning experience. We helped fund-raisers do their job better.
Sramana Mitra: How big was the revenue level of this company?
Katya Andresen: When I left, it was around $14 million. We did that bootstrapping as a non-profit. They have just got venture capital and they are scaling now. I’m very familiar with the non-profit world and with the for-profit world. I’m familiar with the intersection of both and with people who are trying to do good and have a mission mentality. I consider myself one of them.
Sramana Mitra: This particular case study that you just described is actually interesting because you managed to get non-profit to pay. I imagine you had funders funding that non-profit.
Katya Andresen: Originally, but not anymore.
Sramana Mitra: With that, you were able to finance the development.
Katya Andresen: The non-profit was founded with no business model. We built a business model so we can be 100% self-sustaining. That was built by financing through our services.