In 2004, we started investigating the issue of K-12 education, especially in Math and the Sciences. As part of this endeavor, we interviewed a number of teachers at various high schools in the Bay Area. Two nuggets came out of these interviews (1) there is no standardized methodology of teaching (2) there is no methodology for personalized skill-gap analysis.
Lucid was founded upon these two core foundational blocks. They had implications well beyond the local schools and students.
As Chris Kaegi, a teacher at Galileo High School in San Francisco explained, “If a teacher has to teach 50 kids per class, across 3-4 grades, it is very difficult to keep track of which kid has absorbed what’s being taught, and which one has not.”
This results in a chain of problems as the child moves from one grade to the next. A “D” in 7th grade degrades to an “E” in 8th grade, followed by an “F” in 9th grade. If you don’t know how to do fractions in Algebra, how would you solve quadratic equations?
With our knowledge of Artificial Intelligence, we concluded that a knowledge base of content was needed that is aligned with a methodology of teaching. This methodology would include personalized skill gap analysis, such that, a student studying Basic Algebra could be tested to identify exactly where her knowledge gap was. Be it in dealing with fractions or exponents, this knowledge base and analytics software was capable of getting to the heart of the problem.
Once the problem was identified, the knowledge base had modules for teaching each one of the areas that needed focused attention.
Of course, Venture Capitalists at the time hated the Education market, since some had tried to penetrate it with marginal success, including the legendary John Doerr. The conventional wisdom was that you don’t make money in education. There was a lot of truth to this assumption, since getting products into schools was an up-hill task.
However, in 2008, the Web 2.0 era was fully manifest, and Web 3.0 was about to be launched. Web 3.0 turned out to be all about personalization.
Against this backdrop, Lucid was launched with $8 Million in Series A Venture Capital led by a firm called Emergence Capital. It was a powerpoint financing, with no other asset yet in place.
It took us 3 years of absolute stealth-mode Research & Development to come up with a scalable methodology for Math (Arithmetic, Algebra, Geometry, Trigonometry, Calculus) alone that covered grades 6-12. We created and licensed an enormous amount of content that aligned with the methodology at our development center in India. We involved teachers who had particular reputations for being “great teachers,” studied their “art” at great depth, and encapsulated as much as we could into a “science.”
Then came the go-to-market challenge.
While we wanted this to be a worldwide service that every Math teacher at every school in every country adopted to teach every single one of their students, we had to segment the market and find a business model that would let us penetrate and get early traction.
We chose to go with North America with a Web 3.0 approach. We created a Community for Middle School and High School Math teachers to interact, exchange ideas, and organically engage with one another. We also had a Community of Middle School and High School parents at each of the schools that our teachers taught in, who participated in the exchange.
Most importantly, every teacher who adopted our methodology in their schools, managed to get the buy-in of the parents to pay for the service.
This was very important from a business model perspective, since it allowed us to bypass the school system altogether.
It also meant that our target customer base remained constrained to affluent families in North America. We did have teachers and families using our service elsewhere in the world, including India, UK, the Middle East and Australia, largely due to word-of-mouth. But by and large, we consciously chose not to fight the battle yet of tackling the less affluent or poorer segments of our eventual target audience.
We accepted this segmentation reality for 5 more years, because it allowed us to refine our methodology, build company valuation, raise a great deal more financing, and expand into other subjects beyond Math, including Biology, Physics, Chemistry, World History, World Geography, English, and English as a Second Language.
All the while, we grew our revenues at a 113% CAGR.
We could have become profitable by 2016, but we took our time. We were addressing a big problem, and we chose to do it right. We invested in building the most remarkable Content partnerships with Discovery Channel, A&E, CNN, etc.
In 2020, however, we were extremely profitable, and had an operating margin of 29% against a revenue of $3.6 Billion.
And, we were so well-known as an effective methodology by 2017, that Gates Foundation came to us with a proposal to fund a roll-out of our methodology into the poorer schools all over the world.
In 2020, thus, we are the leading global educational brand.
A call to Indian entrepreneurs everywhere, Vision India 2020 challenges and inspires readers to build the future now. In this “futuristic retrospective,” author Sramana Mitra shows how over the next decade, start-up companies in India could be turned into billion-dollar enterprises. Vision India 2020, which encompasses a wide range of sectors from technology to infrastructure, healthcare to education, environmental issues to entertainment, proves how even the most sizeable problems can be solved by exercising bold, ambitious measures. Renowned in the business world, author Sramana Mitra conceived Vision India 2020 from her years of experience as a Silicon Valley strategy consultant and entrepreneur. Well aware of the challenges facing today’s aspiring entrepreneurs, Mitra provides strategies, business models, references, and comparables as a guide to help entrepreneurs manifest their own world-changing ideas.
This segment is a part in the series : Vision India 2020