Why You Should Build What You Know [Podcast #95]

Ozan Dağdeviren

Hello, and welcome to the startups of London podcast. I’m your host Ozan and the founder of startups of London. Today I’m joined by Manfred Olbrich, founder and CEO of lesson wise, scaling the access to affordable private education worldwide, through online group lessons delivered in a state-of-the-art virtual classroom is the official description of lesson wise. But of course, we have the founder, Manfred here. So, get ready for a conversation, where we go through how it is really liked to build a startup in London and what they’ve done So, far. So, welcome, Manfred.

Manfred Olbrich

Thank you. Awesome. Thank you for the invitation. Looking forward to it.

It’s a particularly difficult time for startups. I don’t know if you’ve been following the news about especially lots of growth stocks or losing value by 50% 70% 25%. I think even Spotify is like, down by 77%, if I’m not mistaken. And, some are even more, even Google, Amazon, they’re like, down by 40%. It’s just a crazy time. So, tell us about how the last few months have been for years a startup.

I think the most challenging part has been raising money. There’s the sense of recession looming. And I think investors are sticking to their guns and being careful. And we’re quite bullish, or aggressive. I guess, the second quarter of this year, but then, you know, things happen over the summer. Also, the interest rates increased last week with timber. So, they’ve been just really wary of things. Even though we’ve enjoyed very good traction in terms of the number of users since we started, we craft early revenues in August, which are all things that investors would look out for. We’re still not coming on board enough. You know, I’ve been pitching tirelessly for the last four months or so. And something I need to keep on doing because obviously, money is the lifeline and the oxygen for a startup. So, I think that has been particularly challenging the fact that really selling your company in a time. This is quite difficult, because, people are just being weary of taking care of themselves, I guess.

That’s what you need, correct? How do you think the sentiment of investors are changing the conversations? And the way they approach startups? Do you think it is more focused on short-term profitability over long-term scalability and growth?

Yes, that’s a very good question. So, if I remember my conversations, we did a round in March, which was essentially the first round of investment, where we actually approached external investors. So, after friends and family, -that was the first one-, and it was around, So, the pitch that I did was.  We’re going to get to 20,000 students by the end of the year. So, it was about traction; building the volume of users on my platform, and bringing the message of affordable private tuition to the masses, right?

How many do you have, by the way?

We have 4500, at the moment. Very encouraging. So, at that time, it was, we’re going to build and get to that critical mass of 20,000. And then we talk about making money and generating revenues. Once we have that level of the volume of community, then it’s more viable to make money. And they bought into that, because, for them, it was more growth and really getting that traction up. And they weren’t really thinking about money. It comes down the line. It’s better to just scale rapidly and gain users etc. And, I suppose have attraction going to make money. But then that rapidly changed. And, I had a bit of a stormy period over the summer, because I think investors are generally inactive, or I guess, slower in responding when it comes to summer, same happens in Christmas, for example. But then, the idea with interest rates in the UK, then, became even more inactive. So, that was, it was really hard to reach them. And I think that the sentiment changes towards you need to build a sustainable business, right? So, now it’s about trying to build a sustainable business where you stand on your own two feet as quickly as possible. So, bring that profitability post forward. You know, those speaker buddies, I’m going to be profitable in three years. And I need to happen into that. So, I see it, and if you have the processes, and if you have, the proof of concept, I How do you make money? Is it recurring? You know, that’s extremely powerful and strong at the moment, because there’s a clear path towards you being sustainable. And that’s what matters right

Indeed, let me ask your thoughts on something. About a few years ago, I was having a chat with my co-founder in a previous startup, and it was a video learning startup. So, it’s quite relevant. And we were talking about growth and how some of our competitors were not direct competitors, but other startups perhaps were focused on scaling but they were not profitable. And we were always having this chart. This is not sustainable. Like they need to be profitable as well. They need to make money because it is the foundation of a business to be able to grow with… It is a kind of signal that validates. Okay, I’m creating enough value for people, the fact that you make money. But I would never have guessed that this would be how it happens. I mean, basically, the economic crisis caused an increase in interest rates that in turn, meant government bonds or other assets are safer investments, as opposed to growth stocks. And that, in turn, changes how people approach investing in a startup. So, there’s like this connection that I can see, particularly with hindsight. But I would never have guessed, this is the way it would happen. What do you think about that?

I think it’s been abrupt, to say the least. And I think the market or investors, change rapidly from one thing to the next. But I think over the past, I guess, after the financial crisis, it was all funding and loading startups left and right without much due diligence, I would say. So, a lot of people were just receiving big-ticket investments. But indeed, it has changed. And, you know, after the pandemic, what the government did to keep businesses afloat. So, I think that all have repercussions. Nothing backfires, but they come around. And that’s what happened. Now we have, you know, high inflation and the fact that there’s a bit of a recession looming. I think it was inevitable that the sentiment was going to change. And I think, it’s probably going to be the case for the next two years, at least -that’s what the Bank of England is speaking about-, or session for the next two years. So, I think he was coming our way. And we could see. I mean, my business partners and me were speaking about this last May, and it seemed like, it is going to be the case that the focus is going to be on revenues. I mean, we still pitched the idea of growth, etc. But this is going to change. And I think it was it was bound to happen. And now with interest rates exploding in September, even more so. So, I think it’s something that you know, like, every startup needs to be able to pivot and be flexible, and use just react as quickly as possible. And in the context of lesson wise, I guess, one of the positive things, I guess it would be a blessing in disguise is that our focus is a little bit recession-proof our business per se, because we focus on bringing affordable tuition to the masses, which means, you know, people even during recession need to have access to education, right? And affording a tutor is not, particularly the case for the majority of society, I would dare to say that. I guess the top 1% can’t afford a private tutor. So, what we do in this case is, we offer group lessons, which you know, offer that affordable access to students because they end up sharing the cost of the lesson. And it also has the added benefit that tutors can scale, they can earn much more in one hour of their time, as opposed to doing a one-on-one. So, it scales the access to private education there. And then it is something that is very sustainable, even during a recession, because, you know, it’s a powerful message to be able to access that lesson for it, I guess, 7.5 times?

It is. it is. And people will be looking for cheaper alternatives that create value, and you’re bundling an experience perhaps and it has value, it is cheaper, perhaps. So, it is a good direction for the business. But can you tell us about the focus of these lessons? So, people can understand it a bit more? So, what class are you focused on? What’s the user experience like? Who’s your stereotypical customer? How do you reach out to them? And all of those things, I’m really curious.

I see. If I can start with a bit of context about myself. I might expand a little bit too much. So, anyway, I was working as a private tutor for you know, the last eight years. And eventually, I was once…

What’s your focus?

It was physics and maths and music.

Amazing. An interesting combination as well.

I guess so. My background is in mechanical engineering and music. So, I did a degree in mechanical engineering. And then I worked in Germany for four years as a designer and mechanical design engineer. Then I did a trip around the world. And then I came to London to study music. It was a passion of mine since I was a kid. And in between those, you know…

And what did you study in music? Which instrument or which direction? What is the right word I like is scenario making it into So, I don’t have to ask the right question over like, what in music did you study? Perhaps it’s a better way of putting it?

So, you obviously have classical music, right? It’s just classically trained musicians, Royal College of Music and centre but you also have the Berkeley approach, which is modern styles and modern genres of music that’s what I did. Basically, it’s a Bachelor of Music in popular music performance.

I see okay.

Well essentially trained to be a session musician, which you know, is the guy you call, you know, on a Wednesday and say, we have a gig on Friday. You need to learn 40 songs all across the body of that gentleman, you just have to prepare for it. And you know…

What instrument do you play?

I play the guitar? It was a beautiful experience, in fact, studying music was one of my dreams. And I did work as a session musician. I toured; I play Glastonbury for one year with my band. So, it was an exhilarating year, it was pretty fascinating and exciting that time in London. And you know, back to the tuition is essentially foreign private tuition in the middle of all the things that I can do, as a reasonable thing to help me sustain my life here, essentially. At the beginning, it was just to make ends meet and just treated us as my backup essentially, whilst it’s depressing music. But then eventually, I took it on full-time, it was my sole vocation. And it just escalated and exploded for me. I’ve always been referred left and right, and always doing consistently, almost 35 hours of tuition every single week, which was quite exciting and quite encouraging. But I think even though I was successful, and I was doing quite well, I could also see that was the ceiling, though, that was the end for my job as a tutor, essentially. I couldn’t do more than 35 hours a week. Just because, you account for commuting and drafting reports developing that scale, it’s a lot of, yeah, it’s a lot of work. And that’s it, I just couldn’t do anything else. And there is no scale reaching the end of my career was a little bit disappointing and I couldn’t accept it. I wanted to go to the next level. And that on one side, I really wanted to scale as a private educator, because I was doing well, when in fact. But on the flip side, I was also seeing it’s a very interesting service. And it’s one that kind of changes the life of a student or a person even. Almost every single tuition, I would receive the most, unbelievable feedback, after the tuition, you’ve brought my son up to x grades, and he’s much more confident and much happier. So, it’s a service that, you know, people need to be aware of, and they need to be able to access because it changes lives, every single…

Something that I’ve done for about four and a half years. So, I do definitely agree with you and have a good window into the effect that it creates in people’s life. Especially if you have a caring teacher, take time, and especially if you’re a person who likes to think out of the box, and I definitely can tell you are one of those people because you have first a variety of experiences; one the mechanical engineering side, the other side music, the other side, the commercial side of things. I would pretty confidently guess, if I was stuck with a problem, you would find a different way of representing that problem and making the student think in a different way. And that’s I think, the quality of a great tutor.

Yes, absolutely is. Problem-solving, being intuitive and having the soft skills to recognize what is it that can maximize the outcome of this student or unlock their potential make them feel comfortable.

For entrepreneurship a good, coincidentally great coincidence for you, I guess.

Exactly, yes. So, you know, this is crazy. How can I how is the service overlooked in my ask because it’s treated as something else, something additional? But I’m actually changing the lives of people ongoingly. So, every single year I’m delivering tuition programs for students. There’s always a new story of success, and it’s super rewarding and super meaningful for me, very profound. So, how can I bring this to more people because, essentially, I secured myself in, you know, that tough spectrum of society that really able families of London, essentially, you know, I was fortunate to be in that position? But, there’s, there’s the world, you know, there’s, you know, the other 99% of people that need to access this because I think it will solve most of society’s problems, the fact that, you know, you can sort out that attainment gap between those who can afford private fish and those who can’t. Well, the tutoring space can definitely sort that out. So, I thought, how do I solve this? How do I sort out the problem of access? How do I give this access to private tuition and those benefits to more people on one side? And how do I scale because you know, I find myself locked and trapped in the, in that model of one to one just doing it one by one and doing 35 hours of tuition a week completely maxed out. So, I thought, you know, naturally and later I found that this is in the psyche of most tutors, and it was group lessons group tuition. Because basically, you help students access the same tutor, the same quality educator at a fraction of the cost, essentially, they’re sharing the cost of the lessons and that’s sorted. And also, for me, I obviously would be earning more than if I was just teaching one single student So, went the line and try to find something that was comprehensive and reasonable. But it was extremely disjointed and extremely complex to do it. Sure, you can build your own website, drive traffic through to running ads, etc. But it’s an uphill battle for a one-man band or the single Freelancer the tutor. It was pretty hard. So, I just decided to do it myself, right? And I pitched this idea to the father of one of my students, in fact, he’s a financier, he’s in the hedge fund, industry. And he decided to fund it and bucket early on, which was a pivotal moment in my life actually.

Amazing. And you usually have a what is something I can empathize with as well. When you have been helping somebody’s children, then you have a good trust based on that relationship. And you’re almost like an extended member of the family. So, that’s great in perhaps.

Exactly, exactly. I think, the tutor also becomes that person who’s like, the confidence of the family. They trust them, and they ask them for advice. And it’s just a unique service, essentially. So, yes, he loved the idea. And he backed it. And this was in 2019, December, we had the conversation, yeah, it’s a pretty casual conversation after a lesson, I just thought, hey, I’m trying to scale I want to do this. And he was he bought it, basically. So, let’s do it. And then I spent the entire lockdown drafting the requirements of lesson wise, basically. So, a lot of them for me, even though it was difficult, and I was locked away in my house. It gave me the time and the freedom to actually just sit down and put my vision onto paper. And my vision meant, you know, all the user journeys that I envisioned in my platform, essentially. And yes. So, then we approached a team of developers in India. And the development started, that was the summer of 20, in the midst of the lockdown still. And then fast forward to 2021. That’s when we launched the MVP of the platform. And, it was that vehicle, that’s sort of my problem, essentially. That one can scale the access to private education and through group lessons, basically. You know, on the one hand, I bring affordable private tuition to the masses, and I also help to scale my group of people. I help them scale. And he will seem extremely well received by tutors initially because they saw the potential and as I said, it’s the psyche of most tutors. Group tuition is the future of private education in their eyes as well. So, they say I’m sold, I’m going to create my accounts, it was pretty staggering the pace at which we acquired tutors, the first six months or so. And initially, I saw this as a utility vehicle the way. So, lesson waste initially was just going to offer this great piece of technology, which has a customer and virtual classroom that can have even more than 100 participants in a single classroom. It has payment processing. It has all the tools, you would need to run your teaching. And it stays in touch with your students. And it also has a marketplace where you can actually share your content and attract students yourself as well. So, surely, they’re going to bring their students in to use the platform. And…

Let me just interrupt you there for a second because I think this is really important. What is the real value and real focus of your product in the sense that? You can basically use the zoo, set up a conference, and bring people together. You can set up a payment structure payment gateway with stripe, PayPal and 20 other solutions out there. You can basically use platforms like circle dots, CO, I think was called, or many others, which are around community building. So, you can build a platform there. So, is it technology? Is it the other fact that you curate the right type of high-quality tutors? Is it the way the selection process? Or like what’s the meat there in the way that you think about it?

So, for all those platforms you mentioned we have them all in a single solution basically. So, yes, you surely can, Process payments on the side, but it becomes a very disjointed experience and also the virtual classroom is specifically designed for education. I’ve been doing it for a long time. And I know what can make a difference what can help strive for better teaching and I have designed that accordingly. So, things like Graaff generators and embedding video and audio on the whiteboard, things as simple as a calculator, the ability to generate grids, etc, you know, add screenshots, resources and…

To make it easier for the tutor as well. So, is that the takeaway from it?

Yes, exactly. On the community-building side of things, we have the spaces for you to directly interact with your students and that’s something that doesn’t. You don’t really have that not even in the massive players of the space would quote GO students, which in fact are from Vienna, as we were speaking about earlier.

Yes, I was in Vienna yesterday for our guests are listening.

Yes. So, their unicorn essentially, but you don’t know who else isn’t that far from so your students you have a lesson with a tutor, but it’s a very transactional model. If you cannot connect with like-minded people on that platform, you can’t see them, you can interact with them, we have opened that communication completely. Because I think, there’s a lot of, sort of growth potential in the social interactivity among students. Because what I want to do is also, replicate what happens in the real world, I guess. Do you have the execution of a lesson in a classroom, but then you have the spaces where people can interact and exchange ideas, and maybe team up for another list? And that’s something we were also offering. And again, going back to what you’re saying, yes, you have all the alternatives. But we have built them all in a single platform that is destined towards education and offering quality content. And if I expand on that a little bit more, -because this something you asked, initially, I think I digress a little bit.

That was perfect. I mean, these are all very valid parts of building a business. I’m curious to get your thoughts on what it is, in your experience, like to build a startup specifically in London. How do you think it would be? How do you think it turned out to be very surprised by anything? Very disappointed, but they were disappointed by anything? What’s, what’s your experience been in terms of what the city has to offer to entrepreneurs?

I think the opportunities are here, without a doubt that on one hand. You actually have the opportunity to connect with the right individuals, network with other founders or put yourself in front of the right decision-maker. I put myself in front of the hedge fund manager when I was delivering a lesson. I think that only happens in London, just because the ecosystem is built for startups to thrive, I guess. In that sense, it is a fantastic city to be in that on one side, also the funding side of things, there are countless funds starting from VC funds and angel investors. So, there’s access to funds. Obviously, it’s not that easy as to Yeah, I’m going to definitely get money in London, it doesn’t work like that. But the opportunities are here. That on one side, I guess that’s the positive side of things, on the other hand it’s an extremely expensive city. And building a startup comes with a lot of sacrifices. You have to dedicate yourself wholeheartedly and solely to this for it to be successful, right? And, as you know, the first two, three years of startup, you don’t really pay yourself a salary as a founder, at least I didn’t. So, that means you have to make ends meet somehow. So, you’re maxed out, flat out all the time, basically. And it’s taxing. And I guess, it’s particularly hard from that point of view, because it’s not the most affordable city in the world. But the tickets are here; funding but also grants from the government. There are many things you can explore and you can connect with the right people in the city without a doubt. And just be aware of the fact that you also sacrifice a lot to get there, basically.

How do you think the school experience is different today compared to 20 years ago?

The school as in schools, education?

Yes. Students…The experience of a high school student in your experience. How do you think is different? Because this is something I’ve been thinking. And I think it plays also into what people expect from your service and how they behave around it as well.

I think they have more access to information than before. So, there’s more access to information and to technology, which, things can enhance the learning experience platforms devices. I see… I think, in that sense, you have more opportunities to grow faster. Because I guess, before you didn’t have the access to information that easily. Now, nowadays, you can find answers to all your problems very, very quickly. You know, which also has to the side of being perhaps overwhelmed. And I think in that sense, just for the purpose of developing your knowledge and consolidating knowledge. I think, it’s obviously easier perhaps today. There’s obviously more development, more schools, with better facilities, I would say is in that sense, it’s a richer experience with more access to information, more opportunities. That’s on one side, I think it’s a fantastic change or development or evolution. I guess. On the other side, you would also say there’s the argument that it says there’s a lot of people out there that have an education, as opposed to having a degree is always a given. So, I guess there’s an inflation of degrees in that sense, it’s pretty hard to compete.

That’s, that’s correct. Actually, yes.

It’s really hard to compete. So, you will have to stand out somewhere else. So, definitely the minimum you will want to have as a Master’s which whereas before even without a degree you will just find so something right? Whereas now it’s much more competitive which you need, you need higher grades or higher degrees, etc. So, more competitive yet the education experience is more comprehensive and wholesome, I would say than before.

It also feels more isolated from a relationship aspect.

Yes, that’s true.

This is perhaps not just about education, but about even romantic relationships, friendships, how we socialize, social media, hijacking our dopamine centers, and other things. But in essence, I guess what part of the value it’s feels to me. I would love to hear if you agree with this or not… There is… What you’re bringing also relationship aspect to the learning experience for the people, aren’t you?

Absolutely, absolutely. I think, you know, when it comes to group lessons, there’s that element of forming a support system with your peers. All those people in that classroom are like-minded because they’re on the same journey as you are. And as I said, we don’t really vet the communications between them. They kind of reach out to each other and form a support system in that sense. So… Actually, we are also offering a wholesome experience in that sense. And it is true that nowadays, the fact that you are born, I guess, this generation, they were born with a mobile phone straight up on with an iPad and on social media. So, they don’t get the need to go and interact with someone else. Because they get it online, I guess. So, that isolates them quite a bit. But what we’re doing, in this case, is actually going back and, you know, I guess, driving or promoting those interactions, and those connections, really, through group tuition, you know, as I said, there’s a support system that they can form. And it’s a fun way to learn as well, as opposed to the ones one model. Even though it’s something that is tailored made can solve your problems, without a doubt. There’s also an element of having your support system. There’s also accountability in group lessons, which means you’re also going out of your way to engage in this lesson. Because all these people here are working towards this common goal, I need to engage and, in that sense, you are developing more resilient than stronger students in that sense. And you’re going back to the fact that they are isolated nowadays. You know, that’s something we’ve seen on the platform, which is very interesting and fascinating yourself, seeing how they start chatting to each other. They don’t know each other at all before the lesson. But once they attend, you can see them chatting. What school are you going to? What were you want to study, etcetera? What’s your exam board? -That’s interesting. Why don’t we just create a group? Snapshot? That’s what they start doing?

But it feels magical from your side, right? Like, you see people creating that connection. And that’s the moment you know, it works.

Exactly. So, I think it’s actually working. If I’m able to build those spaces, they will also use less than wise just to connect with each other. And obviously, they can always, find five fellow students that are interested in the same and share tutor friends can always happen. But even for the connection purpose, I think there’s something very powerful there.

I mean, well done on what on the progress you’ve shown so far. There are also a lot of key lessons in entrepreneurship, that is passed around as almost all sayings. Now, in a way, one of them is focused on the problem, not the solution, you’ll love the problem, not the solution. So, you don’t get fixated on your specific way of solving it, but rather, the problem itself. Another one is to do something that is just like I think was Ernest Hemingway who said, write about what you know. I might be quoting that wrong. But the basic premise is the same build something, the ability to build a business around what you know. And in that case, which is really appropriate for your situation, as well, it is an area that you know, the pain you understand the industry, you know, the people. And I think that has a huge effect on the trajectory of the business, how it starts, how it rolls. So, my final question to you, -I guess, as we’re running towards the end of our time- is, what are the next milestones for you and for less than wise?

I think the way see lesson wise now is… The next two years will be critical. What I want to go with this platform is that I actually build that community of not 20,000 sales but 100,000 students within the next two years. I think that once I build up the volume of user base, I have the systems in place, and I’ve gained traction. And I’ve shown them what it is, what is required to deliver engaging group lessons. And then I will just let them operate the platform. And it will become that vehicle that go to the marketplace and vehicle to monetize knowledge from the point of view of tutors and for students to acquire the knowledge they need at affordable rates, which is my vision that they’ve set. If we can roll this out for everyone around the world, and not only the UK, but also nations where such programs are quite needed or would actually make it an enormous change in the prospects of those children, those students, essentially. He has built 100,000 student bases within the next two years and obviously, hits revenue targets. Obviously, we live in a difficult period, a recessionary period. And it is important that we build a sustainable business that we can actually sustain and attain longevity because I think this can definitely bring positive change to the world. And I want to bring this message to everyone ready.

That’s one of the best things about building a business around learning. Because it’s just such a big cause. That’s very easy to get behind. It is a positive impact on the world. And I applaud you for working on this. And I think it’s a good combination. Yes, it’s a startup. It will make money. It will grow. But it is doing it in a way that is helping society not taking away from it. So, I wish… I love to see education startups grow at a pace. And hopefully, that will be the case for you. Thank you for all the insights you’ve shared with us today.

Thank you, thank you for the opportunity.