Edtech Unicorn Outschool exploded during the pandemic. What happens next?

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The pandemic has triggered a major expansion and contraction in the education sector. Some businesses and services have become obsolete without the availability of face-to-face experiences. Others found their holds and took off.

Outschool, a market for small-group, live online lessons for kids ages 3-18, certainly seems to have fallen into the latter’s camp. The company, founded in 2015, had enjoyed steady, if not entirely astronomical, growth prior to the pandemic. Then the schools closed. The children were at home, bored and underestimated. Many parents were also at home, in need of looking after their children. And boom – Outschool took off.

Numbers alone tell the story.

Before the pandemic, around 1,000 teachers worked for the outside world. The offerings of the course were in the playground of 10,000. The company employed 25 people. And to date, it had raised $ 10 million in capital.

Now, a year and a half later, 7,000 teachers are actively working with the San Francisco-based startup, which has served one million students from around the world. These students can choose from a cache of over 140,000 courses. The workforce has increased dramatically. And from Thursday, when the company announced a $ 110 million Series D round, Outschool raised $ 240 million in total, with a valuation of $ 3 billion.

By all measures, the growth of the outschool is outpacing many of its peers. But why? And will it last?

The key may lie in the Outschool offerings. While it provides traditional academic courses in core subjects, the company’s sweet spot is a little more niche and quirky.

“The really powerful thing about this product, and the reason people love it, is that it allows people to connect their interests with interesting learning,” says CEO Amir Nathoo. He pitted a few examples: A class that teaches critical thinking through Dungeons and Dragons. A course taught by a veterinarian that explains the anatomy of a cat. Architectural design through Minecraft.

Courses on niche topics may not count towards school credit, but Nathoo believes it is doing something far more valuable than this: engaging and enthusing students in learning.

Where middle school math may have failed to inspire students who were distance learning for the past year and a half, classes in theatrical arts, animal science, sports history, or yoga have managed to do the trick.

“It won’t last forever”

That’s what Seth Guttenplan found, however.

Guttenplan has been teaching with Outschool since 2017, while working full-time as an education technologist at a private school in New Jersey. He mainly taught one-hour, one-off lessons on stop-motion animation. The class was limited to 18 students, but typically only 10 showed up.

But last year, when children got stuck at home and more families learned about Outschool, things changed quickly and quite dramatically. Each lesson was sold out.

“I raised the prices and they kept filling up,” recalls Guttenplan.

The Outschool business model is pretty simple. Teachers set their prices. Families pay those prices. And Outschool gets a 30% cut. The remaining 70% goes directly to teachers, who are not required to have a credential.

This model naturally attracts more middle and upper class customers. But a nonprofit arm, Outschool.org, has donated $ 3 million to families, schools and after-school programs since the start of the pandemic, with the goal of making its classes and clubs accessible to low-income children. .

Guttenplan had charged $ 20 per student for his stop-motion animation class. But when the demand skyrocketed, it raised the price. Then he doubled down.

“The highest amount I received for a class – in one hour – was $ 504,” he says. (This was after Outschool took its share and before Guttenplan considered taxes.)

Last July, when Guttenplan was on a summer break from his job at a brick and mortar school, he raided $ 13,000 on Outschool. “I did it every day of the week and I said, ‘This is great. I will never make this amount of money again in a month. It’s amazing, but it won’t last forever, ‘”he recalls. The school was closed. The fields were closed. It seemed like a unique convergence of factors working in his favor, and he wanted to take advantage of it.

“As long as I have the Internet, I can teach”

Around that time, Cathryn McNamara was jumping into the fray. The family and consumer science teacher in North Carolina heard about Outschool from a colleague at her second job, at an ice skating rink, and decided to give it a try. His two part-time gigs outside of teaching weren’t available during the height of the pandemic and he thought tutoring was fun.

McNamara’s first attempt to teach on Outschool, in August 2020, was less of a success. He listed a lesson on “setting and achieving smart goals” – a fantastic lesson, he insists – but he didn’t have much traction. Few students showed up.

Then he listed another class: “How to Succeed in Distance Learning: Tips from a Teacher”. That lesson was a great success, until late October, sometimes even sold out, says McNamara. But it eventually lost strength as people not only learned how to use distance learning but were really tired of thinking about it.

The lessons that have remained valid for both Guttenplan and McNamara are, coincidentally, on topics they both really love to talk about and think about. For the approval plan, it is WWE and professional wrestling. For McNamara, it is cooking and baking.

Guttenplan has been running a wrestling “social club” for 65 weeks or more. McNamara’s “Bakers Academy” has been running for 30 weeks. They both have a few babies who have been there since the first week, but most just pop in from time to time.

Between stop-motion animation and his wrestling lessons, Guttenplan says he made about $ 50,000 from Outschool last year, though he has yet to pay taxes on that. He is well on his way to earning around $ 25,000 this year.

That’s not a small amount of money, but it’s only a fraction of what Outschool’s top earners are earning, many of which teach for the platform full-time. According to Nathoo, hundreds of Outschool teachers earn over six figures in one year. About 100 teachers earn over $ 200,000 and the “best performing teachers” earned an average of $ 232,000 in 2020. (It is unclear how many people are counted among the “top performers”).

Last December, McNamara increased her hours from three per week to 20 while her high school was on winter break. He was guiding the children – mostly between the ages of 8 and 11 – through the process of baking Christmas cookies and other Christmas treats, explaining the difference between a teaspoon and a spoon and a cup and a pint.

Find the experience enjoyable and enlightening.

“Some of these guys have kitchens I would die for,” says McNamara. Others have a small counter oven in which to bake. A Chilean student had an outdoor kitchen that fascinated her. (He also had a student from England whose measuring cups and spoons used the metric system and an oven that was set to Celsius. It was a fun challenge.)

As McNamara looks forward to retirement, he sees a scenario in which he sticks to Outschool. You can take your computer with you on your trip to the coast or to visit relatives. “As long as I have the internet,” he says, “I can teach.”

Will growth expand, slow down or contract?

Of course, the looming question is whether Outschool’s explosive growth is sustainable.

Guttenplan, for its part, expects enrollments in its classes to drop as traditional learning at school becomes more and more reliable (although it trusts that its wrestling regulars will keep coming). But Nathoo, the CEO, exudes confidence.

“We certainly don’t see [our growth] like an aberration, “says Nathoo.” Not even the investors. That’s why they continue to support us with a high valuation. “

Outschool’s latest round of funding, the D Series, announced on 11 October. 14, the one led by previous investor Tiger Global Management and BOND. Other participants in the round include Lightspeed Ventures, Union Square Ventures, Reach Capital, Coatue, Funders Club, and SV Angel.

People may be wondering if Outschool will be back soon, but the outlook for the company, Nathoo says, is very good.

“We have had more revenue in 2021 than in 2020. We expect additional growth in 2022. We do not expect such a rapid growth rate in the future, but we do not expect a contraction either.”

Adam Newman, managing partner of Tyton Partners, a consulting firm with clients in the education sector (but who has not worked directly with Outschool), says it will be an interesting trajectory to follow.

“As we return to conventional face-to-face environments, what is an organization like Outschool doing to continue to maintain and maintain the influx of subscribers and participation it has achieved over the past 15 months?” Newman wonders. “Will people want to go back to some of the more face-to-face, more tactile experiences that Outschool has been a replacement for?”

While many existing customers – most of whom are Americans – back off, Outschools’ latest fundraiser is expected to support the company as it expands into new markets globally.

“I’d be surprised if they didn’t keep their momentum,” says Outschool’s Newman. “They might have hiccups … [but] I am quite confident that they will compensate by offering new, expanded and different resources. “

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