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Vienna may have a wealth of museums, public transportation, spring water and social housing, but it has an educational platform GoStudent It is another of the crown jewels. Its services are now used by more than 11 million families, many of whom live outside GoStudent’s home country.
Along with Bitpanda and Runtastic, which were acquired by Adidas, eight-year-old GoStudent is one of the very few Austrian startups that has made a name for itself in the international tech scene. But having had to adapt sharply to a market that no longer favors growth at any cost, its €3 billion valuation and global expansion may be a thing of the past, at least for now.
However, GoStudent was quickly reshaped to suit the taste of the moment. When I visited its headquarters a few days ago to learn about its prominent founders, CEO Felix Ohswald and Chief Operating Officer Gregor Müller, they revealed that the company had reached full profitability. “And it’s not just EBITDA that’s profitable,” Ohswald said Son of a bankerHe hastened to add.
“This means we achieved positive EBITDA and have positive operating cash flow across GoStudent and GoStudent Group,” the company later confirmed in writing. It added that TechCrunch could exclusively release the information after the founders shared the news with their team during an all-hands meeting earlier today.
There is no point in lying or keeping employees out of the loop, as unicorns often do: by Austrian standards, a private company’s annual accounts become a matter of public record by the end of the following year. This is also how we know that GoStudent It lost €89 million in 2021 and €220 million in 2022.
The contrast with previous losses makes the shift to profitability even more significant, and it is easy to see why Oswald described it as a “tremendous milestone.” It will also be a potential morale boost for staff, who after several rounds of layoffs are now down to 1,500 full-time employees across the GoStudent Group.
Back from the highlands
GoStudent’s turnaround comes after a phase that Oswald himself referred to as “crazy” over-expansion. “From 2019 to 2022, we scaled our core business model to over €100 million in revenue and had amazing, crazy growth from basically nothing in two years.” But he added that the company also had a “cash burn of more than €150 million in 2022 alone.”
As markets turned, and despite raising hundreds of millions of euros in funding, the company realized it could not continue on this path. In 2023, it reduced its burn rate by 70%, but that is still not enough. in Share LinkedIn In January of this year, Oswald confirmed that the company was conducting another round of layoffs, its third since 2022.
These restructurings were “difficult moments,” Mueller said, but the company had to figure out how to continue growing without spending too much. “At least we’ve learned a lot now. We have a better idea of how and where to expand, and of the basic things we need to master and be more careful about.
GoStudent’s hypergrowth wasn’t just arrogance. If the digital transformation brought by Covid-19 has lifted many boats, this is especially true for education technology, and especially for GoStudent. The company has gone from having to convince parents of the benefits of online teaching, to becoming the go-to solution for schoolchildren who need educational assistance.
GoStudent’s value-add has weathered the pandemic, so initially, there were easy cuts to make outside its core business. no more Lavish parties. No more takeovers for the time being. No more expanding into places where you’ve learned that tutoring isn’t part of the culture, like Sweden, or where you’ve had to lower your prices a lot, like Latin America. But others were more painful, e.g Exit from the United States After only a few months.
GoStudent no longer aims to be present in 20 countries. It is refocusing on Europe, but outside German-speaking countries, it will “adopt a more organic growth strategy.” It is quite clear, when her former boss growth Officer and early employee Laura Warnier exited the company and was replaced by a president marketing The officer, former Delivery Hero employee Dan Zbijowski. Goodbye net income growth, hello net profit growth.
Long way to the top
Spending less while still dreaming big would be a good balance for GoStudent, whose stated mission is to “build the #1 global school and unleash the potential of every student through personalized tutoring.”
GoStudent is not a school yet; Her offer still falls within the scope of tutoring, not teaching. But the acquisition of StudienKreis in 2022 brings the company closer to that goal. Not only does this traditional tutoring company founded in 1974 have 1,000 tutoring centres, most of them in Germany; But also because GoStudent is now using it to double down on blended learning.
“We believe the future of education is co-ed,” Oswald said. “Glocal” was another keyword he used; While education curricula are national or even regional, GoStudent can add value by leveraging technology to ensure that every child finds the right teacher, regardless of location.
Most GoStudent teachers are college students, and this younger demographic makes it easier for them to connect with students while also serving as role models, Mueller said.
According to Oswald, this is the boost many kids need these days, having to live under the pressure of social media that didn’t exist when we were growing up. “Having that moment where someone sits down with you one-on-one builds some trust is often more important than improving your grades.”
In the GoStudent Future of Education 2024 reportBased on responses from more than 5,000 parents, the company found that families are looking for a more personalized approach to their children’s education. “Obviously improving grades is one of the key things parents are looking for; if they don’t see that, they’re not satisfied.” But they also want their children to get better at problem solving and other life skills.
GoStudent can come where schools fall short, but such a far-reaching mission requires exceptional teachers. Presumably, wages that keep pace with inflation would help attract and retain these employees. Especially in light of recent events Petition Of some of its 23,000 teachers complaining that they “get less than 50% of the parents’ fees while doing almost 100% of the preparation and administrative work”. However, GoStudent’s founders see this differently.
When asked about the pay raise, Oswald talked about how goal-driven teachers get satisfaction from seeing students succeed. But perhaps most tellingly, GoStudent is working to leverage AI to make efficiency improvements in “things that would otherwise take a lot of time so that the teacher can focus on teaching and not on evaluating work,” Mueller said.
Good balancing act
GoStudent has three priorities for 2024: maintaining positive cash flow, staying true to its goal of putting students first, and demonstrating how AI allows GoStudent to scale its business in a capital-efficient way, Oswald told TechCrunch.
The key here, Oswald said, is for GoStudent to “explain how we leverage AI so we can scale operations 100 times without needing hundreds of other people. AI allows us to recruit teachers in a more automated way, and helps teachers teach their skills better.” [students] And assist our extensive support and operations staff on the ground [this] Without spending money on it.”
Mergers and acquisitions are another thing GoStudent won’t be spending money on again “anytime soon,” but the founders are happy about it. “I really believe that being in a position to execute these acquisitions so quickly in a market environment where raising capital is easier will help us significantly,” Mueller said.
GoStudent truly understands the value of becoming a group, not just a company. Tus Medias, a network of teacher marketplaces, has proven to be a powerful customer acquisition channel, but it’s also an alternative that teachers and parents can turn to if they’re not satisfied with what GoStudent has to offer.
frequent complaint From parents that GoStudent pushes them into multi-year commitments, only to make it difficult to cancel. GoStudent counters that education requires consistency, not a one-time fix. But of course, contracts are also better at providing GoStudent with consistent revenue. In fairness, it also increases the likelihood that teachers will have a relatively fixed amount of work; And more than they would have done if they had to find clients on their own.
However, unhappy parents regularly take issues related to GoStudent to the press. One of the most significant cases of deportation occurred in the United Kingdom In 2021, when a father found out that his daughter’s GoStudent teacher was banned from teaching. The company apologized and said it had already changed its hiring practices, which include background checks (enhanced DBA, in the UK) and code of conduct It prohibits teachers from contacting students under the age of 16 using Whatsapp “under any circumstances”.
Child safety is one of the reasons the company is investing in building its own tools, like GoChat. Of course, it can continue to use external solutions. After all, it spent its first three years as a WhatsApp homework chat. But internal solutions make it easier to prevent teachers from obtaining their students’ phone numbers and tracking what happens during class.
GoStudent has also finally ditched Zoom in favor of its own online classroom, GoClass, building on previous developments from Tus Medias. There may be bugs in the moment, but it’s also a reminder that GoStudent doesn’t just want to use off-the-shelf tools: it wants to come up with technological innovations to teach better. For example, one recent addition is GoVR, a virtual reality platform for language learning.
All the talk about artificial intelligence, virtual reality, and blended learning may have been helpful in GoStudent’s latest fundraising, a $95 million mix of equity and debt that it acquired in August.
But more than anything else, it’s profitability that opens the checkbooks and gives companies more options. It gives GoStudent the option to raise more debt to avoid further dilution, choose a different structure, or not raise additional capital. “Finding the right strategy is in our hands,” Oswald said. This is true on the financing front, but also elsewhere.
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