Customer-centricity & credibility: a formula for serial edtech success
Shailu Tipparaju is one of those rare individuals who has founded, scaled, and exited three successful edtech companies — and is working on his fourth. He shares the frameworks that he has picked up along the way and is now implementing in his current company to bring it to new heights.
Welcome to the Emerge Product-Market Fit Academy series, where we bring you practical insights and advice from accomplished operators and founders in edtech. This series is dedicated to helping early stage edtech founders navigate the challenging path to achieving Product-Market Fit.
Meet Shailu Tipparaju, a seasoned edtech entrepreneur with an extraordinary track record. Throughout his illustrious career, Shailu has successfully founded, scaled, and exited not one, not two, but three thriving edtech companies — with a fourth one currently in the works. In this case study, we delve into the wealth of knowledge he has acquired along this remarkable journey focused around the theme of customer — centricity that has allowed Shailu to repeatedly build products that find clear Product-Market Fit. In this article, he shares his approach to understanding the customers needs, goals and ambitions and translating those into a product that caters to them.
Shailu’s journey began at Xerox, where he led successful global initiatives for renowned organisations such as Motorola, Delta Airlines, and GlaxoSmithKline. His exceptional talent and dedication earned him the title of Xerox’s top-performing employee worldwide in 2005. Sharing a short overview of Shailu’s background is no easy feat, but to highlight a couple of his notable ventures:
In 2008, Shailu founded EdAssist, providing education benefits and student loan support for employees. Under his leadership, EdAssist served over 600 enterprises, processing a billion dollars in tuition management annually, and was acquired in 2010 by Bain Capital Bright Horizons. He then founded Strateology in 2011, an education analytics solution for enterprise consumption of learning outcomes, which was acquired by University Ventures in 2017.
Another remarkable achievement is Examity, a world-renowned online proctoring solution founded by Shailu and acquired by Great Hill Partners in 2019. Recently celebrating their 10th year in business, Examity has served over 500 clients across 120 countries, facilitating more than 20 million exams to date.
He’s now back with his latest startup, Magna Education, connecting the world’s leading educators and researchers with purpose-driven entrepreneurs and executives, globally.
90% of startups fail, 20% within the first year. Shailu has beaten those odds multiple times. Being a serial founder has its advantages, such as leveraging tailwinds from past successes and market reputation. However, it also comes with pressure and high expectations. Shailu warns of the bias that can creep in with experience that may cause a serial founder to become quick to rely on assumptions. To avoid such biases, he has developed various frameworks, which we share in this article, for approaching the early stages of company building to accelerate market entry, deliver faster value, and enable scaling across industries and geographies.
By the end of this article you’ll understand more about:
- Understanding the customer
How to build a solution that everyone wants by asking the right stakeholders the right questions - Translating research into a solution
A case study of EdAssist: Using customer research to develop solutions that address specific needs and challenges - First customers: the discipline to say no (or not yet)
Defining your first customers and how staying selective can help to build a demand flywheel - Iterative innovation
The importance of embracing continuous research and feedback to iteratively improve your solution to stay close to your customers - The credibility advantage
Establishing a lasting competitive advantage and brand through building trust and credibility with your customers
UNDERSTANDING THE CUSTOMER
Understanding the customers’ needs and pain points is paramount for startup success. One of the leading causes of startups failing is because they do not meet a market need. Consider the case of mobile-focused streaming service Quibi. Despite raising $1.8B in funding, it shut down just six months after its much-anticipated launch in October 2020. In a joint letter to employees, founder and CEO acknowledged Quibi’s lack of success was likely “because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing.” There simply wasn’t enough demand for the product they had created.
Shailu is a champion of the customer-first approach, emphasising the need to fall in love with the customer’s problems rather than your own solution. He thinks about it as three doors you have to go through as a founder.
“If you think about what makes companies work successfully and then repeat that success over time, through the creation, acceleration, and expansion phases — it’s understanding the true needs of the customer.”
- Door 1: understanding customer needs, pains, ambitions
- Door 2: value creation
- Door 3: solution development
The key to unlocking these three doors is starting with customer research. Rather than making assumptions about their priorities, actively listen to their needs, pain points and ambitions and make a comprehensive list. Validate that list with every additional interaction until you build a strong picture of 2–5 key needs, pain points and ambitions of your customers.
With enough research into the needs, pains and ambitions of customers, the next question to answer is: what is your value proposition that specifically addresses the needs and alleviates customer pain points? This could be faster workflow, better delivery, lower prices, for example. Understanding their ambitions is critical, as your proposed value creation must help them reach their specific goal. Only once you have established how to create value that aligns with customer needs, pains and ambitions, do you move to developing a solution.
It is important to note that, particularly in edtech, the term ‘customer’ is very broad and often encompasses multiple different personas, each one of whom has different needs, pains and ambitions that are important to understand to gain better clarity for solution development.
Shailu highlights the three types of customers:
- The customer: the one who is paying (eg budgetholder)
- The consumer: the actual user of that solution (eg student)
- The enabler: the gatekeeper or implementer of the solution (eg HR)
“Not all of them will define the problem the same way for you, because each one has a different view of the same problem. So you have to segment and make sure that you account for all three, marry these three answers and see where the trends and alignment are […] The CEO of a company would give you a whole different perspective versus the procurement in HR versus the actual user.”
TRANSLATING RESEARCH INTO A SOLUTION
Taking the example of EdAssist, Shailu breaks down how he took the customer research and translated it into a tangible solution. EdAssist’s purpose was automating the workflow for a working professional who wants to go back to learning, be it a degree, a certificate, or just-in-time learning.
Drawing from his own enterprise experience, Shailu saw first hand that enterprises wanted to upskill and improve their workforce — and they had the budget for it. However, employees faced friction in accessing learning and often had unanswered questions such as which institutions to go for, how long it would take, the cost, the approval process, reimbursement etc.
Shailu recognised that the feedback fell into three broad challenges: guidance and counseling, financial barriers, and transactional processing. So he put together a team to conduct extensive research.
- They asked senior management and budgetholders in charge of workforce education for enterprises, “What is your desired outcome with workforce learning?”
- They asked the working professionals pursuing advanced degrees, “What is your desired outcome when you learn?”
- They asked the enablers (those responsible for selecting education providers), “What has stopped you from going out and procuring an existing provider? What would a good outcome look like for you from workforce learning?”
By asking targeted questions, they obtained precise and actionable information. Defining your assumptions and mapping them to the outcomes expected by these three components of users, enablers, and the stakeholders, allows you to craft a much better solution than existing options. EdAssist was an outcome of recognising:
- The challenge for working professionals (users): “I don’t want to pay for this upfront, it costs me too much money.” → Translation: EdAssist enabled upfront payment from enterprises.
- The challenge for universities (enablers): “We don’t have a good platform to pitch to enterprises.” → Translation: EdAssist built a dedicated platform for universities to engage with enterprises, with built in counseling and advisory services, and implemented seamless transaction processes.
- The challenge for enterprises (customers): “We don’t have transparency on learning outcomes and results.” → Translation: EdAssist focused on transparently demonstrating the value derived from budget allocation to stakeholders and aligning outcomes with their investment.
FIRST CUSTOMERS: THE DISCIPLINE TO SAY NO (OR NOT YET)
When it comes to finding your first customers, it’s crucial to take a practical and focused approach. Shailu takes what he calls the “disciplined entrepreneurship” approach to finding his first costumes and making sure they stick. He outlines the following steps to help you target the right customers and establish a strong brand identity:
- Prioritise a smaller segment: Avoid spreading yourself too thin by pursuing multiple customer segments. Instead, prioritise delivering exceptional value to a smaller, targeted segment. This approach allows you to establish a strong brand identity that resonates with your customers. “Marketing is what you say. Branding is what your customers say.” Too many different customers early on will drown out your brand identity.
- Define your ideal customer profile (ICP): Instead of trying to cater to a broad market, focus on a specific user persona. Consider factors such as company size, key needs, revenue, spend velocity, and willingness to pay. This clarity will serve as the foundation for your customer acquisition strategy. “I would rather deliver outstanding value to a smaller segment of customers and have their voice become the brand than try to be many things to many people.”
- Be selective with customers: If customers approach you directly but don’t fit your ICP, Shailu urges founders to resist the temptation to immediately bend over backward to cater to them. Instead, communicate that you would love to have them as a customer but need more time to ensure sustainable delivery. This approach prevents compromising your focus and sustained growth.
As a serial founder, when launching Magna Education, Shailu received a lot of inbound requests from potential customers. “While it is enticing to say ‘Let me do that’, you need to scale a team that is capable of delivering to those different sets of customers. You need to scale your solution, channels and technologies to deliver to those different expectations. Then you need to be able to keep sustaining that delivery. If you’re unable to do that and just sign [customers] up, you will end up not being your best, and the market will say something different than what you are saying.”
Shailu recalls a recent experience when launching Magna Education. A company with revenues over $200M wanted to be a customer, despite not fitting their ICP. Instead of immediately accepting, Shailu’s team offered to solve one immediate problem for them, but explained that they needed time to scale their resources to cater to all of their needs. Though some promote the strategy of selling the plane tickets and then building the plane, Shailu firmly believes that saying no builds credibility and respect. It even often results in referrals to other customers that do fit his ICP. Have confidence that potential customers will still be there once you take the time to properly build the infrastructure you need to service them sustainably.
ITERATIVE INNOVATION
You may have found your first customer, your first hundred customers, or even your first thousand. But customer research and product iteration doesn’t stop there. One of Shailu’s favourite learnings from Harvard Professor, Ranjay Gulati is the contrast between Innovation and innovation. Innovation with a capital I refers to developing a solution that immediately solves a key painpoint for customers. But equally important, and often overlooked, is the innovation with a small i. This refers to the iterative innovation from continuous research. Continual research helps founders avoid the pitfalls of making too many assumptions about what their customers want, by getting direct feedback from them and iterating to get to a better product, solution, or service.
This is so critical because customer needs, pains and ambitions evolve. For example, over time, Examity adapted its product based on feedback and evolving consumer needs. Shailu recalls how, as the industry evolved, the focus in proctoring moved from catching test takers cheating to providing convenience to learners through multimodal options. Examity’s messaging also evolved to reflect that change, and today, the company’s approach centers around understanding the academic goals of learners and adapting the proctoring technology and consumer experiences accordingly. Staying ahead of the curve requires active communication within the value chain, with dedicated groups researching changes, servicing customers, and developing technology.
THE CREDIBILITY ADVANTAGE
When it comes to innovation, creating something completely new isn’t the only path to success — building a better and more trusted solution goes a long way to winning customers. Examity achieved remarkable success in the online proctoring industry by focusing on improving existing solutions for unsatisfied customers. They understood the competitive dynamics of the market through frameworks like Porter’s Five Forces, but their success went beyond analysis, focusing on exceeding customer expectations and building, what Shailu calls, a credibility advantage.
Examity prioritised creating a refined customer experience, simplifying the proctoring process, reducing wait times, and minimising disruptions. They also offered flexibility by providing multiple options for consumers and customers to use their platform without switching providers. By focusing on exceptional service, Examity differentiated itself in the market.
“Exceeding the customer’s expectations by out servicing everyone else. That was our secret sauce, which isn’t secret. You have to treat your customer like gold, and it wasn’t happening. So we just found the right opportunity and service was definitely one of the strong value ads, which was so basic, but we harnessed and finessed it.”
Examity translated customer expectations into results. They continuously asked themselves if they were delivering on their promises of learner convenience and exceeding expectations. Trust was their sustainable advantage, which took years to establish and was difficult for competitors to replicate. The cost of switching provider is high, notes Shailu, and consumers typically don’t switch once they are attached to a product that is compelling and trustworthy. A pure price advantage is very hard to sustain; it’s easy for a slightly lower priced product to come and disrupt you. But credibility is hard to build and harder to replicate.
Examity’s approach to credibility and trust allowed them to process over 20 million exams to date. Shailu viewed every transaction as an opportunity to reinforce their brand and build further trust. By understanding the value they provided to customers and getting the value chain right, Examity scaled their operations while maintaining their credibility advantage.
SUMMARY
Understanding customer needs, pains, and ambitions is crucial for the success of startups. Failure to meet market needs can lead to the downfall of even the most well-funded ventures. In this case study, we delved into Shailu’s customer-centric approach to both initial and continuous customer research, allowing you to build a sustainable competitive advantage. He shared his experiences in translating research into tangible solutions and underscored the credibility advantage of building trust with customers. Additionally, he emphasised the importance of defining your ICP and the discipline to say no (or not yet) to customers who do not fit within it, in order to preserve focus and sustainability. By staying closely connected to customers and adapting to their changing needs, startups can build a solution that continuously brings value and establishes a competitive brand.
Emerge is a global pre-seed fund backed by 100+ of the world’s best edtech operators. Our vision is to democratise access to opportunity — by being a catalytic partner for early-stage edtech founders. If that’s you, get in touch and submit your deck on our website.
This article is part of our Product-Market Fit Academy, where we bring you practical insights and advice from our world-leading community of Venture Partners. To keep up to date with our episodes, follow us on LinkedIn, Twitter, Medium, YouTube and Spotify. You can also subscribe to our newsletter to stay up to date with our latest insights for early-stage edtech founders.
