Breakout Companies Memo #5- Outschool
The startup building the Netflix of Education
“If you join a company, my general advice is to join a company on a breakout trajectory.” — Sam Altman, President at Y Combinator
In this third edition of Breakout Jobs Memos, we are profiling Outschool, a marketplace of live online classes for kids.
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Breakout Job
A Breakout Job is that one role which puts you on the map. Best examples which hit my mind are Andrew Chen heading Growth at Uber.
What is a Breakout Job?
A Breakout Job is that one role that helps you get discovered. The best examples which hit my mind are Andrew Chen at Uber and Erik Torenberg at Product Hunt.
What is Outschool?
Outschool is a remote teaching platform, offering thousands of small-group classes for kids. Their platform offers unique online classes from hundreds of independent teachers. Outschool teachers can be anyone ranging from certified teachers to artists to scientists, or other adults with an expertise or interest to share.
How Outschool Works?
For $10–15 a class, a fraction of the cost of traditional core or supplemental classes, Outschool allows students to both learn material and engage with one another in real-time, online. The course catalog currently spans 8,000 options ranging from Spanish 1 to Astronomy as told through Harry Potter to a deep dive into Hamilton, the Musical. Teachers control the offerings and curriculum, and, through the platform, find a way to reach a broad network of students and often substantially increase their earnings. Many are K-12 educators, but not all, allowing young learners exposure to a broad range of education styles and capabilities. A UN human rights lawyer teaches a series of classes on debating where she earns more than $10,000 each month. A Mom and gaming columnist teaches critical thinking through Dungeons and Dragons that’s become a platform favorite. [Source: USV]
Motivation
This is what Amir Natthu, CEO of Outschool when he was asked, “In what ways is Outschool a pioneering organization?”
Rather than just using software in the classroom as a teaching tool, we’re looking to use it to transform the nature of the education system itself. We’re doing that by offering a new format for learning with a marketplace-based approach.
Live online classes are a new learning format that have been made possible by the evolution of group video chat technology and the bandwidth to support it. They offer important benefits over other online and offline options:
Accessibility — Classes are accessible anywhere with an internet connection and the cost is split between families offering a lower price point than private tutoring.
Collaboration — Learners interact with a teacher and peers rather than studying on their own. Social experiences enrich learning. Nothing can replace a great mentor or exploring ideas with peers.
Choice — Families choose their teachers and their classes based on their needs and interests. They choose from teachers across the world and are not limited by the offerings of their local school or community.
Online community marketplaces, like Airbnb and Etsy, are amongst the great innovations made possible by the web and we’ve applied this model to live online learning. By letting learners choose their classes and teachers we deliver on the promise of personalized learning to adapt education to individual needs. Other models are inherently limited by a fixed curriculum and faculty.
Notable Things
- OutSchool currently offers 8,000 classes from more than 1,000 teachers on the platform.
- Parents often use the one-off classes, which are offered at various times throughout the year, as a test to see if Outschool will be a fit for their children. Sixty percent of customers are returning students.
- Around 80% of students on Outschool are home-schooled.
- Outschool is an amazing place to work at. It is rated very highly by its employees. Take a look at the graphic below!
5. Outschool is turning to be an amazing income source for teachers. See below 👇
Team
Currently, Outschool is headquartered in SF, with team members having worked in pivotal roles at companies such as Udemy, Amazon, Airbnb, Square, Google, and many other startups.
- Mikhail Seregine, Co-founder at Outschool, Previously, software and product at Google, Amazon.
- Nick Grandy, Co-founder Outschool, formerly worked at Airbnb, Clever.
- Amir Nathoo, Co-founder and CEO of Outschool. Worked on Trigger.io (acq by Square), Square Payroll.
Funding
- Outschool has so far raised $10M in funding.
- Marquee VC Firms such as Reach Capital and Union Square Ventures participated in the company’s latest Series A round where it raised over $8.5M.
- Prior to this, Outschool raised $1.5M in a seed round led by Sesame Street’s venture partnership with Collaborative Fund. Additional investors in the round included SV Angel, Caterina Fake, FundersClub, Spectrum 28 and Learn Capital.
- The company was also a member of the 2016 Winter batch of Y Combinator.
Risk of Future Financing
The company stands at a unique point in time where millennials are losing interest in the current education systems and are looking at non-traditional education options coupled with the rise of homeschooling.
Given the company maintains its current growth trajectory, it shouldn’t face any trouble in raising upcoming financing rounds.
Strengths
- The Rise of Zoom as a Communication Tool
This is perhaps the golden age to start a company which relies on video conferencing. Finally, we have a product like Zoom, which enables seamless video communication enabling Outschool to become the company at the forefront of online video conferencing enabled schooling.
There is also an important “why now” to Outschool. The platform is built on top of Zoom, a technology that makes possible and affordable a convenient real time experience that would have been expensive and cumbersome only several years ago. We believe this underlying technological shift to accessible and reliable video chat is opening up mass opportunities across categories. We have already invested in three companies that are taking advantage of it and will likely invest in others.
2. Growth of Homeschooling
“From 1999 to 2012, the percentage of students who were homeschooled doubled, from an estimated 1.7 percent to 3.4 percent”
But, the statement to care more about is this one:
“While the overall school-age population in the United States grew by about 2.0 percent from spring 2012 to spring 2016, data from 16 states from all four major regions of the nation showed that homeschooling grew by an average of about 25 percent in those states”
This growing trend of homeschooling is one more reason to why Outschool stands in a unique position to become a unicorn.
3. Team with Marketplace Experience
The founding team at Outschool have marketplace and platform experience as product leaders at Square, Airbnb, and Google putting Outschool in a unique position when it comes to building an Education based Marketplace.
Weaknesses
- Getting More Quality Teachers onto the Platform
The success of Outschool very much depends on the number of quality teachers that are going to be coming into the platform. So, far, the company has been able to onboard more than a thousand teachers but scaling it up to have 100k teachers on the platform will be an important problem to solve for in the company.
Competition
- AltSchool:- Initially started as a school, but recently pivoted to building software that helps K-12 teachers make assignments and track student progress.
- Wonderschool:- The company offers a platform where people can start infant and toddler programs and preschools out of their homes. They recently raised a $20M Series A round from Andreessen Horowitz.
