In a 2014 survey, the Singapore government found that households spent over a billion dollars on private tuition, up over 30 percent from 2009 and almost double that from a decade ago. Stories of tutors raking in over S$1 million (approx. US$750,000) a year make occasional headlines in a country where parents spare little expense to help their children excel in an increasingly competitive education system.
With hundreds of academic and enrichment centres vying for an ever-expanding pie, it can become confusing for parents to keep track of who is offering what. On the other hand, learning centres had to manage an ever-rising number of students in a cost efficient manner.
To address the needs of both groups, Tan Chia-Zhi created Goforclass, an “online marketplace for parents to discover learning classes for their kids”.
“While doing research,” Tan tells Perspectives@SMU, “I also found that these learning centres have a problem, which is they are rather low-tech. They are still using Excel spreadsheets for tracking fees collected and attendance and what have you. It’s all rather manual.
“I thought, ‘If I could offer an easy-to-use solution for the learning centres to manage student enrolment and online payment, and even publishing the class schedules to facilitate online bookings similar to that of online booking of movie tickets, I could fill the gap on both ends of the spectrum.’ It’d be both an online marketplace for the parents as well as a centre management software for the learning centres.”
A LONE ENTREPRENEUR’S JOURNEY
That was in July 2014, when a 41-year-old Tan left his job at a government IT agency to pursue his startup dreams. His idea received a S$50,000 grant from SPRING Singapore, the country’s agency promoting entrepreneurship, fuelling belief that the idea would work.
By end 2016, the venture had gone through some S$20,000 of the grant money along with another S$30,000 of Tan’s own savings, excluding his foregone two years of salary, before he called time on the venture.
What went wrong?
“No direct answer for that,” concedes Tan when asked if it was a matter of ‘right product, wrong time’. “My greatest handicap was that I was a solo entrepreneur. If I were to start all over, I’d have done it with at least one co-founder.
“As a sole entrepreneur, I had to rationalise every decision by myself. There’s no one to bounce ideas off. As a solo entrepreneur, I made decisions much later than I should have, and the funds had run out by then.”
Bootstrapping was a way of life during the two-and-a-half-year journey. Software coding and development work were outsourced first to firms in Malaysia, then Vietnam, and eventually India. Tan worked from home and at cafes to minimise expenditure while fine-tuning the user experience.
The main hurdle to success was not technology, Tan asserts, but legacy and business environment issues.
“The parents use the portal for free,” Tan explains, “and they can make online booking on courses for their kids. The revenue comes from the learning centres who subscribe to the centre management system, and since their courses are published online, I’d take a cut when people make an online booking.
“However, the challenge for me and the learning centres is the online payment transaction fee,” said Tan, referring to the 2-3 percent merchants need to pay for each transaction made using a credit card. “That is really the challenge. Unless you have big volumes, you can’t drive down the transaction costs, and it’s a cutthroat industry with low margins.”
Had Goforclass taken off, serious revenue would come not from the subscription model but from the user data within and beyond the boundaries of Singapore. Tan elaborates:
“If you have an online portal that is sticky, and the parents keep coming back, you’ll have lots of data. Imagine there are parents living in Punggol looking for classes in their area, and their kids are of a certain profile. With such users’ data, we can pair potential customers with the relevant learning centres. The long-term vision is that, with the Big Data that we have, we can put up targeted advertising and recommendation. That is where revenue could come in.
“When I started, it wasn’t just for the local market. Education is an evergreen industry, especially in the SEA region where there are many developing countries – Vietnam, Myanmar etc. The need for education is ever-increasing, and their population is much bigger than Singapore’s.
“Because what I was developing an IT system, I can easily scale-up and replicate it overseas with localisation. The biggest market is of course China but that is a hard market to crack.”
BACK TO SQUARE ONE?
Now back to corporate life, Tan believes the skills he learnt in the rough-and-tumble startup world – “dream big, start small, move fast and fail fast” – help him do his job better. While the father of two appreciates the Singapore government’s efforts to support startups, he believes policymakers have heretofore neglected a potential pool of entrepreneurs: mid-career professionals.
“Before I start Goforclass, I asked my ex-employer if I could take half-pay or no-pay leave to work on an innovative idea?’ The reply was, ‘No, you have to leave your job.’
“If the government can tell organisations, ‘Hey, if you have staff who have a great idea for a startup, give them no pay leave and allow them to return to the workforce if they do not make it after a specific agreed time period.’ That would create a safety net for would-be entrepreneurs to step out.”
As he approaches 45, would the one-time entrepreneur be enticed to give it another go?
“At my age now I probably can’t just quit and do it again,” he muses. “If my organisation allows me to do something on my own after office hours without any conflict of interest, and I can keep my day job and leave when my venture gains traction, that would be ideal.”
This article was first published on Perspectives@SMU on February 28, 2018.