Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Joining me as an entrepreneur who took on the cloud, created this great cloud solution and people were not as enthused about it as I would have expected them to be.
And so he looked around and realized that there’s a world of parents who want to teach their kids English. And he created an online school that now offers English as a second language done in an immersive way. Online it’s called Novakid. You can find it at Novakidschool.com. I’m bummed this isn’t available for other languages, because I like their approach.
I feel like my kids would totally get into this and if they wouldn’t, I would, I would push them because it’s so valuable to learn, learn another language. And I like how like real person based this is it’s. You can talk to a real human being, not just software, right? But I invited max as a, as a Rob over here to talk about how he built up this business and to see what we can all learn from the way that he built up his business.
And I can do it. Thanks to two phenomenal sponsors. The first will host your website, right? It’s called HostGator. And the second we’ll help you do online marketing better. It’s called SEMrush. Max. Good to see you here.
Max: Hello, Andrew. Nice to meet you.
Andrew: Max, what size revenue are you doing? Right.
Max: well, last year we did, uh, about $9 million this year. We, uh, planning to, uh, about more than to do more than triple that. So
Andrew: from 9 million, you’re close. You’re getting to 27 million this
Max: yeah, probably probably gonna get over 30 million bits here.
Andrew: are all your classes with a real human teacher who guides the student.
Max: Yes, correct. Yeah. So every class is, uh, uh, well, I mean, it depends how you define class, right? So there is a, uh, significant, um, kind of. Uh, self guided learning aspect to it as well. So, uh, actually as of now, about 50% of the time students spend with our content, not with the teacher, but the teacher is definitely a critical part of the experience.
It does provide having confidence, boosting a confidence boost to the student and, uh, as well as this kind of initial engagement.
Andrew: And the classes, are they all one-on-one or some of them one-on-one.
Max: Yeah. One-on-one.
Andrew: So it’s one-on-one with a teacher with a screen and I saw the class where the teacher. Asking the kid, a question the kid answered, and then the teacher moved on to another question. She said something like, can you find the cat on the screen?
And then the boy said, there’s the cat over there? Uh, something like that. And then the teacher was cheering the kid on. So that’s 50% of the sessions are like that. And the other 50% are with videos and other material that the teacher assigned to the student.
Max: It’s more like learning games, uh, learning games, some of the exercises, but we’re really trying to make it fun for kids because, you know, they don’t like it. They’re just not going to do it. And parents, they, what we found is parents are not very keen on forcing their kids to learn usually. Um, so yeah.
Andrew: Meanwhile, these classes are under 10 bucks a class that’s super inexpensive.
I mean, you have to consider that, uh, you know, there’s a lot of different countries out there. Uh, uh, the market is big, quite diverse. So, you know, some countries, 10 bucks to last is a sizeable, uh, price tag. Uh, so we definitely have to address different price points.
Andrew: I feel like the future of learning is going to be a good enough class that keeps your kid happy and feels like you’re doing the right thing. And then a great online programs that the parent picks out and makes sure that the kid shows up for. So you think that’s the future?
Max: Uh, I think definitely content. So w we believe a lot in the content and the power of content. And by the same content, I don’t just mean videos and pictures and stuff. Uh, but really the games, something that really engage, kind engage with someone. So. Uh, really the, the, ultimately what I want to state is keeps actually going.
And actually we see that very often gives they’re actually asking their parents. When is my next networking? I want to go because it’s not just about, not only about the games, it’s also about our life interaction is our kids. All right. I’m sorry. Our teachers are really trained to engage kids because they’re, they play engaged in class as well.
It’s not just outside of class. They play games, uh, Outlaws, they play games. So to them it really feels like having fun while they actually learn it lunch.
Andrew: What was this whole thing kind of sprung out out of? Is it pronounced Cloudlike?
Andrew: What was Cloudlike? What is it still an ongoing business.
Max: Yeah, but, uh, it’s really a B2B play, Uh, with telecoms. And what we try to do is we try to create a, kind of like a, uh, uh, white label, which means that, so basically you take a personal cloud storage, similar to iCloud or Dropbox, and you’ll launch it under your brand. So for example, T-Mobile, you know, with launch, like T-Mobile clouds, the horizon.
Uh, actually, they did go on ships with our competitors, unfortunately. Uh, and, uh, Yeah.
this is, this is kind of so weird technology providers. The Telekom is doing the distribution and the idea is that everybody makes money in process.
Andrew: Because Verizon right now is being considered just a phone company, like any other phone company. But one of the things that you need when you get a phone company is, and you’re taking all these photos is a place to store the photos. So you thought, look, Verizon would want people to store the photos on their cloud.
And if the photos are stored on Verizon’s cloud, it’s less compelling. I would even say it’s harder for someone to switch over to T-Mobile. And even if they do, they’re still. Paying Verizon. And they’ve got an ongoing relationship with Verizon. That was the original idea.
Max: That’s the idea? Yes.
Andrew: And did you raise money for that one before you started building it or build
Max: Yes. Um, I think we built the initial prototype first, uh, and then we, uh, pretty quickly raised, uh, our seed round, um, after we got our first customer. Um,
Andrew: How’d you get your first customer who was the first customer?
Max: uh, it was one telecon bringing the big telco actually in Russia, uh, and, uh, just pure. Just, you know, basically, You, know, working on working the phone, calling people,
Andrew: you’re saying you just
Max: and, and some luck.
Andrew: max. You just cold called in, and then you got a phone company to say. Sure. I could use cloud services from this guy. Just talked on the
Max: That’s exactly what happened.
Max: what happened. And it was a pure luck as well because they were actually looking for a similar solution at the time I was calling. So this is the luck element. Uh, and, uh, they did not have any better primitives to turn to, you know, w we did have some, uh, something to show for it because I previously worked for, um, uh, I had, uh, in my portfolio, I worked on building a personal cloud for LGO electronics, uh, for their devices, TVs, and smart phones.
So we used it as a reference, you know, obviously we. Uh, didn’t tell the complete truth that we didn’t build it as a company, But.
anyway, we use it as a reference,
Andrew: Uh, you said, and what did you
Max: you know, as they say, you’re faking before you make it.
Andrew: Yeah, I saw the early version of your website. LG was featured prominently on the home page with 10 million target devices was on there. This was at a previous job. What did you do for LG at your previous job?
Max: Uh, that’s exactly what we did. We,
Andrew: created a clouds
Max: Yeah. I would create a cloud store. Yeah, exactly. With branded cloud storage for LG. And then basically out of that came the idea, you know, why don’t we try to do it through, you know, other companies too.
Andrew: And when you did it for LG were people using it?
Max: Um, kind of, kind of, uh, I, I wouldn’t say it was like a huge success. Uh, they, they were kind of forced to use it because it was pre-installed on some of the devices. Um, so, um, yeah, I wouldn’t say it Was runaway success.
Andrew: Was it a success in the sense that if it was pre-installed and people had, people were forced to use it, as you said, then did they stay with LG devices? Because their data was with LG. Did they, did they keep paying LG after they stopped using the device? Did any of those metrics solid?
Max: Uh, I don’t think So I don’t think we could really prove that at any point in time
Andrew: So then what
Max: people are pretty smart.
Andrew: mean they’re going to pick their, their own, uh, their own clouds up solution.
Max: Well, first of all, it was a long time ago. There wasn’t that many photos. So most of the photos actually stayed on the device as well as well. It doesn’t in the cloud. So it was actually pretty easy just to, you know, kind of set up a new cloud and just all your photos would go there. Um, so only later actually, The amount of photos became so large that, um, you know, it wouldn’t get in a device even today, right?
With the, even it was like 64 on 1 28 gig. You very quickly run out of space. Um, so maybe we just a little bit tomorrow.
Andrew: Okay. All right. And so what was it about the, the experience you had with LG that made you say I’m going to do this as a standalone business and offer it to other device makers and other companies.
Max: Um, I guess maybe just the inexperience
Andrew: You just
Max: with, if it worked with LG, maybe for work with somebody
Andrew: oh, okay. Maybe it’s LGS fault and not the, not the solutions fault is the
Max: Yeah. Yeah. Yeah. So the thinking was that maybe we get w w w we’ll get them better. If we get, I can better partner, more digital savvy, they will actually promote the product better. And it seems like telcos could be a good fit.
you know, which did not really turn out to be the
Andrew: Okay. How did things go with megaphone? The Russian phone operator?
Max: Uh, well business had rent rooms. Well, they’re still, uh, the customer and they’re still paying. So there’s still, uh, from that point of view went well. And from point of view of, uh, scaling the product and, uh, really kind of reaching those, uh, kind of tons of customers that we would hope for. I’m not quite there yet.
I would say the, the kind of user count was way, way below our expectations.
Andrew: At some point an investor told you that this was a zombie startup. Why do they say that?
Max: Uh, well, because basically you’re at it for, you know, five or six years. Uh, your revenue growth is maybe, you know, 10 or whatever percent per year. So definitely not the VC, uh, type of growth, uh, and, uh, Basically, you kind of run out of ideas, you know, what you can do to kind of change that?
So you do a couple of peanuts, you try this and try that and it doesn’t work.
Um, and, uh, yeah, that’s, that’s eventually how it, you know, how it happened.
Andrew: And you were pretty sick of the idea too, right?
Max: Well, I, Yeah.
I, a couple of things is that we didn’t just give up and, you know, we didn’t just kind of launch it then, then it didn’t work. Then it was just, you know, we kind of waited for six years and that said, hope. Goodbye. Right. So we tried a couple pivots. We tried launching, uh, under our own brand to kind of set an example of how it would work, but obviously, you know, with the Googles of the world, it’s really difficult to compete, uh, with try to positioning our product as, uh, uh, a memory card replacement.
And we will print this nice cards. It looked like, uh, you know, your, uh, as Deckard, uh, but who would actually just have it. Can I promote well, the activation code for the cloud. Uh, so the idea was that the operators would sell this clouds in their retail stores, which I still think is actually a good idea, but the telcos just wouldn’t pick it up or whatever reasons.
I mean, it’s just,
Andrew: It is clever. People are coming in for one form factor. They’re looking for an SD card to give them an SD card. That’s really infinite storage in the cloud.
Andrew: You also offered people on premises thinking, you know what, maybe some people don’t trust putting their data with Google. We’ll let them put it in their own office.
Max: them. They went on prints and that’s actually, there’s also a problem because it’s a pain in the ass to deploy things.
Andrew: All right. So you’re getting all these, all these issues you’re dealing with them. It was a good seven years. And then did you just take off at that point and say, I’m looking for a new idea or did a new idea.
Max: Uh, I would say it definitely brewed for some time in my mind. Uh, and, uh, uh, I, you know, my son was growing up. My first song was growing up. He was, uh, turning, uh, six, I think at that point. And, uh, uh, actually I, uh, as an experiment, I, even though we lived in Russia, uh, I spoke only English to him right
Andrew: Did your wife speak, speak Russian or also English?
Max: No, the wife spoke Russian so we did this kind of one parent one language type of thing.
Andrew: was it, was it a little excluding to have one parent speak it with single language and the other parent not fully follow what’s going on? No.
Max: Well, No. she speaks Russian too. So
Andrew: No, but did she, she understood what you were saying in English.
Andrew: Got it, got it. So she wasn’t feeling excluded by it.
She just saw you do your thing in English. She’s doing her thing in Russia and you both understand each other. Meanwhile, your son is picking up English and he’s learning.
Max: correct. Yes. This was the idea and it actually happened. It actually happened. So he, he, he grew up to be bilingual. So he has, he has a very, I mean, she still has a very strong English skills. Um, and, uh, um, that’s kinda got me to thinking that. Maybe this could be a scaled with technology to more kids, right. Who don’t, who don’t necessarily have parents will speak fluent English who can do this to them, uh, with them. Uh, And um, yeah, so
it kind of was brewing for some time. And then we went to one conference, it was actually telco conference in Shanghai, China, uh, and, and, uh, while we were going to our hotel or something, We sold this huge poster for, uh, online English school for kids in China, uh, in, in subway.
And at that point kind of hit me. Wow. You know, this is actually, this could be actually a business and somebody will write it down to say China. Uh, I better do it in Europe because at that point, I didn’t know that anything similar existed out there.
Andrew: This is VIP it’s VIP kid.
Max: This was a kid.
Uh, those three. Yeah.
Andrew: Huge company in China. I think they have, according to Crunchbase, they’ve raised $1.1 billion. I’ve heard other people use them as examples of what’s possible in online education. And you said, look, this is happening in China already. We need this in Europe from the beginning, you were starting to think let’s go beyond Russia.
Max: absolutely. And yeah, cause you know, I have, I, I, I started my career in the U S uh, as a software engineer. Uh, then I worked for Google, uh, in three office set aside the Google in New York office in San Francisco in Moscow. so I definitely do have this kind of global mindset and just my ambition was, you know, I want to be able to global thing.
I don’t want to build any original place.
Andrew: And so you’re thinking about this idea, thinking about this idea, and at some point you are, you start to execute and the way you executed was you, when you got the engineers who were working on the cloud product at cloud Ike, and you said, let’s work on this new thing to teach.
but we have some spare capacity. As I mentioned to you, things were going kind of slowly. You know today, uh, so people were getting a little bit bored and, uh, I just kinda came in. Of course I also spoke with, uh, you know, co-founders of the company. Uh, of course I brought them award that, Hey, you know, this, this little thing, uh, let’s give It a try.
Um, and, uh, thankfully they, they kind of agreed that, yeah, that’s good to try, even though it sounds pretty great. Uh, you know, for a company that does a kind of this like a heavy B2B kind of telco
Andrew: sound like, like it doesn’t fit. It almost feels like you should have gone off and started this as a brand new business, owning a hundred percent, maybe raise a little bit of money, bring the engineers on, but why didn’t you do it that way?
Max: Uh, good question. Um, maybe I just, uh, it’s just, just me, you know, I, I’m still engineering. Um, not really. I don’t really have like this thing that, oh, I have to own it. It has to be mine explosive. Uh, to me it’s just boring, interesting to build something then to, to own it out. Right. So I’m, I’m okay with being a co-founder.
Andrew: you’re you’re also okay with owning fewer shares, having people who thought of your company as being a zombie startup, still own the shares. You just because it seems like what you’re saying is you just want to build, in fact, our producer was pushing you to tell us an entrepreneurial story from your childhood, not pushing, asking you said I don’t have any, you said I was an engineer from a kid.
Max: I, I’m not really an entrepreneur. Uh, Yeah.
exactly. Um, I don’t really have that mindset to kind of start and build from the Z from zero. So, uh, it does, it does help me quite a bit to have some base, uh, to start building off, but you know, my. Um, uh, Dimitri, he he’s different. So he’s definitely, he has built some businesses that are completely working with the bootstrap.
So I felt that, you know, first of all, I think in general, yeah. It is known that having a great fonder is, increases your chances for success a lot. And, uh, you know, it seems like a no brainer. I mean, I have this great co-founder who is more like a businessy person than me. I know what I do in product. So let’s just try and do it together.
Andrew: The first version though, was you max building it?
Max: Uh, yes, it was mostly me building it, uh, and, uh, Uh, you know, again, it’s, it’s totally fine because, you know, you kind of separate your roles. I mean, he had to kind of stay on the cloud, um, Bronx and make sure everything was running smoothly there. I ran ahead and, uh, a situation. So that’s, I, I, you know, I think that was totally fair.
Andrew: Okay. I’m curious what was in the first version, how it worked, but first, let me take a moment to talk about my first sponsor. It’s HostGator max. If someone’s listening to us and is going to be amazed by what you did in education for kids. And they said, I think I want to do something similar. Is there another part of the educational system that they could go take on, build a business in and maybe use HostGator to host their website.
Max: Um, yeah, I think the, uh, education for kids is definitely not a solved problem at all. And there’s tons and tons of things you can do. Uh, uh, there’s lots of subjects besides learning English. Right. Uh, right now there’s a lot of focus on math, uh, but also there’s things that the kids needs to know. Right.
Andrew: it. So pick a topic and do what you did before this interview started, kept saying, I wish you were offering other languages to my kid could do it. And you kept. You basically kept backing me up and saying, no,
Max: Yeah, the Spanish in the U S like do Spanish in
Andrew: So you’re saying that maybe do Spanish in the U S do Chinese or forget languages.
Find the one class that all these parents want. And then do that, but obsess on that one class. All right, let me say this to people in the audience. If that’s your idea, or if you have another idea, you’re going to need a website and you’re going to want a hosted by a company that you can count on. I’ve been hosting with HostGator for years.
It’s inexpensive. It just works. They’re easy to deal with. I highly recommend them and I would do it even if they weren’t sponsoring, but since they are not only can I recommend them, but I can give you a discount on the price because here’s the URL that they’re going to give that they’re giving you. To give you a discount and frankly, so that they could track how well my ads are doing.
Here’s a URL it’s host gator.com/mixergy, hostgator.com/mixergy. Go get the lowest price they have for the best service you could get. hostgator.com/mixergy. All right, what did that first version have max?
Max: Yeah. The first version was pretty bare bones, basically. A classroom, which was an extremely simplified version of zoom. Um, uh, basically just the video call back to windows, uh, teacher and a student and the interact whiteboard, uh, with slides where they could throw out together. Um, that, that was, that was It
Andrew: It was all just one-on-one with teachers. Parent would schedule it. Got it. And, um, all right. And the curriculum I imagine was not that hard to make. Where’d you get the curriculum?
Max: Uh, so, uh, I actually found one of the former teachers who, uh, taught my son, uh, and it turned out that she actually went to, went on, to teach in Bitcoins. So she was a fit teacher at the time when I reached out to her, uh, I was actually very upset that she disappeared. So I don’t read that too. She would, we would go to her classes and then suddenly she said, you know what? I have to go like I’m quitting. Uh, and, uh, uh, somehow I was able to convince her that it’s a good idea to try and launch fit kit, a copy in, uh, in Europe and I, and she helped me with curriculum and she’s still with us. She’s still, uh, uh, our director of studies.
Andrew: Impressive. Okay. So that’s fairly straightforward. She was doing it online on her own. I’m imagining if she’s doing 40 hours of classes, you could fit in up to 80 people or 80 classes, right? So your first 80 students would be covered by her,
Max: Uh, well, we didn’t rely on her as, as the only teacher. Uh, so she, she did develop the curriculum, but as a teacher, I think at the start we have maybe like five teachers have, so maybe 10. Uh, kind of half baked. Um, and, uh, um, we basically just told him, Hey, we’ll just pay you no matter what, but here you get the booking store now, uh, as long as they stay with us and thankfully we were able to convince them to actually do that.
Andrew: How’d you get your first parents to sign up?
Max: Uh, so first parents were actually colleagues. Uh, we kind of forced them to sign up. I told them, Hey, try this. Um, and, uh, after that we went to, um, uh, uh, influencers to bloggers, uh, and basically we begged them, uh, well, I, I begged them To take our money and write about us.
Andrew: To take your money. You want to do paid articles, paid reviews by them. Okay. And did they say
Max: no. Nobody would, nobody would
Max: absolutely not.
I mean, you know how the bloggers are.
Andrew: I don’t, I’m doing this interview for free. Maybe I should. No. I, I mean, I know actually that for some people it’s a real line that they can’t accept money, but I didn’t realize that in the education space, there are influencers, parents base influencers who would take money.
Okay. That makes sense. Did they take your money? I heard that there was some challenges in getting them to say yes to you.
Max: Of course. Yes. Uh, when, when you’re not known. Uh, basically they’re putting their reputation on the line, right. to uh, by recommending you.
And if your product is shipped, then you know, they’re in trouble. Uh, our product was not shit was actually good, but still it took some convincing to, uh, uh, actually get them jumped on board.
And, uh, we got many nos, um, but we did get few years yeses. So,
Andrew: Was it effective?
Max: Yes. Uh, early influences were very effective?
on. Basically working better than Facebook, better than Google. Um, because, uh, they have this, uh, early adopter audience that was calling them and, um, yeah, it was effective.
Andrew: Okay. And so you started, they get teachers in your state. I mean, yeah. You’ve got teachers in, you’ve got parents, you’ve got kids going into the program as they were using it. What did you learn that wasn’t working? What’d you learn that was working.
Max: Uh, well, uh, we were concerned that, um, some parents and the kids might be, uh, Lu, uh, uh, let’s say confused by the fact that the teacher did not speak their language. Right. Then they’re not really explaining anything during the class, uh, in their native tongue.
Andrew: They didn’t speak Russian at all. I know you launched beyond Russia, but they just spoke nothing but English.
Max: No. Yeah, so they didn’t speak any Russian or Polish or any other language.
And they had to completely rely on English.
and on what the golden TPR, which is kind of determined for, uh, essentially using your gestures to explain things, um, uh, gestures as well as, uh, visual aids, because we did have curriculum slides, so they could use that as well to back up there. Uh, And uh, Uh in theory, if it, I mean, actually it did work, it didn’t end up working so you can actually teach language like this.
Then if you think about it, I mean, obviously you can, because everybody starts with zero, right? When you were just born, you didn’t have any language to rely on. You were just kinda figuring things out.
Max: And the same thing here. It’s just, um, uh, maybe we’re even more concerned about it there and whether they would actually believe that this was possible.
And there were men, there were some skeptics, uh, but when they saw the actual trial class and when they saw that the kid actually was engaged during the class, even those just spoke no English whatsoever. Uh, this was really a very powerful motivator for them to sign up.
Andrew: Okay. And so what did you learn that wasn’t working.
Max: good question. What Did you learn that it wasn’t working? Um, to say in that regard,
Max: I think it went relatively smooth. Um, maybe yeah. One thing that we learned early on, not everybody, a more expensive teacher. Yeah. That’s actually a good point. Uh, because initially we would only hire teachers from, uh, like push countries, like, uh, us, UK, things like that.
Um, uh, obviously, uh, in that case, the cost of the class would be. You know, well above 20 bucks, um, and not everybody could afford that. So We very quickly realized that, and we kind of pivot that to, uh, what we call bilingual teachers, um, which, you know, would come from basically anywhere in the world where, you know, there’s, uh, English is spoken, uh, but, uh, lots of them actually came from, uh, uh, Philippines.
Former us colony, or I know whether you know, the right term for it, but it was just pretty prevalent there.
Andrew: We don’t use the word colony here. It embarrasses us. Fought against being a colony in it know that, you know what, that kind of explains why I was looking at SEMrush. And I saw that you got a bunch of traffic from the Philippines, and I didn’t understand why it teachers coming in from the Philippines.
Max: Yes. Many teacher, we have many bilingual teachers.
Andrew: Okay. All right. And so I see that going to bloggers is a good way to get early adopters, but what did you do to get an ongoing stream of students to come in? Where did you find the pockets of parents who are willing to do this consistently?
Max: Uh, well, thankfully we, uh, our audience is pretty, well-defined basically moms, uh, and you know, that’s, that’s, that’s certainly another learning pretty disheartening, but it is what it is. Dads don’t care about, you know, their kids learning. Unfortunately. I mean, we have very few dads who actually, uh, make purchase for their kids, mostly done by their moms.
Andrew: You know what the truth is that I want to do this, but I could see that if Alivia takes this on, it’s going to happen. Like, there are things that I want to get my kids into. She wanted to get them into rock climbing. They did a rock climbing class yesterday. So I get that, that even is true in our family.
So then what’d you find moms, I guess they’re on Facebook. Is that what it is?
Max: Uh, well, uh, yeah, lots of moms are on Facebook. Uh, Instagram. It depends on the market. So for example, in Russia, we found Instagram. It’s a lot more powerful, uh, promotion platform, uh, in, uh, Poland. Uh, that was. in Turkey, I would say 50, 50, um, both platforms work pretty well. So we kind of started the, uh, you know, good and try the marketing, uh, as well in both Facebook and Google.
Andrew: All right. I should say I’m using SEMrush to check on your traffic and to get a sense of where it’s coming from and what content do you do? Do you SEMrush?
Max: Uh, not yet. Maybe we will.
Andrew: All right. Um, I’m going to give you a free access to SEMrush you and everyone was. you want to get a sense of where a comp a company is getting their traffic, what you could do to grow your traffic. I highly recommend that you check out SEMrush by the way. I don’t want to, I don’t want to start calling out all your competitors, but I could see other competitors were in your space.
Are people whose, who sites are being used, like your actually main organic competitors, class marketing, LLC, online teaching review.com. Uh, oh, admit tad. Anyway, you could start to see, you know, them. You could start to see who the main organic competitors are. You can see what’s working for them and then copy their best ideas and improve on them and find some new ideas for getting traffic.
SEMrush is great. Many of my guests have said that they’ve used it. I’m going to give you max and everyone listening free access to it. Here’s the URL that’s gonna do. It’s mixergy.com/semrush, M I X E R G y.com/s E M R U S H dot a dot nothing. mixergy.com/semrush. From the beginning, you decided to go international.
You’re the guy who keeps telling me about focus and I admire that focus. Why did you in the beginning say we’re going to go into multiple countries instead of saying we’ll focus on Russia.
Max: Good question. I think that, uh, maybe part of the equation was that actually in Russia, there were some pretty strong competitors were likely to feel it. Uh, so we had a company who was, you know, basically running for probably about four to five years at that point, raised a significant amount of money and they were focusing on adults.
But, you know, obviously it wouldn’t take a lot of thinking to, uh, to tech to say that they will eventually try kids as well, which actually they did. Uh, so maybe that was part of the thinking, but also just, you know, personal interests. Sometimes they’re just things do things because you want to. I just wanted to do something that was international and, you know, it turned out to be a good idea in hindsight.
Um, and the reason why is because it allows us to grow a lot faster than any original competitor. Uh, because the, basically you can only go grow as fast as the market expense. And in our case, the market is, uh, Aaron school decided to take the jump on to online learning. Uh, and, um, you know, it just, especially before the COVID was just not happening that fast.
Uh, and by being international, by being in multiple markets, you could essentially, you know, triple, quadruple, you know, 10 X growth compared to any original editor.
Andrew: W how’d you pick a, you did Russia, Turkey and where else
Max: Uh, and Poland,
Andrew: how’d you pick those three countries?
Max: uh, good question. I don’t really remember how to do it. Uh, I think we just looked into neighborhood, um, you know, what would be the. Kind of, uh, different markets that would not be too different from each other, but still they would represent different kind of, uh, areas of the, uh, uh, of the world. And, uh, Russia is obviously a good representation of east Europe.
Poland is, you know, a good representation of west Europe. Although, you know, some would agree with disagree with that. Uh, but I think it’s, you know, it’s, it’s a great country and Turkey is. You know, re really good representation of middle east for us
Andrew: Well, And representations, why not go to Germany then? Germany is a really advanced tech
Max: too tough,
Max: Oh, it’s actually, it’s, it’s not, not true. Germany is not a country. Absolutely not. It’s actually very backwards and conservative country in terms of tech. Um, but it’s, uh, you know, in others, in other senses, it’s definitely advanced, but in terms
Andrew: I, what makes you say that? I keep hearing that Germany is where I should have gone to, uh, do my interviews with European entrepreneurs. I ended up,
Max: No, as far as far as, as far as, yeah, as far as people dealing companies, maybe that’s the case, but as far as actual consumers adopting technologies, Germany’s not really the, uh, kind of the first, uh, and uh, early adopter tech market. I dunno, whatever is the reason maybe life is just too good for average German consumer and they, they just don’t have any motivation to kind of seek for, you know, solutions out there.
Uh, but, uh, what we found is with online learning Germany gave me, uh, much, much later for us. So we were a, actually, I think about two years after we were launched and that our initial countries, uh, so the next year we actually did try Germany and we failed, uh, basically we kind of launched, we translated everything, uh, and.
Yeah, basically, nobody,
Max: we even hired agency in Germany to do the promotion for us. Then basically we get crickets, but the year later, actually after the, uh, when the pandemic shit that’s when Germany started actually picking things up and we’re supposed to attraction there.
Andrew: You know what I’ve noticed that countries like Germany, France, don’t Spain. They don’t, well, maybe Spain is different, actually. I don’t remember, but they don’t have posters everywhere for learn English. I mean, before the internet, they were learning English classes all over the world. Right. I, I think I’d noticed them more in.
Countries that had more of a struggle like Argentina, you know, is it that maybe parents are already getting the English, the English lessons they need from their schools in Germany? Is it that maybe parents are just not as hungry to get their kids to learn other languages and make money outside of the country?
Is that what it is? Do you know?
Max: Uh, could be, could be, yes. Uh, obviously I don’t know the exact answer because every parent has their own. Uh, but, uh, it, it is true that. I, you know, it’s true what you say, although, um, I would say that, um, uh, maybe what helps us is we don’t really kind of position our program as a replacement for school.
And if, even if you have a great school, very unlikely, you’re getting high quality speaking practice. Uh, Right because, uh, very few teachers actually fluently speak English themselves strangely enough. But just as, I guess, not, not every trainer, not that coach actually placed himself very well. Right. So same standard languages, I suppose.
Um, so, so Yeah.
maybe that helps us a little bit in those countries where, and another thing that happens. Uh, now that the world has become a lot more kind of global thanks to the video conferencing that we’re using right now. Uh, and Ben’s through, you know, a push of a global pandemic that forced us to become global.
Uh, parents don’t really think in terms of like, oh, I have to make my money outside. They think in terms of, wow, I went to work for Google by, you know, I went to leave at Germany at work And I can do it now because there is a remote work possible.
Andrew: And I think they’re saying the same thing for, for kids. So you were doing, you were doing a lot of customer support in the beginning. You’re running a company, you got a lot going on, you’re developing the first version of the program. Instill you push yourself to do customer support. You’d spend over an hour on the phone with a client.
What did you learn from talking to them? What did you get that allowed you to either improve the product or improve the marketing?
Max: Well, I guess one thing I learned, which is, um, um, you know, I guess standard learning for anybody who starts doing customer service is that there will always be outside of spite than angry customers. No matter how good your friends. Uh, so really kind of learn to calibrate my, uh, my feedback loop, uh, and, uh, you know, uh, to take things with a grain of salt.
Uh, I also learned that there was a lot of, uh, board women out there who just need, need somebody to,
Andrew: Ah, okay.
Max: yeah. They confused the lead. So I also learned that I’m really bad at customer support, because the reason why. If our customer support person today spends one hour with customer, we would probably find this person because you have to know how to end the conversation, right? When you, when you, when you see that it’s not going, then it starts going the, the customer support issues.
And I just didn’t know how to do it. So I’m terrible at festivals. That was probably the main learning. So I need to hire somebody else to do it.
Andrew: Speaking of, uh, letting some people go. There are some people who weren’t growing as fast as the company you had to let them go. What, how do you, what do you mean by that? Describe what’s going, what was going on?
Max: So really when the company is growing quickly, there’s really two things that happen. One of them is the, the people that were with you oldest. Uh, they grow with the company and they fill in the new roles because essentially, I mean, even for myself, right. I started as a CEO of a company with like five people.
Right. Then one year later I had to run the company was like 20 people. Then one year later it was a hundred people. Over 300 people. And I have to up my game every single year and same thing for every employee and some people they just kind of fall behind, unfortunately, or, I mean, maybe I’m, unfortunately it’s just their nature.
Maybe they’re just not built for this. And, uh, we did have a couple of cases of that.
Andrew: How hard is it to let go of somebody who’s worked really hard up until a point, but you just don’t need them anymore. Do you have to get past that mentally or is it comfortable?
Max: You know, I think actually I think as, as, as a managers, uh, being able to let somebody go, this is the hardest skill that you can have, but it’s, it’s also essential because if you don’t do it, then, you know, your team will go to waste, right. Because the team dynamics. Go down the drain. Uh, so you have to do it.
It’s difficult, it’s tough, but uh, you kind of have to build the muscle for it. And I don’t think I’m still as good as I should be at this. So, um, but, uh,
Andrew: At noticing it is, it is the hard part noticing it, or is it getting yourself to take action fast enough?
the second part, the second part, uh, you know, w when. w when do you cross the line? When you have to say, okay, this is not important, right? So you have to, uh, I guess it’s just an experience that those are, that when is deadline, usually people wait for too long and that’s
Andrew: My problem is I think I haven’t done enough as a manager. Hasn’t I haven’t done enough as a leader. I should be adjusting how I explain this.
Max: How Do you mean.
Andrew: in yourself?
Max: Uh, you mean that it was your fault that, uh,
Andrew: Yeah, that I was focused too much on big issues and not enough on. Coaching, this person focused too much on other things, and didn’t really bring out the best in this person. I saw something and then when I hired them, it’s not there now. I need to bring it out.
Max: Uh, actually, I didn’t have that. I, so my, my kind of my, my, yeah, my initial impulse was also always to fire people because I was extremely demanding, uh, to know how would they form now? I was like, Okay.
you didn’t do it. Okay. Bye-bye and actually had to learn myself to, to stop and pause and say, What did I do wrong here?
Maybe there’s something we can infer from. Yeah.
it actually went from the another way, um, uh, backwards. You know, it’s still a challenge to find this sprites, uh, time when, uh, when, and actually, uh, today what we do is we try to change people’s roles. So not necessarily, you have to let somebody go, but sometimes you just have to talk to them and say, Hey, you know what, I’m your director now.
But you know, maybe this, this title was not really for you. Maybe we should, uh, maybe should. And, uh, we actually had quite a few of those discussions as well. And thankfully people were actually quite, quite okay with that. And, uh, we, we have some people who are still with us, uh, filling this roles.
Andrew: How much money would you say you put into Novakid? Like how much investment money went into it?
Max: Uh, well, I mean, like to see money, uh, altogether, uh, at this point it’s close to 14 years. Uh, I mean, we, Yeah.
we didn’t use it all, but, uh, you know, how much was invested in the
Andrew: Okay. And there was a period and well, this was total, right? Even back when you were doing the cloud business, part of that 40 million went into that. No,
Max: Uh, cloud business was not really.
bad investment, uh, intensive. I think we only raised about $1 million for that. So yeah,
Andrew: So where’s the money. I would have thought that I would have thought the cloud infrastructure, the cloud, uh, enterprise sales would have been more expensive. No education is right.
Max: Yes, definitely. Well, because it scales a better, it scales better. It scales faster And
Andrew: And does the money go mostly into, into advertising because you break even don’t you break even on, on, on classes, if not make a profit on them.
Max: Sure. Yeah. So class, the unit economics is possibly is positive. Um, but, uh, you know, uh, basically if you want to grow, uh, head of the, uh, head of the market, let him go ahead of the competitors. Uh, you have to invest aggressively and we invest in brand and advertising. We invest in, uh, product development, a lot, uh, scaling up our content, our operations.
So particularly that’s, that’s where the money goes.
Andrew: Wow. There was a period there where you almost ran out of.
Max: Yes. Uh, there was this, uh, period, uh, very early on. Um, and, uh, uh, yeah, thankfully we were bailed out by one of.
our professors who basically gave us initial trench of financing before we found a co-investor, which, you know, usually what they see is once they want to see somebody, uh, joined them in the round.
that, that was really a lucky break.
Andrew: And this investor said, that said, I need you to bring someone out. I’ll invest along with, with someone else. You couldn’t get someone else in fast enough. And they said, all right, we’ll come in anyway. And what, what was it? You, you named the type of investment that it was, what was it that they came in with you?
They just did a
Max: Uh, uh, yeah, yeah. Uh, w what I mean? Yeah, basically they Just transferred to my nature for, they just transferred the cash.
Andrew: Just basic. Was it a basic investment? Was it where they were taking equity in the
Max: Yeah, basically. Yeah. Basically equity investments, no, nothing and nothing too offensive there.
Andrew: All right. By the way, we talked a little bit about V uh, it’s VIPKID do you see what’s going on in China with them? That.
Max: Uh, well, w I mean, obviously we don’t see from the inside, I’m pretty sure it’s, you know, it’s
Andrew: China is
Max: murder murder in there.
Andrew: the rules on education. Like I guess one of the latest things was they are not allowed to offer any more classes by teachers outside the country. So they, China does not want their students to be taught by, by teachers who are not Chinese and in the country, I think.
Max: Yes. Yes, that’s correct. That’s correct. Um, definitely it’s a huge, huge, uh, devastating blow to, uh, and you know, um, obviously, you know, I would not want anything like this happen to us. And hopefully, hopefully the markets we’re in will not be like China anytime soon, we don’t expect them to be. But, uh, yeah, definitely.
This was the, this is the risk operating in a heavily regulated and centralized market. Like China, suddenly you get things like this happening, essentially obliterating your business model.
Andrew: Yeah, well, um,
Max: only that, not only that, but also they required all these companies to become, uh, uh, what is it called? A nonprofit you’re a VC company. And suddenly you have to become a nonprofit like that. So yeah.
Andrew: So 10 cent, I think owned pieces of it. You’re saying that they just can’t be a profit a for-profit business anymore. If they’re an education space. And then I think there are more regulations on, on extra care, extra afterschool education for kids, which I was surprised by. I would have thought that they would want more of that.
I understand that the video game band, but, um, I would have thought that they’d want more afterschool education.
Max: go figure.
Andrew: Yeah. Yeah. Like I can’t, but, uh, it doesn’t affect your business. It’s not that, does it allow you to hire more easily now because were you still fishing in the same pool of teachers in the Philippines or is it not impacting your business at all?
Max: Uh, so they actually only hired teachers in, in north America. So probably not a huge impact for us, although we do hire Eric as well. Uh, but the rest, other Chinese schools who did, uh, hiring Europeans. So we do expect that influx of. Teachers, I would say within the next six to 12 months.
Andrew: Okay. All right, congratulations on the success of the business. Um, it’s amazing to see what’s possible in education for kids. We used to hear about these small businesses that would turn into mega businesses, teaching things like the SATs and, uh, and a few other classes. Now I’m seeing in more and more topics that online education is going to start to take over, uh, education in general.
I’m excited to see what
Max: Totally. And, and make makes perfect sense. Uh, I think really the future, you know, uh, the, the model of was really trying to find the best school for your kid possible. And I think the future model will be just, you know, go to any school and just pick and choose the best, uh, additional education online for your kid.
You know, you can have Harvard professors teaching, you know, uh, teaching your kid if you want to. Right.
And it’s totally accessible. Even if you leave. You know, I dunno, Nepal or Indonesia, you can still do it.
Andrew: All right, max, thank you so much for being on here. It’s Novakid and the website is Novakidschool.com. And I want to thank two sponsors who made this interview happen? The first, if you need a website hosted, go to hostgator.com/mixergy. The second, when you need to do online marketing, well, I’m going to let you go.
For free SEMrush, go to mixergy.com/semrush. Max continued success. Impressive.
Max: Thank you very much.