Image of Code4Kids drone curriculum courtesy of Code4Kids.com
Matthew Henshall is the founder and CEO of Lessonspace and Code4Kids. We cover what makes the Code4Kids experience effective and Matthew's advice for would-be ed tech founders.
Episode links:
Episode transcript:
[00:00:29] Fent Hughes: and we're excited to be here today with Matthew Henshaw, who Is a serial ed tech entrepreneur. Matthew's the co-founder of Skill Up, which was acquired in 2020.
[00:00:40] He's also founded Lesson Space, Code for Kids, and room.sh which he still runs all three of those today. So looking at LinkedIn, I can see that Matthew has like four full-time jobs which is impressive. Matthew thanks so much for being willing to share your time with us.
[00:00:59] Matthew Henshaw: Yes. [00:01:00] Thanks so much for having me. And hi to your audience.
Starting up and failing
[00:01:04] Fent Hughes: When we talked before the call, Matthew, you mentioned that when you first started as a founder, you had a few, I think you mentioned three unsuccessful ventures before your first successful experience and I wondered if you could give us a little bit of context on your first three startups and what did you learn from that and how did those experiences affect the businesses you run today?
[00:01:29] Matthew Henshaw: Mm. This that's now 2014, 2015, so a lot has happened since then.
[00:01:35] I actually had started these kind of three ed tech business right out of university. It's a very popular field to go into an ed tech. And the reason for that is because education is technically all we've known for 20 years, and then all of a sudden you come out of university and you think, Oh, I wonder what it is that I want to do. And you start something in ed tech. And the first three ventures I started were all very kind of what I look back now [00:02:00] is kind of amateurish and not kind of fully committed.
[00:02:03] So I was either starting something by myself for, for two of them or something with one friend for another. But I was never full time. I was doing some my own things in the background. They were all born out of problems I kind of saw in the workplace where it was a learning management system maybe it was a, in a poorer community trying to create a maths tool for them.
[00:02:21] And the big learnings I got there, I think in education. There were maybe two and, and the main learning one was from an education startup perspective, and one was from a founder perspective.
[00:02:32] The founder one is age old advice, so I'll, I'll share that first. It's, it's much easier to work with, with the team. You wanna have a founding team go, going at this by yourself is the, you know, the saying, if you wanna go fast, go alone. If you wanna go far, go together. I think that was true.
[00:02:47] And I think the second thing in education that happens is that I think we kind of come out of education and you wanna start an EdTech startup that has, makes a lot of meaning, has a lot of impact and there's, you know, of course [00:03:00] education need to have impact.
[00:03:01] That's kind of why we all do it, but I think sometimes we totally forget that it also has to be a business that makes money. And I was very focused on having this kind of impact, doing something really meaningful. And I never looked at the unit economics hard enough.
[00:03:15] And I think in education it's so important, like the number one rule: if you're gonna start a education startup, make sure you make money first. Make a difference second, and, and that might be a bit controversial. But if you wanna start a business, you have to make money first. And, and really, if somebody is willing to pay you for your services, it's very likely that you are making a difference, a positive difference in their life, just by the fact that they're paying you.
[00:03:38] I think things like crowd funding and NGOs, they're all good and they definitely have their place in society, but you don't wanna get too reliant on that to fund the growth of your business if that's what you are after. So the kind of big learning there was education: make sure you're making money first, make it impact Second. I got that wrong three times.
On LessonSpace and Code4Kids
[00:03:58] Fent Hughes: Maybe at this [00:04:00] point we could talk a little bit about the two main businesses you're running today. Matthew, could you tell us about lesson space and code for kids and how they came about and also how did they relate to each other. How, how are you finding time to do both of these?
[00:04:18] Matthew Henshaw: Maybe it's worth sharing a little bit about how these two businesses started and, and why it's the way it is now. And, and kind of my advice to any founder is don't start two businesses at once, rather do one. That's not what we are doing. And, you know, that happened not by choice, but more by necessity. So we were, we had a tutoring company called Skill Up Tutors, which was a way for, it was a tutor marketplace, B2C, like Airbnb for tutors, if you like.
[00:04:40] That was the business we sold last year. That was a very difficult to build. And it made a lot of sense for that acquirer to buy that business based on their unit economics. They had a much bigger access to audience, much bigger lifetime value, but we were trying to create a way for our tutors to have online lessons and we were using some off the shelf software and that software started failing us, [00:05:00] our failing our tutors, at least it wasn't working, and they kept reverting to Zoom and Skype and back.
[00:05:05] So we decided, cause we were a team of engineers, decided to build our own online Zoom for education, if you like, that that's kind of how Lesson space was born. Because the skill app was, was difficult. So we decided to start kind of trying this new software as our unique selling point and we triggered a Google alert in 2017. It could have even been 2016. And that got us three customers. They all contacted us, two in America, one in Canada, and those are still our customers today. And we just realized, Oh, sharks, we could just sell software as a service. It's kind of something we really enjoy. We don't have to manage the tutors as much.
[00:05:37] So that's lesson space. It's software as a service. It's a zoom for education. It, it was very fortunate to grow quite a lot during the pandemic. We were very lucky. Luck plays a big part and yeah, so that's how that started. But it started because we were kind of at a loss with Skill Up.
[00:05:53] And at the same time while that was happening, I was, I had been teaching my niece to code she was 10 years old at the time. And [00:06:00] by the time my niece was 12 years old, she could pass an entrance exam as a junior software engineer for a company that required a computer science degree.
[00:06:08] And she's not, you know, going to become an engineer. She's not the top of a class. She just was like, I just teaching her basic things for two years. This kind of proved to me that there was this massive gap between what was happening in the world and what was happening in the classroom. So we kind of heard that their school didn't have a computer teacher anymore.
[00:06:27] So I went to say, Can we teach your kids to code? Then another school said, Hey, could you teach our kids to code? And that's kind of how code we get started. So both of those products companies kind of happen in parallel and they both happened because customers asked us for it. And they and, and then once they asked us for us, we were like, Oh, that makes sense.
[00:06:44] So it was, I wish I could say we knew what we were doing. We had no idea.
[00:06:47] So these two businesses, lesson, space, and code for kids, how do we run them both at the same time? Firstly with a lot of difficulty, but secondly, it's definitely for us now in that positive. And the reason for that is, the one advantage we [00:07:00] have is we don't look at a business in isolation anymore.
[00:07:02] You really get the chance of looking at a business like a machine relative to one another. So you can say, Oh wow, that's working at Code for Kids. I wonder why that doesn't work at lesson space, that sales tactic or that marketing tool or that product kind of methodology. And then you can say, Sure, but that's really working well at lesson space, could we try and apply that for code for kids? Hey, we should get the sales team at each of these companies to swap notes. Why don't we get the curriculum designer and the teacher support from code for kids to have a, have a discussion? And so from that perspective, running the two companies have been very, very beneficial.
[00:07:36] But it isn't what I would suggest. We're learning twice as fast, I suppose.
[00:07:41] Gleb Lantsman: All right. So which of your two companies, Matthew, would you say you invest more time in and why?
[00:07:49] Matthew Henshaw: That definitely varies based on kind of the needs of the business. For my position there's only really two of us who are spending time across both companies. Everyone else is very focused on their own [00:08:00] business.
[00:08:00] We might, for example, be doing a massive overhaul of our lesson space outbound marketing tool. And the whole idea of this tool is to also then use it at Code for Kids. So we are doing this, a huge amount of work there right now at lesson space, and that's going very well, taking a lot of my time.
[00:08:17] And when that gets done, it will transfer across to Code for Kids and that also takes on my time, but less. At the same time, Code for Kids is doing a big, a big revamp on a lot of the courses. So where am I spending more of my time? Lesson space is bringing in about 70% of our revenue where Code for Kids because is bringing about 30%.
[00:08:32] So I potentially am spending probably a similar kind of split amongst them. But that definitely ebbs and flows, but I'd like to hope the average was, was close to that.
[00:08:41] Fent Hughes: Could you tell us a little bit more, Matthew, about the code for kids product? What is it you're selling and, and how do you, do you arrive at that product? Because it sounds like you started with the personal experience with your niece mm-hmm, but you know, now you're supporting students in schools across South Africa, and I would [00:09:00] love to understand more about the journey to the product
[00:09:02] Matthew Henshaw: you love day. Yeah, that's cool. Like code for kids really excites me.
[00:09:05] I love lesson space. Love what we're doing. It's very exciting to see millions of lessons happening every, every month on the platform and know that you're having a positive impact on everyone, but you're kind of a little bit disconnected cuz it's really just a metric on a dashboard and you hear customer feedback but you don't really control what's happening in the classroom.
[00:09:21] It's just building a tool that ultimately the best lesson space tool is the one you don't even know it kind of exists and, you know, as kind of a goal. But Code for kids on the other hand, it's something that has a very tangible impact. It's really great to speak with our teacher support team and, and hear what the teachers are doing and seeing the videos they're posting on online.
[00:09:39] So it's a hugely exciting product that what the product is doing, it is trying to bridge the gap from game-based or block-based coding to real world coding. So we are really focusing on your middle school, you're aged eight to 15 years old; now, what has happened over the years?
[00:09:56] It's really easy just to make games for kids. So [00:10:00] a lot of these tools are games and yes, the games are valuable. They have their place to play, very gamified kind of ways to teach computational thinking, digital citizenship, these things which are really valuable. But the reality is, is if you wanna do coding one day and be confident to try coding, you need to be able to see real code and not, not freak out by it.
[00:10:22] So we have an age-old, on day one, they make a website with html, CSS and JavaScript, and we are bridging that gap from the blocks to the real world. And, and you know, we have 40, 50,000 kids doing it every, every week so they can do it, you know, we've proven that these great folks can do it, and they're making these crazy websites.
[00:10:40] but the purpose of Code for Kids is to bridge that gap from game to real. And at the end, we are not trying to make computer engineers, we're trying to make students who are confident to try coding in the future. So it's not designed just for the coding crowd, it's not designed just for the people with the coding acumen.
[00:10:56] It's designed for every single student, no [00:11:00] matter their, their strength or their acumen for coding to be able to say 'Hey, I could try coding in the future cause I've actually done real coding.' It's difficult to get that when you've just been playing games and I'm being a bit derogatory saying games. But what I mean by that is like very very disconnected from actual coding, trying to like soften the edges where you don't really need to for coding.
[00:11:19] So, yeah, that's what we're doing with Code for Kids. And we do it through a number of ways, building websites, building apps, programming, drones, all done online. You know, it's $10 per student per year. There's no devices you need, you just need a computer. And have a huge amount of training for teachers .
[00:11:32] Fent Hughes: So you're providing the teacher training, essentially a curriculum guide for teachers. Can you tell us a little bit more about what that looks like?
[00:11:39] Matthew Henshaw: Yeah, so exactly right, that we, we, we offer the tool, so the, the curriculum and the tool so the teacher can say to the students, Hey, come on to code for kids and start doing your lessons.
[00:11:49] But we also provide what we call just-in-time training. So we say to the teachers, If you ever bought a textbook, the textbook provider will come and drop a textbook at your school. And then they. [00:12:00] And that's not very useful, right? So what we're saying is we have textbook that's always there. So we don't necessarily need the teachers to take a whole day of school to get trained, but we know that if they had their first lesson and they did it in a weird way, our teachers' board jump and say, Hey, we noticed you taught that in a strange way.
[00:12:13] Can we train? Train a little bit different? Can we understand how you taught that? We call it just in time training. So our first value at Code for Kids is teacher first. It's all about the teacher. We focus fully on the teacher and training the teacher to teach coding, and then we give them the tools they need to teach it.
[00:12:29] Most of our teachers have no coding background, so it's very important for us that we can make a teacher confident to be able to teach coding.
On differences from Scratch and the four pillars
[00:12:36] Gleb Lantsman: You know, when, when somebody starts talking about coding for kids, I think the word that immediately comes to mind is scratch. So code for kids is different from scratch because it's more realistic, more real world, so to speak. Plus it gives teachers more support and so they, they get more training. Is that correct or is there more to it?
[00:12:58] Matthew Henshaw: That's exactly correct. Like [00:13:00] there's four core pillars in which code for kids exist. Number one is teacher first. We focus fully on the teacher. Scratch? Yes, the teacher needs to be focused on, but the teacher isn't the center focus. It's kind of gamefied that the kid can go through it.
[00:13:13] Number two, it's all about building confidence in students. Now scratch is very engaging. The students are loving it, they're playing the game, but it's not necessarily building confidence that can be easily transferable to go into something like look at real code.
[00:13:26] The third thing is real code, real, real content. So what we are doing is we're teaching html, css, JavaScript, Python and we are doing it in a real way. So for example, all the schools want to learn about drones. So we partnered with a company that is the best in the world at taking a drone and scanning crops. So they scan orchids and vineyards and, and they, with these scans, they can pick up diseases in, in these plants or they pick up yield, they can do these amazing things. And these are some of the best engineers of the world. So we went and filmed those engineers in some way and so that they can explain what they do [00:14:00] to an 8-year-old and then we said to the students, Here's your drone virtually that you need to program and scan trees. And at first lesson we're gonna go with block, we're gonna go move forward, scan, move forward. The very next task is now do that in Python because it's not difficult, you're just trying to move forward, scan move forward. But now Scratch is totally avoiding that. So we going immediately and saying, Well you can't do the same thing in Python and then we're gonna go to Blockley again, then we're gonna do it again. In Python, we're doing the exact same things. You're just so like that's Py. And then we get more and more Python.
[00:14:30] And then the last thing is begin with the end in mind. The last kind of foundation. and what that means is there's this whole idea of like, if you go and learn coding, you need to learn like hello world, and you need to kind of go on to code Academy and start. This is a header, this is a paragraph. We don't believe that.
[00:14:47] We believe that the best way to learn is like pull something apart and put it back together. Like you don't learn about an engine by starting with thermodynamics, you kind of open the bonnet of a car and starts like tinkering. So we start with the end. We start with a [00:15:00] website that's fully working and then we say the as soon like pull things apart, break things, make it your own. And that's kind of the four principles of Code of Kids, and that's where we're trying to do it differently to. And we do believe Scratch is very valuable in the younger years, but we try to bridge the gap from scratch to kind of computer science.
[00:15:15] Fent Hughes: Yeah. If I had to summarize, I would say it sounds like Scratch is that block-based language is, is really great for engagement and really great for allowing kids to sort of learn to think computationally without even maybe even knowing that they're, that they're learning some, some of those skills.
[00:15:33] Where you guys are focused is, 'Okay, let's make that applied and let's help the teacher be a teacher who doesn't know how to code. Let's help the teacher step in and be able to provide some scaffolded activities to students that enable them to actually get into real code and make real things and feel like they could do programming again maybe in 10 years if the opportunity comes up, they would be like open to it, or at least not as intimidated by it as most of us are.
[00:15:59] Matthew Henshaw: [00:16:00] I think that's exactly right. There's like, yeah, there's so many stories we have of like students we've heard of who've, who've just dived into it. And that's awesome. That excites us. Like students are seeing, oh my word, this is my website. You know, we had a, a school make a cake, a cake sale, and all of a sudden the students were selling the things on their website and the school got a bit annoyed and they're like, Well, we said, Okay, of course you must block this and stop them, you know, selling actual stuff on their website.
[00:16:23] But the reality is we said to the school, you've just. 10 year olds that are entrepreneurs, like that's like kind of the purpose of school. And you did it in age 10, you know? And so we said like, there's a way you can like use this as an opportunity, not as a, not as a kind of problem.
[00:16:41] Fent Hughes: As you look at Code for Kids, you said you, was it 50,000 students in South Africa using It's actually
[00:16:48] Matthew Henshaw: world? About 70, 80% of our customers in South Africa. We, we have quite a footprint in New Zealand, in the uk Okay. And in North America.
[00:16:58] Fent Hughes: So I'm curious what some [00:17:00] of the biggest challenges that you're seeing in terms of things that either teachers are dealing with or student. Or schools in adopting and getting value out of the experience?
[00:17:11] Matthew Henshaw: That's a great question cuz that's what I'm spending most of my time thinking about at the moment. What is the biggest challenge to growth or what is the biggest challenge for us using code for kids everywhere?
[00:17:20] It's different in different countries. In South Africa schools need a kind of one stop shop that can take every box. But the beauty is here. The teachers have a lot of. Oh, I don't wanna say freedom, but a lot of, like, they've been given a lot of the kind of They're encouraged to try new things I think. So the teachers are very willing to try something and see how it goes.
[00:17:40] In the UK we found that, and that's quite similar in New Zealand. We found this same thing in New Zealand to happen in the uk we find that teachers are a lot more inundated by a lot of tools and that's because the, the UK education system is substantially more advanced than really anywhere in the world. So these teachers are having to, you know, before they [00:18:00] can even look at a product, it has to tick a lot of the boxes. And for every one company that's trying to sell the product to them, there's nine that are giving it to them for free.
[00:18:10] So you've really gotta differentiate yourself in some unique way. And those free products don't mean that they are not as good. Some of them are brilliant. Because they're very well funded by non-government organizations, you know? So, so the biggest challenge in getting a school in like the UK to adopt it, I suppose, is can we show them that this is really going to ignite, like, ignite something in the students that no other program's going to do?
[00:18:35] This is gonna impress your parents. This is really gonna make your students like, dive into it in a way. The US our biggest problem is getting to the right people. It's far different. We can't really go direct to school. We have to go to districts. Districts have their own agendas and their own needs and their own like kind of criteria with which they're selecting.
[00:18:53] So it's tough. It's tough in the northern hemisphere we've found In the first world country. Oh, yeah. Specifically in the UK and the US [00:19:00] for those reasons.
[00:19:01] Fent Hughes: What it sounds like is, the relationship between the teacher and the student is a little different in code for kids than it is in a normal classroom, right? Where the teacher is sort of like, if I think about the traditional school room, the teachers sort of the dispenser of content and the, the kids are sort of the, the memorizers of content.
[00:19:24] I mean, that's a very, that's a little bit of a harsh caricature, would you say that that relationship is different in a code for kids experience? Or how does code for kids Yeah. Affect that teacher-student relationship?
[00:19:38] Matthew Henshaw: Yeah, that's, I love the question because it's exactly why we started the company. We kind of, I sat with my co-founders, like, guys, what lesson do we wish we had at school?
[00:19:46] Like what? What if we could make a whole lesson, what would it look like? And that's how we started designing Code for kids. And so one of the examples very practically is that these classes aren't meant to be the students putting the earphones on and just disappearing [00:20:00] into content. Earphones are off and there is discussion.
[00:20:03] So for example, they can all help one another, but they help with their mouth, but not with the maths. So no student can do it for the other student. They help verbally. We have, we equip our teachers, you know, the best teachers. We do a lot of lesson observations. We'd be going and spending time in the classroom and understanding what's working.
[00:20:20] But lots of we have, we train our teachers in something we call the three step problem solving approach. And the three step problem solving approach says Okay, the students puts up the hand and says, So I dunno what to do. Step one, has the student tried? That's all the teacher has to do. Have you tried?
[00:20:34] Show me what you've tried. The beauty of our coding is you can break it a hundred times. It's encouraged. And reset it and rego and try again. Yes, the students tried. They still can't do it. Cool. Step two, have you asked your neighbor? And your neighbor can answer with their mouth, but not with the maths. Right? So this is where you get the strongest students in the class who are typically not always the most popular in other classes.
[00:20:54] They're becoming the heroes in this class. They're helping out all the other students. And because you learn best when you [00:21:00] teach, everyone knows that. Yet we don't apply that into our classroom. , you know, that's when you learn. And then the third thing, if the students still, some don't know, the teacher always answers Socratically with the question, How, how, what about this?
[00:21:12] What about that? Have you tried that? So the best teachers that we observe are the ones, you never give the answer. Sometimes when a teacher actually has a strong coding background, they sort of try and teach the students to code. But we actually need the, to the teacher to teach the students to discover coding without actually giving any kind of the answers away.
[00:21:30] Fent Hughes: That's fascinating because it sounds like what a lot of people would say is a weakness. The fact that the teachers themselves are not programmers probably is, is a little bit of a strength in, in the fact that it enables the classroom to, to like rise up and, and the students to teach each other and learn how to like troubleshoot because that's one of the main things you do as a programmer.
[00:21:53] I. Hmm. You're going to stack overflow. You're finding answers to your own questions.
[00:21:57] Matthew Henshaw: That's a great way to put it. Fenton. Yeah. I love that.
[00:21:59] Fent Hughes: That is really [00:22:00] cool. This the, we, what we, what considered a weakness is actually a strength. Yeah.
On earning money in education
[00:22:05] Gleb Lantsman: Yes. Good. So one of, one of my professors and, and Fenton's professors at university, he did say one thing if you've come to education to earn money, it's not too late for you to rethink this. It's, it's time for you to find something else. So I would like to know, Matthew how successful is well, are your both businesses, are they earning money?
[00:22:30] And what is the business model for each one?
[00:22:34] Matthew Henshaw: Hmm. It's a, it's a great comment and he's not wrong, but I think there's more to it than that. And like, there's, like, so we have values at our company and one of them is, is the value of trying to make people make money. And it sounds a bit ridiculous, make people make money.
[00:22:50] But a very practical example of that is what is the, like purpose of school? What is the purpose of university? You've heard of like Lander School? I love the. I, you [00:23:00] know, it's obviously executed in a hundred different ways, but the, the fundamental principles of the model is education is free. And when you start earning a job, we are gonna get money based on the amount of money you've just earned at the job.
[00:23:13] So what you've just done is you've aligned the values with your customer and every person. If why that education, it's 99% of the time it's going to be because to make money, I wanna increase my salary. I want to start a business, I want to make money. Now I think, the problem is when education isn't making money, it's actually not adding value in some way.
[00:23:32] And that's the kind of problem we found. We were trying to make a difference without adding value without making money, and it, it never worked. Now, it's not to say there's not great free tools out there, but at lesson space as an example, that's how we make money for every hour, that somebody does it online. Online tutoring for every hour. There's more than one person on the lesson. We bill that person for an hour. So if you have no lessons, you make no money you pay no money. But if you have more [00:24:00] lessons , you pay us more money. Now, Zoom, for example a competitor of ours if you like, or an alternative that a lot of customers use, they have a monthly set fee, which means that the more meetings you have on Zoom, the less money Zoom makes.
[00:24:15] Because Zoom is paying for bandwidth. They are actually incentivized for you to pay for Zoom, but never use. Now we have the complete opposite. We are incentivized for customers to use our product. So our team, our team of success from lesson space will go to a customer and say, How can we grow your business?
[00:24:32] How can we have more lessons? How can you have more lessons? Because every time you have a lesson, you are making money. And a general rule for this is that for, if, if our company was making a million dollars, it means our customers making a hundred million. . So the people are making a hundred million dollars in our, on our product for every $1 million we make.
[00:24:53] That's just, you know, a rough estimate. It, it, it's actually probably pretty accurate. And, and that's a nice way to think about it.
[00:24:59] And I think with Code for [00:25:00] Kids the same thing. It's like we, if we can show a teacher, look, look at like how your students are gonna react when they see this, when they start working on this and this kind of light bulb moment goes off in students when they're like, Oh my word. I've just created something that has access to the world, right?
[00:25:16] I've just created something that can be used by the world. You can't do that with Scratch, as an example with with Code for Kids. Can you make something that can be consumed by the world and that is the future. That is how you make money ultimately. So I think, yeah, education, that's definitely true. It's difficult to make money, but I think it's if you can align your incentives or your what, when your customer wins and how do they win?
[00:25:38] Making money, if you can win when they win, you will be fine. So that would kind of be my encourage, like why should somebody pay for this product? It's difficult to find in education.
[00:25:51] Fent Hughes: I love that the concept of aligning your incentives with the good incentives of your, of your partners and [00:26:00] customers, so that you all went together it seems like a much more virtuous business model than then. We often see where, you know, , like often gyms, right? They want you to subscribe to the gym membership, but they don't really want you to go at least not all on the same day, cuz they don't even have the capacity for it.
[00:26:16] But I would love to ask you about the diverse skill sets that you bring together because, you know, you've done this a couple times or a few times now where you've founded an education related business and it sounds like you've always done so with a team.
[00:26:33] And what I'd like to ask is if, if you were going to do that, In a space targeting schools, again, as you've done with Code for kids, who would you have on that team or who would you make sure is included in in the conversation?
[00:26:49] Matthew Henshaw: Yeah, the simple answers. Teachers. I mean, I think specifically with selling to schools, you want, you want to have teachers on your team and then some good sales people, people who know how to [00:27:00] sell to teachers.
[00:27:00] I think. And then, yeah, I suppose if there's three cogs, we, we talk about cogs like gears in a, a machine. It is, it is the teachers who can support the teachers, the sales people who get to them, and the product builders who, who make the product. It's, it's all as simple as that. And they all need to be balanced in, well in a machine and cogs like the gears will need to work together.
[00:27:20] But if you, if you are selling to a school, you need to understand maybe even school brochure. You a school burser, like somebody who is the content at a school. You want to understand when you're signing to a school, like we think about like budget flow. Budget flow is an extremely important thing to think about in any industry.
[00:27:43] And what I mean by that is that when we used to self code for kids to schools, we would say, Hey, would you buy our software? And the schools would say, Sorry, we don't buy software. So we said, Oh, okay. Would you buy our online textbook? and our online textbook is 10 to $20 per student [00:28:00] per year. And the school's like, Oh, terrific. We buy textbooks. It's a line item on the budget that says textbooks.
[00:28:05] So we haven't created a new budget item. We have simply diverted budget to our product. We've even been asked for like our ISBN numbers before, and I think we, you're selling to a school, you need people to have an acute understanding of that.
[00:28:20] So how does budget flow through a school? And then why should it flow to you? How do you divert budget to your product? That would be kind of a simple answer.
[00:28:30] Gleb Lantsman: Matthew, can you tell us a bit more about money first and difference second. And also if there is any other advice you can give to those who want to start their businesses just because they have so much passion in them. I think that's for like two different questions essentially.
[00:28:48] Matthew Henshaw: Yeah. Yeah. So the simple answer would be, make money . I know it sounds so ridiculous, but like if there's just one thing to like take away, it's, it's, can you see the path to profitability [00:29:00] and can you achieve that path quickly?
[00:29:03] And, and, and once you see that path, achieve it. And that's the only thing you should be. So I also would say that like B2C is really difficult as a first time at Entrepreneur. So our first business was B2C, and the ones before that were b2c. One was b2b, but it was a bad product. You know, I think B2C is really tough, first time business, but it's always the one we kind of think about doing.
[00:29:27] Because again, if you're a first time founder, you've always bought things as an individual. You've never bought things through a company. So you understand what it means for an individual to buy. So I would say if you wanna save yourself some like headache, find something that you can sell to a business and find the fastest way to make money.
[00:29:46] So, like for example, if you decide that you need to survive, you need $30,000 a year to survive. Can you get $30,000 in the first three months [00:30:00] or the first year? Like that should be the only thing you care about. And you're gonna, and you're gonna save time by charging more than you think you should and selling it to businesses.
[00:30:09] That's kind of what we got wrong in the beginning. I spoke earlier about strengths and weaknesses where you Fenton you mentioned that really cool analogy. And I think the, one of the things we often talk about is your biggest strength is often also your biggest weakness.
[00:30:25] And what I mean by that is that we are a team of, And we were first launching Skill Up, Our first business that we ended up selling, we spent six, seven months building this product. And then we're just about to launch it, 6:00 PM in the evening. And I asked my younger brother to use the product and he is a nature conservationist, so he's not engineering background.
[00:30:45] And he started using the product and it was a total dog show. He didn't know what was going on. He was pressing buttons, he wasn't reading anything. It was a mess. And I sat there with my one co-founder, Andrew, and I said, What on Earth has just happened here? And he, that [00:31:00] night we deleted like 40% of the code base, and we launched it at two in the morning and it actually worked, It was so obvious what he was doing.
[00:31:07] And my brother's name was Mike, and we call that the Mike test. And everything we launched, it has to go through the eyes of the Mike test. It used to actually go to him, but now he's somewhere where there's no signal.
[00:31:16] And you know, What we learned there is that if any product, it starts with, you know, an idea on paper. It starts with like a design. It starts with a manufacturing. It starts with like assembly, then packaging, then delivery, then sales, then success. And the key thing we learned is to begin with the end in mind. Start with sales and success, and then bolt backwards.
[00:31:39] And we realized that we were a team of engineers. So we had this hammer and we just hit everything with this Hannah. And it was our biggest strength, but it became our biggest weakness. And it's time and time again. We keep falling into the trap. Your biggest strength can often be your biggest weakness. And what we did with skill up is we knew how to use an Excel document.
[00:31:58] Oh, cool. So if we [00:32:00] take 12% commission, and then if we have 20,000 lessons every day, scroll to the right in five years, oh, we're gonna be making so much money. But the reality is like, no, that's like a total trap. Your Excel document is your worst enemy in something like your, your business finances when you're starting should be on one page of paper.
[00:32:19] The unit economics. You shouldn't worry about anything else. Get outta Excel. If you are an engineer spending hours in Excel, you're doing something wrong.
[00:32:27] Fent Hughes: So you've been in the education space for a while and seen probably a lot of interesting business models. Could you tell us a little bit about some of the, the interesting or effective models you've seen?
[00:32:38] Matthew Henshaw: Yeah, definitely. And there's so many different types. I think the one that I'm very proud of is a South African company, a Cape Town company called Get Smarter. A few years ago, they were acquired by 2 U and get smarter, they sold like MIT courses and they sold these courses where a tutor or a [00:33:00] course administrator would help the students get through the course.
[00:33:04] You could do an MIT course for free online or through something like Coursera and you could buy a tutor on a per hourly rate, $10, $20, $30 per hour. But they were able to do this kind of one plus one equals three, where they were able to offer the same content that's technically free.
[00:33:23] Tutors who were like there to help and they were able to charge $2,000 for a 10 week course. and the way they were able to do that is they had a really good understanding of what, why people would pay for their course and their purpose was make people stand out from the crowd. That's what they did. Their company was to make people stand out from the crowd. So you were applying for a job and it showed that you had an MIT certificate in machine learning from Get Smarter, and then all of a sudden you had a higher chance of getting a job. You're making people make money. Like they had a very good understanding of [00:34:00] that.
[00:34:00] So I think anywhere where I see a company that has like a really, really good understanding of their customer's decision making process in education, I find really interesting. This sounds a little bit like hypocritical or, or kind of arrogant potentially to say, but I think I 've seen more EdTech companies that I'm not sold on than the ones I am sold on. Like there's a lot of people who are reliant on grant funding. There's a lot of people whose unity economics of, there's far higher cost per acquisition. Their lifetime value is not long enough. It ultimately comes down to that. The product isn't sticky enough. But, but there are some companies who are really getting it right.
[00:34:38] Gleb Lantsman: Speaking of grant funding and alternative ways to, to earn your income we take it you have never relied on large outside investments and VC money. Is that correct?
[00:34:50] Matthew Henshaw: We did do a capital raise in 2017 for about at the time I think it was like 300,000 dollars. but we've been very fortunate to have broken even in the last three years and [00:35:00] starting to kind of generate and fuel our own growth.
[00:35:02] So we kind of talk to the team. As we say, guys, we are our next investor, you know, if we want to invest in something, we are the next investor. That being said, I do think there's value in VC funding. I just think it has to be very strategic.
[00:35:14] Gleb Lantsman: Could you elaborate on this? Like how would you decide on accepting or not accepting VC money?
[00:35:20] Matthew Henshaw: Yeah. I think it comes down to something I learned from a mentor of ours is you have to focus, If you're focusing on a rising tide industry you've gotta think a little bit differently.
[00:35:30] What I mean by that is we, we, when we were first starting code for kids, we actually wanted to start a way to teach maths online. And I went to our mentor and said, Cool, you're gonna make this cool tool that teaches math online. And the mentor said, Will the maths industry double in the next five years? And you very quickly need to know that the answer is no.
[00:35:50] The math, how much money people are spending on math education is gonna grow at 1% a year at, you know, thumb suck. It's certainly not gonna grow. It's not going to [00:36:00] hit double digits. And I said, Okay, fair. Then we said we're gonna teach coding. And he said, Interesting. Now the coding industry might double in the next five years, and we've seen that to be true.
[00:36:11] It's like it's a rising tide. It lifts all the boats. Now if something is lifting all the boats, you kind of wanna be lifting a little bit faster than everyone now at code for kids and lesson space. We could potentially have grown faster if we took more funding. I think sometimes funding has the ability to make you focus on the wrong things and not get the product focused enough.
[00:36:38] And the way we kind of got around not trying to grow with VC funding is we've been extremely focused in the two products. And this is a detriment because we've had two product two companies. We had to be very focused. So for example, at lesson space, we are the best small group tutoring, whiteboard. So we do one to ten.
[00:36:57] We're not trying to do a hundred people on a lesson. We're not [00:37:00] trying to do scheduling payments. We're just live small group tutoring. That's us. So by being very, very focused, you're getting the right customers. Code for kids? We bridge a gap from game based, from scratch to computer science. That's what we do, We're not trying to do scratch, we're not trying to do computer science.
[00:37:14] We just pointed that. And so for that reason, I think we've been able to avoid funding or, or needing it. But I would also argue we probably could have gone faster. So there's definitely an argument to be made for both. It just depends the kind of what you want in your personal life, I suppose.
[00:37:33] Gleb Lantsman: So speaking of your personal life, Matthew what is your dream? What do you dream of doing in the, in the realm of, in the world of education? Like, imagine it's your 80th birthday, you're looking back on your life and you're like, Okay, I'm happy that I did it. what's this one thing?
[00:37:53] Matthew Henshaw: Without a doubt, teacher training. The most important thing I believe is make teaching easier. That's the purpose of our, all of our companies to make teaching easier. [00:38:00] I think if we can have an academy that is churning out the best quality teachers and putting it back in schools, that is what will change students' lives. So teaching academies.
[00:38:09] Fent Hughes: That is such a great final question and I think we should make that the final, final question. . So I think, I think Matthew just to finish up, I just want to ask you if there's anything else you'd like to tell people that are, that are interested in doing what you're doing, which is essentially helping students have a better experience and, and learn more things thanks to, to teaching and better prepared teachers. Is is there any other advice you would give?
[00:38:36] Matthew Henshaw: Yeah, sure. One piece of advice, I don't know. I think the kind of things that I wish I'd thought about a bit when I was younger or when I was starting it, that I'm at least learning now. And I'm sure in five years time I would've thought something differently. But I definitely think it's important to think of it longer term.
[00:38:52] Think about your business as a vehicle that's not gonna just be around for a year or two years. It's gonna be around for 10, you know, businesses [00:39:00] exist and like make sure that whatever it is that you're deciding this vehicle to do, it has to fuel you from a, from a very objective financial perspective.
[00:39:07] You have to be able to survive. You don't want to be, you know, hating your life because of it. So focus on like how to make sure you, for you to be the best version of yourself in education and do the really amazing things. Make sure you build a foundation of a really high quality, long term passion and vehicle that you're building.
[00:39:24] Start with how does this really help somebody's life? A lot of people are creating tools that they themselves would never use, like, you must be the best user of your tool. We did that skill up. We used our online tutoring, classroom code for kids. I was teaching my nieces to code, like be the, be the user first and make sure you love it.
[00:39:43] You have to love what the tool it is you're making. And then, and then you can like kind of run as fast as you can with, with friends or people you know, go with a group.
[00:39:51] I know that's not one piece of advice, but it's kind of my ending narrative, I suppose.
[00:39:55] Fent Hughes: Yeah, that's perfect. Matthew, thank you so much [00:40:00] for generously sharing your time and your advice with us today. I've learned a lot just from being part of this conversation, and I'm sure our listeners have as well.
[00:40:12] Matthew Henshaw: Thank you so much
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