Our platform keeps our students studying longer and results in Life Time of at least 8 months with an average revenue per customer of $70 and 70% Gross Profit Margin with just $2-$3/hour cost of labor per hour. Our platform eliminates the need to have teaching education/background. A college student becomes a highly effective tutor only after 1-2 hours of training, which makes it very scalable to find unlimited number of teachers at just $3/hour.
We started targeting consumers in the US who want to learn Spanish in September of 2020 and since then we have experienced 42% MOM growth (excluding September) reaching $32K in sales in April of 2021 and $24K in MRR.
We have identified 8 personas, but most are falling under 2 categories and both groups are located in the US.: 1. adults who always wanted to learn Spanish 2. parents of children who have to take Spanish classes in high school.
We fall under Direct to Consumer Blended Solution (which means it involves an app and human interaction). It's projected to grow 3X by 2025 to $115B. There are 2 billion people learning a foreign Language. We focus on Spanish because for the US market $8/hour price tag (we are testing $12/hour now) is very affordable and gives us a GPM of 75%.
Problem or Opportunity
There are 2B people in the world who are learning a foreign language, most of them do it using freemium apps like Duolingo, but almost nobody has any idea if they are improving or not and hence language learning is taking years. - In cities like Miami you need to be fluent in Spanish to get around - In construction, hospitality or even medical industries fluency in Spanish saves money & sometimes lives - Learning a language takes a long time and causes fatigue & frustration
Solution (product or service)
Direct to Consumer 1:1 Spanish classes over zoom with native-speakers from Latin America for just $8/hour (testing $12/hour now). Our platform provides continuous feedback to the learners in real time and on a lesson-by-lesson basis as well as personalized content. Our teachers transcribe what the learners say and the learners can see it in real time. The teachers then make the corrections. n keep our students motivated which results in Life Time of at least 8 months based on the data from the users acquired in September.
The marketplace business model adopted by preply.com and italki.com allows teachers to set their hourly rate themselves and these platforms take 20% cut from what the teachers make. When it comes to English classes this is a perfect strategy because it lowers the final price the end user has to pay and keeps the student from churning.
But when it comes to Spanish classes in the US the price of $5/hour that they offer or $8 that is offered by us does not negatively impact the end user's decision making. So in order to make $5 in GPM these marketplaces have to charge $25 which they also do. So being able to charge $8/hour but making 4X Gross Profit Margin allows us to have more money for CAC, increase our student base, continue to grow and eventually reenter a much bigger English teaching market.
Another type of competitors are freemium apps like Duolingo and Rosetta Stone which do not provide 1:1 interaction with teachers.
Another competitor is in-person classes which cost at least $25 a session and are mostly group classes. COVID pushed a lot of users to consume services like ours online and this trend will continue to stay.
Final and ultimate competition category is study abroad programs, which is highly effective but very expensive. COVID and uncertainty of traveling to these countries again brings additional opportunities to try studying online at the fraction of the cost of study abroad programs.
Advantages or differentiators
Our platform provides continuous feedback to the learners in real time and on a lesson-by-lesson basis as well as personalized content. All of the features outlined in solution keep our students motivated which results in Life Time of at least 8 months based on the data from the users acquired in September.
An average revenue per customer of $70 and 70% Profit Margin with just $2-$3/hour cost of labor per hour. Most of our tutors are college students and only after 1-2 hours of training using our platform they are transformed into highly efficient tutors, which makes it very scalable to find unlimited number of teachers in LATAM at just $3/hour. In the next 5 years we plan to reach $132M in sales.
Our Business Model is subscription, where learners pay weekly, monthly, 3 months or 6 months in advance for 2-14 classes per week. We started targeting consumers in the US who want to learn Spanish in September of 2020 using Google Ads and since then we have experienced 42% MOM growth (excluding September) reaching $32K in sales in April of 2021 and $24K in MRR. Our LTV is $430 while our CAC is $120. NPS score of 94%. Click on the following link for Actuals P&L & LTV calculation https://bit.ly/3hTBRLb
Money will be spent on
We plan to improve UX in order to lower the churn in the first 3 months, hence increase LTV from current $430 to $700 and increase marketing budget while maintaining and possibly decreasing the CAC.
The biggest risk is that most users try apps like Duolingo first. They do not provide 1:1 interaction and hence are much cheaper. They only try blended solution like ours after they fail with the apps. Another risk is the invention of simultaneous translation devices (skype is doing with several language). But these are not applicable to people who want to speak a foreign language themselves.