From Iran to Stanford to Silicon Valley Entrepreneur: Farnaz Ronaghi, Co-Founder and CTO of NovoEd (Part 4)

Sramana Mitra: The pivot story is very interesting. I actually think this is a very helpful discussion because the online education space is still struggling to find business models that work. Coursera and Udacity have had a lot of problems finding scalable business models. Could you work me through the other experiments you did and what you learned from them?

Farnaz Ronaghi: Even in the second year, it was mainly a course business. While we were doing that, we started noticing that inside the universities, we always get bought by Professional Education units. No university wanted to use us for their regular on-campus classes. Why? Because of several reasons. Universities like solutions that integrate well with their register’s system.

Integrating with the register’s system is a high cost for the university. They wouldn’t do it for a tool that’s being used by 10 classes. They would do it for something they would utilize across the campus. Our tool wasn’t really a learning management system. We were a learning delivery tool. Early on, we found out that that’s not a business for us. We are a better fit for the professional education because they were always training people. They’re a revenue-driven organization inside the university, and they have more freedom to pick their own tools. They actually want to differentiate. They want to have the coolest and sexiest tools out there because that’s how they differentiate their offering from all the other online offerings.

As we started noticing that, we also started noticing that all of these executive education units build a class on our platform and offer it to corporations. That’s where the big enterprise discussion started in our company. We started thinking, “Why can’t we be a tool that’s being utilized by organizations? Why is it that we are focused on universities?” The problems that Professional Education have inside universities and the challenges of corporate learning are quite similar. There’s a pressure to expand offerings with lower cost. The end user is the busy professional who has a life and a job already who doesn’t have a lot of time to attend an on-campus class.

We raised our Series A with that hypothesis – we are not a tool just for universities. We are a tool that can be used and should be used by all enterprises to expand their educational offerings. It could be training firms. Training firms provide professional learning to other enterprises, or it could be universities. We raised our Series A with that hypothesis. After Series A, we started learning what that meant and the nuances of going into enterprises.

It was interesting because what we observed is it’s very hard for these enterprises to think in course terms. Our pricing model and all of our conversation was structured around the number of courses they wanted to offer. Enterprises don’t know that usually. They are more used to buying software for a number of people. We were working on trying to understand what that would mean for us and how it should restructure. That took quite a bit of time. There was a lot of back and forth on how we would market ourselves. That has been one of the biggest challenges.

This segment is part 4 in the series : From Iran to Stanford to Silicon Valley Entrepreneur: Farnaz Ronaghi, Co-Founder and CTO of NovoEd
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