CHAPTER 7: TECNOLATINAS PROFILES
Open English:The Latin American e-learning star
Estimated Valuation: US$ 455M
Industry: Ed Tech, E-learning
Offices: Miami, Caracas
Employees: 2,000+ (including contractors)
Founded in 2007 by Venezuelan entrepreneurs Andrés Moreno, and Wilmer Sarmiento, Open English became a pioneer in online education in Latin America. Focusing in just one single type of course: English lessons, the company was among the first in the region to cater a web-based learning tool that today is used by more than 500,000 users in over 40 countries.
One of the secrets behind the company’s success is its very unique marketing strategy. Unlike most in the digital space, Open English turned straight into traditional media, and mostly television, to position its brand right after it got its first investors. A unique set of signature ads, which feature no other than Moreno himself playing a Latin American businessman who dominates the English language and contrasts with a cartoonish character that can’t get around using common phrases and expressions, have managed to create brand recognition among large segments within the region’s growing middle class.
But Open English was not always a success. Moreno first ventured into the English teaching business after he dropped out of college in 2006. Along with Sarmiento he then founded Optimal, a service aimed exclusively at corporate clients, that would offer lessons delivered by flesh and blood American teachers the partners flew in from the US to the Venezuelan capital. Needless to say the business model didn’t work. The costs of having teachers relocated, and the logistics of the process, which involved Moreno driving them around from company to company through the intense Caracas traffic, had the whole venture fail. Until the partners came up with a new idea: they would use Skype to deliver the lessons.
And that is how Open English came to life. The service, firstly offered companies to get lessons for their employees, through American-born teachers, who delivered the classes through the video chat app. Soon the business model was expanded and started serving general consumers as well. To do so, the company started to craft an online self-serve platform, that would allow users to sign up on their own, and that would match every student, or small group of students, with the right teachers.
Unlike traditional courses, which aim at helping students master the English language, this startup was conceived with the idea of helping people learn all they need to establish effective communications in that language both at work and on their personal lives.
The site’s first version was developed almost entirely at Moreno’s apartment, with the help of developers he hired with his own money. It wasn’t until he was running out of funds, that he decided it was time to get new capital, something that at that time was even harder at Latin America. For that reason the co-founder flew to Silicon Valley, where he spent six months living at a friend’s house, and pitching investors. Finally, he managed to raise US$2 million in seed funds.
Throughout the following years, the company managed to raise more than US$120 million in five rounds, from founds like Flybridge Capital Partners, Kaszek Ventures, Insight Venture Parnters, Redpoint, and TCV, among others. This enabled the company to expand internationally, not just throughout the region, but also to countries like Spain, Turkey, and Russia, where it is trying to position itself among aspiring learners.
Unlike other language courses, Open English remains committed to offering personalized lessons delivered by human teachers, rather than to turn to automatized tools, or massive open online courses (also known as MOOCs). This, according to its founders, is a big differential that allows the company to compete with some of Silicon Valley’s giants, and to keep its hold in the region. For the meantime, the product will remain centered on the English language only, as a means to remain focused on just one niche.
However the company is modernizing, and incorporating interactive exercises, and original on-demand program to its programs, as well as adding support for mobile platforms. After all, both in Latin America, as well as on other emerging markets, new Internet users are mostly mobile, and smartphones have already become the main source to access the web across all consumer segments.
Students at Open English pay a fee of around US$80 a month, and it also has corporate clients that pay a fee that depends on their needs. So far, the company has been growing steadily, and while the path to profitability wasn’t easy, it has accomplished that goal. For the future, it faces the challenge of incorporating new technology to keep up with new competitors emerging from Silicon Valley. However, with thanks to its regional focus, widespread brand recognition, and novel programs, this company will most certainly remain one of Latin America’s most successful tech companies for a long time.
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