VIPKID is one of the largest online English tutoring companies in China, which has a valuation of around USD 1.5 billion. It matches over 30,000 teachers in North America and Canada with over 200,000 Chinese students of ages 4 to 12. The student retention rate is 95%, and its revenues for 2018 were USD 760 million, up from USD 300 million in 2017. VIPKID was ranked 29nth on the 2018 World’s Most Innovative Companies list and 2nd among Chinese companies.

The company was founded in 2013 and officially launched in 2014. It attracted investment from huge names such as Tencent, Sequoia Capital, Sinovation Ventures, Yunfeng Capital, Matrix Partners, Learn Capital, Northern Light VC, etc. 

Cindy Mi, the founder of VIPKID, made her mind to help children develop a love of learning from an early age. She had lots of difficulties with school and dropped out in 11th grade, and started the first business with her uncle. They together founded ABC English, English-training company, and Mi herself worked as an English teacher in the company as well.

Challenges VIPKID faced 

The business did not go smoothly at the beginning. It was difficult to make the parents believe in the efficiency of online teaching at first. Both parents and kids have not been familiar with the learning model; therefore, it could say that Mi was creating an entirely new market.

The road got even more challenging when companies like, 51Talk started to recruit many North American teachers right after the sharp increase of VIPKID, but DadaABC, which was founded in 2013, received around 100 million USD in the round C financing from TAL Education Group in Jan 2018. Later, DadaABC partnered with McGraw-Hill Education, and with existing partners Oxford University Press and National Geographic Learning, DadaABC determined to make itself more competitive in the one-on-one teaching area.

Challenges VIPKID will face in the future

To make a profit, a company such as VIPKID has to scale up. This business model has been questioned about its low salaries, low-profit-margin, and high turnover rate. However, with more students, it has to recruit more teachers, which brings the company higher cost, otherwise, the teaching quality will avoidably decrease.

Recently VIPKID has been criticized by the parents, that the teaching quality has dropped from what it used to be. The increasing popularity of the product makes it hard to maintain the same quality level as it does in the past.

Another challenge for VIPKID and such companies is that with the fast developing technology translation is becoming easier day by day, when you can just translate ever thing using a small device there is no point wasting time and money taking language classes. But for now, there is still time and room for improvement for technology in this area. 

Why is VIPKID different from other online education companies?

 VIPKID has three bases: one on one teaching with quick feedback, hiring the right people for the job, and strict teacher criterion.

VIPKID regards the quality of education as the top priority. The applications the company receives each month are between 20,000 and 30,000, but 90% is rejected claimed the founder of the company. The research and development team of the company develops its own teaching curriculum to ensure the quality of the study, for teachers to follow it.

To be a teacher on the platform, a bachelor’s degree is required, although it doesn’t have to be in the education field. A smoothly-running computer and a reliable Internet is a must as well as a minimum of one year of teaching experience. VIPKID pays its teachers USD 14 to USD 22 (90–130 RMB) per hour, based on performance and consistency. It also provides teachers with courses to help those better tutor students.

Teachers are hired on for six-month contracts. They create a profile and upload videos of their instruction on the platform. Parents and kids scroll through the information and read reviews from other parents, and then book open slots for the following two weeks.

During the class, the teacher and their student engage in a live video chat for the lesson. Usually, students take the lesson independently, but parents will receive a video recording their kids ‘performance afterward to help them learn the progress their children have made.    

Chinese online education is growing day by day and more companies with innovative ideas of combining artificial intelligence and emerging. Soon it will get even tougher for VIPKID to stay on top of the Chinese online education industry.