The education industry in China is developing rapidly. Companies are constantly adapting to the rapid change in technology. Coding education especially in the past few years has become one of most (if not the most) important components of China’s education industry.
It has been backed by the government and well known investors.In the past few years the Ministry of Education has issued various policies to promote coding education. From launching information literacy assessment of primary and secondary school students to promoting the elaboration of relevant artificial intelligence courses.
From a global perspective, almost every developed country is stressing children's programming education, which might explain why China is accelerating the development of its programming education at home.
In the first quarter of 2019 alone, coding companies targeting children received huge investments recieved huge investments. The company standing out amongst all was Codemao (编程猫), which completed its latest round of financing worth approximately CNY 600 million in January.
Codemao’s CEO and founder LI Tianchi (李天驰) attended the forum co-organized by EqualOcean and EO company (sister publication of EqualOcean). At the “GIIS2019 China Education Industry Innovation Summit,” LI talked about his company and future plans. After delivering his keynote speech, he sat down with ZHANG Fan (张帆) and Qasim Khan of EqualOcean to share his thoughts in an exclusive interview.
The Interview
EqualOcean: Codemao is backed by strong investors and its latest valuation is about USD 1 billion. Does Codemao plan to raise more funds before going public and where is the company likely to be listed?
LI Tianchi: We are considering the Science and Technology Innovation board (STIB) although we do have NASDAQ as an option. I believe when the scale of growth starts to decrease that’s the right time for a company to go public. For us, the scale is still growing. In the past seven fiscal quarters we have had a growth rate of 200% in each quarter with an income of CNY 30 million. This growth will continue till the end of this year and after that it will either stop or fall and that’s when we will go public. The surest way to get listed on the science and technology innovation board (STIB) is to have a yearly income of minimum CNY 300 million, so for us the target is to achieve that number. We think we will generate a revenue of CNY 700 million this year.
EqualOcean: As we speak about growth, could you detail the current number of employees, and the reason behind opening more offices in other cities?
LI Tianchi: We currently have about 1600 employees in different cities of China. Most of the employees (around 1000) are in Shenzhen; there are another 300 in Wuhan, 200 in Beijing and the rest are in cities like Shanghai, and Chengdu etc. The reason behind our expantion to other cities is very simple. We started off from Shenzhen and as the company grew, we realized we wanted our future employees to have strong educational background meaning they should be graduates of top universities. Shenzhen only has one or two top universities. Keeping this in mind, we made a decision to open an office in Wuhan. It worked, we started hiring more and more talents from top tier universities. So we decided to open offices in cities home to lots of good universities.
EqualOcean: How have you divided all these employees in different departments?
LI Tianchi: Around 300 employees are responsible for product design and development; 300 are working in the content development department; we have about 400 teachers for online tutoring, and approximately 300 in the sales department.
EqualOcean: Talking about business model, Codemao focused on 2B at an early stage and later spent on advertising to attract more consumers. Could you say something about this change of strategy?
LI Tianchi: Actually we switched our strategy back then. Income was not something we were aiming for at that time. We were more focused on increasing the number of consumers, and in order to achieve that we cooperated with a lot of schools. As time went by, we realized that we were getting into a “bad circle,” on one hand the number of consumers was increasing but on the other hand we were not making any income. The more numbers we got, the more resources we spent and the product wasn’t even getting better because we spent more resources on marketing and business development. After this we decided to switch to a “correct circle.” So in 2018 we found another way to generate income and that was to lure paying customers, customers who’d pay thousands of yuan. That is actually what companies like VIPKID, and VIP Pelian do; they advertise through Wechat, Tik Tok and so on. They make customers pay through their mobile phones and ask teachers to serve them and this is a cycle thrrough which you can increase your income. The only problem is that, for VIPKID, their services include one on one online tutoring where the price you pay is high, your income grows but the profit does not. To tackle this problem we introduced the AI assistant teacher “Octopus” which assists teachers in a class consisting of more than one student.
EqualOcean: Customers are the core of every education company. Could you update us on the latest number of total customers as well as paying customers.
LI Tianchi: We have around 10 million users right now, out of which 20,000 are pay above CNY 3000.
EqualOcean: What suggestions would you offer upcoming startups in this field? Is there any opportunity for them?
LI Tianchi: Yes off course, not only in China but also all over the world. I am actually very interested in India because of its huge young population. Even in China I think there are still a lot of chances for such companies. In this era, through online education a company can expand at a very fast rate. As for offline, China has 350,000 schools and we have only cooperated with around 10,000 of them. This shows that there is opportunity for sure.
EqualOcean: So is cooperation with schools still part of Codemao’s strategy?
LI Tianchi: Off course. I think the easiest way to obtain users in China is through school. It is a very cheap and efficient way. In China if you want the parents to know about a subject, you have to use the examinations held by schools. We’ve held seven big examination with the help of Ministry of Education.
EqualOcean: So there are two models, 2B2C and 2C, how do you divide your focus in percentage terms, regarding these two models?
LI Tianchi: I think it’s an ongoing progress. In the first few years we focused 100% on 2C and then slowly started to shift towards 2C2B. By the end of this year we will have 40% of our focus on 2B2C and ultimately we want to focus 80% on 2B2C and 20% on 2C. This is because we are looking for long-term cooperation and we can achieve that only by cooperating with schools.
EqualOcean: At the conference you talked about iteration of your products. Is the product upgrade a result of consumer experience? Could you tell us experience where you made mistake regarding the product upgrade.
LI Tianchi: I can give you a very recent example. We were working on a virtual block which can be switched to java or python. The student can use this block to open a phone or a tablet camera and take pictures. Initially I thought we did a great job. We asked you to use in first class and the response was terrible. When we started this class the retention rate was 15% and it fell to 2%, which in fact was a big failure. In such cases the numbers tell us everything. Though I always insist that a good product manager should test out as many product upgrades as he can. Relying just on an AB test is not what a confident product manager does. For sure AB test is necessary but for a small start up the resources are very limited and AB test costs a lot.
EqualOcean: Some of the parents still think coding at an early age is a waste of time. Does coding really teach children anything or is it just for developing their interest?
LI Tianchi: I think it is neither. Just as I said at the conference, the most important thing for us is to work on and improve children’s critical thinking. It is the way how we solve problems. For instance, in real life when you face a problem you think about finding a solution, same goes for the digital world. We teach them the way of thinking to solve a problem through coding in a digital world.
EqualOcean: There is no denying that you are immensely talented but at the same time you are very young. Do you encounter any problems or difficulties managing such a huge company?
LI Tianchi: Well, all the time. We encounter difficulties almost every day. Managing employees proves time and again a challenge for me since the number is always growing. We also faced problems like losing all our laptops and electronic devices to a typhoon in Shenzhen which flooded our office. So yes problems are always there.
EqualOcean: Does Codemao have a company culture? If yes, could you tell us about it?
LI Tianqi: Yes off course we do. We call it “no fun, go die.” That’s because we want children to enjoy education and have fun while learning. If the child enjoys, he learns; it is as simple as that.
EqualOcean: As a CEO and founder of a company you must be quite busy. How do you manage your time?
LI Tianchi: I dedicate most of my time to work. I use 80% of my time on something I think is the most important. This January I made adjustments in our sales department because I need to scale up to dominate the market and that was the most important thing for me. We had two other companies with the same scale of income and my target was to overtake them within two months and with the adjustments to and the focus on our sales we achieved that gaol. The most important thing for me over next tww months is how to recruit more and more teachers and help them create better content.
EqualOcean: This is the second time you have started a company. What is your motivation behind your entrepreneurial endeavor?
LI Tianchi: Actually this is the third time, or he first time officially. The first and second time I was still a student studying in UCLA and in Paris. The motivation behind all this is very interesting. I started learning how to code when I was eight, I had a younger brother who was ten years old. I always looked at him and thought to myself that maybe I could contribute to his education in one way or another. The second reason is when I attended a summit in Dublin, Ireland, I saw students of CoderDojo, aged eight to 10 using iOS, Swift, object C to develop iOS apps with ease. That ignited a spark inside me and right after two months I founded Codemao.
EqualOcean: You also have a website for the overseas market “Code.game.” How is it doing and how much revenue does is generate?
LI Tianchi: It works very well in the Southeast Asian markets. The strategy for now is not to focus on income. We still have huge potential in the Chinese market so we won’t venture abroad quickly. The goal we want to achieve through Code.game is to aquire a maximum number of users.
EqualOcean: What is the most important thing for Codemao in 2019 and 2020?
LI Tianchi: The most important thing for this year is to become the leading player of the coding sector in terms of income. As for 2020, our expected income growth will not be as rapid as now. Instead, we will focus more on efficiency. Right now we have a output/input ratio of 1 to 2, and we want to take this ratio to 1 to 4 by 2020.
EqualOcean: Now as we know about your short-term plans for the next few years, we would like to know what is the next big step for Codemao?
LI Tianchi: Well, our aim is to teach coding to billions of children around the world and build a very strong community. We are developing the latest programming tool which is the virtual programing language. I think in the longrun we can build the most popular virtual programming language. We believe Codemao language (kitten language) is like Microsoft Windows 95 while java and python are like docks based on command line. We want to make coding a very easy language to learn. We firmly believe that every child will become a coder with this kind of help in the near future.