Rumor Spreads that Gogokid is Conducting Massive Layoff on April 2019
The original intention of online education is to solve the unevenly distribution of educational resources in urban and rural areas. It’s never a technical product that can profit from traffic.
On April 7, 2019, a post from maimai.com said that Gogokid, a tutoring platform for Chinese children to learn English online with foreign teachers, was laying off employees, with the proportion of 70-80%, or 50% minimum, and sales personnel were cut from 700 or 800 to 200. The official response of Gogokid denies this news. Despite the authenticity of the news, the grim situation Gogokid faces do exist.
There are up to 27 online children's English education brands in the Chinese market, including VIPKid, 51Talk and DaDa, which are expanding from 2014 all the way in the Internet-plus-Education industry, as well as the traditional K12 education group, TAL Education Group and New Oriental Education & Technology Group, who are rushing from offline into the online business.
Though experiencing economic downturn starting from last year, online education sector keeps gaining momentum compared with other industries. In June 2018, VIPKid, the leading company in online English education, was jointly invested by Coatue, Tencent, Sequoia Capital China Fund and Yunfeng Fund (云锋基金), which set a record of the largest fundraising of series D+ in the field of online education worldwide. That explains why the USD 75 billion social media unicorn Bytedance, who developed the Gogokid online platform, decided to enter the K12 online education sector even as a rather late entrant.
The Gogokid's target market, youngsters aged 4 to 12, lines up exactly with that of Tencent's education service VIPKid. They both provide children with one-on-one online English courses, link teachers from North America to kids in China. The "curriculum system" published on their official websites are basically the same, the hourly course prices of both are between CNY 90 and CNY 130, almost 30% higher than their counterparties. They also implemented the same free refund within one month after the first purchase.
The amount Bytedance financed for Gogokid is not disclosed at present, but compared with its rival VIPKid, whose total amount of six-year financing rounds is about CNY 5.5 billion, is still not profitable. It is not difficult to imagine that Gogokid, who possesses no better teaching resource and inspections for the industry, is far more from achieving its profit.
Bytedance launches a series of apps that heavily rely on traffic, whether information or video or even selfie retouching, have "entertainment" attributes, or killing time. Behind these apps, there is a big booster of an algorithm. This powerful booster essentially is applied to catering and amuse people. Their contents are basically not related to the word "quality" or “value-added”, but they do contribute to the MAU (Monthly Active Users), which means money for the past 5 years of internet plus movement. The skyrocketing MAU and demand for traffic monetization online education as one of his goals.
However, the core competency of online education is essentially qualified teachers and their teaching-researching experience on the supply side, not the ability to get customers on the demand side. Though the CAC (Cost of Acquiring Customer) soared to CNY 3000 per customer on average by 2018, no existing companies have effectively solved the problems of uneven teachers' level, difficult refund, expensive tuition, lower consumption experience, and high operating cost, technology and algorithm can only play the role of icing on the cake rather than timely assistant for the industry. Online education is never a technical product, it needs a lot more patience and money, not the other way around.
The original intention of online education is to solve the pain point of the industry, the uneven distribution of educational resources in urban and rural areas. In the enthusiasm of seeking profits from capital, we might as well calm down and ask whether the needs of children, who eager to learn but do not have qualified teachers supported, have been met.