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This is the first post of the Edtech Unicorn World Tour, a joint project with the one and only Alex Sarlin from Edtech Insiders! Alex is one of the most thoughtful authors in the sector, having led the learning experience at Skillshare and Trilogy. We have partnered up to cover the global unicorns that may fly under the radar but are emerging giants in the space, starting with 🇦🇹 and JoyTunes 🇮🇱.

If you want to learn about JoytTunes, the only music education unicorn out there, head over to Edtech Insiders for Alex’s deep dive!

The startup buzzword dictionary is fairly extensive. But few words are loved by founders more than the term scale.

Fundamentally, scaling is about growing your company and product from an initial niche to a mass audience. It is both hard to find in startups and hard to execute, but every company that wants to grow its impact will have to go through it.

Scale is a particularly elusive concept in education. Because most education companies are tied to local regulation, funding, or accreditation, they can only grow locally, which reduces the scope of their scale. Global scaling is one of the hardest challenges in education.

This is changing this decade. One of the biggest examples of global scale comes, surprisingly, from the world’s most fragmented market – the EU. That company is Austria’s GoStudent.

What is GoStudent?

GoStudent is an Austrian tutoring marketplace for students aged 6-19. The company has raised over $600M and is valued at $3.3B. It has over 1,800 employees and 19.000 tutors, who teach across 23 countries.

For context, its valuation is roughly equal to Austria’s budget for all national universities (about $4B per year), and at 19,000 tutors, it has 6x the number of university professors nationally.

GoStudent was clearly built as a global business from scratch since that level of scale would be impossible within Austria.

This is fascinating given:

How hard it is to scale internationally in education, where every country has radically different curricula, exams and education systems, and
How hard it is to scale across EU countries, where most countries speak different languages and have very different cultures.

To understand its global nature, we need to look back at its story.

From 3M to 600M in 2 years

GoStudent was founded in 2016 by Felix Ohswald and Gregor Müller. At the time, Felix (CEO) was 20, and he built a chat app that students could use to get support on their homework. Over 500,000 students used it, but product-market fit and monetization were likely big challenges for the company at the time.

Around 2017, one student asked if the app provided any tutoring support: he was willing to pay for it, but couldn’t find it in the app. GoStudent eventually realized this could be the break the company was looking for.

In 2018, GoStudent pivots fully to online tutoring – the student is still the user, but the parent is now the customer (the one who pays for it!), which requires acquiring tutors to teach through video and parents who pay a subscription and bring their kids on board. This proved to be a good business model early on.

At the start of 2020, GoStudent was doing well, but it had raised little more than a seed round (just over $3M in funding in total). Then COVID arrived in Europe in March, closing schools in most countries. Demand for its online tutoring app skyrocketed as students were out of school and more comfortable with online learning.

GoStudent entered a hyper-growth stage that took them through the next two years, in which they raised two Series As (?), a Series B, C, and D, totaling almost $600M in funding.

GoStudent today

GoStudent has 500,000 users who access 50-minute classes across all school subjects, especially Maths, Physics, and English.

Tutoring is their #1 product, but they’ve been active acquirers and integrated new products like Seneca Learning in the UK (free interactive content for teachers based on state curricula with 6M+ students), Tusmedia (in-person tutoring platform in Spanish known for TusClasesParticulares with 1.2M tutors ads) and Schoolfox (communication tools for schools and parents).

Some of these tools they have integrated into the GoStudent platform, but they have expressed they will keep the brands independent for now.

The 🤯 unit economics

Now that we know what they do, let’s dive deeper into their business and how its propelled them to a $3B valuation.

Their business model is simple and quite lucrative – they collect recurring subscription revenue from parents, pay the tutors, and keep the rest. They own all their income, unlike other platforms that bring tutoring agencies onboard to scale the acquisition of tutors.

GoStudent operates like a managed marketplace. In this type of product, the intermediary (marketplace) provides some key services or tools that are compensated with a higher commission than traditional marketplaces like Airbnb.

The parent side

1:1 tutoring costs families between 16 and 30 euros per class (depending on the subscription package and regardless of student level or subject). They claim to have 1.5M lessons every month, which at an average of 23 euros per class would equal 345M in bookings.

The tutor side

There are 19k tutors at GoStudent, but most don’t teach full-time. If we take 1.5M monthly lessons again, we get about 80 lessons per month per tutor. This represents about 20 lessons per week at 50 mins, or 16h per week.

GoStudent promises tutors they can earn about 580 euros for 40 classes/month, which implies the tutor earns about 15 euros per class.

GoStudent shares a little bit about their tutor selection process: after a tutor registers, they get a subject knowledge exam and go through a group interview before getting selected. For Math, apparently, only 8% of tutors who applied actually became tutors, though there was controversy last year when a banner teacher was found teaching on the platform (he was ultimately removed).

Unit economics

From the little we know about GoStudent’s business, we can estimate its take rate, one of the most important metrics for marketplaces. Given how much parents pay (bookings) and what the tutors are paid, their ultimate revenue from the transaction (take rate) sits at 34% (8€ from a 25€ class).

Essentially, GoStudent is taking a 34% commission on the class payment (this would equal 117M€ in revenue). This is a very high take rate for marketplaces, essentially doubling what staffing marketplaces like Upwork charge and surpassing App Stores (known for high rates).

GoStudent’s estimate vs other marketplaces

We don’t know anything about GoStudent’s gross margins once the revenue is collected, but the take rate seems really strong (this is all an estimation, and it could be way off). I’d love to know their cost of acquisition (for tutors and parents), retention and usage too.

Competing with GoStudent

GoStudent has a lot of competition, both with other tutoring marketplaces but also with companies that fulfill the same value proposition for the student.

Online tutoring marketplaces 💻 that offer access to live tutoring like Varsity Tutors, TutorMe, Skooli.
Learning content platforms 📹 that offer video courses and assessments, instead of live 1:1 tutoring. These include Subject.com (previously Emile) or Chegg (for university students) in the US or edtech juggernaut BYJUs.
Local tutoring companies 📚 that run franchises or local establishments, and still represent a majority of tutoring spending. We already saw BYJUs acquire one of India’s largest in-person tutoring companies for $1B last year.
Non-B2C tutoring 🏫 companies that either charge schools (like PAPER in Northamerica or MyTutor in the UK) or don’t charge at all, like Schoolhouse (co-founded by Sal Khan and the Khan Academy team)

Its approach to competing will be most likely to double down on its scale and provide a cheaper offer than in-person, local tutoring services. They can offer more density of tutors around key subjects (especially English or International curricula) at a lower price.

Where does GoStudent go from here?

With a fresh round of funding, GoStudent’s investors are coming in with the expectation of growing into at least a $15B valuation. That size was unprecedented until BYJUs came along, so what pathways does GoStudent have to get there?

1/4 Existing market expansion (same product, same market)

Family spending in education is on the rise, so GoStudent could grow its user base and Lifetime Value from customers in existing markets – only about 1/3 students receive tutoring support in many European countries, and online tutoring accounts for roughly half of all tutoring. Interestingly, group tutoring accounts for 1/3 tutors, which could be a good strategy to scale.

2/4 New market expansion (same product, new market)

Since 2021, GoStudent has expanded to 17 new countries, including Canada, Mexico, and as of last week, the United States. It is expected to expand into Asia and MENA as well (look out for more acquisitions).

3/4 Add a learning content platform (new product, same market)

GoStudent could look for new revenue streams for students who either cannot afford live tutoring or need a complement to the tutoring (videos, assessments, exam prep), which would also make the platform more sticky for tutors. This could be done soon with the acquisition of Seneca Learning.

4/4 Expand into university tutoring (new product, new market)

GoStudent has already mentioned they are currently expanding their offering for university students as well, and it could potentially tap into the same tutoring population to serve university students.

GoStudent is building on top of a massively growing market in online tutoring and learning support. There is no shortage of ambition in their desire for scale, and it is leading to an unprecedented global expansion.

What do you think about GoStudent’s future? Please leave a comment on Substack or reply to this email with your thoughts!

If you are building a startup in this space, we should chat! Reply to this email to tell us about your startup.

The Roundup ☀️

🛫 We are taking our full team to ASU GSV in San Diego April 2-8th! Reply to this email to let us know if you are going too – we’d love to meet you! I will be in San Francisco the following week as well.

👩‍🏫 Our fellow Henry May from Edumoción shared a great piece on why teacher wellbeing needs to be prioritized, and how this can be implemented.

🙌 Great article on why learning together is the future of online education

Network Jobs 👩‍💻

Looking for your next opportunity in the edtech + future of work space? Excited to join a startup? We’ve officially launched our Transcend Network Pallet to source more job opportunities from our network, like these amazing roles:

Growth @ Transcend Network (Remote)
Marketing & Community Lead @Bunch.ai (Remote)

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GoStudent is Europe’s Edtech Giant 🇪🇺…