Internal management: Edtech company Eruditus's next big challenge

Internal management is the primary task before the founders of the edtech company as it witnesses rapid growth

An entrepreneur’s life never gets easier. First, you come up with an idea that sets you apart from the rest of the pack. Then, you refine it and try to convince others to buy into your idea so you can build a team. Raising funds to execute is the next big challenge. And once that’s done, things get even tougher. Not only do you have to deploy the funds correctly, but you also have to manage a growing organisation as you rapidly scale up your operations.

This last stage is where the two founders of Eruditus, Ashwin Damera and Chaitanya Kalipatnapu, find themselves. In August 2021, the company raised a mammoth round of $650 million of funding, taking its valuation up to $3.2 billion. At some level, this is perhaps the most critical stage: Ensuring that management remains steady even as loads increase manifold.

So, the two founders have divided their job responsibilities to begin with. Damera wears the CEO cap looking at key strategic initiatives, board management, fund-raising, enterprise business and regions of India and China, and Kalipatnapu is responsible for the high-growth business lines of senior executive programmes, Latin America (Latam) and two new lines — online degrees and healthcare. The two work together on team engagement, company culture and university relationships.

To begin with, the company has been actively engaged in the “great talent search”. Usually, many Indian professionals leave to join foreign companies where they spot better opportunities but Eruditus has attracted talent from foreign firms. In April 2020, the company hired Matt Delaney from Google as its chief data scientist. This was followed by Dan Bursch in August 2020, from ABC Insights, to head the company’s push in the US degree programmes space. In January 2021, Manoj Thandassery was brought in from Toppr as director and head of sales. In May 2021, Jamie Nacht Farrell, earlier advisor for Osmosis and On Deck, came in as chief revenue officer based in the Miami-Fort Lauderdale area. It has also hired a CEO for Latam, based in Sao Paulo. In October 2021, Emeritus hired Jakii Chu as chief marketing officer, based in San Francisco. Chu has been with Instacart, Fanatics and eBay in similar roles.

More recently, this month, the company’s sub-brand Emeritus has hired Ganesh S, ex-HSBC and Citi, who will lead the hiring. In the next six months, Eruditus aims to increase its headcount by around 1,000 people, a sharp rise from the present 2,000.

Some not-so-happy trends are evident, too. Junior-level employees tend to jump ship for a marginal increment. Now that’s happening even at the top manager levels. Moreover, the burnout rates for companies which push their employees to achieve bizarre sales targets are so high that the whole exercise becomes counterproductive. Attrition levels month-on-month in some firms can be as high as 30 per cent and every four months, the team one works or steers changes almost completely.

Second, while there is a general talent crunch, it is accentuated in the digital sphere: in marketing, coding, analytics, data science, artificial intelligence and machine learning. Segments such as course creation are areas where almost all the players are seeing a severe shortage. Eruditus has recently launched an instructional design academy, a programme that takes freshers on a six-month stipend and then places them across companies. Eruditus will absorb the first 25 (out of the 250-odd who applied) but the idea is to offer trained staffers to other companies in due course. Seventy per cent of Eruditus’ offerings are in future skills — data science, Python, machine learning, cryptocurrency and so on; 30 per cent is leadership, finance, management and more traditional courses. This fiscal (FY 2021-22, year-end June) the company will touch annual revenues of $450 million, up from $180 million last year.

But the rush for hiring has silver linings. One, as a consequence of the pandemic, companies are starting to alter their HR policies to make them more employee-friendly. Moreover, companies like his and other start-ups have ESOPs, something many traditional companies lack. “This currency is suddenly very valuable as employees see that they can create wealth far more quickly than a traditional job would allow,” Damera pointed out.

But even as the founders keep their eye firmly on the talent ball, they are looking to fill gaps they see in their business. Damera said these gaps are to be filled by the right acquisitions. Languages are a gap: 15 per cent of their students are learning in languages other than English (Spanish, Portuguese, Mandarin). “We are looking at an acquisition that allows us to launch even more such language courses in both breadth (German, French and so on) and depth. A partner that enhances our language capabilities,” Damera explained. Some months ago, Eruditus acquired US-based iD Tech for $200 million, which allows them to add to what they believe is its core competency: “skills for the future”.

It is also looking to strengthen its enterprise-focussed business. Eruditus and Emeritus are primarily B2C companies but they are keen to enter the unexplored B2B segment market, too. But Damera and Kalipatnapu are keen on the “right fit” first. In a sector flush with funds, there has been a tendency to “have money, will spend” in the search for inorganic growth.

“For Eruditus, the main challenges have now become internal as they try to grow inorganically (the right buys) and manage a rapidly expanding ship without straying off the path,” said an edtech private equity investor on condition of anonymity, adding that history is replete with companies flush with funds making the wrong buys and hiring the wrong talent, making this the most crucial stage in some ways.

But the founders are the first to acknowledge this and say their focus is on how to grow their impact from 250,000 learners to one million globally, while maintaining the quality of their programmes. Both have seen too many cases of quality being compromised once numbers become the primary goal. This is something Eruditus is determined to avoid even as they build a global company born and managed out of India. It’s a journey few have undertaken successfully.