Uber for Teachers- Find Filo!🚘👩🏫
As we see CAC rising in EdTech- especially in live tutoring- Filo has built a product-first tutoring marketplace, where you can find a tutor under 90 seconds of submitting a doubt. Read on!
Welcome to Old Rope. I write on emerging trends from the East (sometimes West)! 🌏 Subscribe to stay updated.
As a high school student preparing for exams, there were times when I wanted to seek help for a particular question or concept, even when I had the solution in front of me. In fact, 80-90% of students are not self-learners and need help of a teacher or a mentor. Furthering that insight, some students are strong in certain subjects, and not so strong in other subjects, hence the need for in-person doubt solving.
Find Filo- Tutor under 90 seconds! ⌚
Meet ‘Filo’- a New Delhi based EdTech company, which connects students and teachers under 60 seconds to enable real time doubt solving. Not to mention, it’s one of my favourite EdTech platforms!
Currently, the platform has tutors with expertise in the following subjects:
Alongside users in India, the platform seems to be growing in the Middle East as well!
Potential of Tutoring Marketplace 🇮🇳👩🏫
India is home to 250M students in K12, making it one of the largest student markets.
Given Filo’s proposition, let’s assume its relevant for students through grade 6 to higher education.
Demand Side- Students
Globally, there are an estimated 1B learners in upper primary- tertiary education!
Amongst this, over ~25% population can speak English, so ~250M students could be English speakers!
Supply Side- Tutors
Tutors for Filo comprise of several personas:
Teachers:Individuals who have been teaching in schools, universities, and can take up additional part-time assignments (for grade 6 and onwards) University Students:Students (let’s say in top 5%) can teach on Filo for additional income and utilize their free time. Homemakers:Well-educated individuals who are on a break or prefer the flexibility of Filo’s set up.
With 160M home makers in India, we can assume that at least 1% are capable of teaching on Filo
Conservatively, ~8M tutors are available in the Indian market alone!
There are several ways of evaluating supply:
To Filo’s advantage, Indian supply has some unique benefits! Indian tutors cannot service just Indian students, but also students from other English-speaking markets.
Note: After US, India has the maximum number of English speakers in the world (125M+)!
To expand globally, supply of similar persona in different markets will be available to cater to local students.
For example, markets like Vietnam, Indonesia, etc. might prefer local tutors.
In spite of the total potential number of teachers being impressive in its own, when compared against the number of students, it seems to be a bottleneck! I have a thought experiment on how to solve that, let’s go into this a bit later in the blog.
Student Product Demo: Match with a tutor in few seconds! 📱
The first time I was testing Filo, I literally jumped out of my seat because it matched me with a tutor within few seconds, and the tutor was able to solve my doubt within minutes.
I felt…maybe it was by chance, so I tried again, and it was still the same.
Here’s a product demo I have recorded for OldRope readers…don’t judge! 😅
Until now, I have tested Filo a dozen times and it has never disappointed!
Teacher Product ensures smooth onboarding! 👨💻
After discovering the landing page of ‘Tutor Page’ of Filo, tutoring aspirants can apply to be a tutor through the Filo Tutor page.
Overall, the onboarding seems impressive. After completing the details, verification takes upto 48 hours (can be fast tracked in near future). However, a tutor can start receiving calls irrespective of verification being pending. All calls are recorded in Filo’s database, which enables better QC. Based on the tutor’s existing performance and rating, the system can match tutors and students in future.
Teacher Payout 💰
Since the calls usually last for 8-12 minutes, the tutors have to be paid accordingly; but at the same time it’s important to align incentives with tutors so they don’t unnecessarily elongate the calls.
Teachers are paid as follows:
Tutors are incentivized to not extend the calls beyond 15 minutes, otherwise the price is not calculated proportionately (but logarithmically). This means that a tutor doing 4 calls for 15 minutes will receive an hourly price, but a tutor doing one call for 1 hour would receive a lesser amount.
Monetisation: How does Filo make money? 💸
Currently, Filo is a freemium offering with a cap on number of tutor calls a user can do.
So, here is a steady state model with assumptions:
Let’s say Filo has 1M paid subscribers with $5 ARPU monthly; Monthly Revenue: $5M
For this model to work, we can consider an 20-80 rule, where 20% users are actively using the platform after paying whereas 80% users are not as active.
This would lead to gross margin/ take rate of 22%
Subsequently, there will be spend on customer acquisition and teacher acquisition to arrive towards contribution margin.
It’s important to note that several assumptions might not be true at steady state, you could also play around with assumptions 😉
For Filo to monetize well, it will be crucial to increase ARPU potential and find the right inflection point to switch from a per tutor session model to a subscription model to arrive at a blended gross margin of 50-60%.
One of the prominent tutor marketplaces, Nerdy, also has gross margins of 66%. Filo is a mass, low ARPU product, and Nerdy is a high ARPU product - it is important to have higher gross margin profile in tutoring marketplaces.
Doubt Solving is a strong hook, so Filo can likely solve for top of the funnel with engagement through its amazing product experience, and explore upsells like:
1:1 Live Tutoring
1: many Live Tutoring
Since Filo will have various data points on students, it can contextually upsell the above streams without additional marketing costs!
Doubt Solving Ecosystem is Global and Deep! 🌐
There are 3 sub-segments where we can find companies that could fall into doubt solving domain.
Live doubt solving with experts
OCR based doubt solving library
1:1 Tutoring Marketplaces
For a focused discussion, lets look further into first two sub-segments.
Live Doubt Solving Platforms
Filo stands out as the only company which can match students with tutors under 90 seconds! None of the above platforms have been able to achieve this, in spite of multi-million dollars in the bank.
Another interesting data point is Filo’s Play Store reviews. Even at scale, Filo stands out with 4.3 stars ratings - this talks volumes about Filo being able to match students and tutors really well!
OCR Based Doubt Solving Libraries
Doubtnut and Filo could have fierce competition, or maybe not?!
Doubtnut is one of the prime doubt solving destinations for test-prep in India. However, most students are not self-learners, and prefer a tutor/ mentor to guide them through a solution.
Hence, I feel Doubtnut is for self-learners/ relatively motivated students, whereas Filo is for students who prefer guided learning.
One could argue that Doubtnut can also build a tutor marketplace like Filo…but I think it needs a different DNA, skill set and operations.
Thought Experiment on scalability of Filo! 📈
Prima facie, as mentioned above, teacher availability could be a bottleneck in scaling Filo, along with ensuring standardized quality. However, these issues would only exist if we limit the tutor supply to top quartile tutors. What if an average university student could also become a tutor?
In fact, it’s quite possible. Once a student pushes a question, Filo could use OCR (like Doubtnut) and present the solution to the tutor on the tutor app. So an average university student with basic subject knowledge could also become a star tutor and guide the student, effectively acting as a mentor.
Challenges and opportunities ahead of Filo! 🏃
Expansion in non-English speaking markets
As Filo grows beyond India, there is obvious expansion in English-speaking markets where the existing tutor supply from India can be leveraged. However, for growing in not-so-obvious markets, Filo will have to figure out expansion in non-English markets like Indonesia, Vietnam, LATAM, etc., especially building deep tutor supply. This would make the company defensible as it stands against other live doubt solving companies.
Contribution Margin Positive Model
Given the current price points, it seems difficult to arrive at a contribution margin positive model. It will be important to solve this with appropriate pricing, expansion in other markets (leveraging cost arbitrage of tutors), and upselling.
AI tutor is coming!
Although still early, but there are several companies building personalized tutoring and doubt solving to give a live tutoring experience without a real teacher. Early days, but important to prepare and invest in R&D in this direction.