The Growth Journey of GoStudent: A Lesson in Scaling and Adapting

Felix Ohswald has become the favourite of EdTech investment funds. His Austrian unicorn, GoStudent, raised nearly 800 million euros. However, abundant funds don't guarantee freedom from concerns. Nor is everything available for purchase or conquest. This is the insight shared by the inspiring CEO and founder of GoStudent at the CEO Summit of Fortino Capital.

Raising capital stands as one of the pivotal tasks for startups and scale-ups. This task often becomes so omnipresent that CEOs of these companies find themselves wondering how to simultaneously manage their business.

Everyone Deserves Passion

The intervention of investors is quite literal, as later detailed in this narrative. But first, let's delve into the remarkable early years of GoStudent. At university, Ohswald learned the power of passion. His enthusiastic approach to teaching led to the success of the tutoring sessions he conducted. "Remember those inspiring teachers in your school career? Well, everyone should have access to such amazing educators," he asserts.

Spotting a business opportunity – with European families spending 25 billion euros on tutoring – Ohswald approached his best friend, Gregor Müller, in 2016. Together, they aimed to bring exceptional educators to every child. Shortly after local success in German-speaking countries, GoStudent expanded to a global level. The founding duo secured a spot in the Forbes Europe 30 Under 30 Technology list.

Valuable Market Insights

The initial 8 million euros raised by GoStudent were invested in France, Italy, and Spain. "We achieved promising results. Rapid scaling provided us with immediate data and invaluable insights into our market."

In the subsequent 18 months, the COVID-19 pandemic struck, and GoStudent secured 700 million euros from top funds. The valuation skyrocketed to 3 billion euros. "Corona accelerated our growth," remarks Ohswald. "The company was burning 20 million euros per year. It was crazy. Our board members asked us if we could spend more. We aggressively entered 20 markets, with large teams. The pressure to grow was immense. Would I do it differently today? No. Because we had the money and were achieving good figures."

However, the celebration doesn’t last. The pandemic also caused their market to collapse. There was minimal education or evaluation happening, significantly reducing the demand for supplementary education. 

From Cash Burning to Profitability

The investors who, in early 2022, urged rapid spending, demanded the opposite four months later. Cash burn had to reach zero!! 'Cost-cutting' became the order of the day. GoStudent exited 9 unprofitable countries and laid off half of its 2000 employees. This shift in direction hit hard, especially considering an impressive company party had been organized in Vienna shortly before.

The focus shifted to the product, emphasizing significant process automation. Ohswald reflects, "It was a tough period. But I learned a lot, including the fact that we have a major problem if people lose their trust in the story. Because then, they won't give their all for the company. And only when people devote their lives to it, can you build a true champion. Only with a winning mentality do footballers win the Champions League. Rebuilding this trust demanded time."

He also points out a pitfall for scale-ups that raise a lot of money. "When you start, you have no money. That's why you're incredibly creative during that period. Once you raise a lot of money, you risk losing that creativity. Because you hire someone for every job who solves the challenge for you. Now, we're rediscovering our creativity." 

Strong Brand Inspires Trust

GoStudent sells 1 million lessons per year. More than 23,000 instructors assist 11 million families. The streamlined company generates 250 million euros in revenue and experiences double-digit growth.

The weapons it employs for a vigorous resurgence? Firstly, their strong brand name. "As Austrians, we understand the value of a strong brand. RedBull is also from here. Even though supermarkets sell other cheaper energy drinks, most people still choose RedBull. Similarly, in our market, a strong brand value drives growth. It instills confidence in parents."

Secondly, acquisitions of both online and offline learning platforms. This move expands GoStudent's presence into the physical education sector, encompassing over 1000 locations. "The school of the future is hybrid," says Ohswald. "We dream of building a new type of school: private schools with public funding to make them free for children. We believe there should be margin potential in this activity, combined with paying good salaries and providing development opportunities for teachers."

Thirdly, AI. GoStudent leverages cutting-edge technology in two ways: to generate revenue and to save costs. Their AI model in customer service answers the most common queries, halving the number of tickets and resulting in a saving of 3 to 4 million euros annually. Simultaneously, they employ AI to create a better learning environment. "AI can already impart knowledge today, for example, through a fully automated learning video featuring texts and animations with a favorite celebrity as the teacher. For instance, George Clooney could explain the Pythagorean theorem. And all this at a fraction of the cost of a standard educational video."

Once again, the sky's the limit. We're eagerly anticipating where Ohswald and GoStudent's new growth strategy will lead.