How we created an online service for learning English: from startup to flourish

In 2014, we launched the Puzzle English project and shared with the inhabitants of Habr a story about our adventures on investment funds in search of money. There were investors: venture funds SOLventures and Genezis Capital financed the project. And now, after 3 years, Puzzle English has not only a business plan, but also experience. The experience of becoming a profitable business. Reality taught us many lessons, we filled a number of bumps and made many discoveries. These three years passed quickly and were full of various events. All this baggage of new knowledge we want to share with you.

Suddenly this will help you avoid unnecessary difficulties at the start of your project.

Present the project to investors

Even if you don’t really need money (you want to manage your money or plan to develop something first), it is still useful to present the project to investors at the start. This will allow you to get a free and competent assessment of your project for free and see your “weak” sides while you have not yet spent time on unnecessary nonsense. For half a year we had about 30 meetings with representatives of various funds, and I am sure that we have spent this time usefully. At each meeting, we found our weak competence and increased our potential to the next, filling gaps.

Meeting with the funds, we attracted investments, finalized the project and, not least, received a lot of practical recommendations for the development of our startup. Partly thanks to these tips, we were able to become a profitable business. We accepted some of the recommendations immediately and implemented them; the meaning of the others became clear in the process of development, after the first cones, which were independently filled by us.

Form a multi-functional team

By the time we found investors, we managed to make the project break-even with our own resources, but the revenue was quite small, as well as the dynamics of its growth ... The real question was whether or not to attract money. We decided that investments are necessary for a more qualitative and dynamic development of the project.

Therefore, having received the first 500 thousand dollars in October 2014, we assembled a strong team of programmers, invited technical director Andrey Stroganov, who had previously worked at Yandex and Odnoklassniki and director of marketing, who had previously worked at a competing startup.

The recommendation “look for a marketer at the start of the project”, received from one of their investors, with whom we met, is practically one hundred percent justified. I am sure that we could become a profitable fast-growing project not only due to the variety of quality services, but also thanks to the efforts to promote them. The “look for experts” advice was taken into action later when we realized the need to create a complex product and invited linguistic experts who developed and continue to develop high-quality unique content for us.

Thanks to a strong team, by the end of 2015, the Puzzle English audience has grown to the level of 2 million registered users (at the start in 2014 there were 60,000), in the same year we launched the first mobile application and received RUB 45.7 million of revenue at the end of 2015 of the year.

Learn from the mistakes of others

Among the recommendations of investors, there were those who contained a rational grain, gave us good guidelines, but upon critical examination we realized that we were not ready to follow them completely.

In particular, we did not follow the recommendation to make everything free, and the statement “It’s better to have a project with a million audience and 1% paying users than a 100% paid project with a thousand audience” was adopted, but not perceived as an axiom.

The peculiarity of our product is that we once invest in its creation, and it can be used endlessly. Therefore, the above statement makes sense to us. But an analysis of the experience of others, for example, Coursera, showed that “gratuity” can be destructive. On this resource, monetization is realized through the sale of a certificate, but only 1% of students come to receive it, and the audience, which is only a small fraction of this percentage, wants to get it. In this case, it is difficult to achieve break-even and even more so to make a profit.

Free in the eyes of the user devalues ​​the product, and the high fee repels. We have found our approach: on Puzzle English a lot of free content and services can be tried for free. But still, for the main content and full-fledged services, we have introduced very affordable prices that are ten times lower than offline for a similar product. We also use a flexible discount system, we encourage users with a variety of promotions. Thus, we managed to fulfill the recommendation of the same investor: “Make such a resource so that people stay on it and keep returning. And recommended it to friends.”

Focus

At the start, I was fascinated by the development of the product, the number of ideas that needed to be realized went off scale. I tried different online courses, each time I found what could be improved in them, and I immediately wanted to realize this discovery in my project. A strong team of programmers could realize all the ideas, and we did not deny ourselves the pleasure - we started to do many products in parallel. And only in the middle of 2016, we remembered warning one of the potential investors: “a typical mistake when you take care of a large number of KPIs right away, you blur the focus of attention. Some numbers go up, others go down, you do not understand what to do. early beta with absolutely minimal functionality and look only at one KPI: retention rate - user retention ".

We made this mistake, and reality made us focus. When in the middle of 2016 the future ceased to appear bright, and the project’s economy became unprofitable, we analyzed, found unprofitable products and froze their development. Our experience has shown that no matter how much I want to implement all the ideas at once, at the beginning it is worth distinguishing 1-2 locomotive products, and only after achieving sustainable development, to launch new ideas into work.

Try to keep cool

The first successes cause euphoria. Any heights seem attainable, and ambitious plans are almost realized. Keep cool, it is useful to you in crisis situations that can easily follow the euphoria.

Having reached the first successes by the end of 2015, we formed a super-aggressive plan for revenue in 2016. And in order to realize it, they invited an operational and technical director, product managers to the company. We overestimated the potential of our development and began to incur losses: although the project continued to grow, but the growth rate was not enough to cover the costs. We needed composure not only in order to step on the throat of our song and freeze unprofitable products, but also in order to dismiss employees. First of all, we broke up with those people who themselves did not produce anything - these were the managers who control the work of mobile and web developers.

As a result, by November we were self-sufficient. At the end of 2016, Puzzle English significantly increased the number of users registered on the platform, the number of which exceeded 3 million people. The number of active users engaged at least once a month (MAU) also doubled and reached 600,000 people. The company's revenue amounted to 80 million rubles. - almost twofold increase by 2015.

Manage the project yourself

Starting an independent business project, you should be aware that now you will only have peace of sleep. You have to work 24 hours a day, seven days a week and almost no holidays and weekends.

Hired managers are not able to develop the company's business more efficiently than its founders. Even despite their qualifications and management experience, third-party directors do not have the entrepreneurial sense and understanding of the market that allowed you, the business founder, to find a niche for the company. They also tend to use standard schemes and approaches that do not allow for the effective growth of a startup in a highly competitive environment. Hired managers are not able to take entrepreneurial risks for non-standard business decisions, they miss or do not want to pick up weak alarm signals, and therefore the founder, who has entrusted business management at such an early stage of its development, subsequently has to deal with crisis management.

This understanding has grown as a result of passing through the 2016 crisis. So, the mercenaries will not be able to sit out behind the backs, although sometimes they want to do only the work that gives pleasure, discarding the routine of day-to-day management.

Look for your management approach

In a start-up project, the generally accepted management approach practiced in large companies is absolutely not applicable, when an average of 2-3 managers are for each employee producing a product. The economy of a start-up will not sustain such luxury, and I don’t see any practical sense in such a management model. The crisis of 2016 finally convinced me of this. As a result, having overcome the difficulties, in Puzzle English we applied the horizontal management model, which is practiced by such famous companies as Zappos, Valve, Basecamp, Pixar.

With such an organization of business processes, there are not only managers, but also departments and positions in their classical sense. Our employees themselves set goals, organize their work, adhere to deadlines, analyze the results, and bear full responsibility for the function they perform.

Having got rid of managers, we received an increase in motivation and productivity of employees, which immediately affected the development of the project. Since November 2016, Puzzle English has been a profitable business.

Seek new development resources

In our case, employees are the non-standard and very effective resource for the development of the company. Independent, purposeful professionals themselves organize their work, are aware of their tasks and responsibilities, are not under the pressure of bureaucratic procedures and have enough freedom to fulfill themselves, to manifest their entrepreneurial potential in their functional sphere. Equality of positions unites the team, gives rise to a feeling of elbow and unites people aimed at a common result.

In Puzzle English, much is built on trust. We give freedom of action to employees, do not control them "from and to," we reserve the right for people to make mistakes and learn from them. We also have the possibility of “horizontal” movement, for example, did not cope with the function, but he showed himself excellently in doing something else, or you want to grow and master the areas adjacent to your current functions, have been trained and want to try yourself in a new field activities. We always give people a second chance. And people realize their potential, their talents as much as possible. Maybe that's why we have the result.

In 2017, we expanded our product line, began developing services based on artificial intelligence and machine learning, while remaining a profitable business. Today we have more than 4,500,000 subscribers, 1,000,000 students, a quarter of them are learning English through mobile devices.

There are no universal schemes in business, each project is unique and develops in unique circumstances. Everything new and everything has to be raked by yourself. Nevertheless, fragmentary experience of others is still applicable and adaptable to each specific situation. I hope our discoveries, observations and conclusions will be useful for you. The main thing is to go to the end, do not despair and do not give up even when everything goes bad. If you believe in your project and invest in its development, then you will definitely find like-minded people and real partners.

Good luck!