Digital Transformation Project – YouCapita

14

October

2016

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Drukwerk

What does Capita Selecta do?

Capita Selecta (onward calledCapita) is a tutoring business offering crash courses for exam preparation mainly for University students in the Netherlands and also for HBO students. Recently it also started entering the High School exam preparation tutoring to expand its market. The business model is simple: as a student you can sign up for a course, paying about 10 euro per hour. An average course has 12 hours and can maximum host 10 students. Tutors teaching the course are older students, who are paid 12 euro as a starting salary, which can grow to 15 or even 20 euro per hour when they show they are reliable. In the Netherlands Capita is the oldest and biggest University tutoring business. That is also why so many people are customers or tutors: a long-standing reputation, confirmed by a strong presence in each university.

The market trends

Although Capita is the biggest player, competition is fierce and cost-based. Every individual can nowadays rent a room from the university and give a course to a little class of students. Furthermore bigger competitors like AthenaStudies use lower prices to fight the branding Capita has and that leads to extra pressure on prices.

The Disruptive Technology and its evaluation

A trend in the tutoring business one cannot ignore is the e-learning. E-learning is being embraced by all the major Universities in the USA and slowly but surely also in Europe. The market both for students and for corporate is expanding and creating more demand for online courses. In this way, everyone with an internet connection can be reached, wherever he is in the world at whatever time he wants. With an average growth of 5.8%, also the traditional education providers are jumping into E-learning and MOOCs .

RSM is among others one of the innovators in Europe, offering a MOOC one Coursera about Innovation Management on Coursera. It was a success, many customers payed to have access to it and the Bachelor RSM students expressed positive feedback.

Implementation

Combining the positive RSM MOOC experience with a qualitative interview with a management member at Capita, we made an IT strategy for the business.

Currently Capita uses IT as cost center (i.e. website, subscription and newsletter). That means that the IT strategy is driven by the business strategy (having more customers) and a strategic execution approach described by Henderson & Venkatraman, highlighting the importance of a well-defined strategy. In order to offer online courses Capita needs a third party software that hosts video on a platform, which we called YouCapita. The initial investment consists mainly of getting acquainted with the software and buying equipment. The rest is just creating the content, what the current tutors can do. YouCapita will offer COOCs (Capita-Owned Online Courses) for a yearly subscription of €5o for normal users with a singular access to content and € 100 for premium ones with unlimited access.

Being remarkably cheaper and more reachable than the current courses, we believe that YouCapita can deliver value to Capita as well as to new customers.

Strategy for two sided-networks- how a good pricing strategy makes a “winning” company.

5

October

2016

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Quantum_Computer

In the article of Eisenman et al. (2006), the steps to make or become a succesfull factors are analyzed. To apply the concept I will compare two not so well known platforms for IT savvy people, Experts Exchange and Stack Overflow.

Intro

First I will introduce the two platform, second I will compare them according to the framework made by Eisenman et. al (2006), looking at pricing, winner-take-all dynamics and threat of envelopment.

Experts Exchange or EE was started in 1996, as a platform where technical IT problems could be solved. Mainly made for professionals who had thorough understanding of the field, it required a paid membership to view the content of the website and to use it. By being active and posting answers, the users can get a free membership for that given month. The website is well-kept and as a professional look.

Stack Overflow or SO started in 2008 with 2 programmers who wanted to make a open-source variable of EE. They wanted everybody to be able to learn how to code and at the same time to have “quality” answers for the users. Now, 8 years later, SO employs around 20-30 people has some sister-businesses and is exponentially larger than its competitors in terms of traffic and amount of answers on the website. The website is well-functioning and has multiple income streams.

Pricing & Revenues

EE does not subsidize its users with free memberships, yet it makes this possible. It makes some money from advertising, posting jobs on its platform and offering some learning materials. The core business stays the membership fee though since for easy questions users prefer to go to other free websites.

SO makes mainly money from advertising, since the traffic is very high. Plus the users have a feedback system on their answers which allows users to build up credibility that can be used to apply for jobs and for employers to rate their candidates. This search job function is paid for from the companies who want to hire developers. Plus, the employee work mainly from remote, which saves a lot of costs ( statsexchange, 2014).

In this case we see that the article hit the nails on the head. SO has experience a strong growth r subsidizing its users having stronger same-side effects while EE became a sort of a niche.

Winner-takes-all dynamics

Both websites are profitable and growing, we can conclude there is no proper winner. In fact, multi-homing costs are not high for the users, meaning that using one site does not exclude the other and the sites are quite different from each other, creating a market where the two platforms can co-exist(Quora, 2014).

Again the article makes a good point about the requirements to take over the market.

Threat of envelopment

At this moment, none of the two companies is getting out of the market and there are no apparent threaths. The knowledge and user base they have accumulated over the years is a strong factor for both of them. Also, the margins are not that great, which makes the market not so attractive for other competitors. Websites are flexible so that makes it easy to change if new income streams are thought or for potential adjustments to their business model.

The article puts a multi-bundle platform as a threat for smaller platforms. This could be true for both sides, on the other hand losing control over the feedback system for SO and the quality of the experts for EE could be a risk if they consider to broaden their business model.

Conclusion

Eisenman et al. 2006 describe the platform situation quite accurately. Unfortunately, only 10 years later, all those platforms they mentioned, like Media Player, DIVX are not comparable to the dynamics of everyday websites.

The two businesses analyzed are not swimming in the gold but they are profitable abiding by the framework based on older business models.

Now we look at many businesses that do not charge the final user like Facebook, YouTube and so on. That is radically different from 2006 when free software was mainly of bad quality. It would be interesting to see a framework about this new companies and why some of them succeed and some just go bankrupt after the first VC rounds.

References

Eisenman et al. 2006, Strategies for two-sided markeets,

Quora, 2014. Available at https://www.quora.com/Is-Stack-Overflow-displacing-Experts-Exchange

Statsexchange, 2014. Available at http://meta.stackexchange.com/questions/79435/what-is-stack-overflows-business-model

2-sided platforms – The story of Nestpick, a Dutch startup in the housing market

2

October

2016

5/5 (6)

nestpck

2 years ago I started my summer internship at Nestpick. Back then it was a start-up in the first stage with 7 employees and great ambitions. Nestpick business model is easy: it is like Airbnb for medium-long stay. That means, if you are looking for a place to rent for some months, you can apply to a a room online and if you are chosen from the landlord, you will have a deal: you will book your room in advance for a lower fee than rental agencies, your landlord will have his room rented out. Everybody coming to the Netherlands experienced the housing problem and how hard it is to find a place to stay.Even locals struggle with it when moving out.

Nestpick’s ambition was to fill this gap in the market and help students searching for a room. The idea was to build a platform so that users would stick around for longer time and make multiple purchases. In 2014 it had a good start yet looking at the network effects the story becomes more complicated.

Same-side network effects do not exist. Landlords do not benefit from having more landlords on the platform, nor student from having more student. Only for the sake of the platform surivival one could invite people in the platform, so that Nestpick would have more active users.

Cross-side network effects do exist, but only to a litlle extent. Both landlords and the average student-tenant would benefit from a bigger pool of houses or potential customers. Their return to scale is little for them.

Yet, renting a house is a one-time transaction. Once you get your room, you do not need to search for a new one. And maybe the year afterwards your friends can move in with you or they invite you to join their place. The same applies for landlords. In the Netherlands there are different platforms to find a place like Kamernet, Pararius and many groups on Facebook too. Landlords can use any of those to find a new tenant and usually they find a new one in a matter of days.

Secondly, the cost structure is not so efficient either. A place on airbnb can be rented twice per week, users can give feedback and they are mainly using it for fun. For Nestpick, the customer service was constantly busy because the potential tenants wanted to know more information about the room and wanted to make sure it would not be a scam. To avoid this, Nestpick hired professional photographers to visit the properties and take pictures. This had a huge cost which sometimes was not recovered, for example when the landlord changed his mind or just rented the room via another platform. The assumption was that room online would be used several times. Often that happens, some times it is just a one-time supply or not even, which beats the revenue down.

Also just finding landlords in the Netherlands willing to rent out via a website or in busy big cities is never easy, because they are used to traditional ways and they do not have a real incentive to do it online, since their rooms will be rented out anyway. The utility of Nestpick is just in big cities, where students or young professionals move to when they have a new opportunity in their lives, yet that is also the fiercest housing market.

At this moment Nestpick managed to expand to Germany, Italy, France and some more countries. The problem of finding landlords stay, the administrative and customer service costs too. Everybody can see the benefit of such a platform, the question is: is this going to be a lucrative platform? are there going to be enough users to keep it running?

My personal opinion is that if the growth of the platform is not explosive and the break even point is not reached in 1 year then the platform will never be a real success in terms of monetary returns. It will be useful for some users, can have a long existence but it cannot revolutionize the market if the number of users is low. Do you agree?

Technology of the week – e-Learning Business Models (Coursera vs. Datacamp)

22

September

2016

5/5 (2)

e_learning

A comparison of e-Learning Business Models

In the last 10 years many Massive Online Open Courses platform were started, where professors or professionals could share their knowledge with the world, getting feedback from students and improve.

The question is though : is this going to last forever? In this blog we take a look at Coursera, the first and biggest MOOC’s provider and Datacamp, a recent startup from Belgium that proves to be succesfull with a really different approach to online learning.

Coursera vs Datacamp – The revenue model

The online content of coursera is accessible for free, yet to earn a certificate and have access to graded material for a course, you will have to pay a remarkable amount of money ranging from around 50 euro to 80-90. If you apply for financial aid, you could get all this for free, since Coursera was founded as a non-profit business. Coursera has good relationships with universities and corporate partners who already benefit from having an online platform. Yet it has to turn profits to pay back the investors who seed it with $85 millions.

Datacamp provides free access to all the materials only for a number of courses, usually the beginner ones or the introduction lecture of the more advanced ones. On this platfrom you do not pay for course but a monthly premium account. If you are a student, this will cost you 9 euro per month, otherwise 25. 70% of Datacamp customers are professionals, very likely to paying customers for the subscription, although this piece of information was not disclosed. It started in 2013 and at the end of 2015 it was already profitable.

Teaching methods & Public

Coursera addresses pretty much everybody. Curious people looking for a class in humanities, professionals looking to acquire skills, students whose universities use the platform for extra courses. A coursera course is made up of some videos and some related notes, with links and extra resources. Furthermore, there is a forum where you can exchange comments or ask for help.

In Datacamp, you get to see a short video with examples and execution and afterwords you get little exercises to do practice. Little tips and the solutions are available if you do not get it.

Conclusion

Coursera could benefit a lot from applying different prices to its videos (versioning), for example offering a price based on status (i.e. students/ professionals) or on monthly use ( i.e. 3 hours of video available). Also Coursera offers the long tail of online courses, meaning that offering a subscription based fee would be more suitable for its products, just like Netflix and Spotify do.

On the other hand, Datacamp seems to be doing everything right, maybe due to its strongly data-driven culture. If we could suggest one thing is to improve popularity and brand awareness, by way of partnerships to accelerate the growth of the business.

Sources

https://moreorlessbunk.wordpress.com/2014/03/25/you-never-give-me-your-money/ (Coursera facts)

https://www.quora.com/How-does-Coursera-make-money-if-it-does-What-is-its-business-model (Coursera facts)

https://openforum.hbs.org/challenge/understand-digital-transformation-of-business/business-model/coursera-flipped-the-classroom-but-can-it-turn-a-profit/comments (Coursera facts)

https://www.datacamp.com/about (Datacamp facts)

https://www.datacamp.com/community/blog/2015-in-review-and-a-preview-of-2016(Datacamp facts)

http://olc.onlinelearningconsortium.org/publications/survey/online_nation (online learning trends)

https://www.class-central.com/report/mooc-trends-2015-rise-self-paced-courses/ (online learning trends)

Group 29: Dave Honcoop, Robin Aardoom, David Fortini, Jovan Gligorevic