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- Grit, a growth mindset and perpetual learning among leadership and employees are crucial for entrepreneurial success in the long run.
- Access to funding, a deeper pool of varied investors and support within academic institutions are massive challenges when it comes to scaling up a start-up in Canada.
- Unless a start-up’s business model absolutely demands it, it is not necessary to think global from the very start. It might be more helpful to scale up in the local market before moving to an adjacent one.
Entrepreneurs in Canada need much more support in scaling up. Whether it is through services provided by Regional Innovation Centers, stronger angel networks, more funding or university assistance, we need to get better at helping companies at every stage.
Why did you decide to take the leap into entrepreneurship and what motivates you to continue growing your business now?
What eventually became Prodigy started out as a fourth-year project at the University of Waterloo (UW). The leap of faith that I took never seemed crazy because my university had an amazing entrepreneurship ecosystem. There was a technical entrepreneurship class that I took in fourth year, during which Prodigy’s original business plan was written. So, by the time I was graduating, both my business partner, Rohan Mahimker, and I had been working on our business for eight months. We already had a business plan and a great network of aspiring entrepreneurs. Moreover, I come from an entrepreneurial family. My dad started a company in the year that I was born, which he only recently retired from. So, it was reasonable for me to want to start my own business.
My father taught me grit, which is the ability to endure a lot for a long period of time if you believe wholeheartedly in something. It is the belief that with time, focus and effort, you can get better at anything. This gave me the confidence to move into the education market, in which I had no prior experience.My business partner’s family and my own were also extremely supportive; they encouraged us to stay with them until we could afford otherwise. This is why both of us could limit our expenses and move forward with the business more easily than others. Then, I asked myself two questions: “Am I excited enough to move forward with this?”, and “Is the idea big enough for us to be able to make it work?”. The answer to both those questions was and is, “Yes”, so we just moved forward with it.
“My father taught me grit, which is the ability to endure a lot for a long period of time if you believe wholeheartedly in something. It is the belief that with time, focus and effort, you can get better at anything. This gave me the confidence to move into the education market, in which I had no prior experience.”
My understanding of the education system has increased over time and has only deepened my passion for the business as it continues to grow. I enjoyed math growing up and saw how much some of my cousins struggled with it. Then I read a book by Dr. John Mighton, in which he walks through how he thought he was terrible at math in elementary school. He got a better teacher in high school and realized he was okay at it. He then got into university and eventually ended up realizing that he was good at math and got a PhD. Looking back, he tried to figure out why he thought he struggled with the subject for so long. The whole book is about challenges in the education system. Why are so many people okay with being “not a math person”, despite it being the math equivalent of saying, “I am just not a reading person”. We culturally accept a lack of numeracy, which is unacceptable, and I think it is because we do not teach it well. That is not to say that it is necessarily the teacher’s fault. There are a lot of systemic problems with our math education and this strongly affects people’s lives, whether it is simple things like budgeting or career options. If you do not have a strong math background, it closes a lot of doors when it comes to your career. So, over time, the guiding value behind the business has become equity. We want to ensure that no child’s future is dictated by whether they had a string of very bad math teachers or whether they experienced other systemic impediments.Math is something you can choose to pursue or not, but the student should be able to make that choice.
Which are the common challenges faced by entrepreneurs in Canada and what can we do about them?
Access to funding is a huge challenge.Even though we lived at home and did not have a salary for the first few years, we still wanted to hire other people. So, we ended up getting over a dozen new grants from the government. We found that some grants were way too restrictive and demanded significant overhead. A lot of them required start-ups to lead the proposal with some kind of patent application, but a provisional patent registration costs $10,000 and a good patent lawyer. That is a huge waste of money when you would just want to hire people and try to get your product to market. Patents make sense for something like biotechnology, not software.
“There is also a huge gap in Canada’s angel network. We recently raised money from the Canadian Business Growth Fund (CBGF), but it was the only Canadian venture firm we considered because Canada just does not have the same number or quality of investors as elsewhere.”
Regional Innovation Centers (RICs) were very helpful early on. We got training from MaRS before we pitched our first beta customer, but we did not feel as supported by them once we crossed a certain threshold. I know MaRS is working on being available for companies in each stage of their development.
There is also a huge gap in Canada’s angel network. We recently raised money from the Canadian Business Growth Fund (CBGF), but it was the only Canadian venture firm we considered because Canada just does not have the same number or quality of investors as elsewhere. CBGF was very specific about taking a minority investment. The size of that minority investment was in line with what we were looking for because we were a profitable company. We did not need a ton of money and a lot of investors from Silicon Valley were asking for as much as 30% of our company.
“Canada’s education system must play a crucial role in moulding our entrepreneurs of the future since many young people do not consider entrepreneurship as a viable career option.”
Canada’s education system must play a crucial role in moulding our entrepreneurs of the future since many young people do not consider entrepreneurship as a viable career option.The University of Waterloo’s system of ownership of information technology (IT) is a great model for other institutions. At UW, if you make it, you own it. This is especially important for undergraduate level work, which is probably not pathbreaking and highly dependent on good execution. The university environment itself is highly entrepreneur-friendly. It was normal to be talking about start-ups and thinking big enough to want to change the industry with your idea. It just made entrepreneurship seem like a valid career path. UW’s angel network is also relatively strong and the university had a couple of large tech companies nearby. Outside of that, some entrepreneurship courses proved to be extremely pivotal for me. Technical entrepreneurship was a great course, which allowed students to explore what it meant to write a business plan.
How important is it for Canadian start-ups to have a global mindset?
We have always assumed that we would be a global company and our goal is to be the world’s largest education company. We want to help every child, every student and early learner on the planet–from pre-K through to 20. But, unless your business absolutely demands it, you would be crazy to think global from the absolute get-go. Even now, although we do generate revenue from over 90 different countries, most of it comes from the US and Ontario.
“Unless your business absolutely demands it, you would be crazy to think global from the absolute get-go.”
Since our product is customized to a country’s specific education system and curriculum, we need to focus on one country at a time. If your business is closer to Prodigy than to AirBnB, I would suggest getting to scale in your particular region before moving to an adjacent market.
What has been your approach to managing human capital in a start-up? What do you look for in candidates?
While hiring, we always look for a cultural fit, that is, people who have a growth mindset and grit. At the end of the day, because you are paying full market value, you are giving new hires a chance to join something that may become huge in the future. They have the opportunity to somewhat define their own role, so early on, we generally looked for people who were excited by that prospect. This means that we probably did not hire someone with 20 years of experience in a single specialization. We are looking for a lot of generalists that are happy just being super busy as long as they are always learning. The first 20 people that we hired all fit that mold in one way, shape or form. Now that we have been scaling up and employ 300 people, the requirements have changed. We still want people that are generally good at learning new things but also need those who are able to and like to think in-depth.
“The lifecycle of companies is also shrinking. So, they need to create a culture where people do not relax or assume that their company’s success in the last few years will continue five years from now.”
The majority of our early hires have stuck around because we were explicit about how much learning we expected people to be doing. At one point, our performance reviews outlined how many books we expected people to read in a given month. We received some critical feedback on that, but the general idea was that we are moving so fast and there are so many things that we collectively do not know. We needed everyone to sharpen their skills and go deep in the area they were currently responsible for. A lot of the early hires went from being individual contributors to senior leaders. For example, in just six and a half years, one of our Junior Developers progressed to become our Director of Product.
The lifecycle of companies is also shrinking. So, they need to create a culture where people do not relax or assume that their company’s success in the last few years will continue five years from now.It creates a certain unease, but part of it is that it is also really exciting because it means that the barriers to market entry are lower. So, it is an opportunity to enter new markets and scale quickly there.
If you had to start from scratch, what are some of the things that you would do differently based on your experience? Are you content with your monetization model?
There are probably two major things that I think we did quite wrong. Firstly, we should have gotten the product to market way faster. We technically spent about a year and a half in beta and that was partially a side effect of friction. We were testing with users, but we needed to get more user feedback in a more effective fashion. Too much of what we were building was driven by myself and my business partner. Instead, by talking to enough customers in a more systematic way, we could have gotten a better understanding of the market and limited our efforts on unnecessary things.
Secondly, we should have tried to reduce friction as much as possible. We were an installed app when we tried to go web-based. We did not do enough technology planning and ended up having to rebuild our entire product twice. Some decisions are quite hard to change, so we should probably have taken a little bit of time to think through those before fully committing to a path.
“By talking to enough customers in a more systematic way, we could have gotten a better understanding of the market and limited our efforts on unnecessary things.”
One of the areas we had success with is our freemium model. It is a very large part of the reason we are where we are today and it was an absolute necessity. If you do not have a freemium model that allows access to all the education content, schools cannot adopt your product. We wanted every child to have access to our educational content regardless of socioeconomic status, so we just made it all free. We were quite confident that we could make a game that was engaging enough and charge users for it.
In general, freemium is a great way to try to find product-market fit.You eventually need to reserve enough value that people are willing to pay. Once you figure out the core features people love, you will have to frustrate some users by locking them in some capacity. So, you need somebody who is eventually willing to flip the monetization switch properly and that is not easy.
Part of the Entrepreneurship Series presented by: