That’s how Lucid, the No.1 education brand, was born

Or, how to create a multi-billion dollar enterprise by marrying content and teaching methodology

In 2004, we started investigating the issue of K-12 education, especially in math and the sciences. As part of this endeavour, we interviewed a number of teachers at various high schools in the (San Francisco) Bay Area.

Two nuggets came out of these interviews: (1) there is no standardised methodology of teaching; and, (2) there is no methodology for personalised skill-gap analysis.

Lucid was founded upon these two core foundational blocks. They had implications well beyond the local schools and students.

As Chris Kaegi, a teacher at Galileo High School in San Francisco, explained, “If a teacher has to teach 50 kids per class, across 3-4 grades, it is very difficult to keep track of which kid has absorbed what’s being taught, and which one has not.”

This results in a chain of problems as the child moves from one grade to the next. A “D” in 7th grade degrades to an “E” in 8th grade, followed by an “F” in 9th grade. If you don’t know how to do fractions in algebra, how would you solve quadratic equations?

With our knowledge of artificial intelligence, we concluded that a knowledge base of content was needed that is aligned with a methodology of teaching.

This methodology would include personalised skill gap analysis, such that, a student studying basic algebra could be tested to identify exactly where her knowledge gap was. Be it in dealing with fractions or exponents, this knowledge base and analytics software was capable of getting to the heart of the problem.
 
Once the problem was identified, the knowledge base had modules for teaching each one of the areas that needed focused attention.

Of course, venture capitalists at the time hated the education market, since some had tried to penetrate it with marginal success, including the legendary John Doerr.

The conventional wisdom was that you don’t make money in education. There was a lot of truth to this assumption, since getting products into schools was an uphill task.

However, in 2008, the Web 2.0 era was fully manifest, and Web 3.0 was about to be launched. Web 3.0 turned out to be all about personalisation.

Against this backdrop, Lucid was launched with $8 million in venture capital led by a firm called Emergence Capital. It was a Powerpoint financing, with no other asset yet in place. It took us 3 years of absolute stealth-mode R&D to come up with a scalable methodology for Math (Arithmetic, Algebra, Geometry, Trigonometry, Calculus) alone that covered grades 6-12.

We created and licensed an enormous amount of content that aligned with the methodology at our development center in India.  

We involved teachers who had particular reputations for being “great teachers,” studied their “art” at great depth, and encapsulated as much as we could into a “science.”

Then came the go-to-market challenge.
 
While we wanted this to be a worldwide service that every Math teacher at every school in every country adopted to teach every single one of their students, we had to segment the market and find a business model that would let us penetrate and get early traction.

We chose to go with North America with a Web 3.0 approach. We created a community for middle school and high school math teachers to interact, exchange ideas, and organically engage with one another. We also had a community of middle school and high school parents at each of the schools that our teachers taught in, who participated in the exchange.

Most importantly, every teacher who adopted our methodology in their schools, managed to get the buy-in of the parents to pay for the service.

This was very important from a business model perspective, since it allowed us to bypass the school system altogether.

It also meant that our target customer base remained constrained to affluent families in North America.
 
We did have teachers and families using our service elsewhere in the world, including India, UK, the Middle East and Australia, largely due to word-of-mouth. But by and large, we consciously chose not to fight the battle yet of tackling the less affluent or poorer segments of our eventual target audience.

We accepted this segmentation reality for 5 more years, because it allowed us to refine our methodology, build company valuation, raise a great deal more financing, and expand into other subjects beyond Math, including Biology, Physics, Chemistry, World History, World Geography, English, and English as a second Language.

All the while, we grew our revenues at a 113% CAGR.

We could have become profitable by 2016, but we took our time. We were addressing a big problem, and we chose to do it right. We invested in building the most remarkable content partnerships with Discovery Channel, A&E, CNN, etc.

In 2020, however, we were extremely profitable, and had an operating margin of 29% against a revenue of $3.6 billion.

And, we were so well-known as an effective methodology by 2017, that Gates Foundation came to us with a proposal to fund a roll-out of our methodology into the poorer schools all over the world.

In 2020, thus, we are the leading global educational brand.