What was Lido Learning?
Lido Learning was an ed-tech company that offered live online classes to students from Kindergarten to Grade 12. It was founded by Sahil Sheth in April 2019 and was headquartered in Mumbai, India.
Sahil Sheth was no stranger to the EdTech industry prior to this. His previous company called ‘Infinite Student’ operated in the same domain. Infinite Student provided video lessons mapped to the school curriculum via a mobile app. This venture grew successful and was soon acquired by another famous ed-tech company, Byju’s.
After the acquisition, Sheth ended up working as the vice president of Byju’s. While working in Byju’s he realised that most kids prefer studying with their friends, with a sense of community - something you usually get in attending tuition.
To study this more deeply, he spent a month in China, where the tutoring market was thriving online. He observed that the tutoring mediums were more interactive, and incorporated more analytics in tracking the student’s performance.
With this idea, Lido Learning was born. Lido Learning provided interactive classes held online, in a small group format. In each class, the maximum teacher-student ratio was maintained at 1:6. In addition to the live classes, other services such as self-paced videos, quizzes, games, customized tests, and homework was also provided.
With Sheth’s previous experience in the edtech industry, it was quite surprising that Lido Learning shutdown happened. However, before we get to that, let's understand Sheth’s journey first.
Lido Learning’s Operations
In the first year of operations, Lido Learning had an established presence in Tier 1 cities. By November 2019, Lido Learning had 138 employees and managed to raise $3 million in its series A funding round.
6 months later, Lido Learning (according to Sheth) had over 2,000 paying customers and close to 400 teachers. With these promising numbers, Lido Learning announced plans to expand its scope of operations to tier 2 and tier 3 cities.
Lido Learning’s Series B funding round concluded in March 2020. It had successfully raised $10.5 million USD in this round, three-fourths of which was funded by VC firm, BAce Capital.
By 2021, Sheth had even bigger plans for Lido Learning. He wanted to accelerate Lido Learning’s expansion by moving to newer markets - especially international markets. By 2022, he had new plans to launch operations in the UK, Australia, New Zealand, and South East Asia.
With these ambitious plans, Sheth ended up raising $10 million in his Series C funding round led by Indian entrepreneur Ronnie Screwvala’s Unilazer Ventures.
Lido Learning Shuts Down
On 4th February 2022, with a shocking note to its employees, Lido Learning announced it was shutting down operations. The note, written by Sheth, was delivered to more than 150 employees, announcing that the organisation did not have any more funds to continue operations.
And just like that Lido Learning shuts down
What went wrong?
So what went wrong? What caused the lido learning shutdown?
Lido was clearly running out of money. It had 3 successful funding rounds and tried to raise more. However, that didn’t quite pan out causing the lido learning shutdown. They were expecting 2 major funding deals to go through but that didn't happen.
$100 million+ from China's ByteDance (TikTok's parent company) — India banned Chinese apps, and possibly this hampered the deal.
$10 million from Cure.fit's Mukesh Bansal — Cure.fit themselves had a huge setback since their fitness centres were shut due to Covid, so the deal didn't end up happening.
But there were deeper problems the company was facing already. And here's where we get into the real reasons for failure.
Lido Learning Shutdown: Reasons for failure
1) Lido was already in Losses
Lido was facing monetary problems a lot earlier. Over the last few quarters, Lido Learning was having a tough time making its operational payments. It was struggling to deposit its employees’ provident funds, failing to meet the refund requests of its customers, staling the full-and-final settlement of former employees, and delaying payments of its vendors.
Clearly, they were overly reliant on the next round of funding. And with each new round of funding, the company used the money to expand into new ventures, instead of cleaning up the in-house debts. Healthy financial decisions are the backbone of any business. With these bad financial decisions, any bystander could confidently say: It is a matter of time before Lido Learning shuts down!
2)Wrath of the pandemic
Lido's model of selling works similar to Byju's where salespeople visit homes to sell products physically. More than half of Lido's employees were such salespeople. Of course, with the pandemic, these salespeople weren't able to make their visits. For a brief period, operations of Lido Learning shutdown, and growth took a huge hit.
3) Bad hiring decisions
During Covid, Lido had pay cuts of up to 50% for existing employees but they were also hiring for key roles at the same time. The new hires were mostly friends & family of the top management (source: anonymous employee interviews for Forbes)
These new hires also ended up burning cash in all the wrong areas — for instance, they ran ads on social media, where people were pouring in negative comments. Forget the ROI for ads, this damaged the brand name even further.
4) Unhappy customers
If Amazon is the epitome of customer obsession, Lido would be the exact opposite. Pick up any tweet from Lido's timeline and you'll see a flood of replies asking for a refund and complaining about Lido's poor customer service.
In fact, this problem started much earlier. Customers were offered a 15-day free trial, wherein if people didn't like the classes, they could ask for a refund. But such refunds never came through. What's worse is that Lido's customer support didn't even respond to such queries. With such internal problems, to an average joe, the Lido shutdown seemed inevitable.
5) Expanding to other markets
Now, there have been arguments against the refund complaints. Some say that such refunds came with a condition that customers had to return the devices given to them and they never did before asking for refunds.
Be what may, if your customers are unhappy and at such a scale, anyone would logically want to solve it first, before thinking of taking the next big step.
However, with the $10 million funding that they raised in September 2021, Lido instead decided to spend it all on expanding to international markets. They opened up coding classes in the US & Canada when their troubles at home were unsolved.
With all the problems snowballing, Lido Learning shuts down. Lido’s ideology of go big or go home was a major cause for its downfall. Lido’s business strategy was unsustainable to begin with - so its downfall was inevitable.