How Topica overcame early struggles to become Southeast Asia’s biggest edtech firm

Posted on December 23, 2018 by Patamar Capital

Tuan Pham is the CEO and founder of Topica Edtech Group, quite likely the biggest education tech firm in Southeast Asia. Topica, which provides online English-speaking classes and a marketplace of over 2,000 short skill courses, has recently raised US$50 million in series D funding from Singapore-based private equity firm Northstar Group.

In an interview with Tech in Asia, he recounts the company’s rise to the top.

What were some of the toughest moments you faced? Did you ever feel like giving up?

In the early days, we set up booths at an exhibition center and made appointments for a few hundred potential students to come in over the weekend to see our demo product. It was a scary time during a global financial crisis, and our nascent startup had zero revenue. In the next couple months, several other attempts failed to bring in revenue, we were running out of our bootstrapped money, the landlord wanted to raise the office rent, one of our servers broke down, and some staff quit.

I sat down with one of my team members to deliver the news that his salary would be late again. I expected that he would be fed up and thought hard about how to convince him to stay. If he had left, it would have started a chain reaction among others, and I might have had eventually thought of quitting myself. To my surprise, he did not.

How has the e-learning market changed in Vietnam over the years since you founded Topica in 2008? How did Topica overcome the perception in Vietnam, or in most Southeast Asian countries, that online learning is not as effective as face-to-face learning?

In 2008, if you sat next to a cool group in a Vietnamese cafe, they would be talking about trading stocks. The only way we could explain online education to people was to set up booths at fairs and let them try it out. Today, people would be talking about AI, ecommerce, fintech, and edtech in cafes.

When we first piloted an online course, “Introduction to Algorithms,” with the help of a Massachusetts Institute of Technology professor and teaching assistants based in Boston for Hanoi-based students, we were surprised that students in Hanoi got the same grades as those in Boston. That convinced us and our early investors that online education can deliver great results if done right.

It was not easy to convince the public, though. For the first few years, we invested heavily in content development, instructional design, instructor training, software systems, quality assurance processes, without seeing much revenue. We have been always focusing on the needs of working adults, who are less concerned about what kind of degrees they get, but more on what skills they can acquire and from whom.

We brought in instructors who are managers or professionals from the business world to teach real-life skills in our degree programs and on the short-course platforms. We signed up native-speaking teachers in the US, Europe, and Australia, to teach real-life conversational English. We used AI-driven applications from emotion tracking to question-routing to pronunciation practice to convince the students.

When did Topica start thinking about markets outside Vietnam? Who are its biggest competitors in Vietnam, and in the region?

Around 2012, we started traveling to startup conferences in the region to see if we would face stiff competition if we ventured outside Vietnam. To our surprise, there was virtually none. Our first international project started when a university in Manila reached out for a partnership, then one of our product teams volunteered to set up in Bangkok, then another team proposed a pilot in Jakarta, and one thing just led to another.

We are currently about five to 10 times the size of our next direct competitors in Southeast Asia, both in terms of funding or revenues. There are many smart startups though, with potentially disruptive products or technologies, who can overtake us anytime. Globally, there are very big players in the US, and interestingly most of them look at us as potential distribution partners. Fierce competition might come from China if some of the huge edtech companies there see Southeast Asian countries as an interesting market rather than a distraction from battles in their lucrative home market.

Moving forward, what can we expect from Topica?

It feels like the global edtech sector is where ecommerce was 10 years ago and where ride-hailing was five years ago. It’s a period before things start to move dizzyingly fast. We are lucky to be a market leader in a region of 600 million people, to be on the verge of such a tremendous inflection point. With the new funding, we will double down on our engineering team, especially our AI capabilities. We will also enhance product quality, develop new products, and bring them into other geographies.

It is a daunting challenge to predict where the different currents will take us. We are not so concerned about whether we will be a unicorn or decacorn, but more about how we can continue building the best team and deliver the best products.

Read the full interview on Tech in Asia.

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