In today’s Finshots, we look at the rise and fall of a doubt-solving edtech firm.
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The Story
Doubtnut was once valued at nearly $150 million. But coaching institute Allen bought the edtech firm last week for a measly $10 million!
Where did it all go wrong for Doubtnut, you ask?
Okay, let’s take it from the top. See, private tuition is a big business in India. Students flock to teachers after school hours to get individual attention. But apparently, over 70% of the time in these classes is spent on clearing doubts. After all, the new stuff is taught in school anyway. So whatever problems the school teacher doesn’t have time to clarify end up being discussed during private tuition hours.
Maybe the founders of Doubtnut realized this was the situation. And they figured that no one in the edtech ecosystem was asking, “Hey, what if you’re doing your homework and get stuck on a problem? You can’t always pick up the phone and dial your tuition teacher. Your friends might not have a solution either. What do you do?”
Sure, you could look it up on Google or YouTube these days. But it’s not easy to get exactly what you’re looking for. Also, if the equations are written on paper, it’s quite a painful exercise to type it all out.
So Doubtnut decided to be a saviour in these situations. You could simply click a picture of the question in a book and you would get a video solution within minutes.
Yup, a video solution created by engineering grads and interns who were sitting in cubicles and sweating it out. They’d look at the most commonly asked doubts on the internet. Then they’d sketch it out, record a voiceover explaining the steps and have the video ready. After this, it was up to the tech chops of the company — it would have to understand a live query, dig into the pre-recorded video library, and spit it out.
And within a few years, Doubtnut reached the top of the doubt-solving edtech totem pole. After all, venture capital investors love a good story. And solving doubts is a great one. Everyone’s been through the pain of being stuck on a maths problem and not knowing what to do. Maybe this resonated with investors. They would’ve believed that even if the company wasn’t making real money, the founders had the smarts to figure it out.
But soon, the cracks began to show.
You see, Doubtnut had a problem. It offered screenshot-based doubt-solving for free. It was a bait to attract customers. That meant if Doubtnut had to make money, it would have to expand its edtech stack — maybe provide live courses. And that would have a twofold problem. Firstly, it would increase costs substantially since they’d have to get tutors. Secondly, it would also encroach upon the turf of incumbent edtechs like Byju’s. It wouldn’t have been an easy battle to win. The way out would be to get acquired instead. After all, it did have millions of users that would be useful to any big edtech firm.
And just when that was looking like an option, the edtech story itself turned sour. The pandemic-induced boom time ended. Byju’s’ financial shenanigans came to light and the whole industry was looked down upon. Investors didn’t even want to touch any edtech with a barge pole. And if there was any serious acquisition discussion going on for Doubtnut, even that would’ve vanished.
On top of all this, something bigger was brewing. Across the shores, Chegg was crashing.
For the uninitiated, Chegg was at one point the most valuable edtech in the US. ‘Chegging’ had even become a verb among college students. It did the same thing as Doubtnut — solve doubts. The difference though was that Chegg primarily relied on actual humans to do this in real-time. Around 150,000 of them. Now Chegg wasn’t a dinosaur. It did strike a deal with OpenAI. The chatbot would dive into its existing database of over 100 million study questions and spit out answers.
But Chegg knew that students were already leaving in the thousands. They all wanted the fancy ChatGPT to answer queries. And when Chegg warned about this problem, investors scampered to the exits. The stock fell by nearly 50% in a single day. And it’s only been downhill from there.
Maybe people in India were paying attention to this too. I mean, comedian turned YouTuber Tanmay Bhat has a channel called Overpowered with 3 lakh subscribers. He talks about AI stuff with a co-host on this. And one of their short videos from June was titled “You can use ChatGPT as Doubtnut now”. Basically implying that the first casualty of ChatGPT’s onslaught was the doubt-solving app.
We’d imagine that all this might have spooked potential investors or buyers, right? Who’d want to pay a premium for Doubtnut amidst all this upheaval?
Oh, and on top of all this, even the Indian government might’ve thrown a spanner in the works. Yup, the government wanted to get into the business of doubt-solving too. Here’s something from Moneycontrol:
In a video demonstration of the tool accessed by Moneycontrol, a student posted a voice message of a math query in Hindi on a WhatsApp chat. The voice note first got converted into a text in Devanagari script and then the answer appeared on the chat itself. All of it happened in a matter of seconds.
In another instance, the student took a screenshot of a math question from his textbook, sent it to a WhatsApp chatbot and received the solution in no time.
Sounds just like what Doubtnut would do, no?
And here’s the thing. The government planned to use Doubtnut’s own repository of questions to do this. All things considered, maybe Doubtnut came to realise that they did not have a clear way to stand out from the crowd. Maybe they realised they had stretched themselves a little too thin.
In any case, we hope that Doubtnut finds a new lease of life under Allen's stewardship.
Until then...
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