Shantanu
Prakash, MD & CEO of Educomp Solutions is the man who made
'education', a "sexy" word for the stock market. This is a story of
a dreamer with a difference. He not only achieved his own dreams
but also helps many others do it day in and day out.
Shantanu Prakash, a middle class boy from Delhi decided to walk the road less travelled. After IIM-A, when most of his classmates opted to lucrative jobs at MNCs, Shantanu decided to set out on his own and 17 years later, he has no regrets and why would he? After founding Educomp in 1994, he has been changing the face of Indian education on a daily basis.
Shantanu Prakash spoke to CNBC-TV18's Mitali Mukherjee in a special series programme called "Wealth Creators". Shantanu says, 'Education for the past 500 years has never been considered a business. If you really ask what has been one of our greatest contributions besides intellectual property, besides innovative transformational models, it is making people realise that there is value in education.'
Excerpts from CNBC-TV18's exclusive interview with Shantanu Prakash:
Q: I believe you are actually from Delhi Public School (DPS) - were you a geek at school? Were you into computers and you thought this is what I want to do or did it start much later for you?
A: I was a child who would break all the rules in the class. So, if one shows me a rule, I used to say, I need to break it. Thus, I was definitely known as somebody who would not conform to the dotted line and somebody who is really creative in the classroom; seem like somebody who is not studying at all and then pull a surprise at the last minute.
Q: When you passed out of IIM-A, a lot of people from your batch probably joined an MNC, went into a structured job; you really did go down a path that people do not take, what excited you about this and what made you want to be an education entrepreneur?
A: When I went to business school I was pretty much set in my mind that I wanted to be an entrepreneur, do something different. And probably, if I walk down memory lane, I would credit the fact that read a lot right from like Grade-III or before and I used to read all the Arthur Hailey, the Robert Goodlands of the world and they are all about painting a larger than life fantasy, the exciting life of being on your own and doing something which is very risky and risk taking. Given where India was in the late eighties, the risk after passing out of business school was actually to start a business and a lot of people said that I must be completely crazy. In fact, the truth is that even before I took the decision that I would go to IIM-A, I actually toyed with the idea that should I actually spent these two years in a B-school or should I actually launch something on my own. So, when I passed out of B-school, I was not faced with the issue of doing something on my own or not - that was a decision that was taken 7-8 years back.
Udayan Mukherjee, Managing Editor, CNBC-TV18 says, "It has been a phenomenal business model where a lot of large IT education companies have faltered. I think Shantanu has shown what a little bit of a dream can do and he has just changed the equations completely in the education space. We need hundred more Shantanus who make this India education story come through and I think the wealth creation that he has done is not just from a market perspective but I think the social and national ramifications of it are far intense."
Q: Just to approach the whole entrepreneur thing from a different point of view, I have been speaking to a lot of people who are part of this Wealth Creators set and I think what stands out is that not everyone is from the same background. One person is from a middle class background who never had exposure to equity markets, one actually got a business down from his father - do you think in order to be a successful entrepreneur, you need to be from a certain financial or educational background, because I do not know what it was for you?
A: No, I think at least that quality is completely overrated. Firstly, if you want to be a good entrepreneur, I am not talking about the big entrepreneur or small entrepreneur, one needs to have vision and passion about what one really wants to achieve. Then, there are certain universal principles of entrepreneurship. Staring with risk-taking. Starting with - is the opportunity big enough, are we going to make enough money doing this, what is our sustainable competitive advantage and so on. So it is not about knowing finance, a number of the best entrepreneurs in the world have not come from the world of finance but they were masters of what they did.
Q: Specifically for you, Educomp was a risk-taking game when you started it off, wasn't it? Is that the biggest thing that stands out about what you did; that you took a big risk?
A: When I started Educomp, it was not so much about risk or no risk. It was about there is this huge problem in Indian education and I had been a victim of that when I was in school. Kids should be out there enjoying themselves, enjoying learning but that rarely happens in Indian classrooms. Classrooms are typically overcrowded, the best and the brightest of India do not become teachers - they get into professions like TV journalism or they do other things in life. The curriculum is extremely stressful, the assessments are all focused on rote learning and there is so much competitive pressure. So, one of the things that I set out to do was, can I make a change, can I make an intervention? Then I thought that computers and IT - when I started the company, these were just coming on. They were the magical tools in my hand and I was so excited. I said if I can use this to liberate the child and make him break away from the drudgery of the classroom, I would accomplish something.
TV Mohandas Pai, Director-HR, Infosys says, "Today India's enrolment in the age group of 18-24 is only 11% in Universities - all emerging markets have 25% and developed markets maybe 50-52%. So if India has to dry up the enrolment rate from 11% to 25%, technology becomes a need on which education services have to be built."
Q: You straddled many continents as well - a bulk of your business comes from the US, as a market and by way of business for your e-learning initiative. Do you sense a dichotomy there in terms of what is happening? You feel for here but the money is there?
A: Not at all. In fact, in the world of education, it is really interesting that if one looks at different societies; looks at the Indian society, we invest a very small amount of money in our education because we do not have enough money to spend and the output of our education system despite the fact that parents are so motivated, students are so motivated, they work 10-12 hours - it is actually pretty dismal. So 50% of students fail to pass the school leaving examination.
Now cut to the US. It is a very prosperous economy, they do not believe in putting too many kids into school; they spend USD 7,000 a year on each student, we could educate a whole village in that amount, and look at the output that they achieve with that. 78% of students in the US fail in grade 12 math examination.
So the point that I am trying to make is there is universal pain. Societies have not been able to really understand how to deliver educational outcomes. Look at Educomp in that backdrop, I do not look at this as a US or an India or a Singapore or a China problem. When I look at the world, I see a borderless world. There are classrooms across the world and the problems of these classrooms are exactly the same no matter where the classroom is located.
Q: Does it irk you when people say there is so much coming in from government schools, there is a problem with the cash flow for this company? Does that irritate you because it is fair for them to ask it, they are tracking the stock?
A: Yes, the ideal business of growing at 200%, making 90% margin and no risk at all, does not exist. So these are challenges that one has to deal with. Thus, the fact that the government has begun paying us is fine, we do a great job so they have no reason not to pay us and we eventually get the money. So I think some of these challenges are overrated. Broadly speaking, if you do something that adds value to the customer, the customer will be more than happy to put money on the table for you to do that. That has been the mantra in Educomp.
Q: Give me your own fantastical view for Educomp because I don't know if you saw it coming three-years back, but five-years from now where do you see the business going because of what you feel is happening with education?
A: I can't give guidance so to say. But let me flip the question and answer it in a different way. Currently, we work with about seven million students in about 15,000 schools worldwide. I think in the next five years that number can go to 10 times. So from 10 million we could be working with 100 million students, but that is just the tip of the iceberg. Just in India itself, there are about 350 million students who could potentially go to school. The country has been able to provide education just for 220 million. So there are over a 100 million that are still out of school. This is a big problem and I hope people understand that, but most people don't realise the magnitude of the educational challenge. It is a big part of who we are as a nation going to become tomorrow.
Shantanu's vision is to transform the teaching-learning process through the use of technology and best practices. Educomp serves over 15,000 schools and hold your breath a whopping 7 million learners and educators across the world with some of its popular initiatives like 'Smart Class', 'Mathguru.com' and 'Roots to Wings'. Educomp has built strong partner relationship with major companies in India and abroad like Intel, Microsoft and Wipro. It has also formed two joint ventures with Raffles Education and has acquired a 51% stake in US-based web delivered curriculum provider 'Learning.com'.
Q: I was just talking a little bit more about the whole wealth creation thing. It is interesting when you went IPO in 2005, you were subscribed about 35-times - it was Rs 100-125. People said this was overvalued. Did you see it coming where it is today, because truly you are one of the biggest success stories from the IPO route?
A: When we went public, we were the first education company to tap the capital markets. A real challenge was how to make people understand the education story. We had to in a way pay the price of a pioneer and people were saying Rs 125 is too expensive. As stock went up to Rs 5,000 plus, we had more buyers at Rs 5,000 than we had at Rs 125.
Q: Do you track the stock market very carefully? Do you keep an eye on the daily market?
A: Not at all. Whether the market goes up or it goes down, it makes no difference to our business. Look at what has happened over the past two-three months. We have lost about 30-35% of our marketcap - has it impacted our business? Not a single bit.
Q: But isn't it that your calling card as well in a way, the reason your success is so well documented is because the equity markets has reflected it in your marketcap in our price - so when you go and strike a deal or look for potential money as you did in the past, that must stand you in good state?
A: Absolutely, it does so. A good marketcap, great visibility in the stock market, being on interviews like this, certainly helps the business. So, clearly I completely agree with you.
PN Vijay, Portfolio Manager says, "There are a lot of positives for Educomp. People who are interested in an entry into a sunrise industry could definitely look at Educomp as a growth stock. If there are some concerns, it is that the valuation has gone very high and secondly it sees huge operator activity. It has high intra-day and intra-month volatility. So one has to be mindful of volatility."
Q: The other thing I read on the website of IIM-Ahmedabad was that when you went IPO you actually wrote a note to your colleagues at that point saying "I am going IPO - please help me, please subscribe; tell your friends and family". Did you get any other responses, as IIM-A is very tight as a community?
A: Actually I did.
Q: You did?
A: That's the time all your friends would support you. I meet some of my old friends at an airport or somewhere else, they say I still own that Educomp stock. That's a great feeling.
Q: What about your folks? Do they feel proud that they see you as a 'Wealth Creator'?
A: That's probably the last thing they would look in me. I guess, yes they are. They are proud of whatever I have managed to do for education in India.
Q: I noticed also when I was reading up on you that one of the terms that is used for you is 'Pedagogue'. Is that how you would like to see yourself more than an entrepreneur as someone who is part of the entire education initiative?
A: 'Pedagogue' is a term that essentially applies to teachers.
Q: And educational instruments?
A: I am not an educator. I am in the education business and so I don't have a degree in education per se. That's in a way an advantage because when you take a step back and look at education, education for the past 500 years has never been considered a business. If you really ask what has been one of our greatest contributions besides intellectual property, besides innovative transformational models, it is making people realise that there is value in education.
Q: Candidly, we all know what the situation is with education. If you were to change one fundamental thing about the education system right now, what would it be?
A: Actually, I would say two things. One is quality of education. Despite the fact that India is a poster child of high-quality education outside India, the statistics from India are actually quite dismal. 50% students fail in the public exams, there is an 80% dropout ratio, only 3% enroll for professional education. So I would improve education quality in the classroom.
The other thing, I would clearly improve is access to education. It's a telling comment on our society that this 2008; this is a new millennium and 100 million students are still out of school. Before we do anything else, we need to have those kids inside the school.
Source: MoneyControl, CNBC-TV18
Shantanu Prakash, a middle class boy from Delhi decided to walk the road less travelled. After IIM-A, when most of his classmates opted to lucrative jobs at MNCs, Shantanu decided to set out on his own and 17 years later, he has no regrets and why would he? After founding Educomp in 1994, he has been changing the face of Indian education on a daily basis.
Shantanu Prakash spoke to CNBC-TV18's Mitali Mukherjee in a special series programme called "Wealth Creators". Shantanu says, 'Education for the past 500 years has never been considered a business. If you really ask what has been one of our greatest contributions besides intellectual property, besides innovative transformational models, it is making people realise that there is value in education.'
Excerpts from CNBC-TV18's exclusive interview with Shantanu Prakash:
Q: I believe you are actually from Delhi Public School (DPS) - were you a geek at school? Were you into computers and you thought this is what I want to do or did it start much later for you?
A: I was a child who would break all the rules in the class. So, if one shows me a rule, I used to say, I need to break it. Thus, I was definitely known as somebody who would not conform to the dotted line and somebody who is really creative in the classroom; seem like somebody who is not studying at all and then pull a surprise at the last minute.
Q: When you passed out of IIM-A, a lot of people from your batch probably joined an MNC, went into a structured job; you really did go down a path that people do not take, what excited you about this and what made you want to be an education entrepreneur?
A: When I went to business school I was pretty much set in my mind that I wanted to be an entrepreneur, do something different. And probably, if I walk down memory lane, I would credit the fact that read a lot right from like Grade-III or before and I used to read all the Arthur Hailey, the Robert Goodlands of the world and they are all about painting a larger than life fantasy, the exciting life of being on your own and doing something which is very risky and risk taking. Given where India was in the late eighties, the risk after passing out of business school was actually to start a business and a lot of people said that I must be completely crazy. In fact, the truth is that even before I took the decision that I would go to IIM-A, I actually toyed with the idea that should I actually spent these two years in a B-school or should I actually launch something on my own. So, when I passed out of B-school, I was not faced with the issue of doing something on my own or not - that was a decision that was taken 7-8 years back.
Udayan Mukherjee, Managing Editor, CNBC-TV18 says, "It has been a phenomenal business model where a lot of large IT education companies have faltered. I think Shantanu has shown what a little bit of a dream can do and he has just changed the equations completely in the education space. We need hundred more Shantanus who make this India education story come through and I think the wealth creation that he has done is not just from a market perspective but I think the social and national ramifications of it are far intense."
Q: Just to approach the whole entrepreneur thing from a different point of view, I have been speaking to a lot of people who are part of this Wealth Creators set and I think what stands out is that not everyone is from the same background. One person is from a middle class background who never had exposure to equity markets, one actually got a business down from his father - do you think in order to be a successful entrepreneur, you need to be from a certain financial or educational background, because I do not know what it was for you?
A: No, I think at least that quality is completely overrated. Firstly, if you want to be a good entrepreneur, I am not talking about the big entrepreneur or small entrepreneur, one needs to have vision and passion about what one really wants to achieve. Then, there are certain universal principles of entrepreneurship. Staring with risk-taking. Starting with - is the opportunity big enough, are we going to make enough money doing this, what is our sustainable competitive advantage and so on. So it is not about knowing finance, a number of the best entrepreneurs in the world have not come from the world of finance but they were masters of what they did.
Q: Specifically for you, Educomp was a risk-taking game when you started it off, wasn't it? Is that the biggest thing that stands out about what you did; that you took a big risk?
A: When I started Educomp, it was not so much about risk or no risk. It was about there is this huge problem in Indian education and I had been a victim of that when I was in school. Kids should be out there enjoying themselves, enjoying learning but that rarely happens in Indian classrooms. Classrooms are typically overcrowded, the best and the brightest of India do not become teachers - they get into professions like TV journalism or they do other things in life. The curriculum is extremely stressful, the assessments are all focused on rote learning and there is so much competitive pressure. So, one of the things that I set out to do was, can I make a change, can I make an intervention? Then I thought that computers and IT - when I started the company, these were just coming on. They were the magical tools in my hand and I was so excited. I said if I can use this to liberate the child and make him break away from the drudgery of the classroom, I would accomplish something.
TV Mohandas Pai, Director-HR, Infosys says, "Today India's enrolment in the age group of 18-24 is only 11% in Universities - all emerging markets have 25% and developed markets maybe 50-52%. So if India has to dry up the enrolment rate from 11% to 25%, technology becomes a need on which education services have to be built."
Q: You straddled many continents as well - a bulk of your business comes from the US, as a market and by way of business for your e-learning initiative. Do you sense a dichotomy there in terms of what is happening? You feel for here but the money is there?
A: Not at all. In fact, in the world of education, it is really interesting that if one looks at different societies; looks at the Indian society, we invest a very small amount of money in our education because we do not have enough money to spend and the output of our education system despite the fact that parents are so motivated, students are so motivated, they work 10-12 hours - it is actually pretty dismal. So 50% of students fail to pass the school leaving examination.
Now cut to the US. It is a very prosperous economy, they do not believe in putting too many kids into school; they spend USD 7,000 a year on each student, we could educate a whole village in that amount, and look at the output that they achieve with that. 78% of students in the US fail in grade 12 math examination.
So the point that I am trying to make is there is universal pain. Societies have not been able to really understand how to deliver educational outcomes. Look at Educomp in that backdrop, I do not look at this as a US or an India or a Singapore or a China problem. When I look at the world, I see a borderless world. There are classrooms across the world and the problems of these classrooms are exactly the same no matter where the classroom is located.
Q: Does it irk you when people say there is so much coming in from government schools, there is a problem with the cash flow for this company? Does that irritate you because it is fair for them to ask it, they are tracking the stock?
A: Yes, the ideal business of growing at 200%, making 90% margin and no risk at all, does not exist. So these are challenges that one has to deal with. Thus, the fact that the government has begun paying us is fine, we do a great job so they have no reason not to pay us and we eventually get the money. So I think some of these challenges are overrated. Broadly speaking, if you do something that adds value to the customer, the customer will be more than happy to put money on the table for you to do that. That has been the mantra in Educomp.
Q: Give me your own fantastical view for Educomp because I don't know if you saw it coming three-years back, but five-years from now where do you see the business going because of what you feel is happening with education?
A: I can't give guidance so to say. But let me flip the question and answer it in a different way. Currently, we work with about seven million students in about 15,000 schools worldwide. I think in the next five years that number can go to 10 times. So from 10 million we could be working with 100 million students, but that is just the tip of the iceberg. Just in India itself, there are about 350 million students who could potentially go to school. The country has been able to provide education just for 220 million. So there are over a 100 million that are still out of school. This is a big problem and I hope people understand that, but most people don't realise the magnitude of the educational challenge. It is a big part of who we are as a nation going to become tomorrow.
Shantanu's vision is to transform the teaching-learning process through the use of technology and best practices. Educomp serves over 15,000 schools and hold your breath a whopping 7 million learners and educators across the world with some of its popular initiatives like 'Smart Class', 'Mathguru.com' and 'Roots to Wings'. Educomp has built strong partner relationship with major companies in India and abroad like Intel, Microsoft and Wipro. It has also formed two joint ventures with Raffles Education and has acquired a 51% stake in US-based web delivered curriculum provider 'Learning.com'.
Q: I was just talking a little bit more about the whole wealth creation thing. It is interesting when you went IPO in 2005, you were subscribed about 35-times - it was Rs 100-125. People said this was overvalued. Did you see it coming where it is today, because truly you are one of the biggest success stories from the IPO route?
A: When we went public, we were the first education company to tap the capital markets. A real challenge was how to make people understand the education story. We had to in a way pay the price of a pioneer and people were saying Rs 125 is too expensive. As stock went up to Rs 5,000 plus, we had more buyers at Rs 5,000 than we had at Rs 125.
Q: Do you track the stock market very carefully? Do you keep an eye on the daily market?
A: Not at all. Whether the market goes up or it goes down, it makes no difference to our business. Look at what has happened over the past two-three months. We have lost about 30-35% of our marketcap - has it impacted our business? Not a single bit.
Q: But isn't it that your calling card as well in a way, the reason your success is so well documented is because the equity markets has reflected it in your marketcap in our price - so when you go and strike a deal or look for potential money as you did in the past, that must stand you in good state?
A: Absolutely, it does so. A good marketcap, great visibility in the stock market, being on interviews like this, certainly helps the business. So, clearly I completely agree with you.
PN Vijay, Portfolio Manager says, "There are a lot of positives for Educomp. People who are interested in an entry into a sunrise industry could definitely look at Educomp as a growth stock. If there are some concerns, it is that the valuation has gone very high and secondly it sees huge operator activity. It has high intra-day and intra-month volatility. So one has to be mindful of volatility."
Q: The other thing I read on the website of IIM-Ahmedabad was that when you went IPO you actually wrote a note to your colleagues at that point saying "I am going IPO - please help me, please subscribe; tell your friends and family". Did you get any other responses, as IIM-A is very tight as a community?
A: Actually I did.
Q: You did?
A: That's the time all your friends would support you. I meet some of my old friends at an airport or somewhere else, they say I still own that Educomp stock. That's a great feeling.
Q: What about your folks? Do they feel proud that they see you as a 'Wealth Creator'?
A: That's probably the last thing they would look in me. I guess, yes they are. They are proud of whatever I have managed to do for education in India.
Q: I noticed also when I was reading up on you that one of the terms that is used for you is 'Pedagogue'. Is that how you would like to see yourself more than an entrepreneur as someone who is part of the entire education initiative?
A: 'Pedagogue' is a term that essentially applies to teachers.
Q: And educational instruments?
A: I am not an educator. I am in the education business and so I don't have a degree in education per se. That's in a way an advantage because when you take a step back and look at education, education for the past 500 years has never been considered a business. If you really ask what has been one of our greatest contributions besides intellectual property, besides innovative transformational models, it is making people realise that there is value in education.
Q: Candidly, we all know what the situation is with education. If you were to change one fundamental thing about the education system right now, what would it be?
A: Actually, I would say two things. One is quality of education. Despite the fact that India is a poster child of high-quality education outside India, the statistics from India are actually quite dismal. 50% students fail in the public exams, there is an 80% dropout ratio, only 3% enroll for professional education. So I would improve education quality in the classroom.
The other thing, I would clearly improve is access to education. It's a telling comment on our society that this 2008; this is a new millennium and 100 million students are still out of school. Before we do anything else, we need to have those kids inside the school.
Source: MoneyControl, CNBC-TV18
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