ST11 | Mridula Shridhar On Beating Large Franchises At Their Own Game

When we talk about business success, we usually think about the Founder, the person who set up and grew the business in its early years. But in many cases, a successful stable business, especially a family business is passed on to the next generation who then take it forward into the future. So how does the new generation make their mark? And what are the challenges in making a transformation towards a new way of doing business?

Discussion Topics: Mridula Shridhar on Beating Large Franchises at their Own Game

• How Kido Enterprises started
• Learning from the market
• Challenges come as the business grow
• How did the business survive in Covid
• Advices for entrepreneurs (B2B or B2C)

Transcript: Mridula Shridhar on Beating Large Franchises at their Own Game

Today, we talked with Mridula Shridhar, CEO of Kido Enterprises, an early childhood education firm. And unlike the fabulously well-funded ed techs of the world, they run a sustainable profitable business that’s been making a profit and has been around for nearly 20 years before passing on to the next generation. And we learned from her what it takes to take a mature business forward and find the levers for growth and take it to the next level of skill.

So with that said, Mridula, welcome to ShopTok. It’s a real pleasure to have you with us today. And maybe before we jump into the meat of the conversation, perhaps you could give us a short intro to yourself and to your business, Kido Enterprises.

Thanks for having me. I am trained as an engineer but after my MBA, I moved to Bangalore where my mother has an 8 years old business at our home. I joined in 2000 and my mom and I decided to make it a little bigger. I have seen her business throughout my college and it was an accidental decision in many ways but I get to learn a lot more when I joined. We moved to the factory space but there was a fire. So, we started in 2001 together after the chaos had been settled.

Wow, that’s one way to start. I know you ran that business for a while with your mom. How was it in the first few years when you were running it as the original business before you made a major pivot?

When my mom started the business, she had a few teacher friends at school and they suggested she start something that could help the school. Starting a small business in that sense has a lot of advantages as matching your expectations and growing at the pace you want to. There are market situations and circumstances that were not in our favors but I was pretty confident to start this business and I think the starting stage of the business is the best time to be in it.

This is actually an important point. When you do your own thing without having raised funding, you can grow at the rate you want, you can experiment with new things, and you don’t have to build a massive team before you even start doing anything. This is what a lean startup would be. You just make something, take it to the market and see if it works or not. So that’s how the original business got started. And then how did that grow because obviously, you had to grow beyond your mom’s friend circle and things like that?

For 5 to 7 years, we were purely in the manufacturing space, and by 2004, we had started exporting to the US. We started growing into a manufacturing space and had to ask my husband to help me because I don’t want to let go at this point. We found more and more things to do both from manufacturing and marketing standpoints. We were suppliers for a lot of the preschool chains and UNICEF.

Around 2008-2009, we started seeing that everybody wanted activity-based learning. That’s when I jumped into early education and started doing a lot of research and homework. Between 2008 – 2011, I was barely aware of what I wanted to do in terms of curriculum and spent a lot of time with schools and teachers and in the field. In 2012, we launched Kido which was a preschool solution designed on a non-franchise model.

We decided that education is something that’s very owner dependent and no matter what franchise you’re using, at the end of the day, it’s the school that is running the show. So, at that point, we were the only non-franchise solution and there are a few now. Because it was non-franchise, we started helping women entrepreneurs to start small businesses.

With 300 new preschools opening every year, 300 new entrepreneurs were born. It was how we started competing with Kido with the franchise brands but offering a very different proposition from them. Being a small business, we could grow very fast and we ended up growing at the rate of 300 schools a year and becoming the same number as any big franchise chain within three years.

You were competing with very well-known names where people who set up schools want to go with those well-known names because then parents will want to go to those schools because they recognize that name. How did you convince people to partner with you instead?

There was a big market with wanna-be entrepreneurs who would like to build their own brand with their money instead of spending money on building someone else’s brand. Those self-motivated entrepreneurs accepted us instantly and they knew it was the right thing to do.

Wow. That’s pretty cool and in fact also because it’s an owned model, you’re essentially selling the package to the school. They aren’t on the hook for paying you anything anyway. So neither are they building anybody’s brand nor are they giving away any extra money in this whole process. So, for the person who wants to set up a school, they can adopt your system but without all the paraphernalia of adopting a globally branded thing. So, that’s how you’ve grown Kido that far. Were there challenges along the way?

I think the easiest part was getting started. It was very exciting with every new signup 2 or 3 years after you start the business, it’s really the most critical phase. The expectation of what’s next has started. We started blindsided, believing that activity-based learnings are what a pre-child needs. We gave basic training and the package to entrepreneurs who don’t know how to set up preschool.

After 10 months, the requirements to do their design services, create websites, or interview the teachers came in. By 2014, after adding those, we were offering very different value propositions to our customers. So, we listened to every customer and stakeholder to know what they needed but also the teachers and the parents. It was really challenging to add new requirements coming from the market and prioritize them and adjust the price marginally and keep the customers happy at the same time.

With the increasing demands from the customers as you grow, how did you create the bandwidth? To launch books is not the same thing as making puzzles. How did you expand the team with different skill sets? How did you hire people when you were a relatively unknown brand?

There are 2 things that struck me in hindsight. We were looking for people who shared our visions but with completely different skills. The biggest mistake I made was hiring someone who can do the same things that I can do. For every entrepreneur, while listening to the market, you also need to have an understanding of each of the areas that your team is doing.

Once you have set up the core team who come along with you on the ride and have the same vision of scaling up, it gets easier in so many ways. As a small business that has money as a challenge, we couldn’t pay as much as our competitors would but if you want long enough, there are people who are driven to do things and it’s good to have more and more entrepreneurial mindset within your team. I think that makes a big difference from just having people who just do what you ask them to do.

It sounds like you’re looking for a mix of skill and this entrepreneurial mindset or drive. So, what you’re saying is if you can get your core team or early team to be like that, they will figure things out and the business will grow that way. On a related note, how did you actually get the hundreds of schools? How did you get started? Because again, people don’t really know you. Did you build out the sales team first or did you pitch them yourself?

Me and my husband, co-founder, did the sales initially when we launched. We had to learn some things. You don’t even know what kind of team you’re expecting to have if you don’t know how to do it. We went to exhibitions where all the big names put up stalls and we did that too. Initially, we were the only one providing the non-franchise solution and we had a maximum crowd. We did a lot of groundwork and you have to put in the hard work in the first couple of years. Every team member who joined us had a very interesting story with us.

I just realized, the trade fair thing allowed you to get a concentrated dose of customer feedback in one shot, like 200 conversations in a day which would have taken a year with a website. On the challenging part, schools have been shut for 2, 2 and a half years and especially early childhood education where it’s hard to teach on laptops. How did you or your schools get through that?

This has been the worst time for early childhood education. Not only our schools but 50% of the entire preschool industry has been wiped out. We’ve never had issues and problems with cash flow but when it hit, the team was very cooperative and they had to take a lot of cuts in the last year. But they had the vision, they waited patiently and we’re keeping our fingers crossed for when the schools begin.

It has tested us in ways that we couldn’t imagine. After June 2020, with everyone working at home, we had to create activity-based learning kits that go to the child’s house. We had 25,000 children on the Kido platform in 2018, it went down to 200 children but with the learning kits and books delivered to the kids, about 20% of our children came back and we also survived with support and grants.

Going from 25,000 down to 200 is insane but the fact that you’re smiling through this conversation is impressive. What keeps you motivated through this time? How do you keep going?

So, we’re just waiting to ride out the storm. The entire team has spent so much of their life and energy with us and I know that the decision we make will impact not only us but 300 people in the organization. That’s something we can’t take lightly. With the emotional and other support from them amidst the struggles going through on their own, I’m sure we will find a way together.

Most of us entrepreneurs are quite adventurous and like taking risks. How you view the successes from small wins also keeps you motivated. I’m not quitting because this is really worth it. I think both the team and the impact I’m creating keeps me going.

You’ve seen most of it and now you’re here with a lot of support from people who have helped you through this whole process. So, what are the next steps and the future for you guys?

I think we are done with our organic stage of growing. We have the team, the experience, and the processes set up and we are looking to impact a million children annually in the next few years. We’ve always been fascinated with the low-income space but we never realized what a massive space that was. There are 350,000 affordable private schools in India and 70% of the children go to the affordable private school rather than the government school.

In the next three years, we are looking at completely democratizing quality education. We want to make sure it’s affordable and accessible to every child. We strongly believe that school is the best place to learn. So our idea is to empower the schools, and the teachers and keep them motivated.

That’s a very noble dream because obviously, your business does well then, but you are empowering so many businesses and they are empowering children who will then grow up and I suppose become valuable members of society. Looking back at your journey with Kido Enterprises, what do you think you might have done differently and what advice would you give to other aspiring entrepreneurs either in the education space or in general?

Unlike the time we started, so many entrepreneurs nowadays are more exposed to knowledge and have a lot more ideas. I think one of the biggest challenges is to find the right product market fit. The enterprises fall off after a short period of time when their products don’t fit the market or if the market is not big enough.

A lot of entrepreneurs, for example, a lot of our school owners started opening schools because they couldn’t find the right school and they struggled personally. But you have to scale and pick the right area, and have many children for that school or else it won’t be successful. So, I would love to share them to find the right market and see where it fits and keep evolving and adapting. Your solution changes with the market, not the other way around.

The other thing is to build your team early and don’t be scared to let go if somebody is a misfit. As an entrepreneur, we get somebody good on board but we know they’re not going to be able to do the jobs that we have in mind but we don’t want to let go. Make your mistakes early and find a better fit. I think one of the things that you should look at is setting an example. Be fair whatever you do, you’re setting the culture of the organization. Whatever you are expecting from your team, just make sure that you’re setting an example.

Finally, don’t stand and think ahead of the market the minute you’re meeting your success. You need to keep anticipating the market and stay ahead of the game. To be in the education space specifically, I would advise them to choose B2B or B2C when you start because it is a whole different market from each other. Choose as per your strength.

That’s a lot of good advice. Thank you so much for being here with us and sharing your journey. For listeners, we were Mridula and Amit with ShopTok, see you next time.