Big Players and what it means
2025 May 15
See all posts
A year ago, I reached out to Elizabeth Yin of hustle fund, via email to
share with her this new thing that I have been working on.. Partly I was
so excited because we were making a considerable amount of money already
and we were even profitable as early as it was. It was the NextGenHub,
which is solely a tutoring company that just offered tutoring for kids. I
was so much inspired by the success of goStudent that I convinced myself
there was a possibility to conquer the markets that gostudent wasn’t
operating in. And I still think there is a chance. In the email, I laid
down a sneak into our numbers (although they weren't very much) and had
very high expectations for what her reply email would be.
I don’t want to ever lose the child in me. You know, the closest friends I
have are very few. And they happen to be way older than me. And when I
meet with any of them, we have a couple of drinks, wine, too many and
another, and another. And we just have so much fun! Sometimes we talk
about business, other times we don’t even know what we are talking about.
We are all drunk.. And it's some of the best times of my life!
After some wait, she replied to me. For context, I had already been in
contact with her via the same email during my time of running a fintech
startup called ‘Zyde’. Went nowhere. Team lost morale after spending lots
of time working on the product without any funds, amongst other reasons.
Here’s her most profound reply I got in the email I sent:
‘Hi Eric - I think the big question you have to answer is how is this
differentiated? Everyone is in this space: Chipper, Payday, Kuda, some of
our portfolio cos, etc… Lower fees don't win against well-funded players,
and often there’s a reason fees aren’t low / ppl don’t compete on price. ‘
Now with this new tutoring service, I expected a better response. Here’s
what she sent to me:
‘Thanks Eric! I think it comes down to what you want. If you want to build
a VC-backed business, I don’t think this is an idea that will get VC
funding. In the US, this space is incredibly crowded. Bets have already
been made. Everything from Synthesis School (Elon Musk’s startup) to
Outschool (well funded) to ActivityHero (marketplace for kids activities,
of which there are many mom and pop coding classes on there), to
Codecademy / Udemy / Codedex / et al which are strong alternatives — this
space is completely saturated, and there are already great solutions in
the US for this. ’
I read this clearly. And to be honest I misunderstood her. We were already
making money. Isn’t that clear signal that there is a demand out there for
a tutoring service?
We brushed it off, and she advised that I could run the tutoring service
as a side business and get the cash flow. I agreed with her at this point
and still somewhat assured her that I would come back with $20k in MRR
after 6 months. Boy, did reality hit me so quickly. Today marks a year
since that email and we have barely made that amount of money in total.
And I am writing this because I just had a huge realization that I think
could have saved me a lot of time that I also think will be beneficial to
you reading somewhere in the world.
I just closed an Ad that I put on instagram for the tutoring service.
Great ad. And it's summer. Who doesn’t want a verified online tutor for
their child in preparation for next academic year? It’s been hours now and
I am burning a considerable amount of cash on the ad, and I have gotten
zero App Installs. What could be the reason? I thought about this a lot.
It's not that my target audience is not there, maybe there are just no
ones seeing the ads. Even when I have specified them. This flashed back to
me in a mild thought, what Elizabeth wrote to me.
Looking back at the above snippets of Elizabeth’s email. One phrase
remains dominant; Well-funded players. She used the same phrase for When I
was working at the fintech startup, and at the tutoring startup. The naive
me thought we could win because we had a better product. Transactions were
free and the product was better (in the case of the fintech product) and
For the tutoring App, existing customers loved us and our main customer
acquisition channel was through referral – I mean, your customer gotta
love you enough to refer you right? I thought we were going to win in both
cases. It has now occurred to me, after a year, that I was wrong. It’s
hard to admit it, but I was. When she used well-funded players,my brain
shallowly translated it to mean that the competitors are just big because
they had more money. I didn’t think deep into what that meant. I am doing
it now. After a year. She didn’t mean that I didn’t have a better product,
rather It was pure logic that we wouldn’t win. Let’s do the math.
1. In the beginning, you start out with this great product that your first
10 customers love so much and appreciate you for. They even go ahead and
refer you to their friends.
2. Sooner or later, the referrals come to a halt and you no longer are
getting as much inbounds as you used to.
3. The only logical next step is to start putting in money to acquire the
customers. They are not coming free anymore.
4. Where do you advertise? What comes to mind>> Social media and Google
Ads. Billions of people are on there daily, your customers are there, you
only need to let them know you exist.
5. Now, you start marketing on social media and google ads. One thing
becomes clear sooner or later. The same customers that you are marketing
to, via keywords or interests, are the same target for the bigger players.
They want even more attention from the same demographics. How then, does
google decide which company to prioritise? Well, it's simple, the one with
more dollars. Cost per click goes up and because the bigger companies have
a lot of cash to burn, they effectively bid higher and take up the
priority for all these advertising channels and you are once in a while
thrown a bone to suck on.
6. This is the reality. Not fair, maybe, but it's the reality. They are
well funded simply means, they are willing to pay more to whichever
platform you are both marketing with to make sure their ads are
prioritised over yours. Doesn’t matter if your product is better.
What’s Next?
For now, I am just going to keep the tutoring ‘NextGenHub’ product running
organically just for the cash flow, then I will leverage this cash flow to
fund Fasua for now, which is a Maths Self-Learning program for kids.. With
this new product, I am thinking of unconventional customer acquisition
channels that are even more effective and not as brutal as traditional
social media and google ads. This way, I get to compete with the bigger
players also in this space without it being a factor of who has more money
to spend.
With respect, Easy!
E.B
Big Players and what it means
2025 May 15 See all postsA year ago, I reached out to Elizabeth Yin of hustle fund, via email to share with her this new thing that I have been working on.. Partly I was so excited because we were making a considerable amount of money already and we were even profitable as early as it was. It was the NextGenHub, which is solely a tutoring company that just offered tutoring for kids. I was so much inspired by the success of goStudent that I convinced myself there was a possibility to conquer the markets that gostudent wasn’t operating in. And I still think there is a chance. In the email, I laid down a sneak into our numbers (although they weren't very much) and had very high expectations for what her reply email would be.
I don’t want to ever lose the child in me. You know, the closest friends I have are very few. And they happen to be way older than me. And when I meet with any of them, we have a couple of drinks, wine, too many and another, and another. And we just have so much fun! Sometimes we talk about business, other times we don’t even know what we are talking about. We are all drunk.. And it's some of the best times of my life!
After some wait, she replied to me. For context, I had already been in contact with her via the same email during my time of running a fintech startup called ‘Zyde’. Went nowhere. Team lost morale after spending lots of time working on the product without any funds, amongst other reasons. Here’s her most profound reply I got in the email I sent:
‘Hi Eric - I think the big question you have to answer is how is this differentiated? Everyone is in this space: Chipper, Payday, Kuda, some of our portfolio cos, etc… Lower fees don't win against well-funded players, and often there’s a reason fees aren’t low / ppl don’t compete on price. ‘
Now with this new tutoring service, I expected a better response. Here’s what she sent to me:
‘Thanks Eric! I think it comes down to what you want. If you want to build a VC-backed business, I don’t think this is an idea that will get VC funding. In the US, this space is incredibly crowded. Bets have already been made. Everything from Synthesis School (Elon Musk’s startup) to Outschool (well funded) to ActivityHero (marketplace for kids activities, of which there are many mom and pop coding classes on there), to Codecademy / Udemy / Codedex / et al which are strong alternatives — this space is completely saturated, and there are already great solutions in the US for this. ’
I read this clearly. And to be honest I misunderstood her. We were already making money. Isn’t that clear signal that there is a demand out there for a tutoring service?
We brushed it off, and she advised that I could run the tutoring service as a side business and get the cash flow. I agreed with her at this point and still somewhat assured her that I would come back with $20k in MRR after 6 months. Boy, did reality hit me so quickly. Today marks a year since that email and we have barely made that amount of money in total. And I am writing this because I just had a huge realization that I think could have saved me a lot of time that I also think will be beneficial to you reading somewhere in the world.
I just closed an Ad that I put on instagram for the tutoring service. Great ad. And it's summer. Who doesn’t want a verified online tutor for their child in preparation for next academic year? It’s been hours now and I am burning a considerable amount of cash on the ad, and I have gotten zero App Installs. What could be the reason? I thought about this a lot. It's not that my target audience is not there, maybe there are just no ones seeing the ads. Even when I have specified them. This flashed back to me in a mild thought, what Elizabeth wrote to me.
Looking back at the above snippets of Elizabeth’s email. One phrase remains dominant; Well-funded players. She used the same phrase for When I was working at the fintech startup, and at the tutoring startup. The naive me thought we could win because we had a better product. Transactions were free and the product was better (in the case of the fintech product) and For the tutoring App, existing customers loved us and our main customer acquisition channel was through referral – I mean, your customer gotta love you enough to refer you right? I thought we were going to win in both cases. It has now occurred to me, after a year, that I was wrong. It’s hard to admit it, but I was. When she used well-funded players,my brain shallowly translated it to mean that the competitors are just big because they had more money. I didn’t think deep into what that meant. I am doing it now. After a year. She didn’t mean that I didn’t have a better product, rather It was pure logic that we wouldn’t win. Let’s do the math.
1. In the beginning, you start out with this great product that your first 10 customers love so much and appreciate you for. They even go ahead and refer you to their friends.
2. Sooner or later, the referrals come to a halt and you no longer are getting as much inbounds as you used to.
3. The only logical next step is to start putting in money to acquire the customers. They are not coming free anymore.
4. Where do you advertise? What comes to mind>> Social media and Google Ads. Billions of people are on there daily, your customers are there, you only need to let them know you exist.
5. Now, you start marketing on social media and google ads. One thing becomes clear sooner or later. The same customers that you are marketing to, via keywords or interests, are the same target for the bigger players. They want even more attention from the same demographics. How then, does google decide which company to prioritise? Well, it's simple, the one with more dollars. Cost per click goes up and because the bigger companies have a lot of cash to burn, they effectively bid higher and take up the priority for all these advertising channels and you are once in a while thrown a bone to suck on.
6. This is the reality. Not fair, maybe, but it's the reality. They are well funded simply means, they are willing to pay more to whichever platform you are both marketing with to make sure their ads are prioritised over yours. Doesn’t matter if your product is better.
What’s Next?
For now, I am just going to keep the tutoring ‘NextGenHub’ product running organically just for the cash flow, then I will leverage this cash flow to fund Fasua for now, which is a Maths Self-Learning program for kids.. With this new product, I am thinking of unconventional customer acquisition channels that are even more effective and not as brutal as traditional social media and google ads. This way, I get to compete with the bigger players also in this space without it being a factor of who has more money to spend.
With respect, Easy!
E.B