Reason why giant EdTech firms can spend insane amount of money marketing:
A THREAD:
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A THREAD:
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1/ To make sense, we should understand the difference between product and service companies.
Product firms: they spend money on R&D to build a great product. This requires a lot of money. Getting VC money makes sense.
Product firms: they spend money on R&D to build a great product. This requires a lot of money. Getting VC money makes sense.
2/ For eg. if the money flows into creating a better version of Ethereum, it makes sense.
The product is novel and probably necessitates the huge spent.
Service firm: eg. teaching, consulting -- on the other hand-- do not require excessive spent on R&D (generally speaking).
The product is novel and probably necessitates the huge spent.
Service firm: eg. teaching, consulting -- on the other hand-- do not require excessive spent on R&D (generally speaking).
3/ A large chunk of the money DOES NOT go into product development, but goes into product marketing.
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Now the interesting part is:
If you strip apart all the bells and whistles, good EdTech companies are nothing but a collection of great teachers.
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Now the interesting part is:
If you strip apart all the bells and whistles, good EdTech companies are nothing but a collection of great teachers.
4/With good teachers-- you take away their blackboard, they can still teach damn well.
But, take away the marketing budget of EdTech monopolies, they will fall in 6 months.
But, take away the marketing budget of EdTech monopolies, they will fall in 6 months.
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