Preply‘s value proposition as an online learning platform is simple: remove the geographical boundary between teachers and students. Teachers have access to a global pool of students and vice versa.
When it comes to online learning platforms, Coursera, Udemy, and SkillShare are household names. What they have in common is a library of pre-recorded online courses, which students can access via subscription plans or ala carte purchases.
But what platforms like Preply tackle are an access problem.
Value Proposition: Solving an access problem
How Preply appeals to students is access to highly qualified teachers (especially native speakers in the case of language learning) at a reasonable price.
How it appeals to teachers is access to a big addressable market of students. Teachers are no longer bound to the city or country they are physically located in. They can teach anyone from anywhere in the comfort of their home.
If and when the platform executes the value proposition well, it is a win-win situation for both teachers and students.
Take me as an example. In 2019, I wanted to look for a tutor who can work with me to improve my Chinese. I figured I would benefit greatly from having a real teacher with whom I can connect and who can hold me accountable. Thanks to Preply, I have had the chance to work with two excellent Chinese teachers based in China over the past one and a half years.
(Photo by Markus Spiske on Unsplash)
Online learning platform as a network product
Preply functions like a marketplace matching students with teachers depending on their learning needs. It is a classic example of a network product where teachers are the creators of the value on the platform and students are the consumers of the value created.
The platform is valuable to the teachers when there are a lot of students. On the other hand, the platform’s value is realized for the students when they can find teachers that meet their criteria: high teaching quality, reasonable price, and schedule/timezone compatibility.
For a new network, creators constitute the hard side of the network. They represent a small group of users who need to put in lots of work to create the value that is enjoyed by the rest of the users. Preply reported that it had 30,000 to 40,000 teachers while the number of students was in hundreds of thousands in 2022. In this case, each teacher’s investment in preparing lesson materials and teaching classes creates value for multiple students.
As a result, it makes sense for a network to first invest in building the creator side of the network.
Acquiring with the hard side of the network: creators
Based on the value proposition, my guess is that the success moment of a creator/ teacher on a platform like Preply is when they have more than a minimum threshold of regular students. The product’s mission will be to get as many teachers to achieve that success moment as possible. It is because that is when they realize the value of the platform and stick around.
Preply does that by employing 2 tactics.
Low barrier to entry for teachers
Almost anyone can become a teacher on Preply. The barrier to entry is extremely low. I, myself, have successfully applied to be a teacher of the Vietnamese language on Preply (just for the fun of it). All I had to do is to create a teacher’s profile that contains my teaching experience and a self-introduction video.
Once the platform approved my profile, I was searchable by students who were interested in learning Vietnamese. I had some teaching experience, but not related to teaching Vietnamese. The reason why my profile was approved was most likely because I am a native speaker of the language I want to teach, and I speak good English, which is the language of instructions.
Making students buy lessons in bulk
After the first trial lesson, if a student wants to continue studying with a teacher, they need to purchase lesson time with that teacher in bulk. Preply offers 4 packages for students: 6 hours, 12 hours, 24 and 40 hours. The more hours purchased, the more discount they get.
This has two benefits. It ensures that those who make a purchase are really committed. To a teacher, that means a regular student from the second hour of lessons onwards.
Moreover, bulk lesson purchase also increases the predictability of the teachers’ income, which is important to many freelance teachers on the platform.
With these 2 tactics, Preply has been very successful in attracting teachers to the platform. It makes onboarding easy by lowering the barrier to becoming a teacher. It also creates a mechanism for students to provide teachers with regular income just after one hour of trial.
Online learning platform as a network product case study
While it is important for a new network to attract teachers first, there is a fine balance to maintain. When there are significantly more teachers than students, i.e. supply outweighs demands, it drives down the price point for every teacher for the same subject, making it less desirable for them to remain there.
On the contrary, when there are not enough teachers for a particular subject, prices go up for students. Also, when there are simply no teachers for a subject, the students will look for another platform.
A look at Preply’s lesson prices can give us a pretty good guess on where the scale is tilted.
Preply’s new Chinese teachers are willing to go as low as USD2/ hour in order to attract new students. This price point is insanely low.
As a point of reference, the average living cost for a single person in a tier-one city like Beijing in China is about USD 1,900 per month. Assuming these teachers live there, they will need to work 190 to 950 hours a month to cover the cost.
It is safe to say that they have really acquired a lot more teachers than students. The competition for students is fierce, which often boils down to how cheap the teachers can go. This can have an anti-network effect on the ecosystem.
The tipping point: when a network might decline
When there are too many new teachers joining the platform with very low entry requirements, it is harder to enforce a high-quality standard for all teachers. It only takes students one or two negative encounters to churn from the platform.
Moreover, when supply is way much more than demand, there is a downward pressure on prices for existing teachers as well. Coupled with a high commission rate by the platform, there will be more incentive for teachers to switch to another platform that offers more competitive rates.
What a platform like Preply can do is closely monitor its network’s breaking point (when supply outgrows demand and vice versa). Each subject taught on the platform has its own network of teachers and students, and these networks can have different tipping points.
In my opinion, one way to monitor the tipping points is to monitor the number of users achieving their success moments as a success metric. For instance, on the creators’ side, it can be the number of teachers who have more than the minimum thresholds of regular students. On the consumers’ side, it can be the number of students who have shown up to class for more than a minimum threshold of hours. When these metrics show a significant decline, the network is reaching a tipping point, which requires an intervention.
And there you have it: how Preply cracked the Cold Start Problem to build a successful network. I would love to hear your thoughts on how their tipping points can be defined and monitored. Leave them in the comment section below.
