10 min read.Updated: 21 Dec 2020, 05:58 AM ISTMihir Dalal
WhiteHat Jr’s anxiety to create a new market has made it vulnerable to criticism. Can it now maintain growth?
The market for coding is getting crowded. All firms are vying for the same customer base that caps out at 15-20 million. Apart from affordability, another limiting factor is infrastructure
Earlier this month, Time magazine named its first kid of the year–15-year-old Gitanjali Rao, an Indian-American, for technological achievements, including creating an app and browser extension that use artificial intelligence to detect cyberbullying. Rao is just the kind of person who could feature in the ads of WhiteHat Education Technology Pvt Ltd.
Since its founding two years ago, WhiteHat Jr has become one of India’s biggest startup success stories by selling the dream to parents of turning their children into Gitanjali Rao-like prodigies. In a startup ecosystem that is criticised for producing too many copycats of American and Chinese firms, WhiteHat Jr has achieved the rare feat of creating an entirely new market that didn’t really exist either online or offline–teaching coding to children aged 6-17.
In August, WhiteHat Jr was bought by Byju’s, India’s most valuable education firm, for $300 million in an all-cash deal that enriched its founder Karan Bajaj, former head of Discovery India, and marked a victorious bet for its venture investors Nexus Venture, Owl Ventures and Omidyar Network.
But in its quest to create a new market and generate explosive growth, WhiteHat Jr, later joined by its parent firm Byju’s, has sometimes used questionable methods, including misleading advertising that peddled unrealistic outcomes, pushy salesmanship, suppression of online criticism and defamation lawsuits.
Much of WhiteHat Jr’s success comes from efficacious sales and advertising than from the strength of its product, its critics allege. They claim that the company’s curriculum, which is derived from other sources, and pedagogic methods trivialize coding education. The anxiety of inventing a new market has made WhiteHat Jr and Byju’s vulnerable to criticism, according to online education entrepreneurs and executives that Mint spoke to.
And yet, for all its feints and missteps, WhiteHat Jr has indeed created a lucrative market that is backed by real demand and real customers. Coding is increasingly being considered an essential skill, the possessor of which will secure some of the best jobs and careers for many years to come. WhiteHat Jr’s brand has become synonymous with this emerging market for coding education for children.
Many of its customers seem to like its service and many prospective customers are willing to try it regardless of the controversies surrounding the firm. The company is also pushing a service–teaching of computational thinking or coding–that has been identified by the National Education Policy (NEP) as an important new subject from the sixth grade onwards for Indian students.
Rather than pesky critics on social media, the biggest challenge for WhiteHat Jr may come from maintaining its stunning growth (the company said its average annual run rate over the past six months was around $150 million). With the entry of a host of new rivals into the space, the coding education market for kids could become crowded very soon, education executives said.
For most of its two-year existence, WhiteHat Jr has had a dream run. But a few weeks after its sale to Byju’s, criticism of the company’s advertising began increasing on social media platforms.
Both the contents of its ads—the unauthorized use of the pictures and quotes of Bill Gates, Elon Musk and other tech leaders—and its messaging (that children would become tech champions) were roundly criticised. In late October, the Advertising Standards Council of India (ASCI) asked WhiteHat Jr to withdraw five ads for violating its code.
More than ASCI’s reprimand, what damaged the company was the freewheeling criticism by two individuals, Pradeep Poonia, a software engineer, and Dr Aniruddha Malpani, a doctor by profession and angel investor.
The two criticised WhiteHat Jr in provocative language that quickly caught the attention of hundreds of thousands of users on social media platforms. These included: WhiteHat Jr’s advertising was deceptive; its curriculum was a satire of actual programming education; its teachers weren’t qualified to teach coding (Poonia called some of them “housewives"); the company encouraged its sales staff to bully parents into buying.
WhiteHat Jr’s machinery countered forcefully. The company alleged defamation and copyright infringement by Poonia and Malpani. Poonia had secured unauthorised access to its internal messaging system and made recordings of trial sessions with WhiteHat Jr teachers without their consent (according to WhiteHat user terms, only children can take trial classes; the company does not permit recordings or dissemination of these sessions). WhiteHat Jr got Twitter, Youtube, Instagram and LinkedIn to remove many of the posts and suspend Poonia’s accounts.
Poonia and Malpani continued to upbraid the company and, in November, WhiteHat Jr sued them for ₹20 crore and ₹14 crore, respectively, alleging defamation. The Delhi high court granted an interim injunction late last month to WhiteHat Jr, putting certain, though not sweeping, restrictions on Poonia and Malpani from posting about the company.
In an interview, Poonia reiterated his criticisms of the company and said that he will continue to voice his opinions about WhiteHat Jr and Byju’s.
WhiteHat Jr, on the other hand, said that the company only filed the two lawsuits after repeated violations of its user terms and breaches of its Slack system.
“The crux of the legal action is predominantly against defaming our women teachers by calling them housewives who are not trained, taking their videos and putting it in the public domain, which is illegal as it violates our terms and conditions," WhiteHat Jr’s Bajaj said in an interview. “Teachers get impacted psychologically; they feel psychologically unsafe." In combination with the Slack breach, this compelled the company to act, he said.
“There have been only two things (that have prompted the company to file lawsuits). Either these activities that threaten the psychological safety of the teacher or breaching into the system or supporting these activities in some form. Apart from that, I would categorically say we have no objection to (criticism). (But) badgering a teacher, putting their video in public, scoffing at her and doing it 200-300 times a day is not criticism and satire," Bajaj said.
Poonia, however, said that he had signed up for 10-12 trial classes as part of his effort to develop a grounded critique of the company by vetting the quality of WhiteHat Jr teachers. He said he was part of a public Telegram group of people who found WhiteHat Jr’s methods problematic but wasn’t acting in concert with anyone else.
Until recently, Bajaj said that the company had flagged posts by Poonia, Malpani and others on social media platforms based on two considerations: abusive language and copyright infringements. It has now outsourced content flagging to a copyright specialist firm.
Bajaj admitted that some of its ads had conveyed dishonest messages like the infamous Wolf Gupta ad that showed a 12-year-old child securing a lucrative tech job at Google.
“The core idea and mission of the company was that kids would become creators instead of consumers of technology. All of our creatives should have stuck to this theme. We should not have done those ads (that promised WhiteHat Jr customers would become crorepati tech executives and entrepreneurs)," he said.
But these problematic ads totaled 8-10, a small fraction of the more than 800 marketing creatives published by the company this year, Bajaj said. He added that the company had withdrawn some of the ads flagged by ASCI on its own after an internal review in June, before the ad body’s request. Since then, it has instituted a new review process to clear ad campaigns.
Still, the fracas has damaged WhiteHat Jr’s image as a brand and an employer. Every day, customers, engineers and white-collar employees put out scornful posts about the firm on LinkedIn and Twitter that easily outnumber posts by its defenders. Some engineers boast they’ve rejected interview offers from WhiteHat Jr, which pays lucrative salaries, because of the firm’s objectionable practices.
“Definitely, it has impacted us negatively. The minority of the ads that crossed the line, we should not have done them. Other than that, the purity of the course, the purity of our intention is not reflecting in the conversation right now about us," Bajaj said. He said that the company is continually improving its service and processes and believes its image will be repaired as a result of these efforts.
“My view is that systems are very efficient in the long run and inefficient in the short run. I’m being very steady about the focus that every part of our internal systems should be getting stronger and stronger. The content should be getting better, teachers’ training should improve. So if we continue to focus on these fundamentals, we’ll weather this crisis and come out stronger," he said.
The controversies notwithstanding, many parents are curious about WhiteHat Jr and open minded about signing up their children for its courses. Mint spoke to half-a-dozen parents who had all heard of WhiteHat Jr and the controversies surrounding the company. All of them said that they knew the company’s advertising claims were exaggerated. Some of them, who work at startups, said that they were concerned about the quality of the teachers on the platform. But all of them would consider enrolling their pre-teen children for coding lessons on WhiteHat Jr or already have.
“I’m a competitor of WhiteHat’s and I still say that the job they’re doing is pretty good," said Aditya Singhal, co-founder of Instasolv, an online education startup. Singhal has enrolled his five-year-old child on WhiteHat and said that the course offered valuable lessons in problem solving and logical thinking that enhance children’s ability to grasp technical concepts.
“The kid is engaged, the product is good and the teachers are good. They’ve created a completely new market and they deserve a lot of credit for that. Knowing coding will give people better jobs going forward, and WhiteHat has shown that the basics of coding can be taught at scale," Singhal said.
He said that he knew that what WhiteHat Jr was teaching is “logical thinking, not coding" (for grades 1-3, WhiteHat Jr teaches computational thinking, not coding languages, which are taught from grade 4 onward) and that signing up for their classes wasn’t going to turn children into “geniuses."
“But what they’re teaching will help prepare children to learn coding or any other technical stuff. Going forward, knowing coding will allow people to get better jobs and coding will become a mandatory subject along with maths and science. WhiteHat has enabled this," Singhal said.
For now, the market for coding education for children is fast saturating, some education executives said.
Drawn by WhiteHat Jr’s success, dozens of education companies have either launched products or are working on launches. These include Byju’s two largest rivals Unacademy and Vedantu as well as Camp K-12, whose founder had helped develop Scratch, a coding language designed for children, while he was at the Massachusetts Institute of Technology. (Scratch is one of the main platforms used by WhiteHat Jr)
Industry executives estimate that at the present prices charged by WhiteHat Jr and other platforms of ₹400-750 per hour, only upper middle class and wealthy parents can afford coding classes. In effect, all firms are vying for the same customer base that caps out at 15-20 million. Apart from affordability, another limiting factor is infrastructure. Unlike many other online education services, the current products offering coding or computational thinking lessons require a laptop and can’t be imparted via mobile phones.
“The market is on the verge of saturation; almost every firm is looking abroad," said Rahul Ranjan, CEO of LeapLearner India, whose parent firm is one of the biggest coding education firms in the world. “Computational thinking is clearly an important subject for all children to learn. How do you take it to everyone in India and not just the top 1%–that’s the key question. To do that, we need a mobile product but that’s not easy to build (given the complexity of the subject."
Aware of these limitations, WhiteHat Jr, which presently offers only 1-1 classes, is trying to lower prices by increasing the number of students per class, selling its product to schools, and working on a mobile offering, all of which could help expand the market. It has also entered markets, including the US, which equals India as the biggest revenue contributor, and Latin American countries.