India's biggest scam | Watch till the end as Chamath Palihapitiya unfolds it for silicon Valley

Vladimir Lenin, the founding head of Soviet Russia once said that there are decades where nothing happens, and there are weeks when decades happen. 2020 was one year, where a decade worth transformation and digitization happened across sectors. And one sector worth pointing out is education. Just to give you an example - If you bought a flatscreen TV in 2000, it would have cost you $5,000. If you go to Best Buy or Walmart to buy that same TV, you can get it for $75. That’s a 98.5% drop in price. The same analogy applies to your internet plans, home based entertainment options, your laptops, your mobile phones, and even your travel options. Technology is making life more affordable, more accessible, and higher quality. However, if you were to pursue an MBA degree from a top business school you will have to shell out around $200,000 (that’s almost double of what you would have paid 10 years ago). In fact, in the world’s richest country - the United States of America the cost of education has grown 8 times faster than the real wages. And its residents currently hold $1.5 trillion in student debt. And it is for this reason that education is an attractive space for entrepreneurs. Because the sector is ripe for reinvention and innovation. Here if founders are innovative they can create an equitable world - a world where not just 1% gets an Ivy League education.- but a world where the majority of people can get impeccable education via rooms and gates not manned by 19th Century Ivy League gatekeepers. Be it India, or Indonesia, or the US - many innovations are happening in the education space. In the US for example, Lamda School is training people to be software engineers, in Asia, the Middle East, and Africa - Global Governance Initiative is providing networking, community, and learning alternatives to MBAs and MPPs - all for less than 1/1000th of the cost. And there is a pantheon of education ventures like Leif, Flokjay, Primer, SchoolHouse closing the skills gap. But there are also education ventures that have transformed themselves to be full blown marketing companies. These startups are sponsoring cricket tournaments, they are hiring movie stars as their brand ambassador, and if you were to browse through the LinkedIn accounts of employees in such ventures- you’d realise that majority of them are marketeers, and not educationists. The three steps of the scam : This is how the scam unfolds! Step 1 : Founders of funded EdTech ventures work under tremendous pressure from their board members and investors. Inventors are under pressure to build a portfolio of companies that promises strong returns. Why? Because they have to raise another round from the limited Partners. Step 2 : Here comes the problem of IRR : Returns for an investor are measured by a metric called - IRR (Internal Rate of Return). IRR is a function of two factors - Time and Capital. The faster a portfolio company is sold, for as high an amount, the higher the IRR. Exit delays create immense pressure on the investors. The longer a start-up takes to reach a critical value milestone (growth, acquired users etc), the more concerned investor becomes. After all, as mentioned the one metric that VCs live by called IRR - drops rapidly over the passage of time. 3. In every board meeting, founders have to justify their user acquisition strategy, blitzscaling strategy. As a result, education companies are reduced to a single line statistic, measured primarily by multiple of capital invested and gross IRR. It is no surprise, the so called 'Education' companies hire more marketing professionals than real educators. And they innovate not to improve the course content, but to sell the course content. These ventures will have all the money in the world to splurge on Bollywood stars, mega sporting events, YouTubers, LinkedIn Influencers. But never to improve the quality of their product. And one beautiful thing about education space is that YOUR PRODUCT is THE MOST IMPORTANT component. This is one reason why I will keep GGI bootstrapped. Because in education your product is EVERYTHING. Bootstrapping allows us to focus on the core products, and all our time and attention is spent on improving the user experiences (and not massaging the egos of investors, or dealing with influencers and their egos So next time when you see an actor, a YouTuber, or a cricketer promoting an EdTech startup - one thing should click in your head - that the education venture isn’t innovating to improve the course content but to sell the course content.