Matthew Henshall - Co-founder & CEO – Lessonspace
The Easiest Way to Teach Online
Hello there, welcome back to the 728 Founders Series. This series seeks to interview the best builders in South Africa. Ask them genuine 7 to 8 questions about themselves & the businesses they are building. I have had the privilege to engage with many exceptionally talented and gutsy builders here in South Africa & Matthew Henshall is one of them.
When I first started at Foonda I wanted to learn the most I could about the EdTech space in South Africa & I find that the best way to learn about an industry is to find the best person building in that space, ask them questions and learn as much as you can from the stories they wish to tell. I first heard about Matthew when I was researching EdTech last year, this was around the time they released room.sh, a video meeting platform with a google doc-like interface built into it. Little did I know that this was Matthew & his teams’ fourth project.
Back in 2016 Matthew & his Co-founders started their journey building tools & startups to provide better education to students. The first startup was SkillupTutors, a marketplace where parents can find and hire reliable, accredited tutors. Then came Lessonspace, the easiest way to teach online through a collaborative whiteboard. The third one was Code4Kids, a complete solution for teaching ICT, coding and robotics at junior school. Then there’s Room.sh, the video meeting platform that powers Lessonspace. Room.sh is a powerful meeting portal that anyone can use.
Matthew & his team have a clear understanding and focus on what they are building. I really enjoyed asking Matthew questions & his responses blew my mind – very articulate & purposeful. The teacher in him comes out.
Hope you enjoy this interview as much as I did!
Hi Matthew, thanks for doing this.
Let’s start with a little background about you, who is Matthew & how did you come to build not 1, not 2, not even 3, but 4 businesses In the last 5 years?
Trying to run 4 businesses is certainly not something I would recommend, and while in the past we have been apologetic about the fact, today we embrace it as just part of our journey.
I finished my engineering degree at UCT in 2013 and went straight into a pharmaceutical and FMCG company. As much as I enjoyed that, from a young age I knew I wanted to be an entrepreneur.
I joined a start-up and tried to start a couple of education companies over the period of 2014-2015, all with varying levels of success/failure.
In 2016 I saw the importance of having co-founders alongside me. I joined up with 3 friends, much smarter than me, and in 2016 we launched SkillUp Tutors.
Since then, over the last 5 years, the founders and I have stuck together and gone through a rollercoaster as entrepreneurs. We want to build fulfilling businesses, largely focused on EdTech, and that journey has led us to now having 4 active brands SkillUp Tutors, Lessonspace, Code4Kids and room.sh.
Can you walk me through the journey of building your businesses? From Skilluptutors to Lessonspace, to Code4Kids & Room.sh, the video-doc platform that powers all of this? What is your mental model(s) for finding opportunities or problems to solve?
We’ve had some big, hind-sight learnings over the years. With starting each new brand, we’ve managed to apply a large number of those learnings to the new businesses.
Firstly with SkillUp, we made some big mistakes and misassumptions:
(1) We didn’t begin with the customer in mind.
We were four software developers so we spent months building software to solve problems. We came to the point on the night of a big launch in 2016 where my younger, not-so-tech-savvy brother took our products through the cleaners. He highlighted some massive errors in our assumptions of how a client would behave on our apps.
We learnt an important lesson, our biggest strength is our biggest weakness. We were engineers so we tried to solve all problems with code. Problems are solved by beginning with the customer.
This mental model, or value, we call, ‘Begin with the end in mind” and it stays with us today.
(2) Secondly we weren’t honest enough with ourselves about the key metrics.
Being a B2C startup in South Africa is brutal, you’ll come out with some scars. Everything is about Cost Per Acquisition (CPA) and Life-Time Value (LTV) of customers. It is extremely difficult to get this right and we spent years optimizing a percent here or there, but we should have seen that we needed something completely different to improve 10x.
Companies in education, in South Africa, that do succeed are ones with a strong brand and lots of loyal customers. A company like SkillUp works well alongside a customer like that - we should have seen that earlier.
We raised capital in 2017 with the thesis to take our South African tutors and market them overseas for live online tutoring. We thought we could offer the most affordable tutors at the highest quality. We quickly learned that low cost = perceived low quality in education
During this time we lacked direction and started working on our own online tutoring software. This software soon became Lessonspace, what we might call Zoom for Education.
Lessonspace was fundamentally different. We were B2B, we could focus on being the best, not just the most affordable, and we could have more control over CPA and LTV.
Pre-COVID Lessonspace ticked along well and it saw a large growth over 2020. Conversely, during our time of directionless, pre-COVID we started a new company, Code4Kids. Code4Kids was experiencing rapid growth in 2019 and took a bit of a hammering in 2020. I am pleased to say it’s now bouncing back big time!.
Code4Kids is a way for teachers to teach coding, robotics and IT to junior school students, in the school classroom. I started it as a side project to teach my nieces coding, and then upon hearing how little coding they were doing at school I asked the school to give us a chance. Miraculously they did!
Again, we began with the customer first at Code4Kids. We sold it to the school before we had a product, we made sure the unit economics worked and ultimately made sure the students loved the work they were doing!
Begin with the end in mind - that’s the mental model we always try to apply. It’s the thing in our business that we say and ask a lot
Begin with the end in mind – such an important value and mental model.
When we first had a conversation you walked me through the value of earning recurring revenue & the benefit of building in South Africa for the world. The potential for Room.sh is enormous; Can you talk a little bit about Room.sh & your plan for scaling it? Is it a separate entity or does it sit within Lessonspace Inc?
Room.sh is essentially our core software, it is the Zoom part of Lessonspace, born and bred in South Africa. It’s a brand we re-skinned at the onset of COVID. Lessonspace is our commercial arm, in the education segment, built on top of room.
The beauty about meeting software is that it grows pretty organically. If you want to have a meeting you need to invite someone to it, which means that all our users, if they love us, will invite others to join. We don’t spend money on marketing our B2C product.
All the work we do for Lessonspace starts out as room.sh improvements. From a B2C perspective, we monitor something called the virality factor very closely. It's essentially the metrics for how many users are invited by our current users. If we make improvements we see that factor increase, the key is to find the improvement we make that increases that factor 1-10 fold.
It is also a very busy space, so we are not making any assumptions or targets for room.sh right now, we continue to listen to our customers, but remain focused on Lessonspace.
Got it!
Your team consists of very technical people & great technical teams build great technology products. What advantage does having a strong technical team give you in building your company? & how do you balance building & business development when selling outside of South Africa?
The team has hands down been the biggest contributor to success.
With SkillUp we were essentially building a pretty basic REST app. It was complicated, but we could build quickly on it. The difficulty there was sales, marketing and biz dev. An area our team didn’t naturally excel in. This quickly became my only job.
At Lessonspace the tech is orders of magnitude more complex and the team is solving seriously complex problems. That’s super exciting, and that means we can differentiate on our tech.
The key here I think is that if you want to start a tech-centered business you need tech founders. If you are great at sales, marketing or biz dev, it’s important to find a niche where you can be the best.
Being tech-centered and tech-enabled are very different. We were no good at commercialising our tech 5 years ago through SkillUp. In hindsight, we needed to be experts at sales and logistics.
Focusing on what you’re good at, finding that niche, ours happened to be tech, so we started getting things right when we started doubling down focus on that.
So how do we do sales, biz dev outside of RSA? Firstly we’ve been a product lead sales team, so we sell our product, our customers come to us because we have the best product. Those are the metrics they look at. Secondly, we’ve made some great hires in customer success and sales, both locally and internationally. Thirdly, we decided to make things easier for ourselves and we started partnering up with key companies to offer our product to their already existing customers. We made sure it was a win-win-win situation and we got it there early. Lastly, we were in the industry before it started to rise, so when it rose we rode the wave. We were lucky in that regard.
It’s quite difficult to build a venture-backed business in South Africa, the ecosystem is quite nascent at the early-stage, how have you & your team navigated raising capital in South Africa?
I think it is relatively possible to raise capital in South Africa if you have growing revenue. When we tried to raise capital without it we struggled, we had to delay our raise by a year.
That’s just a fact of our ecosystem, I would encourage early-stage entrepreneurs to look at this as an advantage. Get your first 10 paying customers, turn them into 100 and you’ll get some options.
A caveat might be industries with long lead times such as MedTech.
The fact that there is not much early-stage risk capital suggests something interesting, but I haven’t quite been able to put my finger on it. I might have something to do with the fact that investors don’t need to take 10x risks to find 10x business as the natural early-stage filter being created is doing the job for them. It might also be due to the limited market in South Africa.
I have this blog I always read by an American VC called Fred Wilson, it's called avc.com, he used to do a series called MBA Mondays which I found extremely helpful. He wrote a blog post about the role of a CEO titled, ‘What does a CEO do’ & one person gave him the answer:
“A CEO does only three things. Sets the overall vision & strategy of the company & communicates it to all stakeholders. Recruits, hires, & retains the very best talent for the company. Makes sure there is always enough cash in the bank.”
I don’t know if you would agree with that framing, but what would you say your main job is as the CEO?
Great blog, great question. I’ll start by saying that the best CEOs I know do just that, they do those three things, and sometimes seem to have quite a lot of time on their hands.
I will also say that I am personally undecided on the ratio I should spend at the coalface vs. in the space station. Part of me seriously believes it is important to never stop speaking to customers, but I also acknowledge that you can quickly fall into the not-important-urgent trap and not get around to the important-not-urgent tasks.
I do agree with those three things, but I would add a fourth. The fourth would be a constant search for how to grow the business.
This for me is anything from assessing new opportunities, large customers or unblocking bottlenecks. Trying to focus on the high-leverage activities and being ok with not doing less important tasks. Perhaps with clearer strategy, the assessment of opportunity becomes easier and when we’re big enough even large customers will be dealt with by others.
I do and continue to do, whatever needs to be done to get us to 1 million hours of monthly lessons. And of course, that is an ever-moving goalpost.
Growth is the great fourth factor, a very important lesson.
I want to ask how you think about growth vs profitability. I know the context of where you build from matters. How do you think about building a high-growth but sustainable company & managing the balance sheet?
This is a particularly interesting trade-off for us right now. I have given this some proper thought, and I am not sure I have the answer.
Furthermore, it is often a point of ridicule if you don't have an answer for “What would you do with $1m if I gave it to you right now”, the idea of a tech startup making a profit is somewhat shunned. Just a note on that bias and its play in this answer.
I really do believe in being cash-wise, I count every penny in this business and will cut a $10/m expense if it isn’t being utilised.
We originally raised money as we needed to pay for certain things like servers, a very basic salary and marketing. We didn’t have the cash or the risk appetite, but our angel and seed investors saw something in the team so they invested.
That was money we raised as there was no way to go further in the venture without it. It was a necessity.
But now, looking at opportunities, or high-growth investment. Growth capital.
My first comment is I’d never do something unsustainable. For example, if we were to invest internal or external capital, if it is a complete 100% flop, I’d want to make sure the business can still thrive.
For me, breaking even every month is great. As long as we’re growing at good rates, say 5%+ every month at this stage, and taking that extra 5% revenue and reinvesting it.
We know this market well, and if we see an opportunity to invest 100% more every month to ultimately increase the growth rate over and above what we’re currently doing it is certainly something we consider.
Up until this point though I would always rather use the companies working capital, it’s our risk, our reward, and if we aren’t willing to spend our own cash, we are then risk-mitigating with someone else's.
And I do believe there are scenarios where we would raise more capital, especially one where we had proven, repeatable growth, and saw the opportunity, but never had the bank to do it.
One thing I have learnt is that capital is not just capital, it comes with lots of changes and expectations, it’s like getting into a relationship and you taking your whole team into it, so you need to think carefully and be very sure of yourself. Ultimately capital can be of huge value and it can open doors, but preferably if you’re raising capital, it is strategic and you’re getting the right partners on board who can perhaps even offer more long-term material value.
Last question, I promise haha. What is the grandiose moonshot vision for the company?
As we have two major brands Lessonspace and Code4Kids we have two slightly different, yet parallel visions.
At Code4Kids, we really believe education in South Africa can be changed, as Peter Thiel says, from 0 to 1. We believe that because of the internet we can give not only equal, but the best, education to all South Africans who want. For now, our goal is to get into 5000 schools in the country, that's significant enough to start whatever comes next.
At Lessonspace, we want to become the pen and paper of the internet. For now, our goal is 1 million monthly hours, but we might need to move those goalposts soon!.
Thanks a lot for doing this Matthew, if anyone wants to get in touch with you for business, where can they do it?
The best way to get in touch with me is via LinkedIn: https://www.linkedin.com/in/matthewhenshall/, here our websites: