VIPKid founder and CEO Cindy Mi

VIPKid was founded in 2013. With the then popularity of 'Internet Plus' (a term put forward by Chinese authorities, meaning to combine tranditional industries with the internet) and thanks to the optimistic view of one-to-one English teaching by native speaking teachers in the market, Cindy Mi and her team built an online platform from the ground up with an astonishing ability to coordinate resources in order to connect North American English teachers and Chinese children.

Its business was thriving. "Their platform is changing things," were the words of retired NBA star Kobe Bryant in an interview with 'Los Angeles Times' in 2016 at the time that Bryant Stibel, the venture capital fund founded by the sporting legend and tech entrepreneur Jeff Stibel, invested in VIPKID. Kobe stated that it took him only five minutes to make his decision to invest in VIPKID.

The rise of VIPKid happened to satisfy the need of a new generation of Chinese parents for practical and tailored English teaching of their children. At the same time, the online education model is not only cheaper than offline options, but also removes the time required for transportation to class, making it especially effective in China's super fast-paced first-tier and second-tier cities.

However, there are also obvious drawbacks to this model. Besides constant bubbles in the industry brought on by competition and capital fervour, VIPKid has no other options but to target lower-tier cities if it wants to further expand its client base. However, for this lower-tier market, the cost of one-to-one learning is intimidating for many parents, particularly in comparison to the prices of one-to-many English classes.

Many online education startups are trying to break the curse of one-to-one online learning falling into a pattern of diseconomies of scale. However, judging from current conditions, the situation has not improved.

Furthermore, following the rapid development of recent years, the drawbacks and chaos of the online education industry have drawn attention from the regulatory departments. 

This summer, the first national regulation document targeting issues related to the development and standardization of the online education industry, which has specifically laid down and publicized specific requirements for the employment of foreign teachers including their education, work and teaching experience, was publicly released by six departments (including the Ministry of Education).

All signs indicate that VIPKid has been having a difficult time of late. In fact, beginning from last year, VIPKID has started making efforts to break away from its positioning of a one-to-one learning platform by introduced its online Chinese learning platform, Lingo BUS, as well as classes of one-to-four.

At the same time, experiencing difficulty in its efforts to expand and develop further in the changing market, VIPKid has adopted the strategy of broadening its subject base. There has been reports that VIPKid has for some time been testing the model of online teaching of science subjects.

However, judging from the current observations, such attempts have not made much of a difference in the short run. How Cindy Mi and her team manage to make any breakthroughs in the current climate of pessimism once VIPKid receives the money from its new round of financing is something that everyone is watching closely.

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This article was edited by Dido Pang. The original Chinese version was written by Li Chengcheng.

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