Eilert Hanoa interview: Why the kids education market is booming

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Kahoot is a digital learning and engagement platform company that is helping kids learn during the pandemic. And in the fourth quarter of 2021, the company generated 137% revenue growth to $107.2 million in bookings in 2021.

The Norwegian company has more than a million paying subscribers and it has grown to more than seven billion non-unique participants since its launch, with two billion of those in the last 12 months. And the company has more than 420 employees.

It recently launched Kahoot Multiplication by DragonBox for iOS and Android, the latest in a series of math apps. It has more than 20 minigames aimed at challenging kids with their multiplication skills and making learning fun. Kahoot also partnered with Microsoft’s Minecraft: Education Edition to launch free learning content as part of their Hour of Code: TimeCraft program. I talked about the growth in the market and the opportunities with Eilert Hanoa, CEO.

Here’s an edited transcript of our interview.

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Eilert Hanoa is CEO of Kahoot.

VentureBeat: What’s most interesting to you about where Kahoot is now, and where it’s going?

Eilert Hanoa: As far as an overview, we’ve been building Kahoot since we launched back at SXSW in 2013. We’ve been growing organically since then. We’re one of the few companies not spending any money on paid ads, but rather using the strength of the user base and earned traffic as the way to grow. We’ve had a pretty cool journey behind us when it comes to growth. We just passed 7 billion non-unique participating players. We had 2 billion non-unique participating players last year. We reached $100 million in billing last year, and we have a target of $190 to $200 million this year. We have about 420 employees, half in the U.S. and the rest in Europe.

The core Kahoot product is the most well-known we have, Kahoot at work, school, and home. Kahoot was used by 9 million teachers in the last 12 months, playing with 1 billion student sessions. Tens of millions of individual students and parents use it at home to learn, in addition to corporate use. Top Fortune 500 companies use cahoot for corporate training, compliance training, customer events, and sales training, and of course individual training as well.

Kahoot has grown into a fairly unique platform. We have this single platform where we’re building all our features, packaging them for each of the segments so we get synergy in the user experience. If you’ve used Kahoot at home, you’re probably also interested in using it at work or in class. That’s what fuels the growth. You’ve seen Kahoot, you use Kahoot, and you can continue to use Kahoot in different settings. Since it’s user-generated content, which is the foundation of the platform, we also have very solid financial scalability in the company.

VentureBeat: Who do you consider to be your major competitors?

Hanoa: Since we started in 2013 we’ve had a great series of competitors, because engagement in the classroom, making learning awesome, of course isn’t something we can patent or by any standard control. We’re working closely with Microsoft, Google, Apple, and other companies like Zoom to see how we can integrate the Kahoot experience into their services, whether it’s using Teams or the Zoom app to make it happen, but also in Google Classroom and Apple Schoolwork, to make Kahoot more available in the classroom.

To some extent, all these large corporations, as well as other startups, are aiming for the same individuals and their time on the device. From an attention perspective, we have many competitors, like TikTok and Netflix for kids, all the way up to corporate learning systems that are already established. But I think we’re a good companion to what’s already out there. We try to do things differently. We say that for teachers, it’s possible to use Kahoot for free forever. For parents and students, it’s the same. Even the new app that launched today, the multiplication app, which is pretty cool when it comes to making math more exciting for kids, we also say you can use this for free with a daily challenge you can run, so that every student and every family, or every teacher for that matter, can use the app without having to buy anything from us.

Freemium isn’t a new concept, but a constant free service that you don’t have to buy, that’s unique. If you look at the Kahoot platform, approximately 98 percent of our users are not paying anything. Only two percent of our users are actually paid. But we’re stable enough to build a successful, scalable financial model based on the Kahoot platform.

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Kahoot just launched a new multiplication app.

VentureBeat: What about something like Byju’s as competition? They’ve been buying a lot of companies.

Hanoa: Byju’s is an interesting company. I don’t have any insight, but I’ve been tracking them alongside many other companies on the outside. Some of the companies they’ve acquired are interesting, like Epic Books today. It’s an interesting unit to roll into Byju’s.

The scalability we can get on the Kahoot platform–when we make a new feature, it’s available for millions of students, kids, parents, and businesses around the world on the same day. That’s not something you can do if you have a set of different platforms and different services. The scalability aspect, for those who track the financial damage, is very strong in Kahoot’s setup. That’s also reflected in our financial numbers. We have a 90-plus percent gross margin, zero spending on ads, and a cash conversion last year that was approximately 30 percent of revenue.

VentureBeat: As far as acquisition activity goes, have you been as active as a company like Byju’s?

Hanoa: Maybe not as active, but we did acquire Clever last year. Clever is a great company for us, and also a great platform in the K-12 classroom in the U.S. It gives us an extension both toward teachers that are using Clever, but also more than 20 million students on the platform. Combining the Kahoot platform, the tools and apps coming from Kahoot, with the distribution power and the simplicity of Clever is a very compelling value proposition that we’re going to explore more in 2022. We closed the transaction in September, so it’s still early days for us joining forces with the Clever team, but that’s the most substantial acquisition we’ve done.

We also acquired the DragonBox team back in 2019. Today’s announcement of the multiplication app is a great new product coming out of the DragonBox gaming studio, which puts us in a very different category on that front. More of a traditional gaming app player. And then of course we have the whole enterprise space, which is the main part of the business, except for the Clever franchise, which is Kahoot at work. You have a lot of larger corporations using Kahoot, as I mentioned, for professional use, whether it’s corporate culture, training, compliance, and so forth. The Kahoot brand is across all these different segments, but also representing a compelling value proposition for students, teachers, home, and work, and also the Clever dimension of distribution of digital learning assets into schools and classrooms.

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Kahoot recently teamed up with Minecraft.

VentureBeat: I wrote a story this morning on Talespin raising money for VR training. Is the VR education and training market interesting to you?

Hanoa: With the big announcement from Meta before year’s end, I think everyone is scrambling toward VR and the metaverse equivalents. It’s an interesting dimension for training. Some will argue we still need to see relevant hardware in order to really be able to use VR on a consistent basis. You have HoloLens from Microsoft. There are some rumors that HoloLens 3 is not really a top priority in Redmond. Then you have Apple with the rumors that we’ll see a 2023 launch from them. You have rumors that Facebook internally isn’t developing too much new hardware, but rather teaming up with others. Microsoft also may look into teaming up with Samsung.

A lot is happening between the different mega-players in that space. For anyone else it would probably be a waste of good money to try to enter the catfight, at least from a hardware perspective. But using the Microsoft or the Meta platform to extend your own services into that ecosystem is definitely valuable. That’s something we want to do. But we’ve been around the block. We have no interest in being on the bleeding edge of these new platforms. We’d rather see how we can engage with a mature service. We have some great ideas about how to extend the Kahoot experience as those services become available, relevant, and distributed toward a critical mass of users.

As we all know, it’s about having that critical mass of users on the platform, and the accessibility of the platform. Not only the latest and greatest technology and hardware, but what works for the average user. We’re very much about inclusiveness in the classroom. We can’t make solutions that require a school to spend hundreds of thousands of dollars on hardware to make the solution work. You should be able to use Kahoot with whatever you have in the classroom, whether it’s using your own mobile phone or the classroom devices that are already there.

To some extent that puts more pressure on us, using the technology part to make that happen. Sometimes we have to lean back a bit more when it comes to using the latest and greatest in new functionality and technology.

VentureBeat: What about the notion that educational products haven’t kept up with the best of what games can offer? You’re not likely to be using Unreal Engine 5 or anything like that.

Hanoa: It’s relevant to the same discussion. If you’re going to sell the ultimate version of Call of Duty to a kid who spends $5,000 on a gaming rig, it’s possible to make a fantastic experience. But if you want to make it inclusive, to make learning for everyone, we need to make that happen with a slightly simpler setup. That said, all companies that are about engagement, including ourselves, are very much able to learn from the best game companies. You can even look at how TikTok has become so compelling for our users. There’s something there that shouldn’t be underestimated when it comes to building out learning tools and gaming in general.

We should always be positively inspired by what we can see in the market, what really engages and works. But on the other hand, as we also know, it’s not a goal in itself that digital tools and gamification end up being the product. We’re delivering that as a way to strengthen the learning experience that’s already happening in the classroom. We don’t look to replace the teacher or replace the textbook, but rather make sure that the teacher and the textbook come to life through using Kahoot. There’s a difference between being a companion and being a replacement. For us, using engagement mechanisms to make the teacher become the classroom hero, and having all the students leaning in instead of zoning out, that’s what Kahoot is all about.

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Kahoot is expanding globally.

VentureBeat: Have you gotten any interesting research or feedback on how learning has changed during the pandemic?

Hanoa: We have some more structured papers that we can share with you, but what I think personally, what I’ve found most intriguing–if you asked a teacher two years ago to set up a Teams call or a Zoom call for a class, in February 2020, it would probably be a very tiresome process to get everyone on board, to log everyone in, to connect the microphones, and so on. Now any teacher in the world can do that in a heartbeat. The digital competence that you find across teachers and students and parents is phenomenal. It’s like a 10-year fast-forward training session for all of us in efficiently communicating digitally through video conferencing.

We see that knowledge is not disappearing as we’re hopefully returning to a more normalized world. On the contrary, we see teachers, students, and parents are much more comfortable using digital tools as companions in their daily lives. For instance, the app we just launched today, the multiplication game, you can have five sessions a day where you can train on multiplication, but it’s not going to take over your life and shut down everything. It’s a great way to also focus on math in between everything else you do in life. The combination of digital savvy and, to some extent, recognition of the value of using digital tools to better accomplish normal tasks, that’s the best of the changes and the new mindset that we see after the pandemic. Fingers crossed that we will continue to see that. Not the lockdowns and not all the Zoom calls, but that we use these digital tools to help us save time and effort in our normal way of life.

VentureBeat: You said you had 420 people or so. Is that going to change in the coming year?

Hanoa: We’ll continue to grow, both in Europe and the United States. I don’t think you’ll see us tripling overnight, but we’ll continue a healthy development. I talked about the scalability of the company. We’re very focused on making sure that we show that scalability every step of the way. Especially these days, where from a financial perspective–solid growth is back on the table, and maybe more important than ever before. Showing that we’re not burning money to grow, but that we actually have a product that customers care about and are willing to pay for. And that what we deliver and develop is also competitive compared to what’s already available in the market.

We’ll be growing slowly. We’ll continue to grow, continue to invest in the organization. We’ll continue to have half of the organization focused on product development, which is great. We’ll also continue to give away our products for free to teachers, students, and parents. Again, for us that’s very rewarding. It’s important for the ecosystem, but also important if you really mean something about making learning awesome.

VentureBeat: When it comes to acquiring users or advertising the brand, making it better known, how do you feel about that as you get bigger? Do you ever want to experiment with spending more on that front?

Hanoa: There’s a big difference between earned traffic and paid traffic, as we all know, when it comes to consistency, renewal, and maybe even the understanding of what you’re looking at. We’re not religiously against spending money on marketing, but we do believe that the main priority should be having a fantastic product that’s creating engagement by itself. Playing Kahoot is promoting Kahoot, basically. If we had to choose, I think we’d rather put $1 million into R&D to benefit all our users than put that money into ads. That’s the philosophy. Of course there are always shades of grey in between. But so far our success has come because we’re constantly trying to innovate on the platform and deliver a better service to all our users.

VentureBeat: What are the top markets for you? Are there markets you’d like to grow in more?

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Kahoot has taken learning to the smartphone.

Hanoa: The top market is definitely the U.S. from a revenue perspective. With Clever, that wasn’t a U.S. play alone, but the U.S. and Canada were the bulk of our revenue in Q4, which was helped by Clever contributing for its first full quarter. We’re also growing slowly but surely in Europe – our headquarters is in Oslo, Norway – and in Asia-Pacific and Latin America as well. The U.S. and Europe are by far the biggest regions for us in revenue, though. We just launched in Japan last summer. About two weeks ago we launched a version in traditional and simplified Chinese, which is great for Chinese-speaking users outside of mainland China. Yesterday we launched in Arabic.

We’re expanding across the globe with localized services and experiences. This has been extremely well-received by our users, again because it’s free, so it has an instant impact for families at home or teachers without a budget. They can use Kahoot in the classroom or for homework without paying anything, and that’s of course very much appreciated.

VentureBeat: Do you have any metrics around time used during the day? How has that changed?

Hanoa: The usage of the platform has been growing pretty steadily. If you look at Q4 for the last four years, we used to have under 50,000 paying seats in 2018, and then it’s 574,000 here, so 10X over those years. We went from 12 million active accounts to 31 million active accounts. The number of sessions has also grown substantially, as you can see. Not a full double, but not too far away. The number of participants reached 2 billion in the last year. There was especially an impact at the end of Q4. You see that in other companies’ performance as well. Q4 was a challenging quarter. Year on year, of course, we had great developments on all these different drivers. Again, building our ecosystem will be important for us in the next cycle.

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Kahoot has a subscription learning business.

VentureBeat: What would you expect to happen when some of the game platforms might expand into this space, someone like Roblox?

Hanoa: Roblox is a great company. They definitely have done some solid work building their ecosystem, their marketplace, and a place where gaming and learning are at the center. I don’t think there are too many corporations using Roblox for sales training, though. Not that I’ve seen, at least. They have the potential to develop and deliver a more sophisticated experience for grown-ups, but I think we’ve been fairly successful in enabling others to have their content showing off, using Kahoot as the platform. It’s a bit similar to how you’d present yourself on LinkedIn. It’s not about LinkedIn. It’s about you on LinkedIn.

We have the same philosophy: making sure companies look great on Kahoot, being able to brand their experience. We’ve invested a lot in this over the last couple of years, and we’ll continue to do so to make sure that it’s not about Kahoot. It’s almost like Intel Inside. You’re buying a Dell PC, but it has a great Intel chip. We want to do the same with learning. It’s Kahoot inside, but it’s about you and your company’s look and feel and content. That’s the center of training. It’s slightly different from what you see from a lot of other companies.

Last but not least, we’re not selling ads. We’re not selling personal information. For us it’s about you as a software user, whether you’re a teacher or a business. You have full control of your content, how you use that content, and who you use it with.

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