How an Ed-Tech Giant Went from $1.5M to Total Shutdown in 1 Year!

In a shocking twist, the CEO of a startup held a sudden online meeting and dropped a bombshell: the company is closing down immediately. This news stunned everyone, even the investors who had recently given the company a whopping $10 million. So what happened? This is the story of Lido, a company that taught kids various subjects like Math, Science, English, and coding. But they did things a bit differently. They focused on small groups and aimed to be like the friendly neighborhood tutor. They even made learning fun by rewarding kids for doing their homework. So why did a company that seemed to be doing well suddenly close down? Lido's main problem that led to its downfall was its financial difficulties. If you take a quick look at their financial situation, you'll see the story: In one year, their revenue went from about $500,000 in 2020 to $1.5 million in 2021, which sounds great. But at the same time, their losses went from $5.7 million in 2020 to a huge $7.7 million in 2021. They tried to get more money from investors, but it didn't work out because 1) They were expecting a massive investment of over $100 million from ByteDance, the company behind TikTok. But this fell through because India had banned Chinese apps. 2) They also hoped to get an additional $10 million from Cure.fit's Mukesh Bansal. However, Cure.fit had its own problems because of COVID-19-related closures of fitness centers, so this deal didn't happen either. But the need for more money was just the tip of the iceberg for Lido. They had deeper problems: 1) Pandemic Challenges: Lido's way of selling its services was similar to another company called Byju's. They had people who went to customers' homes to sell their products. However, when the pandemic hit, they couldn't do this anymore, and their growth suffered. 2) Questionable Hiring Decisions: During the pandemic, while they were cutting pay for their existing employees, they were also hiring new people. Many of these new hires were friends or family of top management. This was revealed in interviews with anonymous employees for Forbes. These new hires also spent money on things that didn't help the company, like social media ads that attracted negative comments and hurt Lido's reputation. 3) Unhappy Customers: Lido had a big problem with unhappy customers. If you looked at their social media, you'd see lots of people asking for refunds and complaining about their poor customer service. This issue started a while back. They offered a 15-day free trial, where people could get a refund if they didn't like the classes. But many people didn't get their refunds, and Lido's customer support didn't respond to their complaints. Indeed, on top of everything else, they decided to use the $10 million they received in September 2021 to begin working in other countries like the United States and Canada, despite the fact that they still had problems in their own home market that they hadn't resolved. In the end Lido's story teaches us that the desire to grow rapidly can sometimes lead to poor decisions. Not every company needs to aim for rapid billion-dollar growth right away. Some successful companies, like Zerodha and Zoho, have grown steadily and patiently. So, startups need to decide if they want to focus on careful, step-by-step growth or take big risks to become huge quickly.