 Welcome to Miami, gateway to Latin America. And I'm here because at the start of this season I went on Twitter and I asked everyone, what is the company in Miami Tech that I need to visit? And everybody said Open English. Now Open English is a platform that connects people all over the world to live instruction as well as tutorials so that any Spanish or Portuguese speaker can learn to speak English. And what's so cool is this company started in Caracas. We're going to find out what brought them here to Miami. Hey man. I'm Alexis Ohanian, startup founder and Y Combinator partner. Over the last year I went on a 200 event book tour and met people building small empires all across North America. Now I'm back with a new season revisiting some of my favorite stops from the tour. The thing that makes software companies so attractive to venture capitalists is that once you have an app finished, the costs of scaling that business are really low. You could sell it at an app marketplace and costs for cloud software are getting cheaper every day. Startups who have to hire humans to grow face a much more challenging environment. If you have to hire a new salesperson, driver, or stock boy for every hundred new customers, that's going to eat a lot of your money. Open English, a language learning startup, is dealing with this classic conundrum. Its service is popular and can be distributed anywhere in the world, but the company has to hire salespeople and teachers to support that growth. The trick here is to make sure your costs don't outweigh your revenue, obviously. Otherwise, all the money and time that have been invested in Open English will fall by the wayside. Open English is the leading online English school in the Americas. So we are in 20 different markets, all Spanish-speaking, Latin America, Brazil, the U.S. Hispanic market. And what we created was an alternative for emerging market consumers to learn English that wasn't going to the brick and mortar school. We created Open English, which is available 24-7. You just open your laptop or your tablet. As we speak, there's hundreds of teachers working with our students today. We have a lot of students who are in the business world, and they're all ESL certified, they're all native. You pay a flat fee every month, it's very affordable, it's about a fifth of the cost of your traditional school, and you're going to get unlimited access to these teachers that are committed to your fluency. And actually what happens is that you're not just taking notes and learning the past progressive tense of a verb, you're actually talking and losing that fear of speaking, which makes a big difference when you have to go into a job interview, when you have to travel, when you have to do any of these things. It's invaluable, invaluable. If you don't speak English here, you know, you can't communicate. You're isolated, just like if you were back in Cuba or any other country. You know, worldwide, English has always been the language of business, the language that's opened the doors for you everywhere you went. The last year alone we enrolled about 100,000 people into the company, and you know, we're venture funded, we raised over $100 million from some of the premier VCs here in the U.S. Wow, alright, so you've been busy. We have been busy. Been very busy. I always had a passion for languages. I actually grew up traveling around the world. My dad is a diplomat, so I lived in nine different places. Got to see a lot of different cultures. And English was, I realized, not just a language, but as a tool for success and a tool for global communication. We see it as really a transformational step in your development. Normally I advise startups against running expensive television ads. The conversion rates usually are pretty low, and it's really hard to track how well you're actually doing. That said, most of the companies I'm advising are looking at the American market, not necessarily looking at the Latin American market. And what's so interesting about this is, for Open English, they found a way to build a brand through television ads. They found a way to build a brand through television spots, probably because so many of their market audience isn't spending a dominant amount of their time online. They're still watching a lot of TV. So the bottom line is, if you're going to do marketing, understand your market. Boom, boom, on the moon. Boom, boom, on the moon. Boom, boom, on the moon. Boom, boom, on the moon. We did a commercial agreement with a TV station in Venezuela, actually, where they helped us shoot a couple of TV ads. They were very simple. We put it on TV. That generated 60,000 leads that month. Keep in mind, we had a call center with three wireless phones in our small office. So it was like, okay, this is real. People do want this product. Yeah. How much of Open English's success is because of those campaigns? And in particular, how much of that can you attribute to your own ability as an actor? At the time when we started, we didn't have any money, so we needed somebody who was bilingual, and we both Latin. So I said, hey, Andres, why don't you do the other guy for this first commercial? And we see where it goes. And the first commercial went viral, and it was very hard to change the faces in the ads. So it's been, what, five years, and I'm still doing ads every six months. We go and we actually write our own scripts, and we micromanage that process a lot. We do a new ad every month. The last ad that we had, this ad called Persuasion, it got 12 million views on Facebook the day before it went on TV. So there's a whole following there that's just waiting for the next Open English commercial. And presumably you get stopped on the streets? Yeah, so when I go down to Lettam, it's a bit of a production. So we have these Israeli security guards. Wait, seriously? Yeah, they go with us. You can't get through the airport. The minute I sit down on the plane, people are Instagramming and tweeting and all that. And you get to the airport, and there's people waiting. It's a bit of a production. It's a good thing. There's different methodologies on how to teach English. The methodology that we find to be the most successful is immersion. We'll run 100,000 students through live instruction classes every single month. So we teach classes 24-7, every hour of the day, every day of the week. And so there's a lot of human interaction, right? So rather than you just trying to go through a lesson on your own, we actually supplement that with a lot of live instruction talk, a talk time with teachers. Now, this platform is designed for native Spanish speakers to be learning English. I wish I spoke Spanish, but we're going to still walk through. I'm pretty good at English, so we're going to walk through this process. We'll see. We'll see today for sure. Can you walk me through what we're doing right now? So we use a combination of methods to teach our students. So on the platform, the students can choose between practice units and lessons or live instruction. Practice allows them to watch videos and just really kind of go back and forth, say out loud, they can hear pronunciation. Live instruction, which is what you're seeing here, is speaking with a native English teacher. So unlike some other language programs, they actually have access to teachers 24 hours a day, seven days a week. And they're native English teachers, so they live across the world, but they're generally American-speaking English teachers. They can actually learn from their little village wherever they're at and really have that opportunity to speak with someone who speaks perfect English without an accent, which you don't see in most countries. It's really hard to find a teacher on site that is an American that speaks perfect English. These are highly educated professionals that come with a strong ESL background. So they are bringing a skill set to open English that we don't have today. We are contracting these teachers for a reason. We really hope to find teachers that have a great sense of empathy. This process, learning a language, is not easy specifically for an adult. So our teachers, we hope, that have had that experience, which is why we hope to find teachers that also speak Spanish or Portuguese. They've gone through the process before, and so they're definitely much more empathetic to how a student learns. We have a big marketing function that basically just drives a lot of traffic to our website, which we capture lead information and then basically we become a call center. We have a very aggressive sales team. We have a pretty consistent call campaign that will call you within the first 30 days to try to convert you onto a student. So all that started with a handful of people in an apartment in Venezuela, which then grew to a call center, which then expanded into the rest of the LATAM. Learning English is hard, so there's a lot of engagement that needs to take place. We'll call you when you're not logging on. So how many different call centers do you have right now? We have three call centers today. About 10% of our business is from Venezuela today. So we have all the call center operations supporting the sales and service of those students there. We then have the rest of LATAM, so all Spanish-speaking Latin America, is serviced out of Bogota, Colombia. And between sales and service we have another 500 reps probably there. And then we have started and launched Brazil, which is our newest market, but we've been there probably about 18 months. And when we started Brazil, we set up operations in Sao Paulo. So we have about 100 reps there across sales and service. When I think about this and where it is today, it is easy to get caught up with, like, holy shit, look at all the success. I want to go back. I want to bring it all back to where it started. I had literally $700 left to my name, and I bought a ticket with miles, and I took my $700. And I remember on the flight just feeling this sense of weight that my co-founder had told me, look, if you don't come back with a check and some way to sustain this thing, I'm out. I have to generate some money for my family. And pretty much everybody was on that same boat. So I literally had like a two-week window to actually get a check from someone. In a city I didn't really know anyone. And people there, they understood how to invest in startups, but they didn't really understand Latin America. So we're trying to sell them on this vision of an $80 to $100 a month subscription product for the emerging middle class in Latin America that we were going to promote through TV commercials. It was completely contrary to everything they were seeing. They were like, hey, but Netflix is $7.99. How are you going to charge $80 to someone that may not have a credit card in Peru? So it was very hard to raise money from VCs. And so we started raising money, $20,000, $50,000 at a time. It took two years, but we raised $2 million. And there were so many moments. I don't know if you believe in faith or God or you don't, but I think there were so many moments during that that the company was about to shut down. And literally something happened the day before that changed our course. And we would not be here if it weren't for that one person doing that one specific act. Open English has raised a little over $120 million. And I really hate it whenever I see fundraising announcements get celebrated as if it were some big milestone. Look, that's not your money. You're giving up equity in exchange for money that you'll put back into the business to hopefully grow it to justify that investment. In Open English's case, they want to open into a new market, Brazil, which is a different language, a very different culture. And it's a question of whether or not they can do it because that's what they have to do now. They have to grow, and it means expanding it to new countries. We'll see if they're up for the challenge. It can't be as simple as a find-and-replace, right? It's going to be more complicated. How do you go about launching a new country? Our platform is very English-focused. There's very, very little Spanish on our learning platform. So that does allow it to transfer pretty easily. The only thing I would say is there's some entry-level things. Like if you don't know any English, there's some basic stuff. So that's where we tend to focus our product and try to optimize it for the different levels of Spanish or Portuguese or whatever it might be. But even beyond that, I would say that's just from a product perspective. If you take a look at the people side of the business, right, selling to different countries, I think accents are extremely important and making sure that you have the right sales rep trying to convince you that you want to purchase the platform. And I don't think it's as simple as just one dialect or one approach. I think what Open English has been able to figure out is what is the value proposition by country instead of just trying to spread it like vanilla across the, you know, just icing the cake, right? Rather than just ice the cake, ultimately be a little bit more sophisticated about it and start thinking about individual markets. And how do you keep this scaling? Because software is great at this. Humans are not great at scaling. And when you're doing something like education where great teachers are such a fun little part of the business, how do you keep that growing and keep the quality of it the same time? I think it's been a little bit of our secret sauce, right, where lots of companies, even some in the U.S. that are doing language learning, they wanted to create great software, and they wanted to create software that would not require a human to teach you. And we always were of the opinion that you need a great teacher to succeed. And especially if you're learning a language, you need to be able to speak and have a conversation and feel comfortable, listen to different types of accents and understand them and get comfortable with your own voice. And so we went about using technology not to eliminate human interaction but to make it more efficient. What we did is we spent a lot of time thinking about, like, what are those core customer-facing processes that need to be standardized to a point that, you know, work but are still able to be localized? And we basically automated all those processes as much as we possibly could, and then we supplement them with, you know, bodies when necessary. Speaking of things that aren't scale, right, how do you build and maintain a great network of instructors? I think ultimately if you can set up good operations where you have a funnel that is constantly out-marketing the new teachers, bringing them on, applying that they fit Open English, and then setting them up for success, you know, at Open English, you're always going to be ahead of other growth. Do you think there's any kind of an upper bound to that, where you just, the demand for teachers just outpaces your ability to create the supply? I do, I don't foresee us running out of teachers. I think we may have to change our ways, right? We may have to be a little bit more innovative on how we go out and we find those teachers and we bring them on. And I think Open English has built a brand in the marketplace as well where, you know, teachers are reaching out to us. Now we're very picky with who we allow to become teachers, and I want to hold that quality standard at a certain level, so we want to maintain that, but I think that we'll be able to figure it out as we move forward. So this software, this is Blackboard? Yep. So you've built on a curriculum, and then you didn't have to write your own software for this, you're just using Blackboard to power the actual teaching? Correct, we use Blackboard Collaborate, and it essentially just allows us to access our students across the world. Is there an option for video? The teachers are able to, and actually students are able to do video. We don't use video for the most part because most students in South American countries don't have the bandwidth to handle it. Sometimes the teachers will try and kind of see, but if any of the students has an issue, we don't want to cause a problem with them. Sure. Are we doing well in this class? I can't get a sense because of our lack of participation. I don't think so, probably not. We're getting lapped right now. For companies that are here in Miami today, getting started, or maybe they want to start their company here, what are the strengths of the Miami tech community? It's very tough too. If your main market turns out to be Latin America, it would be on the West Coast, you have to fly for a day and then get down to Sao Paulo or Argentina or Bogota or Mexico City, so move the company to Miami. You can be in a place where it's highly international, highly diverse, right? The climate helps, right? But now on top of all of that, which is fantastic, you actually have a really cool cultural community. I basically went to Twitter and said, I'm coming to Miami, what is the startup I need to meet? And everyone said Open English. Well, I mean, Andres is just crushing it, right? What is it going to take to create more Open Englishes here in Miami? We need to sort of create more stars and to turn those stars into funders and mentors of the next group coming up. That sort of virtuous cycle, of course, is the big prize that all cities are after. And so a guy like Andres is now on the board of Endeavor, which is all about finding those high potential entrepreneurs and turning them into stars, and then having them then become the next, helping the next group coming up. There's two and a half million people in Miami, and about 40% to 50% of those people have not reached the 12th grade, and half of those people never reached the 8th grade. So, you know, we have a difficulty attracting major technology companies to come down here to South Florida, because these companies are looking for people who are trainable. You know, this is a service community. So a lot of these people that work here is all, you know, cleaning hotel rooms or cafeteria servers or, you know, whatever it is, because of, you know, the lack of the language and the level of education and so on and so forth. And so what's the future of Open English? Where is this going? Gosh, well, you know, we are still continuing to deepen our presence in Spanish-speaking Latin America and in Brazil. We feel like we're just scratching the surface. We've already enrolled about a quarter million students in the region, but we think that, you know, we should be 10x the size in the next few years, because there's so many people that need English as a tool for success. Now that we understand the power of EdTech and how it transformed the lives of our students, what else can we do to further that transformation in their lives? And I think we're talking a lot about that currently. And perhaps my most important question, when are you going to appear in one of the commercials? I won't be appearing in commercials. Never? That's Andres' thing. I'll let Andres appear in the commercials. You're selling yourself short. He's the face of the company, so I'll let him participate in the commercials. All right, well, you'll be busy running the operations. I will be behind the scenes. Great startup communities are born when entrepreneurs realize the unique strengths of their cities and then embrace them and utilize them. Open English is doing just that. Remember, this company started out in Caracas and it moved to Miami. All those jobs, all that innovation could have stayed in Venezuela, but it came to the United States of America. And clearly, more and more companies are going to be involved in the Latin American market. As that region continues to develop, there are going to be more opportunities. And I want those opportunities to happen in the United States. We've already got companies like Open English that are leading the way. The question is, who will follow? Open English is conquering the already crowded field of online language courses. But by keeping things focused and simple, it's quickly standing out among the rest. So how can you use these same ideas to make your business succeed? Try starting with your website. Make sure your site is responsive and is easy to use across all devices, as well as giving customers the ability to make their online purchases using phones and tablets. Try utilizing services like PayPal for easy mobile payments. And most importantly, keep everything simple and focused. Learn what your customers want and rid your site of any confusing extra features. You'll be on your way to success in no time. For more business advice, check out AT&T's Business Circle.