Ed-tech Investments in the Aftermath of the Pandemic with Denis Nikolaev, Head of Ed-tech at Prosus

“An interesting complement to the use of AI in education is collaborative learning.”
– Denis Nikolaev

The pandemic has been a game-changer for the education technology landscape, helping parents, corporations, and investors experience first-hand and realize that online delivery of content is often more efficient, allows for more personalization, and is more convenient. On this episode of the On Work and Revolution podcast, Debbie Goodman is joined by Denis Nikolaev, head of EdTech investments at Prosus, one of the largest technology investors in the world. 

Debbie & Denis discuss:

The 3 major mindset shifts that emerged post-pandemic
✓ The impact of AI and ChatGPT on teachers, education, and testing methods
✓ What’s innovative and forthcoming in the space of EdTech investments

About our guest, Denis Nikolaev:

Denis Nikolaev is the Head of EdTech Investments for Prosus, where his team identifies and invests in innovative global companies that are disrupting the future of education across K-12, higher and professional education, and workforce training.

The Prosus EdTech team has invested over US$3.5 billion in a portfolio of twelve companies globally, including Stack Overflow, Udemy, GoStudent, Byjus, among others. Prior to his time at Prosus, Denis worked as an investment banker at Citigroup in London, where he helped establish the Internet investment banking team.

Denis earned a bachelor’s degree in Economics from the London School of Economics and Political Science and a master’s degree from Saïd Business School at the University of Oxford.

Helpful Links:

Follow Denis on LinkedIn

Open for Full Episode Transcript

Open for Full Episode Transcript

Debbie Goodman  00:04

Hello and welcome to On Work and Revolution, where we talk about what’s shaking up in the world of work and education. I’m Debbie Goodman, your host, and today we have as our guest, Denis Nikolaev, who is head of ed tech investments at Prosus, one of the largest technology investors in the world. And whilst you may not necessarily be familiar with the Prosus brand, if you’re in any way connected to the ed tech world, you’ll definitely have heard of the companies in their ed tech portfolio certainly. In fact, Denis’s ed tech team has invested over $3.5 billion in a portfolio of 12 companies globally, including Stack Overflow, Udemy, GoStudent, Byjus, amongst others. You’ll definitely have heard of some of those. Prior to his time at Prosus Denis worked as an investment banker at Citigroup in London, where he helped establish the internet investment banking team there. He has a Bachelor’s in Economics from the LSE, London School of Economics, and Political Science and a Master’s degree from Said Business School at the University of Oxford. Very well educated fellow. And today we’re going to talk to Denis about what’s going on in the post pandemic world of ed tech investments, how the recent spate of AI tools like ChatGPT and Bard are going to impact the sector, as well as hear his take on new interesting areas of innovation in the ed tech landscape. So listen up, and welcome, Denis.


Denis Nikolaev  01:41

Thank you. Great to be here.


Debbie Goodman  01:43

All right. Well, first, I’ve got a career question. I follow the arc of people’s careers. And I’m really curious to know how and why you decided to find yourself specializing in ed tech investments of all things.


Denis Nikolaev  01:59

So I’ve been at Prosus and Naspers now for over four years. And I started having come from investment banking background. I started in the group M&A and investments department. So I’ve been more of a generalist, although always focused on the technology space, but I haven’t specialized more narrowly, at that point. And having spent a few years doing sort of M&A, and investments for the broader Prosus and Naspers universe, I decided that it would be interesting to, you know, double click on one of the large verticals, that Prosus and Naspers has been investing behind and become, you know, more of a specialized and expert in that area. And ed tech was, frankly, a natural choice. It’s one of the youngest, if not the youngest segments that Naspers and Prosus have strategic interest in. And it is still very early in its development. Naspers and Prosus have been lucky to observe over the years how verticals within technology and internet startup and then grow and then become, you know, an established part of the day to day life, over the years and ed tech, I feel, is still at the beginning of the of that path. And therefore, I saw a lot of exciting developments in the industry to come over the years. And hence it was really interesting for me to explore that area deeper.


Debbie Goodman  03:39

And also, I mean, if we think about it, ed tech, and its uptake was really not widely taken up until really the pandemic. I mean, the pandemic was this massive catalyst for the growth of the sector and a really positive catalyst for education technology. Many companies just like found their raison d’etre during this time. And then there was all this potential for growth and so much capital that was being raised and invested. I’d love to hear your take on the impact of the pandemic.


Denis Nikolaev  04:12

The pandemic clearly was a game changer in many ways for the education technology landscape. And companies have, of course, existed, pre pandemic that have been pretty big and successful. But I would say there have been a couple of areas where ed tech has not fulfilled its potential pre pandemic, there hasn’t been a widespread consumer acceptance of the fact that it is possible to get high quality education online, right? So that has not been an established fact yet by any means. Parents in most geographies still sort of strongly preferred to have an offline experience for their children and the online content almost, you know, was considered as at best supplementary, but in no way a substitute for the real thing, right? And on the other hand, investors, apart from a few notable exceptions have not yet made good money in ed tech, right? And both of these have combined to kind of make ed tech something, you know, that everyone agreed was super promising, but something that hasn’t yet arrived, right. And the pandemic has really changed that mindset, has really caused a pretty substantial shift of that mindset. Because, you know, parents, on one hand, parents and frankly, corporate, they had no alternative. Suddenly, overnight, they had no alternative, but to offer training and tutoring and content to their children or employees through online means. Companies that have historically been focused on maybe at best a blend of companies on the on the education supply front, I mean, that have been focusing historically and best on a blend of online and offline, they had to, again, overnight, really transition to a purely online offering, but we needed to make some very rapid investments. Usage of these online services has just skyrocketed. And that has, that has changed the view of people, and we feel it changed the view of people irreversibly, right? So we’re not going back to the pre pandemic days in terms of that mindset. Everyone that often online is a more efficient way of delivering content, right. And it allows for much more personalization, and allows for much more, you know, tailoring of content to the needs of specific learner group, etc. It’s just logistically often more efficient. We were investors in a company called GoStudent, which is connecting students to tutors, mostly out of Europe, school age typically children. And if you think about it, an offline tutor needs to travel to your home, as a parent, let’s say they need to an hour there and then travel back and need to get paid for all the time. If now suddenly, they can fill their schedule, in a much more efficient way through online, maybe they can even do it for a lower price for the consumer. And for the consumer it’s also more convenient. So that realization has come for sure, right.


Debbie Goodman  07:37

Yeah, I mean, during during the pandemic, I remember my kids were taking online piano lessons. And I was like, how on earth is that going to work? The piano teachers may have figured it out. I mean, teaching an instrument online actually happened, something that was completely unfathomable. Before, if you’d said to a parent, yeah, we’re going to we’re going to teach your kids an instrument, and we’re not going to act, it’s not going to be in person, they would have thought you were bonkers. But it happened very effectively. And then after that, I was like, now I’ve got to get in my car and schlep across town in LA, to go take my kids for a piano lesson. I didn’t really feel like doing that anymore. So yeah, and so it stuck.


Denis Nikolaev  08:15

It stuck. And then if you look at the sort of metrics of, of usage that all major online platforms have sort of seen. It all skyrocketed, of course, during the pandemic and then the interesting thing is interesting question that we’re now asking ourselves is, what’s the new normal in the post pandemic world and that the picture is crystallizing, to some extent as the restrictions have been lifted in most geographies. And, you know, I think there’s been, I would say, there’s been a broader, you know, bifurcation on the B2C side. The tailwind of the pandemic has been tremendous, in a lot of cases, right. And then in most instances, there’s been some sort of reversion to the growth trend that has been there pre pandemic, right. So there’s been a strong boost and then there’s been maybe either a bit of a, you know, decline or maybe a plateau. But there is some slowdown, if you look at year on year metrics. Let’s say this year versus the pandemic restriction periods, there is somewhat of a slowdown, although of a higher base, right. So overall, the pandemic has definitely increased the user base, but now the growth isn’t obviously as meteorical anymore, as the restrictions get lifted.


Debbie Goodman  09:34

And can I ask you a question? How do investors feel about that? Because a lot of capital gets raised on these big growth projections. And the reality is you can’t keep growing at that pace, year after year. And there was this massive boost at the pandemic out of necessity. And now it’s just logical that things would not necessarily plateau but grow at a much more moderate pace and how do investors, did you build that into the model? Or how do they feel about it?


Denis Nikolaev  10:04

So I think here, you know, there is an interesting overlap between two impacts. One is the COVID boost and then, let’s say normalization, right, which frankly, people have been capturing. I would say, like, no one expected that this will be just now this exponential growth forever. But then it also, of course, overlapped with the financial, with the financial and macro headwinds that we’re now experiencing. Because if you look at 2021, which has been maybe the last year of where pandemic restrictions were still in full force was also a year where there’s been sort of incredible monetary easing, and all that stimulus issued by governments that have caused a huge amount of liquidity and then 2022 has been a year where realization came in that this causes inflation, right? Interest rates started to increase. It’s very difficult to say what impact is really causing one because there’s like, a couple of inputs, one is specifically related to the COVID tailwinds for the industry. The other one is related to the broader micro and financial landscape, I would say. But I think across the tech spectrum, definitely, there is a normalization of expectations occurring, right? As the micro environment is now much less favorable. There’s much less tailwinds from things like quantitative easing. Overall, tech investors are becoming much more sober, I would say about what can a company really achieve in this environment?


Debbie Goodman  11:44

And so if you have to comment on the sort of the pandemic aftermath, the little bit of the hangover after the big party, that the entire ecosystem has been enjoying with lots of promise and hope, but surely some certainly realization that this could not possibly go on forever. What are you seeing now, in the aftermath of the big growth phase?


Denis Nikolaev  12:08

There’s definitely more realism, right, that, you know, some investors sort of spurred on by the combination of COVID tailwinds, as well as this sort of favorable micro environment have maybe been a little bit too enthusiastic, let’s say in the year 2021.


Debbie Goodman  12:25

Listen, we love investor enthusiasm, right? I mean, we’re happy with that.


Denis Nikolaev  12:29

We’re happy with that. But sometimes it causes things like, you know, overheated valuations in the market, and that at some point become unrealistic and unsustainable. Definitely correction in the market since then. And it’s been across all tech, you know, and ed tech has not been insulated from that by any means. All tech names are, if you look at even the public markets are substantially down since their 2021 picks. And now, I think there is a discovery process of what is really the new normal growth level, what is really the new new profitability potential in the post pandemic world? And, you know, frankly, some companies are doing better than others. I mean, in our portfolio, we are pretty happy with how the companies have been managing this transition. And our portfolio is very broad, right. So it covers both B2B as well as B2C focus names. It covers K12 focus names and professional focus names. So we have a pretty broad lens on the development of the ed tech space, the headwinds, the tail winds, and I’d say, sort of, we’re guiding our companies now to as I’m sure everyone or most investors are to really look forward. And, you know, aim to balance solid growth with healthy profitability or healthy path to profitability. That has definitely always been the focus, but I would say the balance has shifted significantly from sort of growth, growth growth, which we’ve seen in 2021, to more like any grow but sustainably and profitably. And that is very true for ed tech. That’s also true for other areas of tech, I think.


Debbie Goodman  14:14

Completely. Yeah, no, that’s just across the board. All of a sudden, the P word made a re emergence, like actually, we’re in this to make some profit. Just remember that. That became sort of front and center certainly over the last year. Okay, let’s switch and talk about AI and particularly ChatGPT, which is just it seems like it’s dominating every single conversation that I have right now, regardless of industry, regardless of context. ChatGPT and Bard obviously made it sort of half appearance a couple of weeks ago and keen to hear your thoughts on the impact of these tools.


Denis Nikolaev  14:53

So it’s fascinating, frankly, and this is something we talk about all the time now. We have a sizable AI team at Prosus and Naspers that work with all our portfolio companies and have been doing that for years now to, you know, develop ways to use AI and AI driven tools in the businesses that the companies are in. And we have a pretty early lens on what these tools can do right. And we have been experimenting and implementing some of those tools and well ahead of the recent explosion of interest that has been spurred on by ChatGPT becoming sort of a publicly available tool. But I will say that, you know, ed tech as a sector has generally been punching significantly below its weight in terms of using and leveraging AI, right? I remember we did a bit of a sort of thought exercise, what in which segment, the potential for AI use is the highest across all the segments we’re playing in and where the gap between the actual use and the potential is the highest and ed tech was firmly sort of, currently on top, right. The potential is huge. But also, the extent to which companies are leveraging it was until recently pretty limited. And I think the potential is, potential is truly tremendous. Because, you know, personalization is something that is the holy grail. Ed tech, everyone is trying to achieve maximum personalization to enable the learner to follow a very unique path, rather than a boilerplate sort of template that is good for some, but not really suitable for others. And machine learning and AI can can really help with that. And I feel like now this explosion of interest is making every ed tech CEO scratch their head, and if they haven’t already been firmly on this journey to really think how can I make this part of my offering? So it will impact everything, starting from K12 all the way to professional. And problems are multi multifaceted, right? On one side, there’s a question of, you know, maybe certain ways of learning and testing might be gone, right? Or might be much more challenging, like essay writing.


Debbie Goodman  17:18

I mean, the essay itself as a learning measure or tool. It’s having an existential crisis right now. Because the amount of kids at all levels of schooling and certainly higher ed, that are already leveraging ChatGPT to at least provide the base of an essay. I’m not sure what the numbers are now, but they’re increasing on a daily basis.


Denis Nikolaev  17:43

Exactly. So that’s, that’s on one hand. And on the other hand there is a question of, well, how this will impact the teachers, right? Because, you know, some even in pirate shape, ChatGPT can maybe act as a teaching assistant, in some instances, right. But maybe with the next iterations, it could even in some instances, act as a teacher, and who knows what that leads to. Now, on the other end, we have some limited historical precedents that maybe give a little bit more reason for optimism on that front, because look, if you look at the calculator, right? The calculator, once it appeared, it kind of, you know, one could have said it would invalidate, always on assessment related to mind math, but then, you know, the schools adapted. Now they have tests where you can use a calculator and then just testing high level skills. And, you know, it may be that something similar eventually happens here, where writing a basic essay without original thought would be considered table stakes, because you can use ChatGPT for that, but the tests will actually focus on ability to innovate and engage in more creative thinking. So it’s ultimately very exciting. And we’re in the very early days of this, but one thing that’s clear, I think, is that this is just not going to go away. I mean, this has arrived and it’s only gonna get better.


Debbie Goodman  19:14

A colleague and friend who’s in the work of Futurism, has said, the AI is the worst it’s ever going to be right now. It’s only getting better. So you know, I in fact, what I’ve just played some games with for myself is I usually write a bio an intro on my guests. And either I get it online or ask somebody to send me a bio, but I’ve just asked ChatGPT Denis Nicolaev, I need a bio. Anyway, ChatGPT thinks you’re someone else, just to let you know. So fortunately, I’ve verified that. But in a little while, the errors that are coming up are going to be erased and it’s going to be the most incredible tool but yeah, definitely confounding a lot of things. You know, stakeholders in every ecosystem are trying to figure out what the impact and opportunity is. But I’m glad to hear it’s so exciting and that the ed tech sector really not yet fully developed in terms of what those those opportunities could be. I think that the most exciting part of your job must be getting access to the cutting edge innovation. All the new things that are happening in a sector, which is always interesting and exciting to me. Okay, AI is here. And we know that that’s gonna only get better and evolve, but what’s new and innovative in your space?


Denis Nikolaev  20:34

Right, new areas that we’re excited to follow over the coming months and years to see what where that leads to, you know, this is in no particular order. But I’ll just, I’ll just kind of give you a few snapshots of some exciting stuff that we’re seeing. So one area, which actually, I think will be a very interesting complement, to the use of artificial intelligence and AI in education is collaborative learning, right? So it’s, it’s learning, which is, which is sort of, to some extent, at least focused on the social element of it. So students learning side by side helping each other. And something that’s been occurring in classrooms for decades, obviously. And is there a way to, in a smart and scalable way, move that online, and there are a few exciting companies that are working on that. And it feels like in a world where AI plays a more significant role as an educator, right, having that social connection with a peer would be actually quite valuable and will not go away at all. So social learning and leveraging your peers rather than, you know, a centralized teacher figure for, you know, clarifying things, making mistakes, jointly figuring them out. This is something which I think is quite interesting to observe.


Debbie Goodman  22:05

Yeah, well, I can I can vouch for that. I mean, I don’t if you if you have kids, or teenagers, I’ve got two teenagers, and they literally are online with one another whilst they’re doing their homework, and they don’t even talk to each other from time to time, or they do they have these like, kind of coexisting study groups that are a bit informal, but that’s how they learn. And they’ve been doing this since the pandemic, it’s a natural way for them to engage.


Denis Nikolaev  22:29

It’s very natural. And, you know, if the right platform offers the right tools for that the growth can be quite significant, right. The other area, which is, which is pretty interesting and promising, I would say. You know, now it’s a little out of vogue, but I think at some point it will make a comeback is the whole VR AR metaverse thing, right? And I’ve read an article that I think metaverse as a term has declined in popularity over the last year like 80% or something like that. So it’s definitely out of vogue. And I think, you know, Meta and their humungous spend in that area didn’t sort of make investors any more cheerful on that front. But at some point, my personal view is that this will, this will arrive, right, that moment just hasn’t happened yet. And many companies, many exciting and good minds are working on creating a learning metaverse, right? And I’m a parent as well and my 12 year old daughter, all she wants to do in her spare time is be on Roblox, right? And Roblox is arguably the best and most widespread metaverse in existence today. A lot of companies are struggling with the with a huge prize of you know, creating a Roblox for learning. And something which is cool, interactive, allows children to take on cool avatars yet also helps with their learning objectives, right. And several companies are trying to build something like that, including ed tech as well as new, smaller tech innovators. It feels like there should be something there but that is probably a longer term horizon. Because at the moment, it feels like there’s a bit of a metaverse winter for a few years maybe.


Debbie Goodman  24:36

Okay, I’m wondering though, because it does seem like there’s still a lot of bubbling under the surface around around VR and AR. It seems like a natural next step for for learning. I wonder about that time horizon. Maybe just, you know, AI in the form of ChatGPT to the consumer just like landed suddenly, but it’s been just going on in the background for a while already. I actually read an article, it was produced by a16z, on all of the different AI entities, tools, companies, that are around that we just don’t necessarily know about as consumers. But they’re there. They’ve landed. They’re in development. They’re growing the next steps regarding AR VR. I think we’ll speak in a sooner time than a few years and go, Wow, that happened sooner than expected. Or maybe not. Denis, it’s been such a pleasure to have this conversation. Thank you for joining me. I hope you have an amazing year of investing. And I hope portfolio companies continue to grow and thrive. And we’ll speak again and see if your predictions have come true in the investing world.


Denis Nikolaev  25:44

Thank you very much. It’s been a pleasure.


Debbie Goodman  25:46

Thank you so much. Bye now. Thanks for hanging around all the way to the end. It would mean the world if you would rate and review On Work and Revolution on your favorite listening app. It helps people know that the show is worth listening to. And so I will really appreciate that. Thank you so much.


Kind podcast reviews help us make awesome content for you!

This site uses cookies to provide you with a great user experience, analyse traffic and serve targeted content.