Pakistan’s first EdTech company acquired in a deal sub $100 million
360training, a Pakistani-American e-learning platform for industry-focus skills, has been acquired by a New York-based private equity firm, PWP Growth Equity. While the financial details of the acquisition were not disclosed, it is being characterized as a deal worth ‘sub $100 million exit’.
It is one of the largest transaction in the past decade of the technology ecosystem of Pakistan, involving three entities tied to the 360training holding company. This includes the Pakistani entity represented by Hader Mota Law Firm, an entity in the Philippines and the US-based entity itself. The transaction came together with an approval from National Competition Commission of Pakistan, a regulatory body that ensures healthy competition between the companies to benefit the economy.
From kickstarting a startup across two countries to a successful exit over a decade later, what are the lessons that can be learned from the first Pakistani-American EdTech company, 360training? TechJuice asks Founder & Former CEO 360training, Ed Sattar.
“At the time of acquisition, 360training had 1500 e-learning partners, 4 million users in 176 countries and 400 employees across US, Phillippines, and Pakistan.”
In 2000, Sattar kickstarted 360training in Austin as one of the first e-learning companies in the region. A decade later, it also became one of the largest e-learning company in Austin and the sixth largest growing company in the US with over 1500 e-learning partners, 4 million users in 176 countries and 400 employees across Pakistan, Phillippines and the US.
In 2003, a Karachi office was established to handle local operations. When the company launched its operations in Pakistan, Sattar was residing off-shore and hired remote employees from Pakistan. A big chunk of these first employees were women who at present hold a notable position in the industry such as Bina Shah, author & columnist, Salma Jafri, content strategist, and consultant, amongst many others.
What were the challenges faced in running operations across two countries?
At that time, there was no company in Pakistan who was working on the concept of e-learning. This resulted in Sattar losing valuable employees as they did not see their career path winding up to a destination. Therefore, in mid-2004, Sattar established an office in Karachi and started recruiting people. The company started growing and started reaching out to major banks and multinational companies to deploy e-learning modules for human resource development. The response was lukewarm as businesses at that time, were struggling to address the need for investing in human resource. Therefore, 360training was unable to secure any business in Pakistan.
The infrastructure of the Pakistan office was set up to run every function as the US office. The local office was running all technology functions, industrial design, customer support with light-weight sales and marketing. E-commerce had just emerged as a new concept, and 360training started capacity development of its Pakistani employees to harness this new concept that will drive critical internet businesses in the year to come.
“Frequent power and internet disruption produced a major hurdle for the Karachi office that required connectivity at all times.”
However, the infrastructure started suffering. Frequent power and internet disruption for indefinite periods of time produced a major hurdle for the Karachi office that required connectivity at all times. The company also started facing some safety issues in their Karachi office. By 2010, when the risks exceeded the limit, 360training decided to set up an office in the Philippines.
Sattar believes the real estate cost in Pakistan holds back a lot of entrepreneurs and small business to find a strong foothold in the market. Shared office spaces also tend to be expensive. Real estate is the safest investment in Pakistan. Therefore, Sattar believes,
“The Government should pave the way to allow stability in different sectors so people could invest and real estate does not become too concentrated as an investment avenue. Moreover, imposing higher property taxes will make investors do not hold the estates for too long.”
Being a US based company, the company also struggled when transferring funds between the US and Pakistan due to some regulations by the State Bank of Pakistan. Sattar still finds it a pressing issue and believes that unless payment channels are simplified, foreign companies will hold back venturing into Pakistan.
The same year, they flew a lot of key team members across US, Pakistan, and the Philippines. By this time, the company stopped facing any employee retention issue and emerged as a strong technology brand in the ecosystem. At this time. the Philippines office had close to 85 team members while Pakistan office comprised of 145 employees.
When did you realize that it is time to let go?
Self-awareness is key for any leader. Sattar started realizing that he had stacked up and it was time to pass on the baton. He was also receiving some acquisition offers and therefore, he started preparing for the exit. He shares,
“Every leader needs to understand that their leadership quotient will take them to a certain level. The leadership and management style that got me to 400 employees, was the maximum that juice I had. If I continued on with that, the ability of 360training to grow would have been detrimental.”
Looking back at the journey of 360training, Sattar is content that it provided a launchpad for various team members to kickstart their own technology ventures not just in the US or Pakistan but around the globe. It also set the benchmark for operating an ed-tech platform on a global level.
What is your advice for young entrepreneurs exploring the ed-tech space?
In the initial days, 360training had a difficult time building the capacity of junior team members as it had no middle tier management that can be a guiding force. Sattar realized that middle tier management is the backbone of the company that drives the whole organization. He suggests leaders to actively develop their team and put trust in them. In times of failure, Sattar wants them to be proactive.
For entrepreneurs kickstarting their ed-tech ventures, Sattar suggests,
“The most important thing for entrepreneurs is to understand the market. Technology is not the difficult part, but the market
analysis is. Your analysis will drive your strategy. The strategy will drive the plan and the plan will execute processes. If the analysis is poor, the end result will suffer. Therefore, be it Pakistani or international market, always understand B2C and B2B market to make a cognizant decision.”
Sattar continues to have a minority stake in 360training. He has also kickstarted a new venture, QuickStart, a cognitive learning marketplace for IT Skills. He is also a Board Member of Moneta Ventures, a Sacramento based early-stage VC firm and has formed Sattar Ventures with an objective to drive investments into the ed-tech ecosystem.
Image Source: Orange Smiles