Children's literacy goes online

Jon Smith isn’t a teacher. Before the London Business School MBA graduate co-founded Pobble, he was a civil engineer. But that hasn’t got in the way of him co-founding an online venture that has inspired over 65,000 children in their reading and writing. Where did he get the money to do it? His customers – the forward-thinking schools raising their literacy game.

Jon’s brother, Henry, is a primary school teacher and a literacy specialist. When he saw the impact that STEM based technology tools were having in the classroom, he wondered why there was nothing similar for reading and writing. He didn’t wait long to do something about it. Teachers often use ‘examples’ of children’ writing in the classroom which they get from textbooks – by authors – or actually write themselves. It irked Henry and many of his fellow teachers that there was no database of real, hand written examples of children’s writing to use. “Henry would show the children his own writing, pretending an eight year old child had done it, and they’d all lose interest,” Jon says. “So we started to share actual handwritten work via a Word Press blog and shared it with a network of teachers. Teachers are great at sharing things.”

Starting up

The brothers soon teamed up with two other teachers, who are all co-founders. They made the blog free, everyone loved it and it soon became an online community. “We soon realised we had to get a business model,” says Jon. They were all in full-time jobs and time was poor, so they started things in the most economical way they could, putting together a creative writing workshop that they knew head teachers would buy. “We were quickly overrun with bookings and realised that we were pricing ourselves too low. There was little science around the pricing, we simply responded to customer demand.”

About six months after their launch day they decided to use an online subscription model. Up until that point the online platform had been a free tool. “It took some time to work it out – that it would be a good revenue cycle. Then we had to think about raising a bit of capital,” John says.

This capital however, wasn’t venture capital. It was customer funded capital. Because schools do their budgets in April the group realised that if a few schools would buy into the online product – before the Pobble team had even built it, truth be told – they would sign up and pay them with cash in advance. “Cash for schools is no problem because they get their money allocated in April, so paying us in August is fine,” says Jon. “We had something like 80 subscriptions ahead of time so we were able to bring that money into the bank account. We used that cash to fund the developers to build the product. We found out about SEIS funding, which is a brilliant UK funding initiative which means people can fund your business with very little risk. So we took our SEIS funding of £150,000 which enabled us to get more teachers to go into schools and get more customers.”

The power of community

When the group came to the point where they needed a little more financial backing, once more, they asked their customers. They crowdfunded, asking the teachers already enamoured with their product to invest five or ten pounds to get it further off the ground. “It was a PR exercise as well as a funding one,” says Jon. “The story of Pobble seemed to appeal to people on a feel-good societal level too.”

By this point, it was clear the business was a big hit. Children loved writing and sharing their work, but everyone wanted more. The group soon saw the scale of the task ahead of them. “At a school there’s the head teacher looking at the Pobble dashboard to see who’s using what and how, you’ve got each of the teachers managing a class, each of the children have got their own login so there’s safety and data protection issues around that,” says Jon. “The schools also need to connect with the parents. The backend of the tool needs to be far more complicated to do that. We took the decision to raise more money and accelerate that growth.”

Because they had already hired additional teachers, revenue had increased too and they were able to add really good developers to the team before closing the second funding round. “We had investors saying ‘This is great, but do you really have the tech expertise to be able to develop to this level?’” says Jon. “Because we had made a really good start on the platform before we approached investors, we were able to say ‘Look, we’ve done this already and see how much we’ve achieved.’ It made a compelling case for investors.”

The future is customer funded

Pobble has grown and grown. The platform has shared 64,000 pieces of writing this year. Everything appears in children’s own handwriting, much to the delight of parents, grandparents, aunts and uncles all over the UK. “They love seeing what children are doing at school and engaging with that,” says Jon. “Peer to peer assessment is getting bigger. Children also enjoy looking at each other’s work and talking about it.”

Does Jon think he’ll have to raise larger amounts of capital at some point? Because of their funding model, they managed to take £250,000 in cash from their schools before this academic year even started, so they look pretty good right now without raising funding. “If you look at cash flow and cost, or cash out, that puts us in a very good position,” says Jon. “If we want to go international we might need extra financing for things like legal and compliance for setting up in other countries. But we’ll cross that bridge when we come to it.”