Daybreak - Daybreak Special: Stoa School is dead. Long live altMBAs.

Episode Date: June 28, 2024

Four years, 15 cohorts, and roughly 1,500 students later, Stoa School has shut down. The poster child for alternative business-school education in India is no longer accepting new students. What went wrong? And what does it mean for India's altMBAs?  Tune in to find out. P.S. While you are here, check out the latest episode of The Ken's careers podcast The First Two Years, where host Akshaya Chandrasekaran delves into how to build trust with colleagues who don't trust you. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too? It's for a special announcement. For the last few months, I and Sita Raman Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the same. secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they managed to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into.

to the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert, as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcast. or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode.

The poster child for alternative business school education in India is dead. I'm talking about the Bangalore Bay Stoa School which literally introduced India to the concept of the alternative MBA. Stoa has said that it is no longer accepting new students. So we are going to dive into the story. of Stoa today. And for that, we need to start right at the beginning. 2020.

This was the year Stoa introduced its revolutionary six-month part-time MBA program with a focus on the startup ecosystem. And with that, it started a whole new trend. Very soon other companies like Uppraised, MESA, Masters Union, all started following that trend. But what even is an alternative MBA? And how is it different from a new business? your regular run-off-to-mill MBA.

So the script is pretty simple. They tell you that you don't need to give up your employment to be educated. This will be not as expensive as the other programs out there. It'll be shorter too. Like, it'll be six months. And at the end of it, you'll have enough skills and a strong enough network to enter the startup space. So these Alt MBA programs are exclusively for breaking into.

to the startup scene. So that's how they, that was the pitch that they made to students. I will just equip you with skills and a strong enough network to like tread these testy waters. And just to clarify, you're not getting a degree at the end of all of that. No. So they call it certificate of competence, but it's just unaccredited. So it's just. So not even a diploma or anything.

Nothing. That is our colleague, the Ken reporter, Nathan Nadee. And he was actually the one who broke the story about Stoa shutting down earlier this. month. And what he just said was quite interesting. So, at the end of an all-time MBA, you're not getting a degree or even a diploma of any sort. It's all about the experience. And funnily enough, people were lapping it right up. These courses were hugely popular, and that's because, at the end of the day, a lot of people want an MBA. But not everyone can get into a top business school. So, 2023 witnessed like a

record registration in the CAT exam at 3.3 lakh students and this was 30% more than the previous year. So when I spoke to Professor Venkatesh from IAM Bangal, he made it very clear that alt-MBAs or new age MBA institutions, they're basically filling a capacity gap in the education ecosystem. 3.3-3-6 students compete for roughly 5,500 seats. So basically, and this is something that's echoed even by the founders of like alt MBA schools that the general views that we need more institutions in the country so demand will always outmatch supply and that's why you have the likes of like stoa school popping up messa school of business which is an offline MBA program and master's union and the likes so the old MBA is filling a gap in the Indian business education

system in more ways than one the reason platforms like Stoa were considered so revolutionary is because they set out to literally change the approach to business education. They felt the most important lessons were learned outside the classroom. They didn't see the utility of traditional MBAs and breaking into the startup scenes. They felt that the syllabus was outdated. We didn't have like any industry visits. They'll just learn about theories and case studies, which is like the mainstay approach. of like traditional B schools. Right.

Now they come with the built-in benefit of hindsight compared to like an alt-MBA, which is like a more practical way of learning. They call it learning by doing. That's the mantra all of them follow. So they'll probably go to like a Kirana store. They'll go to like a reliance retail. They'll speak to people, engage with them, see what it's like.

So it's a more on-ground and hands-on approach. So basically Stoa was. offering you an MBA that was significantly cheaper, was giving you more real-world hands-on experience, was helping you build a network, and you had the flexibility to do it while holding onto your job. It was ticking all the boxes, and it almost felt too good to be true.

And it was. Four years later, now Stoa is shutting shop. So what really went wrong? Stoah's story is similar in many ways to most businesses that saw an online boom because of the pandemic. But the pandemic eventually did come to an end. So, 2023, and this is what the founders of said as well, like was this turning point. Like, live learning was facing headwinds and Stoa was standing right in the midst of all of this. Welcome to the Friday special episode of Daybreak. I'm Snigda.

And I'm Rahil. And once a week, Snigda and I come together to talk about. about things in business and tech and interests the both of us. And it won't just be us. Depending on what we're talking about, we'll also be bringing in a bunch of really interesting people onto the podcast. In this episode,

we talk to our colleague here at the Ken, Nathan Narday. He tells us about the Stoa School story and what went wrong along the way. What's interesting is that a lot of these all-t MBA programs were launched around the same time, right? The COVID pandemic. Right.

What was it about that time that was so like, I think their offering also was tailor-made to like the pandemic. So they all decided to be online only, especially with Stowa school and even like the likes of Cairo's, which is almost identical in terms of its offering. So it was just a natural fit at the time. Like we will remain online only and then we'll offer this education to like people that have more time at hand. Right. Like, there was no mandate of working from office back then, which gives them this ability to, like, engage with the course. Because being a Stoa student is time demanding.

Like, oh my God. Like, every day there are readings and there were check-ins on the readings. Over the weekends, you have live lectures, which go on for, like, say, eight hours over the course of two days. And then you discuss them obviously. So it's very demanding. and in this six-month process, they have 18 weeks of learning. Wow. They're called sprints.

And they cover, like, different topics from, like, marketing to product management and, like, a wide host of subjects. So it was very demanding to be a Stoa student. Right. And people found this experience enriching in the beginning as well. How popular were these programs? So Stoa kicked off with around 60 students in its first cohort. The numbers swelled. like 130 in like cohort five,

after which it just became like a hundred odd. And four years, they had around 15 cohorts. So roughly 1,500 students have gone through this program. Wow. Right. So Nathan, apparently these companies, they're now looking for specializations, right? Like data science, digital marketing, statistics.

Do these Alt MBA courses offer any of these specializations? I don't think, no, they do not offer specializations. specialization in any of these fields because it's like only six months of learning right you don't they don't offer depth per se it's a more generalist view so like even uh uh like take financial accounting they won't be taught mergers and acquisitions because someone at this age won't be even an mna team at a company correct so they dropped these parts from their syllabus and this was covered in like the Ken's previous story on Stowa in 2021 where we interviewed the founder. So like this is exactly what they had said back then.

Like we'll drop a modulo too because students don't really engage in these topics at the beginning of their career. So can you tell us a little bit about these courses, what subjects, you know, a little bit? Like it ranges from like again like product marketing, branding, product management. these are like the four major verticals under which they're taught over these 18 weeks. But again, they don't offer too much depth. Now, another unique factor about Stoa was that they had this thing called a charter. Now, charter is like a PST dissertation of sorts.

Like, they'll pick a real-life problem. And this is exactly what happened at Stoa. Like, identify a new revenue stream for CAS 24. This is something that they actually. actually had. So the students can voluntarily opt into this charter program. They'll come up with like a solution using first principles thinking and then they have to present it in front of a jury. So that's that was one level of like certification that they offered. So like once you cross that, yeah, you'll be a charter holder as well. But this was optional and this only kicked in like

I think in the sixth cohort or fifth cohort onwards. Got it. So all of this sounds really great on paper. But I'm interested to know if, you know, getting an alt MBA from CES II or from anywhere else, is it, you know, you've spoken to so many people who've done it. Is it taken seriously by like employers or is it just like fluff on your CV, you know? Right. I think it is taken seriously by employers because a lot of people do swear by like getting people. placements from Stowa because the founders themselves were very well integrated into the

startup ecosystem. Like take Raj Kulkarni, his brother is running another startup called Wintwealth. So they always spoke about this guy called Ankit who's there in like their marketing promos as well, who was a Stowa student and that ended up at Wintwelfth. So within the startup ecosystem, they just, they're held in like very high regard. So they see like if you're Stoa, there's a store. like some stamp of approval that you know a thing or two about how this world works. So we'll take a bet on you.

So a lot of people do swear by like Stoa's placement process as well. But over the course of time, now that led to like a mismatch of expectations too. Because they didn't exactly say that we'll give you a placement. But students wanted it. So it was a mental model that the students walked in with. But Stoa always maintained that, hey, we're just going to give you skills. And these are like, like, like education in like certain subjects and we won't like guarantee placements.

But there was like a mismatch of expectations towards the end. And when I spoke to the founders about this, they conceded to the fact that you will find anecdotal cases such as these, but they're a minor draw. Majority of the people felt self-sufficient to go for jobs themselves. And go and look for jobs themselves. Got it. You obviously spoke to a lot of store students, right?

Like, what were there, what did they tell you about, not about the placement, but about the course in itself? They found it very enriching. Like, but another key thing is that they found the course material enriching. It was demanding. Like, it took up a lot of their time. And the major problem was that it was online only. Yeah. Yeah.

Like, so I, a program operator at store up, like, characterized it perfectly. She's like joining Stoa is like getting a gym membership. What you get out of it is determined by what you put in. Yeah. So as long as your self-motivated, you will get outsized outcomes from this course. So those that were really self-motivated did get those outsized outcomes. But for some of the students I spoke to, engagement waned. And that was a given because like you can literally walk up out of a lecture, right?

And this is what even the ex-employees confess to that they kind of struggled with maintaining those engagement levels. So I'll just give you an instance. There would be daily readings given to like a student. And there would be check-ins for those readings. It used to be like a one-hour check-in. That one-hour check-in became every alternate day. From one-hour, it became half an hour.

And all of this happened as we moved out of the pandemic. So, 2023, and this is what the founders have said as well, like was this turning point. Like, live learning was facing headwinds and Stoa was standing right in the midst of all of this. And is that where things kind of started going downhill? Yes, the unraveling of Stoa lies in its transition out of the pandemic. And even the founders confessed this in the story as well. Like, live learning was facing like a challenge everywhere. And another thing is education fundamentally faces a customer acquisition problem.

Right. This is what another founder called WebHur from Growth School had pointed out that everyone struggles with this. And to solve for it, you depend on marketing. Now, it's either organic or paid or performance marketing. Now, Stoa before the pandemic, had a 50-50 split. Post-pandemic, this ratios are really. it's skewing. Right.

And it was kind of bleeding the business dry. To give you an idea, they were probably spending in the course a range of like 1.2 to 1.5 lakh per student for performance marketing. And the ticket size was 3 lakh. Oh, got it. So it was becoming unsustainable for them. It's quite like what happened to ed techs, right?

Right. It's powerful. Yeah, yeah. Correct. Like the whole post-pandemic, you know, online learning wasn't. the big thing anymore. Right. Were there any other things that were common between, you know, what happened to these big

ed techs and what's happening to old MBAs? Actually, not common, but something unique about Stoa. Okay. And this is something all of the ex-employees pointed out to me is that whenever any ed tech found themselves in such a sticky situation, there's just one thing you resort to, hard selling. Right. Yeah.

So that's something that Stoward reframing. from doing. And this was true across all of the 7x employees I spoke to. They were like, we, although Stoa may have failed as an experiment, we have like profound respect for the founders for like sticking to their guns, they were like, we're not going to resort to these techniques because the attack space is like marred by this reputation of hearts. Yeah, it's ugly.

Because they tend up taking advantage of like rather innocent students. Very true. So, yeah, not common, but it was like unique. Like, they didn't resort to these tactics. Okay. So consider this scenario. You just started your first job at a new company. You're doing quite well, so you get tasked with leading a project.

How exciting? But now, you have so many dependencies on people from different teams to make this happen. And absolutely no authority or title whatsoever to demand it of anybody. You're starting to notice that many of your senior colleagues are judgmental of your skills and expertise to run the project. You're facing resistance to get people on board. This continues to happen week after week after week. And you start to wonder if you're not being taken seriously enough. Well, this isn't a hypothetical scenario.

A listener had written in with this exact problem. In the latest episode of the first two years, An early careers podcast from the Ken, I explore influencing without authority with the brilliant Dr. Nasheter Duesolheim. She's a psychologist and author, and she's worked with psychopaths in maximum security prisons. So it's safe to say that she knows a thing or two about building rapport and trust with difficult people, I guess. Basically, she's a pro at making connections, and we explore so much in our short time together. including what's this coveted thing called influence. Why you need it for people to listen to you

and what makes someone follow your lead? It's free and streaming everywhere. The link is in the show notes. I am Aksha Chandrashakran, host of the first two years. Thank you. And now I'll let you get back to the conversation between my wonderful colleagues, Snigda, Rahel and Nathan. Talking about, you know, what employees thought of, you know,

to our founders. Can you tell us a little more about what students thought of them? Students again, like warm words for like all of the founders across like

be it Raj or like Aditya, they really liked them as individuals. They like their perceptiveness about the entire space. Like, Aditya Kulkarani,

he's quite something. Like he has these one-liners that really catch on. Just to give you a flavor of what he says, he's like, I think of my students and myself as a professional,

not a thing to be placed. And that's, that translated to like his life and how he approached Stoa too. So, Adity himself went to IAM Bangalore, which is like a very prestigious MBA program.

And he chose not to sit for placements. He chose to like work in the planning commission. So, and then he ended up working in the education space. His last project was called Lido. it's a shorthand for learning by doing. Again, it comes back to the mantra of like all 10 beers. So yeah, that's what the students like feel about them.

And yeah, I think there was that mismatch of expectations only later on. But it was, yeah, it wasn't that big of a problem. Like people still like muscle their way through it. So it's like a really unusual guy who made like unusual choices and ran like a pretty unusual business. Right. Like we were talking about the pandemic a little. while ago and how this was a business built during the pandemic and, you know, it saw some of its best times during the pandemic and post-pandemic is when things went downhill.

The obvious reason for that would be that online to offline transition. If you could talk to us a little bit about how Stoa navigated that. Right. So that's again another interesting point. So they entertained the option of like going offline so much so that there was this space that they found in Banergata. It's a we work, a third floor. Right now, it's occupied by people studying in Alt-MBA just from the MESA School of Business.

So, like, the irony is palpable, you know. Like, people are still starting there, but just not store our students. But when I spoke to the founders, they were just very clear that there was no founder fit for this model. They wanted to work in a remote-only manner. So that was the major reason they decided not to go offline. Right. And it's a totally different beast as well that they didn't want to end. entertain. Right. But you know what's interesting there is that with Stoa, there's so much emphasis

on building your network, on building like meaningful connections and things like that. But to be able to do that, like virtually on Zoom or on Discord or whatever, just the idea of it sounds, it's almost contradictory in that sense. Right. Right. They seem to be almost like vehemently opposed to the idea of being offline. Right. They didn't want to be like any other business school. Exactly. That's the all. They have to put the all. They have to put the all. Alt in the Alt MDA. So they kind of recognize this as well that we need to have some offline element.

And this comes from their insider motto that we have to be this third place. Now what they mean by that is that apart from work and family, everyone needs a third place to belong. Like they gave me the example of like the bar and how I met your mother or like the coffee shop in like friends, right?

Yeah. They wanted to be that third place for students that wanted to break into the startup scene. So they were cognizant of this and they started a immersion program which was like completely offline and I think it started on cohort six onwards. Basically from like Friday morning

to like Sunday evening, there would be like marathon meetings and they'll just get a brief flavor of what the course is going to look like. Okay. So they started off with like going offline then. But that was the extent of it. Students kind of took,

it on themselves, like, interact with each other. And there was this tradition of like going to Goa at the end of Stoa ending. So this was like another, yeah, goa after store was something that all of them followed. Like, as a ritual. And again, this wasn't a dictate from the founders. It just happened organically. But like, then again, there's nothing alternative about going to Goa after your courses over. Everyone does it.

10th grade, 12th grade, college. Everyone does it. Yeah. Nathan, can you give us like a clear picture of when things started going downhill after the pandemic? Like, how did it play out? Right. So they entertained this option to go offline in 20, 23, say early 2020, March. And then I think in August, the writing on the wall got clear that we need to press pause and no longer accept any students.

However, they did not make this clear to A, their employees, B, the students. And they continued to maintain that silence until the story broke as well. Wow. You broke their story. Yes. Just to make it clear to our listeners. Right. Yeah.

So even once the story came out, they maintained that Stoa is just hitting pause and they will update everyone about their future plans in early August. but as if now they no longer accepting students. So school, for all intents and purposes, no longer exists. Right. So, yes, like, that's where the, that's where we're at right now. So, tell us a little more about employees because you also mentioned in your story that they cut short the number of employees, right? Like, from 35 to 10, I think.

Yes. So, like, they laid off 70% of their workforce. So what did you, what sense did you get from these ex-employees? Whenever I spoke to the ex-employees, they were like, okay, the program's over. Like this, we're just like waiting for this final cohort to end. And we'll keep waiting to see what they do next. And I think almost all of the employees are like, although Stoa, the sun may have set on Stoa, the old MBA story will live on. And they were so keen of like joining the founders in their next adventure.

So they were really taken in by the mission that Stoa set out with. some loyalty. Yeah, it was genuinely very interesting to see the kind of compassion they had for like the founders. And I met like three of them in person and it was genuinely like very authentic. So they weren't faking it like. You can tell. Yeah, yeah.

You can tell sometimes. But yeah, they weren't faking it. So that was my key takeaway when I spoke to the ex-employees. Can you also tell us what are the other competitors doing? Are they facing the same issues? What's happening? Right. So in this story, I spoke to Weybhav, who also founded Growth School, which is a skilling platform.

And they offer courses that range from like two-day courses or two-month courses. For example. Like they'll teach you coding or like how to use notion. Like very micro skills. Yeah, micro skills, right? And there was a demand within growth school students to have like a more structured business school course. Now, Q to 20204, we have the birth of this company called Cairo School of Business. Right.

Now, Cairo School of Business, again, comes under Webhaf's belt. And it's identical to store. Like, the offering is almost identical. It's a six-month online-only program. They have this out-class component where they meet for an immersion program. They want to be that third place as well. The only difference is that WebHav pointed out is that they pay zero on marketing. So there's a pipeline of students from growth school that came to Cairo's.

So they didn't end up paying anything for marketing. Like 100% of their first cohort was just growth school students. And then their second cohort, which is going to begin in like a month or so. 70% according to him are from growth school. And 30% are word of mouth referrals from the first cohort of Cairo's. So growth school is almost working like a mini. advertising sort of with... Right, like a pipeline.

It's a funnel for them. Yeah, yeah, yeah. And they don't pay anything on customer acquisition. This is what the founders set on record. Just one more related question to this. Like, what are these competitors thinking about the whole online versus offline approach? So, when I spoke to Verva about going offline, he's like, never say never. Like, I may entertain that choice.

Stoa said never. Yeah, Stoa said never. Like they said, there was no. found a fit for that model. But Weber was like, never say never. We'll cross that bridge when we get to it. That's their approach for now at least. Understood.

And is there like a sense of, okay, if it happened to Stoa, it could happen to us? Did you? Not really. I spoke to another alt-M-B-A kind of company called UpRaste, where they basically focus on upskilling product managers for tomorrow. Right. Her name is Mona Gandhi. She founded the company, again, a pandemic baby.

She said that alt-ambias are more relevant now than ever, given the onset of generative AI. People need to be upskilled. And they may not have the opportunity of like opting out of like the workforce for a full-time degree. So these courses become more relevant than ever. So not really. They don't have that sense that, okay, this happens to us or we might get caught in that crossfire. I think Stoa had like unique problems, just specific to them. But again, Kairos is only two cohorts old.

Let's see what happens down the line. I'm feeling a little confused about this whole thing, you know? Like one of the reasons that, you know, Stoa was affected after the pandemic was also because people were expected to go back to office. And like you said, like these courses were very intensive, right? So it was very difficult to manage. Right. So how are these competitors then expecting?

the same thing, to go smoothly. Online engagement is like always going to be a challenge in these circumstances. So they try to have like these, they call outclass components, basically they're trying to be offline. Upraised follows a similar thing where they try to meet at least once a month or so. But I think the same thing holds true for Kairos where they try to meet for the first three, four days. But going forward, I think they will have to have some offline component to it just to keep their students engaged. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the Ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by Rahal Philipos and I, Sinkas Sharma, and it was edited. by Rajiv Sien.