What I want my investor to understand about my business

After seeing some tremendous traction over last one year, we have started approaching some investors, which requires us to explain the opportunity we see in our business. Hence, we thought of writing it down – for everyone to see. In a way, everyone who associates with us is an investor of sorts. I hope to win over all of you as some sort of investor (we are not interested in crowdfunding as such, but we believe that everyone who contributes to our success, or works with us, become an investor irrespective of whether they have equity).

We are a legal education company started in July 2012. You can find out more about us over here: https://angel.co/ipleaders. If you are a qualified investor, you’d be able to see our biz deck, detailed traction data, tech usage etc.

 But why legal education of all things?

What is the opportunity in legal education? Why such a niche area?

Is this big enough? Many people ask us this question – how big is the legal education market? Why are we working here? What is the point of doing all these? Lawyers seem to be doing fine on their own – most of them are quite rich already, isn’t it?

No one knows for sure how big the market exactly is, because it has not been discovered yet – but the task is not to teach some law to some people. The job at hand is to teach law to the people of India, in such a way that it is useful for them. The byproduct will be an all transforming change in how people interact and do business in India. It is in all probability much bigger than teaching programming languages to self-learners – about which a lot of people are deservingly very excited. I know legal education is much bigger than that in India. Guess why?

We live in a low trust society. We dirty the roads because we don’t trust other people to make an effort to keep it clean or even catch us. We avoid people who come to us with “opportunities” – because a lot of people who do that never keep their promises and still get away with it. People are discouraged from doing business because contracts are not entered into, and even when one has been signed, contracts are very difficult to enforce in India. Court cases take ages to resolve. Hiring a lawyer is extremely expensive and there is no assurance that you will receive any reasonable service from the lawyer even if after paying through the nose. People don’t trust each other at all – promises have little value. Cost of doing business and uncertainty is high – and this weighs down on the whole economy, holding everything back. It does not only drive away foreign investors, it also discourage people of our own country to significantly invest in their own business.

What could it be?

Compare this to an European country. If you throw a banana peel on the road, and someone gets injured because of it – be assured you will be dragged to a court and sued for a hefty amount. Compare that to India – you can spit Pan Parag on someone’s brand new BMW and still likely to get away. You can spit on every wall you see – and no one worries. Service providers expect that you would take ages to pay your bills and include that cost in the quote. People expect to be cheated on every step and are ready to pay bribe at the drop of a hat – because that’s how we know life. We don’t know the alternative.

Now what if we could reduce the cost of suing people? What if recovering money was easier? What if there were easier, cheaper, quicker means to resolve disputes? What if you knew how to get the best work out of lawyers? What if you knew how to make your contracts water tight, and how to negotiate?

Why do big businesses buy certainty

This already happens on the top end of the India Inc. – and I saw this saw this as a lawyer working for one of India’s big four law firms. No one dares to skip a payment because they will be dragged to court and a huge compensation will be demanded. When people did default – they faced stern consequences. Promises were expected to be kept and consequences followed if they were not kept. Lawyers were accountable and did their best to impress clients.

Now this was in stark contrast with the rest of the business. When it comes to smaller service providers/ vendors – even the big companies will squeeze bill payment. Ad agencies will intentionally slow down payments of freelancers and small design firms – it was a part of cash flow management. They would do it because they can get away with it. People will promise and break the promise without a blink – except, of course, where lawyers were involved. Credit card companies did not want to give us credit cards – because lawyers sued them for malpractices – while the rest of the country quietly put up with it. Even corruption is quite rampant when people are not dealing with big businesses.

Why is that? The answer was obvious – the people at the top had more at stake – and were ready to pay huge bills for the legal system to work for them – so that they will have fairness and certainty. This did not happen at the bottom.

What does this chaos mean?

This apparent chaos means something – if we can reduce the cost of the traders and businessmen at the bottom to enforce contracts and or if they can take resort to the legal system at a reduced cost – a lot of them will be interested.

In fact, a lot of law has been enacted to make this possible – the MSME Act for instance. Registering as an MSME gives you instant superpowers in terms to recovering pending bills – but unfortunately India Inc is simply oblivious to this wonderful piece of legislation. Similarly – there is arbitration – which can help them to solve legal disputes in a fair way without having to go to the court – but only if they knew how to make it work for them!

They don’t even know how to apply for government schemes which are hugely beneficial for entrepreneurs (think SEZ scheme, STPI scheme and so on). They have no clue what to do to be eligible for an investment or a bank loan – forget negotiating the terms at the time of taking money.

Et tu, MBA?

I am not talking about the uncles running the lathe workshops and textile factories – even the engineers and doctors, or the new age MBAs are clueless about all of these. The veterans of any industry, of course, learn these lessons the hard way – through trial and error as well as observation. What if we could drastically increase the number of people who knew such things? People who could negotiate watertight contracts and thrash out a service level agreement, professionals who know what it takes to get government contracts (not just paying bribe, or having IAS uncles) or understands how to ringfence the intellectual property of the business. These are the people businesses need, not just degree holders who mugged up case studies to become glorified clerks. We need people with real legal skills – and not just lawyers, we need businessmen and managers who gets law and can use it to advance the interests of his business. We can mend the chink in the armor of some of the MBAs, but how will we get paid for it?

Non-awareness of law leads to sticky disputes, lengthy legal battles and loss of economic value. Millions of businessmen suffer from difficulty in enforcing contracts or recovering payments. Many suffer from wrong kind of business structures, do not take advantage of schemes, do not apply for government contracts, cannot figure out what they need to do to take investments or borrow money. Accessing lawyers is not always possible, and in India it is rarely cost effective.

If we can find out a way to teach the common businessman about business laws in a cost effective way  –  it will have a fundamental impact on how business is done in India.

And that is exactly what we, at iPleaders, have set out to do.

Legal education is broken too

It may be a natural thought that you need to enlist the law colleges if you want to teach law to the common man. Well – that is a little far fetched, because the lawyers themselves acquire very few of these skills while they are in law school. In India, legal studies are jargonistic theoretical studies, you learn a lot of latin, sections and some case law – but most law graduates don’t know how to draft a contract or how to get a company incorporated. They have no idea about strategic use of law in course of business. Legal textbooks remained the same while the practice areas of lawyers have been drastically changing. First it was FDI and disinvestment in the early ’90s, then capital markets, later private equity and now venture capital markets are booming. 90% of law students would not have even heard the term venture capital or capital markets while they are in law college. 

As a matter of public perception also, legal education in India is thought of as very burdensome and costly. Law colleges are not the source of solution, but they are probably a part of it –  we also need to train the tens of thousands of law students graduating every year in practical legal skills, so that they can contribute meaningfully to the industry, instead of becoming touts and agents at various courts – which is a fate that a large number of law graduates face every year.

The solution – re-engineering legal education for emerging India

We believe that within this apparent chaos when it comes to anything legal, there is a great opportunity of teaching law to businessmen, engineers, managers, entrepreneurs and even other groups of people – such as teaching women’s rights enforcement to women. We have received validation of this concept through businessmen and strategic decision makers who have benefit immensely from our business law course offered jointly by NUJS.

Interestingly, there is a great opportunity to teach law to 90000 a year law students market as well – because legal education is greatly outdated and theoretical in most of the country. Some high pedigree universities like Mumbai University has not changed its law curriculum for the last 25 years. Even at the modern law schools practical skills like contract drafting and negotiation or even structuring a business is rarely taught. Hence, very few graduating lawyers are employment ready, or can even serve their own clients. In fact, 1 in 3 law graduates fail the bar exam despite the examination being extremely easy.

Super-niche products

Apart from teaching general legal knowledge, there is a great, huge, huge, unfathomed market out there to teach super niche courses that can be immensely profitable. Imagine teaching labour and factories law to manufacturing engineers, or teaching women how to enforce women’s rights. It’s not only going to be very profitable, it is also going to be world changing, and very satisfying.

Content Delivery

The big challenge here is to deliver content in the right way – it must be accessible, suitable for self-study, and easily comprehensible. The internet already brings a lot of relevant knowledge free – what enables us to charge a premium is uniqueness and immediate utility of the content, as well as making the right tool available at the right time and right place. Two third of the earth is covered by ocean, but you can charge a huge premium by selling water in the desert. This is what our marketing philosophy is based around.

This represents an unique opportunity for a legal education company like us in four fronts:

1. Building legal courses to teach essential skills to lawyers

2. Teach law to entrepreneurs, strategic decision makers and businessmen

3. Teach law to other students (MBA, engineering, CA, CS students etc) to increase their likelihood of employability

4. Teach specific laws to niche markets (e.g. teaching industrial and labour laws to factory managers)

However this can be made possible only through suitable technology and ensuring that quality is not hampered despite teaching learners at a massive scale. We are currently tying up with industry bodies and universities to make this possible.

Going forward, we have also identified other themes around which we will create mass literacy courses and educational products.

What’s going in our favour?

#1

Indians are culturally willing to pay significant amounts for education, especially when it promises quality. Since we are involved in last mile delivery, we are able to benefit from this sentiment.

# 2

Advancement in mobile technology and increase in mobile phone penetration increases accessibility of our educational content.

# 3

We have got some paying customers and profits in the past year for one of the most highly priced online courses (at USD 400, where the average course is between USD 90 to 150) because of the value we deliver, which validates our concept.

What’s the size of the market?

Our current flagship course is priced at Rs. 23,000 (approximately 400 USD), and is one of the most expensive but also extremely successful completely online courses in India – it is offered at about a fraction of the cost incurred at a private university. With educational products built around legal education for the masses alone, we believe this is at least a 200 million dollar market. 

If you are interested in investing in us, visit our Anglelist profile here: https://Angel.co/ipleaders