“The ‘eradication of educational gap’ is the mission of the SuRaLa Net. From the time we began planning and developing eLearning in 2005, we have been working on delivering light even where the light of education is not delivered. Currently, the mainstream of e-learning teaching materials is ‘drill-type’ using mainly video delivery and applications. These are effective for the child with a high willingness to learn, but it is not enough for children with average and low academic ability or learning habits. So SuRaLa focused on teaching materials that can learnt autonomously even for students with low academic ability. Children who have a successful experience in studying can acquire great confidence. By actually experiencing that ‘effort leads to achievement’, we can foster the most important ‘can-do’ mindset in life. By developing such experiences for children, we have developed the possibilities so that future options can be expanded. That is why we are thoroughly focusing on improvement in real academic achievement,” comments Takahiko Yunokawa, founder and CEO of SuRaLa Net (TSE: 3998).
“We are making interactive animation teaching materials using the program. Most other digital learning programs have charismatic lecturers speaking unilaterally in the video type. Students with low academic ability tend to become sleepy on the way without concentration power. On that point, our program have an animation teacher who teaches a little each time, raising a question to the student. It is difficult to become sleepy because there is a reaction such as ‘I did it!’ Children with low academic ability dislikes studying further if my correct answer rate is too low. Even if it is too easy, they will be bored. Therefore, in SuRaLa, the AI system responds according to the academic ability of each child so as to make a difficulty level to obtain a moderate success experience. Since April 2016, SuRaLa’s software has been enhanced with an artificial intelligence voice dialogue and feedback technology developed in collaboration with NTT DoCoMo. The technology gives characters in the software voices that are encouraging to users, and the student replies to the chat bot. The AI voice is not only praises but also a voice to urge the next action and encourage efforts that changed the children’s learning. It is a motivating mechanism that allows dialogue and sustain the learning motivation,” CEO Yunokawa adds.
CEO Yunokawa also shared the interactive game-like elements and adaptive learning features of SuRaLa, including the “stumbling block analysis” to pinpoint re-learning to lead to root-cause resolution for deep learning: “An animation starts when the children log in to the SuRaLa Ninja! system. The characters begin their actions with the ninja protagonist named Hayate in the center. Voice actors and actresses ask the children questions and praise their achievements in clear voices depending on the scene. The interactive style of instruction enables children to enjoy and learn at the same time while maintaining a suitable feeling of tension. The incorporation of game factors that excite children is another major characteristic of this system. It displays ranks as studies advance, enabling the children to compete with other pupils and win medals on the screen. Furthermore, the classwork progresses in small steps of units as small as 10 to 15 minutes that are elaborately designed to ensure an understanding of the matters taught, giving the children a sense of achievement and a feeling of definite understanding.”
“One of the features of SuRaLa is the difficulty level control of the problem so that children can solve comfortably. It is what is called ‘adaptive learning’. For this child, we are going to ask ‘just right problem’. Even students who are not good at learning can acquire a sense of accomplishment that they are ‘able to do’, accumulate success experiences, and acquire academic ability steadily while deepening confidence. There is also an algorithm that automatically finds out the student’s ‘stumbling block’ and teaches it, so you can create a situation where students with lower academic ability can understand. For example, if the score of the linear equation problem is low, SuRaLa gives the child further thrust by discovering where you are stumbling and make a recommendation to pinpoint re-learning of that part, which lead to root-cause resolution. It sounds easy but the educational content of the company is a detailed curriculum accumulated for a long time to produce the results. Those who visit cram schools using SuRaLa are always surprised at the concentration of the children who seriously learn.”
SuRaLa Net is Asia’s leading EduTech SaaS (Software-as-a-Service) innovator with its cloud software powered by artificial intelligence (AI) technology to personalize learning, serving over 60,000 paid students in 900 schools in Japan (148 private schools and 724 supplementary cram schools as at 3Q2018; 2017: 693, 2010: 144), including over 1,800 students overseas in the developing countries in India, Sri Lanka, Indonesia, Vietnam and Philippines. Unlike nearly all other digital learning programs with charismatic teachers speaking unilaterally in the video format, SuRaLa’s game-like software uses a proprietary algorithm to personalize lessons for individual learners to address any gaps in learning and its high-quality interactive easy-to-understand content in small steps with anime characters, such as the Japanese ninja, keeping children interested, backed by the real-time learning management and data analytics function “Slider” to analyze the progress of academic performance and learning, a valuable tool and feedback for teachers and parents. The software’s game-like elements is designed to help learners master new skills who move to higher levels as they solve progressively challenging problems, just like in a video game. SuRaLa was founded in Aug 2008 by Takahiko Yunokawa who acquired the business from Venture Link in an MBO (management buyout) in 2010.
The AI cloud learning system is aware of students’ learning behavior in efforts and goal achievement and differs from conventional e-learning material with its patented algorithm that combines:
(1) Adaptive learning function that adjusts the difficulty level, spots and smart-corrects individual learners’ mistakes, as well as discovers where the student is ‘stumbling’ so as to make recommendations to pinpoint re-learning of that part, which enables the student to work through the problems on their own effort and also lets teachers and parents diagnose the children’s weak points so that lesson plans can be designed and developed to fit their particular needs;
(2) Interactive lecture function with the anime character teacher who make motivating and effective feedback and conversations at the right time to expand concentration power, as opposed to most other digital learning programs with charismatic teachers speaking unilaterally in the video format;
(3) ‘AI supporter’ function with an AI voice dialogue and feedback technology developed in collaboration with NTT DoCoMo since April 2016 which gives characters in the software voices that are encouraging to users at the right time and urges the next action for deep learning.
SuRaLa differs from nearly all other education companies and digital learning players who compete in the red ocean for economically privileged children whose academic abilities were in the middle or higher levels. Guided by its mission of the “eradication of the educational gap”, SuRaLa’s focus and powerful business model with high profitability is providing its high quality interactive software delivered at low cost in the recurring revenue monthly subscription model at high marginal profit margin to the extremely underserved underprivileged students with average and low academic ability, including children with developmental disabilities and learning disabilities, and the base-of-the-pyramid segment in its overseas markets in the developing countries in India, Sri Lanka, Vietnam, Indonesia and Philippines. SuRaLa earns high achievement in improving the academic ability of such children.
In Japan, the number of learning private institutions that can be targeted by the company is estimated to be about 40,000 nationwide, and private junior high schools and high schools are estimated to be about 2,000, as compared to the current penetration of 724 cram schools (1.8%) and 148 schools (7.4%), indicating a huge total addressable market with a long runway for growth. In Feb 2018, the Japanese government has revised the school education law which positions the ‘digital textbook’ utilizing tablet terminals as an official textbook and urges its implementation in elementary schools from April 2019 and full-scale utilization by April 2020. The current law stipulates that paper textbooks must be used in class, and the digital version is treated as supplementary teaching material. SuRaLa’s high-quality low-cost AI cloud learning system for children with average to low academic profitability has already gathered unstoppable momentum and the revision in law will bring forth and accelerate another exponential wave in adoption.
In addition to its own teaching materials in math, English and Japanese for elementary through high school students, SuRaLa has adopted the open platform strategy that provides content collaborated with other companies and is expanding into interactive science teaching materials through collaboration with its strategic shareholder Toppan Printing (TSE: 7911), Japan’s second largest printing conglomerate and the largest textbook printing company, who owns a 4.91% stake.
With the curiosity, community and circumspection exponential edge in delivering high quality digital learning at low cost to its underserved customers, SuRaLa achieved a 77% absolute increase in sales and 175% in operating profit in the recent three years with high profitability in operating margin of 20% (3Q18: 25.2%), ROE (= EBIT/ Equity) of 21.3% and ROA of 18.1%, propelling a 266% increase in market value since its listing on 22 Dec 2017 at the IPO price of 2,040 yen per share to US$84m. On 8 Nov 2018, SuRaLa announced its 3Q2018 results (Jan — Sep 2018) in which 9M sales increased 28.4% to 682m yen and operating profit rose 61.3% to 150m yen with 3Q operating income margin improving from 19.4% to 25.2%. Balance sheet is healthy with zero debt and net cash of 485m yen, or 5.8% of market value.
For overseas markets, SuRaLa competes with the Zuckerberg-Tencent-backed Indian EduTech unicorn BYJU’s The Learning App which claimed to have turned profitable in June 2018. BYJU offers personalized learning and makes use of original content, watch-and-learn videos, rich animations and interactive simulations that, as opposed to rote memorization, make learning contextual and visual. BYJU achieved a US$4bn valuation (at the multiple of 20 times its annual run-rate in sales) as India’s fourth most valuable unicorn after a Series F funding round of US$328m. BYJU’s B2C freemium model claims 1.26m paid annual subscriptions with a 85% renewal rate and more than 20 million registered members on its learning app which sees an addition of 1.5 million registered students every month. BYJU had crossed the Rs 100 crore (US$14m) monthly revenue in May 2018 and expects over Rs 1,400 crore (US$196m) in revenue for FY2019/March. BYJU’s revenue in FY2017/March was Rs 247 crore (US$34.7m) with losses of Rs 59 crore and revenue of Rs 520 crore (US$73.2m) in FY2018/March.
Other prominent EduTech players include Toppr Technologies and Embibe. Toppr Technologies, which runs an test prep app providing education content for students from Class 5 to Class 12, raised US$35m in Dec 2018 at a valuation of US$110–115m, a valuation multiple of around 12–13x its annual run-rate in sales), bringing its cumulative funds raised to US$58m. Toppr founder Zishaan Hayath claimed students spend 110 minutes a day on the Toppr app, almost three times as much as BYJU. Toppr’s FY2018 revenue was Rs 25.66 crore (US$3.6m) and losses widened to Rs 59 crore (US$8.3m). Toppr eyes Rs 100 crore for FY2019. Toppr has a team of 500 educational counselors who make home visits to market to parents and contribute to 80% of sales. Mukesh Ambani’s Reliance Jio acquired a majority 72.69% stake in online test prep provider Embibe for US$180m (or a valuation of US$247.6m) in Apr 2018 and commits to invest a further US$180m over the next three years. Using analytics and AI, Embibe captures student weakness centred on critical exam performance metrics like accuracy, speed, time management, stamina, attempt planning and confidence and claims to have more than 60 educational institutions on its platform. Reliance aims to connect over 1.9 million schools and 58,000 universities across India with the technology. Embibe’s estimated revenue is around US$4m and its valuation multiple is around 60x its annual run-rate in revenue.
SuRaLa adopts a combined B2B and B2C recurring revenue monthly subscription business model in winning customers from both the schools/cram schools and the direct student user. When asked to elaborate on SuRaLa’s business model, CEO Yunokawa shed insights on their strength in consultation know-how to schools as a success factor in winning over customers, and their B2B model also helped to keep a low ratio of selling and advertising costs as compared to the B2C model of pouring cash in advertising and subsidies/promotions to acquire users at a loss that they are seeing in other companies: “SuRaLa is thoroughly devised to aim for teaching materials that can be accumulated from the experiences of knowledgeable experts so that they can be understood and studied even for children who are not good at studying. We write the scenario of the content of the lesson and draw the image of the animation, making contents of teaching materials for children to study everyday. In system development work, we aim to deliver unprecedented learning experiences to children through UI (user interface) improvement, automatic drawing, character recognition, artificial intelligence and other advanced technologies.”
“In addition to our own teaching materials including SuRaLa, we have adopted the platform strategy that provides content collaborated with other companies through our SuRaLa LMS (Learning Management System). By enlisting other companies’ contents on LMS of the company and enabling them to participate, we aim to expand customer service, customer satisfaction and users. Through collaboration with other companies, we offer content such as English conversation, science and social science subjects. In June 2018, we also started offering interactive lessons in Chinese content, Chinese poetry, Japanese poems and haiku while understanding the background of the times to junior high school students. Even a learner who has a sense of resistance to reading ancient Chinese sentences for the first time do not need to memorize by heart but will learn knowledge based on understanding the process of change of words and the background of the times and do training such as narrative, essay and commenting on genres and sources.”
“In addition to selling SuRaLa as a SaaS to cram schools nationwide, we are supporting the opening of business for those who want to set up a new school for themselves using SuRaLa. We provide consultation and business support services for schools and cram schools using our services such as education of teachers and educational curriculum using SuRaLa. Our salesforce are trained in the power of consulting to solve the problems of the cram school, such as lack of lecturers, lack of students, and suggest the best way to use SuRaLa. We do not only propose and introduce but also provide consulting activities in management issues and solve them together with customers. In addition, we provide business start-up support services to independent cram schools using our service such as providing information necessary for property search, fund procurement, sales promotion and student recruitment activities.”
“In September 2018, at Kyushu’s largest cram school, a ‘reversal lesson’ using SuRaLa alone was started and the outcome was a reduction in school officials, improvement of grades, realization of family learning, better reputation with parents etc. In a reversal lesson, the instructor does not give lectures in the classroom since the online learning takes place autonomously at home. Instead, the lecturer gives guidance according to the characteristics of individual students and facilitates classes in the form of cooperative learning among students. Meanwhile, in the case of traditional independent teaching cram schools, there are an increasing number of renovation cases of unprofitable school buildings to self-sustaining individual guidance cram school whose business style is changed and learned with SuRaLa alone.”
“As our products and services are differentiated, the conversion rate into customers is also high. In the case of cram school, when the inquiry comes, you are likely to have already tried SuRaLa. When you actually see SuRaLa in action on your own, you will soon see the goodness, so there are many patterns that the user decides to make a purchasing decision immediately without meeting our sales team. With B2B, we can increase our customers without spending a lot of advertising expenses, unlike for B2C. About 98% of the company’s sales are direct sales. Sales employees who make sales activities nationwide make full use of the web conference system, and keep sales expenses as low as possible. Because the service is offered in the cloud, the marginal profit margin is high.”
We also view the B2B model as effective in scaling up users and profitability with its land-and-expand sales penetration strategy once a foothold is secured. Especially when a major school chain starts to adopt SuRaLa in some of its schools, there is a very high probability of spreading the adoption to other schools in its network, including peers who are left behind. CEO Yunokawa elaborated how the demand and adoption is also driven by the trend in which the basic academic abilities of the schools’ intake of students varies greatly and remedial lessons to even out the variation is a big burden and they increasingly see SuRaLa’s adaptive learning system as an effective solution.
CEO Yunokawa said: “Our sales has been growing steadily and the increase in the number of students per school building is more prominent than the expansion of the number of school buildings. One of the major reasons is that major cram schools with many students have come to adopt SuRaLa, such as Noda Juku, a major learning cram school in Tokai with 64 schools across the Aichi prefecture which introduced SuRaLa from March 2018, and Hokkaido’s leading cram school Knights Group which introduced SuRaLa in March 2018.”
“SuRaLa is increasingly adopted as an adaptive learning material to establish an efficient ‘foundation fundamental strength’ required as a force to live as part of the 21st century type skills proposed by the National Institute for Educational Policy Research for elementary, junior high and high schools. From April 2018, the school corporation Tongguen Gakuen in Yokohama in the Kanagawa prefecture introduced SuRaLa to all junior high and secondary school in the primary course. SuRaLa was also introduced from April 2018 at the elementary school attached to Kinki University in Nara City for 4th, 5th and 6th graders; at Shimogyo Gakuen High School, which is one of the leading schools in the Osaka Prefecture; at Tokai University Sugo High School in Tokyo.”
“In Dec 2018, we announced a business alliance with Zkai Solutions which provides remedial education for higher education institutions such as universities, junior colleges and vocational schools. As a result of diversification of the curriculum subjects in high school and the diversification of the entrance examination, the entrance student’s basic academic ability varies greatly, and implementation of remedial education according to individual academic ability at higher education institutions is a big burden. Through this tie-up, we will combine the educational solutions proposed and provided by Zkai Solutions with our know-how and adaptive learning contents of SuRaLa and consulting results for educational institutions, and offer it to higher education institutions to become stronger than ever.”
“We also introduced SuRaLa in the middle school of the Japanese cram school LEC (Leading Education Center) in Singapore and Johor Bahru, Malaysia for Japanese children of overseas expatriates in June 2017. The international school GEMS World Academy in Singapore also introduces SuRaLa in August 2017. While the students are generally of high academic abilities, the variation in academic ability is large, and furthermore it is difficult to secure teachers. In March 2018, we introduced SuRaLa at Shanghai Japanese School’s High School which was opened in 2011. SuRaLa was also introduced to the High School of Aizu-kan in Bangkok in 2014. We would like to continue to promote the provision to educational institutions for Japanese people in various countries.”
“In Sept 2018, SuRaLa Ninja in math was selected from among 59 applications to be adopted as the official project ‘EDU-Port Nippon’ public-private partnership for Japanese elementary, junior high and high school students and overseas elementary school students. Japan educational content attracts great attention from around the world, but its efforts have been done at the level of individual companies and organizations. Based on this background, since 2016, the Ministry of Education, Culture, Sports, Science and Technology, Ministry of Foreign Affairs, International Cooperation Organization (JICA), Japan External Trade Organization (JETRO), local governments, educational institutions, private enterprises, NPO collaborated on the EDU-Port Nippon project to promote overseas expansion of attractive Japanese education.”
CEO Yunokawa also shared that their B2C business, while much smaller than its B2B, is growing rapidly: “We are promoting business development in B2C market in selling directly to individual learners as our third pillar following cram schools and schools. The number of IDs has been on an upward trend due to the increase in inquiries for developmental disorders and learning disabled children released in Oct 2017. As of the end of the third quarter 2018 (Sept), the number of IDs was 994 and sales for the first three quarters increased 186.7% tot and contributed around 8.5% of group sales.”
While SuRaLa is highly profitable and positive free cashflow generative now, CEO Yunokawa shared that his personal and entrepreneurial journey to start SuRaLa has been full of struggles, including taking over SuRaLa in a MBO (management buyout) at the age of 50. CEO Yunokawa shared reflectively the inspiring story: “I was born in 1960 in the Kochi prefecture and moved to Ube City, Yamaguchi Prefecture, where I spent my childhood with children from the fishery or agriculture families who occupy around 60% of the classmates in school until my high school graduation. After graduating from high school, I went to Osaka University, Faculty of Engineering Science, Department of Biological Engineering with the desire to become a scientist. The department covers a wide range of fields, and I learned mainly in the software programming areas. Learning programming languages such as Fortran and C language is still helpful now because, since I know the basics of computers, communication with our software engineers can proceed smoothly. While many of my friends got employed in leading Japanese manufacturing companies, I chose to work for a consulting company called Nippon LLC in 1985. I experience consulting in all areas such as strategy and personnel affairs, mainly for small and medium enterprises.”
“Eventually, I transferred to Venture Link, which was then a listed company on the First Section of the Tokyo Stock Exchange, where I worked on discovering and improving various new businesses, especially the restaurant industry, and started to actually run them. In Venture Link, I experienced 1,000 knocks in setting up a new business, looking for which franchise to support, conducting business analysis, and actually managing the shops with their team. We standardized operations for franchising. In 2004, Venture Link enters the educational business and supports the franchise chain of individual guidance cram school.”
“I rose to become the executive in charge of the planning and development and franchise of the new eLearning teaching materials business. The recruitment of the students was very good. But I cannot get the results of the children to improve their academic ability. Especially for children with low academic ability. Since the quality of part-time lecturers will inevitably vary, it is difficult to stabilize service quality. In addition, because of the relatively high price, children’s families who cannot afford economically have limited number of visits despite the need for daily learning. This raises the question of whether you are doing socially valuable work.”
“As a means to solve this, I launched the eLearning project SuRaLa in Aug 2008. Since there is no lecturer, there is no variation in quality. Moreover, since it is software, the cost is always constant, there is no restriction on the number of times of learning and time. When classifying children with low academic ability, there are those that cannot understand the lessons and those who take time to understand lessons and solve problems. However, because school classes do not match with the learning speed of such children, all children who do not understand are all put into the same category. With SuRaLa, children know they can learn at their own pace with the voice of a virtual teacher with infinite patience.”
“At that time, there were still many skeptical views on e-learning, and we tried to make the effect known to the world by demonstrating. I opened a learning school that completely used e-learning alone near Komazawa University station in the Tokyu Den-en-Miyako line. When a new cram school without any brand or reputation opens, the students who have low academic ability mostly come first, because children with high academic ability already attend famous cram schools. Soon the results of such children gradually went up with comments such as ‘I thought English and math classes were fun for the first time in my life.’ So I thought about the meaning of ‘fun’. I decided at that moment, ‘This comment is worth so much, I will seriously turn this into my passion. I believe that e-Learning is a very valuable business that can solve the problems of low-academic children.“
“The market we are targeting is a serious Blue Ocean. Almost all preceding e-learning systems were developed for economically privileged children whose academic abilities fall in the middle or higher levels. There was no e-learning system developed with the consistent concept of enabling children with low academic ability who are not attending school to study systematically in small steps. It is an impression that traders who do online educational things have been around for a long time, such as Benesse’s (TSE: 9783) classi (https://classi.jp) (Benesse is one of our strategic shareholders with a 2.85% stake and the number of paid users of classi is 2,100 schools and 810,000 students) and Recruit Holdings’ (TSE: 6098) Recruit Marketing Partners’ studysapuri (https://studysapuri.jp), and that more players have come out. However, there is no competition at all for the underserved segment in the low academic ability group. Everyone is thinking about the problem, but nobody brings a solution there. So, in solving it, we were able to make very differentiated products.”
“Children who can study are already attending one of those entrance examination schools, and even at school, there is a mechanism like a special class for them. However, there was hardly any mechanism to support children with low academic ability in the world. It was expected that supplementary cram school will become the receiving end, but teaching quality is not stable to improve the academic ability. Parents chose individual guidance cram school for the primary purpose of raising children’s grades, and it resulted a lot of children who are like ‘school refugees’ when they cannot stay on in cram schools who want to maintain their reputation. Our learning school gathered these children who showed improvement and the number of students grew to around 180, which is second or third place among about 400 schools across the same franchise.”
“However, it fell into trouble amid the global financial crisis that struck the following year and it soon began running out of cash. I pumped several million yen of my own money into the business at the end of 2010, at the age of 50, and we purchased the SuRaLa business in a MBO (management buyout) and made it independent. But the business was losing 70 million yen annually and I could not keep it alive on my own. I never had any experiences in fundraising. I met with several venture capital companies, but few showed interest in the business amid the Lehman slump in 2008 in a very difficult environment.”
“The only one that paid serious attention to our vision was Globis Capital Partners, a Japanese venture capital specialist. We would not have survived without investment from Globis. Globis invested 200 million yen in 2011, betting on higher demand for personalized online learning services. In that same year, there was the Great East Japan earthquake and it was a fumbling start. SuRaLa began turning a profit two years later in 2013 after the Globis investment.”
“I made the decision never to do a franchise business model based on my previous experience with Venture Link from the lessons learnt. We cannot tell the true goodness unless we actually manage the schools. Franchisees listening to the story of sales representatives before the contract will have the impression that the rosy world awaits them. Even if there is no lie in that explanation, I feel a sense of incompatibility with the difference between the tone and the reality that confronts after the contract. A seller of franchises will promote acquisition of membership by imposing quotas, especially as franchise fees become the main source of revenue.“
“We offer the software at the fixed monthly subscription of 30,000 to 55,000 yen per school and about 1,500 yen per student. The introduction cram school will gain profits only by acquiring a lot of students who showed improvement and continuing with our software. Since the success of our school customers and children and our line of sight match, we thought that this business model would be better in the long run. Moral hazard, which tends to be triggered if it is a franchise system, is also unlikely to occur.”
“It is difficult to have students with low academic ability to actually keep using it unless the cram school and the school properly care. So we are very particular about the operation of schools and cram schools as customers. We talk about setting goals to be achieved by introducing SuRaLa. ‘What are the challenges faced by schools? Which subjects you would like to raise grades?’ Let’s commit to the pass rate, go forward with a schedule and do progress management in consultation with the teachers. That means that we are doing guidance not only to teaching materials for C (students) but also to B (cram school and school). There is a huge cost and time to create a system containing interactive programs like SuRaLa from scratch, even if it were a major player. In addition, we have the power to provide consultation and business support in making an eLearning system and the ability to enlighten teachers at the site. Thus, It is not easy for a company to have the two wheels of high product quality as well as the consulting ability.”
“Recently, SuRaLa has begun to be adopted not only by the supplementary cram schools but also by local middle schools and major cram schools who are forced to survive and enrol students with low academic ability given the increasing difficulties in recruiting students of high academic ability amidst declining birthrate and they need ICT solutions like SuRaLa to leave results for such students. We propose ‘Would you like to convert your business style to a compact cram school that instructs using only SuRaLa without using part-time lecturers, thereby reducing the break-even point?’ A cram school that introduced SuRaLa has one major strength. For example, a student who needs to be retaught the content learned at elementary school when he or she cannot keep up with the lesson will result in a cost burden to the parents as the monthly tuition jumped. On that point, the cost of the cram school will not increase no matter how often the student uses the software. For these reasons, cheap ‘unlimited course’ is possible at the cram school introducing SuRaLa. You can study even at home using the same ID and password at a reasonable monthly rate.”
CEO Yunokawa also shared thoughtfully and patiently his inner thoughts on eliminating the educational gap through SuRaLa: “If you frequently memorize the material, it is possible to easily score points in the immediate periodic examinations. However, it cannot be said that the child has acquired a true academic ability useful for the future. We found out that the stumbling block of individual learning is to learn each unit of the concept thoroughly. We have developed an interactive lecture in ultra-small steps so that the student can gain a fundamental and conceptual deep understanding. Therefore, regardless of the progress of the class at the school, you can acquire the ability to understand contents from scratch and apply it.”
“We are committed to ‘matching learning to each individual’s personality’. The peculiar pace differs depending on the student, and the reason why the score does not grow is also different for each person. Therefore, we realized personalized learning that allows us to issue academic challenges according to the pace and academic level of each student and to develop a self-directed learning plan and goals and they feel the enjoyment of learning and the pleasure of achieving the plan and goals. There is also a ‘connection and encouragement mechanism’ with students nationwide and overseas. Furthermore, while being online, we are also putting emphasis on communication that consults and questions the learning plan to the teacher in charge who encourages them.”
“As the academic discrepancy widens, both schools and cram schools are shifting from ‘group guidance to individual guidance’. Education in Japan is progressing toward the direction of ‘individualization’ that respects individuality. However, the number of classes and the amount of teaching have been increasing, and the shortage of teachers and long hours of teachers’ work have become a problem in the field. We must solve the difficult task of realizing individualized learning while increasing teacher productivity. Unfortunately, learning opportunities in society as a whole are not equal for all children. Some children have difficulty in learning more than usual due to economic reasons, regional reasons, health reasons, etc.”
“In the past, schools have tried to create achievement scores by dividing students with high academic ability in the form of ‘special classes’ while holding simultaneously ’ordinary classes’. In order to eliminate even such opportunity gaps, we reconsider the fundamental premise of ‘going to a cram school’, ‘paying a high fee to a teacher’. SuRaLa will make it possible to provide individualized learning according to differences in individual academic achievement while streamlining teaching labor. It is not simply just teaching material that is digitized for convenience. We will provide a whole new learning style of ‘being connected with teachers and other students’.”
“In addition, by eliminating the disparity in learning opportunities, we will fill the gap in the world’s academic discrepancies, and we also have the desire to solve the problems of academic inequality and income disparity. We will deliver new learning experiences suitable for each one of these children. Through this learning experience, children can acquire true academic ability that will be useful even when they become an adult and the confidence that results will be obtained if you make efforts.”
“These efforts not only made it possible to provide services that can solve the problems of schools and cram schools in Japan, but also support low-income families with children and the learning of children with developmental and learning disabilities, such as using the services in after-school day service and in hospital classes. Also, if you look overseas, opportunity gaps in education are bigger than those in Japan due to various causes such as poverty, the proficiency level of teachers and teaching materials, and I realize that there are still plenty of opportunities for SuRaLa to be useful.”
“Unlike highly talented students, who can improve their scores by studying on their own or attending cram schools, underachievers often need personal guidance and private lessons. Schools generally do not have the resources to offer individual guidance. Some cram schools provide personal help, but the quality of instructors at such schools varies widely. Economic disparities are leading to wider gaps in academic ability among children. Our mission is to provide digital products to help children of average or low academic ability make progress.“
“The country tends to focus on developing leaders, which is of course important, but the raising of the academic ability of children will also lead to national strength. Even children who were practically abandoned from the scholastic inequality within the class came out of SuRaLa with confidence and in many cases the character and behavior turned positive. They come to think that ‘I am able to do it with my own power’ because the teacher did not tell me, that is, I will think that if I make an effort, the result will come out. This mindset is very important in that child’s life.”
CEO Yunokawa is also passionate in solving social problems with SuRaLa in developing countries: “With the philosophy of ‘breaking the negative spiral of income disparity and educational opportunity disparity’, we also implemented activities such as learning support for low-income households in cooperation with NPO corporations. With a view to providing high-quality education at low cost to children all over the world, we offer SuRaLa to schools and cram schools in Indonesia and collaborate with microfinance institutions in Sri Lanka to develop ‘SuRaLa JUKU’ cram schools. Through these activities, we have a track record of winning the ‘Scale Out Award’ at the ‘SDGs Business Award 2017’ related to ‘SDGs’ (sustainable development goals) advocated by the United Nations.”
“SuRaLa opened SuRaLa JUKU, the first after-school study facility of its kind where SuRaLa Ninja! is used for teaching arithmetic to children, in 2015 in a slum area around Colombo in Sri Lanka with the adoption by the Japan International Cooperation Agency (JICA) of the Preparatory Survey for the base of the pyramid (BoP) Business Promotion project for businesses that contribute to the solution of problems faced by the impoverished class. SuRaLa has continued its overseas work, although the JICA program has ended. At present, it provides online learning programs to 17 schools in Sri Lanka, including private preparatory schools for poor children, and to five schools in Indonesia. 50 to 100 children, mainly in the low-income class, attend each facility. It is drawing attention because it can also continue without subsidy at all. We also began operating private schools in Bangalore and Mumbai in India.”
“Instructors are essential for the operation of these after-school study facilities. SuRaLa hires two facilitators (instructors) per facility from the impoverished class in local communities in partnership with Sri Lanka Women’s Bank, a local non-profit organization undertaking deposit, financing and insurance operations for women who belong to the BoP class. At the start, SuRaLa staff members dispatched from Japan educated and trained these facilitators. Now, local staff members have begun to provide them with training. The friendly, enthusiastic approach of the facilitators has won favorable comments. In a questionnaire survey, 96% of parents rated the facilitators as ‘very good.’ 92% of surveyed facilitators replied that their income grew and all of them said that they were satisfied with the job.”
“In Sept 2018, we introduced SuRaLa Ninja in math to the Sussex College, Sri Lanka’s largest international school group which manages 23 schools in Sri Lanka with 5,500 students enrolled. With a high reputation for the quality of English education and the teaching skills of teachers, Sussex College is a very well-known school with a top-level evaluation in Sri Lanka as an international school. Students from elementary school grade 1 to 7 will take SuRaLa classes as an afterschool activity.”
“In Bandung city in the western part of Java, Indonesia, we started SuRaLa at an elementary school in collaboration with the Indonesia University of Education (Universitas Pendidikan Indonesia). There are 30 PCs in each room and 300 students learn SuRaLa Ninja three times a week. In conventional classes, students did not concentrate on studying, walking around in class in some cases. After introducing SuRaLa in mathematics lessons in 2016, the principal commented that students like arithmetic and their computing power dramatically increased. In Aug 2018, we also introduced SuRaLa Ninja in math to the elementary school of Indonesian international school Mutiara Nusantara in Bandung.”
“On 7 Jan 2019, we announced that KEC, the largest learning cram school in Japan’s Nara prefecture with a history of over 40 years, will be adopting SuRaLa from Feb 2019 to realize more adaptive guidance at its Ho Chi Minh junior high school in Vietnam who wanted to expand using SuRaLa as a new next-generation educational model.”
“In Jun 2018, Hyderabad’s leading school chain Gitanjali Group adopts SuRaLa Ninja in math for elementary school students. In the past, the Gitanjali Group considered differences in understanding among students in group classes and were searching for effective solutions. Gitanjali school principal commented that children who learned with SuRaLa Ninja ‘improved not only academic achievement but also life skills. This is because SuRaLa Ninja! Is introducing methods that allow the child to be confident, and it becomes possible to provide individual support for each child more carefully as an individual learning material. I hope that as students engage with Japanese companies, they will grow up as a more diligent and systematic child like the Japanese, as well as improve the basic computing abilities of all students.’”
“If the percentage of correct answers is increased by 10 to 20% per year, the results are superior, and if 30% is reached, it is a considerable achievement, and the children of emerging countries show double or triple digits growth. Ninja characters are also popular because they are growing up watching Japanese animation such as Ninja Hutririku and Naruto. The way in which the results of children learned with SuRaLa are common in any country. When creating teaching materials for animation, we arrange for local voice actors and actresses. Currently, there are Sinhala version for Sri Lanka, Indonesian version for Indonesia, and English version mainly used in India.”
“Kumon and Benesse actively develop cram schools abroad. However, if you try to develop a traditional cram school that people teach in developing countries, the monthly currency translated into Japanese yen will inevitably be in the range of 3,000 to 4,000 yen, and as a result you will have to focus on the middle income groups and higher. However, we can provide it according to local price level, and because we can learn with digital teaching materials full of Japanese know-how, students will gather if we do promotion.”
“In emerging countries, the price per ID drops but the market is many times larger than the domestic market. In the cloud-type service, there is not much cost increase with increases in students. In Sri Lanka, we are also approaching the poorest. There is a microfinance organization in the local area, and a classroom is opened by bringing several PCs in one corner of the microfinance branch in the slum area. Also, the local women are teaching in this classroom. We have guided through training for a few days and then hire them to help create local employment opportunities.”
“We must eliminate the vicious circle of income disparities leading directly to educational gaps. We are advancing our business targeting the BoP class based on this concept. Children who belong to this class comprise a significant majority in developing countries. They have potential for high performance. I believe that the improvement of their basic academic levels leads directly to the development and growth of their respective countries. SuRaLa, which is a cloud eLearning system, offers high quality educational services at very low prices regardless of country or region. We are aiming to solve the problems of educational gaps in not only our domestic country but also many countries in the future. There are still many countries in the world where literacy rates are still low and women’s learning environments are not in place yet. In the future, we will become a force of people from such areas who are suffering by making high-quality education at low prices, and we want to grow together with them.”
CEO Yunokawa also shared how SuRaLa is expanding into being adopted for students with developmental disabilities and learning disabilities, including in new markets that include after-school day service and even Buddhist temples: “I have been researching several years ago and started developing e-learning for students with developmental disabilities and learning disabilities since Oct 2017. There are about 600,000 people with developmental disabilities and learning disabilities in Japan. It is possible to deliver adequate learning to children who suffer from such disabilities by using the teaching method suitable for each person. Hollywood actor Tom Cruise also gained great success by overcoming dyslexia. If you can learn properly when you are a small child, you can grow up to be a professor of the university or a manager as well as a movie actor. I know that e-learning is effective for children with such disabilities, but I heard that there is no systematic teaching material to learn properly, and I thought that we would make it. The social significance of handling effective learning support for these children will be immeasurable.”
“Moreover, we can provide education to childcare facilities such as after school day service and children’s cafeteria for children with developmental disabilities. In March 2018, SuRaLa was adopted initially in 100 classrooms of Happy Terrace, the largest after-school day service development improvement school in Japan which aims to help children with developmental challenges acquire the communication skills necessary for future social self-reliance. In July 2018, the Tsukiji Honiyo Buddhist Temple also offers SuRaLa to provide educational support activities for elementary school students in the temple and we plan to spread it to affiliated temples throughout Tokyo.”
CEO Yunokawa summed up in pouring forth his life mission to nurture children who have the courage to cultivate their own path as the greatest driving force for his work at SuRaLa to keep innovating with state-of-the-art technologies to solve social problems and offer a whole new educational experience to children: “The pleasure of solving social issues with the core business has become the greatest driving force of our work. We believe that we will build a future through improvement of academic ability of many children. Instead of simply aiming at passing, I always want to build a posture in the children that ‘I will do my best now’ with a view to the future. We can save such a child for them to have the ‘power to live’ and to shift their ability to keep updating the latest learning rather than the final academic record. Because it is a tough world, I hope every day to become a companion to children who have the courage to cultivate their own path and to nurture and raise as many children as I can who can think and act on their own. We will continue to evolve SuRaLa services incorporating state-of-the-art technologies through big data analysis, interlocking with vital data, utilization of AI, etc., as well as offering a whole new educational experience to children to solve social problems while responding to the needs of parents.”