Back in 2008, Open English, a company run from Miami that uses online courses to teach English in Latin America, had just a handful of students in Venezuela and three employees. Today the company has more than 50,000 students in 22 Latin American countries and some 2,000 employees.
To fund this meteoric expansion, the founders of Open English — Venezuelans Andrés Moreno and Wilmer Sarmiento and Moreno’s American wife, Nicolette — began with $700. Over the last six years, the partners have raised more than $55 million, mostly from private investment and venture capital firms.
Their formula for success? The founders rejected traditional English teaching methods in physical classrooms and developed a system that allows students to tune into live classes every hour of the day from their computers at home, in the office or at school, and learn from native English-speaking teachers who may be based anywhere. Courses stress practical conversations online and the company guarantees fluency after a one-year course, offering six additional months free if students fail to become fluent.
“We wanted to change the way people learn English,” said Andrés Moreno, the 30-year-old co-founder and CEO, who halted his training as a mechanical engineer and worked full-time at developing the company with his partners. “And we want students to achieve fluency. Traditionally, students have to drive to an English academy, waste time in traffic, and try to learn from a teacher who is not an native English speaker in a class with 20 students.”
Using the Internet, Open English offers classes usually with two or three students and a teacher, interactive videos, other learning aids and personal attention from coaches who phone students regularly to see how they are progressing.
Courses cost an average of $750 per year and students can opt for monthly payments. This is about one-fifth to one-third of what traditional schools charge for small classes or individual instructors, Andrés noted.
“We work at building confidence with our students and encourage them to practice speaking English as much as possible during classes,” said Nicolette Moreno, co-founder and chief product officer, who met Andrés in Venezuela while she was working there on a service project. “Students are taught to actively participate in conversations like a job interview, traveling and talking on a conference call,” said Nicolette, who previously lived in Los Angles, worked with non-profits to create environmentally friendly products and fight poverty in emerging markets, and was head equity trader at an asset management firm. “Students need to speak English in our classes, even though it is sometimes difficult. They learn through immersion.”
Open English has successfully tapped into an enormous, underserved market. Millions of people in Latin America want to learn English to advance in their jobs, work at multinational companies, travel or work overseas and understand the popular music, movies and TV shows they constantly hear in English. Many of them take English courses at public and private schools and learn little if any useful conversational English. While students at private schools for the upper middle class and wealthy often learn foreign languages extremely well from native English-speaking teachers, most people can’t afford these schools or courses designed for one or two students.
Students who want to take Open English courses fill out a form on the company’s Website and are contacted by an Open English employee from either the Bogota call center (for Spanish speakers) or the Sao Paulo center (Portuguese). Once they sign up, they receive an activation code and instructions and can start classes immediately. Classes last 45 minutes and students can choose basic, intermediate or advanced levels. For beginning students, teachers are bilingual.
While Open English continues to expand in Latin America, the company plans to offer classes in the U.S. in the future, Andrés said.
Success did not arrive overnight for the company’s founders. Before setting up Open English, they ran a school that offered English courses in Venezuela to corporate executives with native English-speakers and very small classes. But they found that it was difficult to find native English-speaking teachers who were willing to relocate to Venezuela, so they developed the scalable idea of online courses where these teachers could work from virtually anywhere.
At first, they struggled to find capital to put together their project, quickly using up their own limited funds and obtaining a $10,000 bank loan six months into the project. They presented their business plan to venture capital and private investment firms, but it took about 18 months to obtain the first $400,000. Once potential investors saw that Open English had obtained funds, more money came in.
While Open English had received some money from angel investors, Flybridge Capital Partners, which focuses on providing seed money and early-stage technology investing, was the first institutional investor to take a major stake in the company, starting in the fall of 2012.
“We are very interested in online education and were aggressively exploring possibilities in this area,” said Jon Karlen, a general partner at Flybridge’s Boston, Mass. office. Flybridge saw an opportunity for Open English to appeal to the large, rising middle class in Latin America, Karlen added, “But what was really unique about the company was Andrés, who is an exceptional entrepreneur and became an outstanding CEO and leader.”
Currently the largest investor in Open English, Flybridge sees excellent growth opportunities for the company, in part because there is a huge market and broadband penetration is growing rapidly every year in the region. Flybridge has invested in Open English over three different rounds. Typically, the firm puts a total of $8 million to $12 million in their projects over the life of the investment, Karlen said.
As of today, the company has received more than $55 million from investors like Flybridge, Insight Venture Partners, Kaszek Ventures, LAM Ventures, Redpoint Ventures and angel investors. As the company’s operations staff expanded in Miami, the company needed new space and moved into a large, new offices in Coconut Grove in October of 2012.
After developing their system, videos, supplementary materials and software to support online courses, the three founders began promoting Open English in Venezuela five years ago.
They used — and today continue to use — advertising in Spanish and Portuguese that include clever and amusing Internet ads where Andrés and Nicolette have key roles. Andrés plays a student who speaks fluent English thanks to Open English and jokes with his friend who is taking traditional classes, spends hours in traffic to and from class and can hardly utter a phrase in English. Nicolette, who in real life is from Los Angeles, plays “Jenny from California,” one of the company’s teachers.
After Open English began attracting students in Venezuela, the company moved on to Colombia, Peru and other Latin countries. Currently, Brazil has the largest number of students, followed by Colombia, Venezuela and Peru. Brazil has been one of the fastest-growing markets for the company. Open English started with less than 50 students there in November of 2011 and now has more than 10,000, Andrés said.
Aside from its unconventional Internet English classes, Open English also has an unconventional human relations executive, who the company calls its Director of Happiness.
Alain Lagger, who assumed the new post last October, is responsible for creating a culture of optimism and cooperation in the company. His role includes creating motivational initiatives, team-building activities that emphasize the company’s core values, organizing group sessions and personal counseling. “We want people to feel a sense of purpose in their work,” Andrés said. “Some work — like call centers — can be tedious and we want to show employees that their jobs have a real purpose, that their work has the power to transform students’ lives.”
Interviews with Open English students — who range in age from teens to people over 50 — indicate that the convenience of online courses, the ability to practice English in a small class and the availability of teachers and coaches set the company apart from other types of courses.
Diego Fernández Acevedo, a 31-year-old teacher from Bogota, took English classes in school but turned to Open English to gain fluency and studies about one and a half to two hours daily. “I’ve been studying with Open English for more than six months and I find their small classes and interactive programs very interesting. It is difficult to practice English in the course but the experience is very valuable.”
“Learning English is not just one more language” Andrés said. “It’s a global communication tool that allows us to be better at work and helps us understand our social surroundings. We’re excited that Latin America is being transformed, how people today can start up companies like ours. And Miami is a kind of hub for startups in Latin America.”