'600,000 Users' App Shuts Down as EdTech Startup Pivots: The Reason

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"Good teaching skills and content do not necessarily lead to improved student grades. Studying ultimately depends on the students themselves, so we began asking what we could do for them, which led us to discover a new concept."

Shin Hee-cheol, CEO of Unboxers, recently met with Money Today's startup media platform 'Unicorn Factory' and stated, "We believed that combining advanced AI (artificial intelligence) programs with human instructors could solve problems that traditional academies were structurally unable to address."

Established in March 2022, Unboxers currently operates an HYBE-led math academy in Cheonan, Chungcheongnam-do, which combines AI learning programs with human instructors. The first location, which opened last August, started with only two students but grew to 120 within ten months, reaching a monthly revenue of approximately 50 million won. He noted, "Other academy operators have remarked that this is an 'unprecedented growth rate for a new math academy.'"

Unboxers gained recognition with its anonymous praise app, 'HYPE,' launched in 2023. HYPE secured over 600,000 users within two months of its release and rose to the top of the free app rankings on the Apple App Store, garnering significant popularity. Based on this success, Unboxers also attracted venture capital (VC) investment.

At the time, Base Investment, Future Asset Venture Investment, and Goodwater Capital made a seed investment of 1.4 billion won in Unboxers. Subsequently, Unboxers continued its momentum by launching hits such as 'Concept,' an AI profile app that ranked fourth among domestic photo apps and recorded monthly revenues of 100 million won. However, as the limitations of services relying on fleeting trends became apparent, the company faced growing concerns about finding a sustainable business model.

In its early days, Unboxers adopted a strategy similar to Toss, rapidly launching over 20 apps to validate market viability. However, despite numerous experiments, it failed to identify a business that could be cultivated for the long term.

"Shin (CEO)" said, "It was a dark period where funds were depleted and team morale had stagnated." He recalled, "At that time, what resurfaced in my mind was that 'education' was the field I had pondered over the longest and understood best." He continued, "I persuaded each team member one by one, even presenting an IR (Investor Relations) presentation before them, stating that 'the more legacy an industry is, the more completely new it can become if we redesign it from the ground up.'"

The decision for the entire founding team to relocate to Cheonan and operate the academy directly was also a manifestation of their resolve to "start from scratch." "Shin (CEO)" said, "We chose Cheonan after searching for an area that is not too far from the capital region, has high educational enthusiasm, and has students who can demonstrate results." He added, "While existing edtech companies often hire individuals with academy experience when entering the academy business, we had to redesign the operational model itself from the beginning, so our founding team had no choice but to dive directly into the field."

Unboxers divides the value of offline academies into 'learning provision' (lectures, homework, tests, content) and 'management provision' (counseling, motivation, question management, learning management). The academy was redesigned so that advanced programs handle learning provision, while humans manage aspects like motivation.

Students receive a daily 'Today's Learning Mission' individually designed by their assigned instructor. There is no fixed study time at the academy. If a student answers a problem incorrectly, they must review the explanation and solve a modified version of the problem to proceed to the next stage. Incorrect problems are continuously reissued in modified forms during subsequent classes. This structure ensures repeated learning until students can understand the material on their own.

Solution data is visualized in real time, allowing students, parents, and instructors to all view it. "Shin (CEO)" stated, "This is an academy that teaches based entirely on data, not intuition." He added, "Every student has a different pace, difficulty level, and schedule, and parent requests are reflected within 30 seconds." He further noted, "While the academy operates like private tutoring, its cost is significantly lower than that of private tutoring, which is its key differentiator."

The core competitive advantage lies in the AI Content Research Lab. Each AI agent handles tasks such as problem difficulty classification, type classification, generation of modified problems, and error verification. When a student brings school handouts, the AI recognizes them via OCR (Optical Character Recognition), writes explanations, matches them with its own DB (database), and generates sets of modified problems.

Since many internal school exams are derived from modified versions of materials distributed by schools, the ability to create problems is the core competitive advantage of regional hub offline academies. "Shin (CEO)" said, "Approximately 97% of tasks previously performed by humans have been optimized." He explained, "It has only now become possible to build this properly through the combination of development and data capabilities accumulated over three years while creating over 20 apps, along with three years of experience in the private education market."

Unboxers is using AI to lower labor costs and convert most of its revenue into operating profit. In comparison to the typical academy industry operating profit margin of around 10%, Unboxers has achieved profitability at the level of 40% to 50%. The company plans to open a second direct-operated location within this year and launch a franchise business to fully validate its business model. It is also pursuing investment for this purpose.

"Shin (CEO)" said, "While no one can guarantee what the education market will look like in 20 years given the AI era," he added, "I am confident that the private education market will not shrink compared to today over the next decade." He continued, "Offline academies are a market where achieving number one in Korea means you can succeed globally." He concluded, "We have currently implemented about 80% of our target model and plan to complete the remaining 20% before expanding nationwide."

"[Money Today startup media platform Unicorn Factory]"