• In the news
  • 12 June 2020
  • 9 min read
  • Words: Michiel Kotting
  • Images: Kahoot!

A Fika with: Eilert Hanoa, CEO of Kahoot!, discusses fast growth, adjusting revenue model, being a nordic player & behavioural changes

Northzone’s Michiel Kotting and Kahoot!’s Eilert Hanoa discuss fast growth, adjusting revenue models, the advantage of being a Nordic player, and behavioural changes in the face of COVID-19.

Founded in 2012, Kahoot! (KAHOOT-ME.OL) is a game-based learning platform that aims to make education more effective and accessible to people of all ages, around the world. It currently counts more than 1 billion participating players annually, “playing” from school, at work, and at home. Find out how the current global situation resulted in a high volume of new Kahoot! customers, how the company successfully added a paid tier to its originally free model, and how being a Nordic company has affected its business and general ethos in the conversation below. 

Michiel Kotting: As a company focused on the education system, Kahoot! is pretty unique in the sense that it managed to capture so many people in such a short period of time. What do you think is the underlying reason that made Kahoot! such a great fit for that audience? 

Eilert Hanoa: Kahoot! was created as a project based on the thinking of Professor Alf Inge Wang, who is a professor in Game Technology at the Norwegian University of Science and Technology. He saw the need for a solution to make the teacher the classroom hero and create excitement in the classroom, whilst also making sure that all students were paying attention during the lecture. That was the original idea for Kahoot! — making sure that everyone was looking up on the big screen, not dreaming away on their small screen or lost in thought, and at the same time to create excitement as you were learning. In 2013, we presented on stage at SXSW EDU to thousands of teachers from the US and abroad. At the time, the product was free, and ready to use. The teachers tried Kahoot! immediately, and shared it widely through their networks around the world, triggering the viral growth we’ve had since.

But like you said, there was basically no revenue model. And the revenue model that ended up working out well coincided with you joining and taking over. So how was that journey from being a super popular free product to being a solid business?

The founding team had ideas of commercialisation already from 2013, but since the growth of free use exploded, catering to this virality was prioritised. When we were maturing both from an organisational perspective and from a product perspective, we saw that it was possible to launch the second wave, which was the commercial edition, that we fully launched at the beginning of 2018. In the first quarter of 2018, we had 100% cash burn, which, of course, you’ve seen before. During the next 18 months, as we were launching the commercial edition for businesses and later the commercial edition for schools and teachers, we were able to turn that around to positive cash flow for operations 18 months later.

In the first quarter of 2018, we had 100% cash burn. During the next 18 months, as we were launching the commercial edition for businesses and later the commercial edition for schools and teachers, we were able to turn that around to positive cash flow for operations 18 months later.
Eilert Hanoa
CEO, Kahoot!

Michiel Kotting, Partner, Northzone

Which is unbelievable, I don’t think I’ve seen something like that before. You’ve built very successful businesses before, so to what extent was that commercial journey and transformation at Kahoot! similar and different from what you did, for example, at Visma?

I’ve been lucky to both build a company — Mamut, starting from scratch and turning it into a commercial company with healthy, operational performance — and as Director of Business Development at Visma, witnessing several companies sell software on subscription. This helped me both accelerate and think smart about how to manage costs and investments at the same time. It’s very much about having someone on the team who’s been through the journey before and can recognise the different steps when it comes to scaling and timing this scale, to make sure that you’re not running out of resources during that transition. In addition, you need to be proud of the product and service you deliver, and of course, make sure customers are willing to pay for it. 

Being known for being the most popular free software for teachers in the world, then starting to charge teachers, must have been another major step. Did you get any negative pushback from this?

Traditionally schools, school administrators and teachers are not necessarily a group which are easy to identify unless you already have them as users. I would say all in all it was overwhelmingly positive. Some of our teachers using Kahoot! were concerned about the company having sufficient resources to continue offering the platform as a free service. So when we were launching commercial editions, they understood that meant there will be a revenue stream there. Whether they are using the premium version or the free version, at least there will be some opportunity for Kahoot! as a company to continue to thrive, to continue to invest, and to continue to renew and innovate on the platform. There has been very positive feedback on that because I think there are too many burnt fingers out there of teachers and others who have invested a lot of time and resources into using a service that was then suddenly shut down.

It’s interesting because if you look at education tools, so far, there’s not a lot of mega-companies being built that way. A lot of them try to go through the school districts and have very long sales cycles. You go directly to teachers. Do you feel Kahoot! is a good example of a new renaissance in how we should look at education and education startups? 

I don’t think Kahoot! is an EdTech company in the traditional categorisation. And the reason is that the majority of revenue in Kahoot! is business-to-business subscription software. You have the teachers and students as an important user group on our platform, and also now teachers, schools, and educational institutions as customers. But the majority of what we do from a revenue perspective is related to corporate customers around the world. So, you can say that being a pure-play EdTech company is not a very easy position to be in these days, because there are so many good alternatives out there for whatever use case you have. And as you alluded to, the sales cycles, implementation cycles and testing cycles are fairly rigid compared to other segments you can address. Overall, I think it makes sense to think about Kahoot! more as a business-to-business company that has an educational dimension or EdTech dimension versus the other way around.

Let’s switch gears a little bit to the whole COVID situation and lockdown because you’re used in classrooms and big company events. Now, the schools are closed down and no one organises events anymore. This is a company that could be under pressure, but the contrary is true. 

We have been working for some time to make Kahoot! accessible both in the classroom as well as remotely distributed and asynchronously. When this happened, we knew that we would be able to deliver value. The features that we built into our premium offering, which is the commercial edition for teachers, would suddenly be very valuable for schools and teachers around the world, including in a remote classroom setup. So back in March, we instantly decided to give that away for free to all schools and teachers affected by COVID-19. We’re very happy that we’ve been able to do this and, at the same time, continue to show the strong operational scalability of the company both on running the services, but also on the financial side. 

And how’s it been to be working remotely for the team? How’s the morale in this whole period?

Overall, working remotely has been working pretty well. And although young, Kahoot! is an organisation that has that experience already, and has a rhythm, a business working asynchronously, across different time zones. A lot was already happening on Slack, of course, but we also connect employees with daily Kahoot! sessions. It’s not about necessarily expecting everyone to be able to work efficiently remotely instantly. It’s more about how you can work and deliver while being stuck in a setting you didn’t really ask for. I do believe that this will change a lot of the thinking about the need for pushing everyone into a building everyday, versus having a much more relaxed model. Also maybe a more flexible model for new hires, versus what we’ve seen before and what has been the gold standard, even for tech companies going forward.

What is your long term vision? Where do you think things are going for Kahoot! and what is possible there?

Of course, we continue to have very high ambitions on behalf of the company. We think that all in all, there’s still extreme untapped potential in the Kahoot! platform, in the Kahoot! brands, in the 17 million active accounts we have on the platform, its 1 billion participating players, and the 100 million kahoots our users have already created in our repository.

There’s obviously a number of the big tech giants really interested in the space. You’ve been doing a pretty good dance with them so far.

I think as in any relationship, you have to show that you can contribute over time; it’s an absolute must. It’s also about understanding what kind of role you can play, what kind of value you can add, and what the other part in the relationship actually needs. Finding that balance as you grow and as you evolve is extremely important. We’ve been able to, both through my previous work at Visma and with the great team at Kahoot!, work with a lot of these larger partners over time. Being open-minded on what we can deliver, being flexible on what we can do, thinking smarter about what should be to aim for tomorrow are very good lead points in building out the company. These are also important factors to make sure we can reach our target, which is to have over $100 million in revenue in 2022.

That's not unique for Nordics as such, but the Scandinavian design dimension definitely surfaces and can be recognised in several of the successful software companies coming up in the region. Nordic culture is also fairly flat organisationally, or less hierarchical in society in general, which also means that there is a different way of thinking on how, for example, teachers should interact with students, versus what you might find in other regions in the world.
Eilert Hanoa
CEO, Kahoot!

Source: Dealroom.co

A lot of these mega companies have been built either out of the US or out of China. How is it to build such a prominent platform out of Norway?

Scandinavia and the Nordics are starting to have a solid list of companies coming out of the region, like Spotify, Skype, iZettle. Coming from a region where you have had older star companies paving the way is definitely helpful because there is a larger general belief that can actually happen in that region. It’s not necessarily about finding the best place, it’s more about thinking how we can use the advantages of this region to maximise our potential. 

We have a fairly good thinking around how we should make our software very user-friendly. That’s not unique for Nordics as such, but the Scandinavian design dimension definitely surfaces and can be recognised in several of the successful software companies coming up in the region. Nordic culture is also fairly flat organisationally, or less hierarchical in society in general, which also means that there is a different way of thinking on how, for example, teachers should interact with students, versus what you might find in other regions in the world. Again, there are no secret formulas for one or the other, but those are at least elements which are important in the journey of Kahoot! 

We now have three months of raw data documenting human interaction on an unprecedented scale, and the pandemic stimulated a radical shift in function and perception, which has led to an unprecedented use of tech in our everyday lives. What kind of behavioural shifts will be permanent? 

Physical meetings will definitely be significantly reduced, as will business travel in general. The need for just sitting next to each other in the same building versus working efficiently together will be changed. You could say we have made 10 years worth of change over only 10 weeks. That is very positive. But then, of course, there are negative sides within a lot of industries, companies and even generations who haven’t had the time to transform or exchange their knowledge into the next cycle. This is a challenge for many societies around the world. If we are able to get through this, it will be on better terms than how we were operating just a couple of months ago.

Thanks for your time and for sharing your insights, Eilert. We wish you the best of luck in continuing to grow Kahoot! and look forward to seeing what’s next.