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A deep dive with Kunal Dalal on the business of running schools | JBCN Education
285 Plays5 months ago
Explore the critical role of high-quality schools in addressing the root causes of low education standards in India. While Edtech solutions provide temporary relief, Kunal argues that building and running schools is a lasting solution. He shares his journey, his significant challenges, and how he successfully scaled JBCN Education.
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Transcript
Introduction to Kunal Dalal and JVC Education
00:00:00
Speaker
Hi everyone, this is Kunal Dalal. I'm the Managing Director at JVC and Education. We run a group of international schools in Bombay, India.
Is India the EdTech Capital?
00:00:21
Speaker
In the first few years, we have featured a number of edtech founders on the show. They are essentially building solutions that are meant to solve the low standard of education in most of India's schools. And that is the reason why India is the edtech capital of the world because in advanced countries, the problem of poor quality education in schools does not exist. But we would
Schools vs. EdTech: Deep Solutions for Education
00:00:40
Speaker
argue that edtech solving for quality gaps in the K-12 segment are essentially applying band-aids and not going in for a deeper fix.
00:00:47
Speaker
the truly deeper fix is actually build and run schools. And this is why this episode of the founder thesis podcast is so special because your host Akshay Dad speaks to Kunal Dalal who has built up a chain of premier international schools in Mumbai. Running a school is a different level of challenge for a founder to take up and is surely not for the faint hearted.
Challenges in Scaling JBCN Schools
00:01:06
Speaker
And Kunal explains some of the challenges in this sector and how we solve for scale to expand the JBCN chain of schools.
00:01:12
Speaker
Stay tuned for some very special insights on the business of schooling in India and don't forget to subscribe to the Found a Thesis podcast on any audio streaming app.
Education's Attractiveness to Investors
00:01:30
Speaker
I want to understand the business of running a school. First of all, how big is
00:01:37
Speaker
the school market in the education space. I mean, you know, education as a space has received a lot of investor interest, a lot of startups, raised lots of funding. The most well-funded startup in India is an EdTech company. But within the education system, where do schools lie? How big of the value do they capture?
00:01:59
Speaker
So I think the education system and the education industry is large, but given the size and population in India, it should have been larger.
Government's Role and Opportunities in Education
00:02:12
Speaker
If you look at some of the government spends, the GDP spends on education in countries around the world, the percentage of GDP spend is a lot larger than what it is in India.
00:02:26
Speaker
Having said that, there has been a lot of focus in the last five to 10 years by the current government on education. There's a lot of opportunities that have come up as well in education. I think it's a growing industry. It's something that people are looking at. People don't mistake tech.
00:02:49
Speaker
and some of the other areas in education. I think the online ad tech space is completely different. It's based on valuations. It's value-driven. There are a lot of investors, a lot of funding that comes in. But when you look at the traditional businesses or traditional entities in education, like your kid through 12 schools,
00:03:11
Speaker
or your medical colleges, engineering colleges, MBA colleges, they are still run in a slightly different manner.
00:03:21
Speaker
All
Regulatory and Profitability Aspects of Schools in India
00:03:22
Speaker
educational institutes in India have to be run in a non-profit entity. So it could be a charitable trust, it can be a society, it can be a Section 8 company which is for non-profit that continues even today. All your government permissions, all the licensing, all your board approvals, all of that are given to you only if you run these institutes in a non-profit entity.
00:03:52
Speaker
Having said that, please. You're saying that it is no school in India is a private limited business. All schools are non-for-profit. It's a regulatory requirement that you need to be a not-for-profit to run a school, like a traditional CBSE, IB kind of a school. Yeah. All of them have to be run in a non-profit entity. None of them are run by private entities. They cannot be for profit.
00:04:22
Speaker
There are certain Supreme Court orders that allow a certain amount of profit in schooling and education. There's a very famous Supreme Court order called the TMA Pi order, which says that reasonable profitability is allowed in education, and that kind of governs
00:04:45
Speaker
a lot of what we do, but yes, there's no private entity that can run for profit.
00:04:54
Speaker
IPO potential structure in education. Do you agree with this policy? It just makes me wonder what's the incentive for people to open a school then? If you eventually cannot build a business, take it public, you know, all those traditional incentives for entrepreneurs don't exist in the schooling market from what I can understand.
Entering Education: Vision and Legacy
00:05:16
Speaker
So I'd like to answer this in two ways.
00:05:20
Speaker
The one part of me actually agrees with this, and I'll tell you why. I genuinely believe that if you get into education, you have to get into it for the right reasons.
00:05:33
Speaker
you know, shaping and forming the future leaders of the country. You have the ability to set the right value system, the right skill sets in these learners. So whoever enters into this has to enter with the right intention, with the right experience, but most importantly, enter it with a very, very long term vision.
00:05:59
Speaker
I think if people want to enter education and schools or colleges to say, Hey, in three years, five years, seven years, I want a five X three X seven X return. Uh, I think then they're entering for the wrong reasons and the eventual product, the eventual program that they offer.
00:06:18
Speaker
could get compromised. So one part of me says that, no, it's good that it's running nonprofit entities because then only people who are looking at building legacy, building something for 20 years, 30 years and beyond are going to enter it. And I think that's the right attitude, especially when you're dealing with young kids and young kids that are at a very impressionable age. There's one part of me that says, hey,
00:06:45
Speaker
you know, for exponential growth or for the kind of growth that is required in the educational sector.
Financial Dynamics of Running Schools
00:06:54
Speaker
For example, in the rural areas, in the tier four, tier five cities, if you want to build quality education, and I think that is the foundation to any kind of
00:07:07
Speaker
growth in a country like India to set the right values, to set the right programs, to get the right mindset. It requires a lot of capital. So education and especially K through 12 schools are very, very capital intensive. You have to buy the land, get the permissions, which is quite a long process. Build everything upfront before you start getting students and fee and revenue.
00:07:35
Speaker
So it is a long-term game. It is a long-term plan. There's a lot of patience required. If things did open up in this industry, then a lot more funding would come in. A lot more interested parties would kind of assist operators to build more and more schools or grow that landscape, which would eventually help improve the overall education quality.
00:08:03
Speaker
accessibility to quality education in larger parts of India, not looking at the four metros or the tier one cities because they have access to quality education. I'm looking beyond that. So that's the way I look at it.
00:08:19
Speaker
Why does almost every businessman want to open a school? Is it just for legacy or are there other ways to make money? I think there are two or three reasons. One is it really kind of adds to the brand value of the organization. When you're running a quality educational institute,
00:08:40
Speaker
Today you see a lot of developers building schools. Unfortunately or fortunately developers are looked at in a certain light. And I don't think that's right. I think that's a pre-notion or a judgment people have, which I don't think is right. But this kind of helps change the perception of the kind of work they're doing. Second is a lot of these
00:09:07
Speaker
individuals or industrialists that get into education have access to capital, CSR funds that need to be deployed. So this is a great way to do it, which really helps improve the overall quality and accessibility to good education.
00:09:26
Speaker
And lastly, if you want the real honest answers, it's always nice to get phone calls when admission is difficult. And, you know, parents will do anything and everything to get their child into a good school. So it's always nice to get those phone calls and say, Baha, please, you know, admission, Karado, get my admission done for my son or for my daughter. And that's a different kind of relationship that you build. So that's probably another reason as well. But that's on the lighter note. Interesting.
00:09:56
Speaker
an entrepreneur who's running a school, how much cash can they take out? I mean, assuming it's a popular school, a lot of demand, and so on. Is there the ability to be wealthy off running schools? Or you can at best have some sort of a marginal return on your investment? So the way I look at it is, again, education is a very long-term business.
00:10:26
Speaker
The advantage of it is that it's an annual cash flow, it's an annual income. So if you're vested in this for the right reasons, if you're vested in this to build legacy and to run this for a long term, then yes, of course there are benefits in it.
00:10:46
Speaker
But again, I think all the good schools, all the good brands that run educational institutes, the key to being successful and the key to kind of withstanding competition and everything that happens
00:10:59
Speaker
is taking intangible decisions to ensure the health of the institute in the long run rather than taking financial decisions for the short run. I think the moment you start looking at the bottom line and financial decisions, again, I feel
00:11:18
Speaker
over the course of a certain period of time, there will be other people that will come in that may run more successful programs and more successful institutes. So if someone is here to look at this as a long run, really play it out, happy to invest a lot of money upfront,
00:11:38
Speaker
because the gap exercise, especially in a city like Bombay, where we run schools. I don't think we look at things like return. You know, we're not the traditional
00:11:50
Speaker
We're not investment bank friendly. We don't look at IRR, return on investment, return on capital employed. I think the moment you start looking at those parameters that a lot of other industries and organizations look at, which you should rightly so, especially when you're deploying funds.
00:12:08
Speaker
I think there'll be mistakes made. But if you start looking at a long run, annuity kind of opportunity, then yes, of course, that's one of the reasons why you see a lot of good international schools or even national board schools much moving in the country.
Growth of International Education in India
00:12:30
Speaker
So just to give you an example, when we started JBCN,
00:12:35
Speaker
In 2010, that was our first school. I mean, our organization is 20 years old. So in 2004, 2005, I think there were 100 and some international schools, IB schools in India or less. Today, that number has gone to almost 2000.
00:12:54
Speaker
IB schools in the last 10 to 15 years. There's obviously a reason why people are doing that. If you look at Cambridge schools, that number has gone to beyond three and a half thousand. They're growing at about 120 to 150 schools every year.
00:13:12
Speaker
There's a lot of traditional schools that have been following the ICSC, CBSC program for many, many years, legacy schools that are now adopting international programs. There's again, a reason why they're doing it. So I think if the reasons are right, and if the thought is long-term, and if the thought is to build legacy and a solid program and a solid curriculum, then yes, why not?
00:13:41
Speaker
A veteran school in Mumbai would say a thousand seats would be making what kind of revenue? ballpark?
How is School Revenue Calculated?
00:13:50
Speaker
I mean it's a very simple math if they have thousand students if your fee is 5 lakhs a year it's 50 crores if it's 8 lakhs a year it's 80 crores if it's 3 lakhs a year it's 30 crores so the math is quite simple in that sense
00:14:05
Speaker
There's no hidden fees in most schools, I would like to say. So the revenue calculation for anyone is very easy in terms of the actual fee that they pay. The fee depends on the location. The more premium the location, the higher the fee you can charge. What are the things that determine how much fees a school can charge? I think the fee depends on a lot of aspects. One is the board and the curriculum that you intend to offer.
00:14:34
Speaker
The second is the student teacher ratio that you intend to maintain in your school. So for example, at JVC and our student teacher ratio is eight is to one. So if we have a thousand learners, we have between 120 to 130 faculty. And this doesn't include the admin staff, the support staff. I'm talking about pure teaching faculty. So the student teacher ratio plays a big reason.
00:15:04
Speaker
The third are all the external or non-academic programs, if I may use that word. So the co-curricular programs the school offers.
00:15:18
Speaker
Is robotics part of the school program? Is sports part of the school program? Is music? Is drama? Is entrepreneurship? Is design thinking? There are lots of programs and skills that today's learners require. So are they all part of the school program? In what capacity? Are they run by external vendors? Are they run by internal vendors? Or are they run by internal employees? So it's a combination of all of that.
00:15:46
Speaker
And then yes, the location of the school also does matter. And I'll tell you why it's nothing to do with whether there's affordability or not. All your electricity costs, maintenance costs, property costs, security costs, uh, invigilation, uh, CPTV, all of those costs are based on what we call the ready rekna rate.
00:16:14
Speaker
which is the rate the government sets for that area. So today I have a school in Parel, which is in South Bombay, and I have a school in Boorivli, which is in one of the suburbs of Bombay. The property tax that I pay in Parel is four times the property tax that I pay in Boorivli because the ready regular rate, which is set by the government for the two areas are different. And the property tax is a percentage of the ready regular rate.
00:16:41
Speaker
So yes, the location also does matter, but- How does the ready retainer rate affect anything beyond the property tax? Your electricity costs, your property tax, your maintenance costs, the land development costs. There's a lot of costs that are associated on the ready retainer. So we have a lot of
00:17:07
Speaker
government permissions that you're required to start a school. And after you start a school, also there are permissions that are required to be renewed on sometimes early, sometimes three early. All of those permissions are also based on the cost and location at which you are.
Fee Regulations and Transparency
00:17:24
Speaker
Okay. Is the fees controlled by the government, the fees that a school can charge?
00:17:32
Speaker
No, the fees are not controlled. At least in Maharashtra, there was a control put just before COVID in Gujarat where the government came up with a scheme saying any school can't charge beyond 25,000 rupees a year or 50,000 rupees or something like that. It was challenged and now it's been removed. What the control is, not the fee you can charge, but there are certain laws and acts
00:18:01
Speaker
around the increment of C. So whether I start my school with a fee of 100 rupees or 500 rupees is my prerogative.
00:18:12
Speaker
But once a learner comes into the program, they say that her parent needs to have visibility over the next 12 years. So I can't start at 500 and say next year's 1,000 and then it's 1,200 and 1,500 where the math of a parent goes haywire. So there are certain regulations around how you can increase the fee.
00:18:32
Speaker
It's not necessarily a percentage, but there's a process. For example, at JPGN, we're very, very compliant with all these processes. We have a formal BTA, which is a parent-teacher association. We propose the fee to them, have discussions around the fee, explain why we need to increase the fee by X or Y percentage. It is approved and ratified, and then the fee is
00:18:58
Speaker
put forward. Also, whenever you do the fee, there are two options. One is you can declare a fee for two years at a time or three years at a time. The government has come up with a new regulation where when a parent joins your school, you can decide the fee for 10 years or 12 years, make the parent sign and hand it over. So for new schools at JBC and what we're doing is a nursery parent, we're saying this is your fee from nursery till
00:19:25
Speaker
Great size. And then this is your fee from grade six to grade 10. So there's visibility for eight to 10 years. I think I'll pay 100 today, 108 tomorrow, 112 day after 120, whatever that number is. And they have signed off on it. They have the clarity. They can do the math saying, Hey, 10 years or 15 years of schooling. This is what I have to spend. Can I afford it? Not afford it. Does this work? Not work for me. And then take a decision.
00:19:54
Speaker
Okay. Is that common? I think that's not a very common practice. What kind of visibility? No, it's not very common because people are unaware, unsure of their costs. But I believe that
00:20:10
Speaker
since this law came out a year ago or two years ago, I can't remember, we have started implementing it in new schools. It's very difficult to do it in old schools where there are already students existing because I fear it shows our, it shows transparency and it shows our commitment to a parent saying, Hey, we are willing to commit to you if you're willing to commit to us. And I think that relationship is important.
00:20:35
Speaker
Hmm. Interesting. Okay. Typically, are most schools acquiring land or are they renting land?
Land Ownership vs. Renting for School Growth
00:20:43
Speaker
I think both groups of schools that are in a hyper growth phase typically go in for rentals because the capex is lower. Also, what happens in a rental is today, for example, JBCN is Bombay centric.
00:21:00
Speaker
Tomorrow, when JDthea goes beyond Bombay to get permissions, deal with the government, et cetera, et cetera, in different states, different languages, different sets of permissions requirements gets difficult. It's always better to have a local landlord who can do all of that. People who are looking at growing in a more structured manner and not in hyper growth, I think typically go in for ownership.
00:21:29
Speaker
And then you have a few groups that are really large. They've been doing this for 60 years, 70 years, they have 100, 120 schools, built really strong brand names all over India. They do a combination of both. They do some rentals and mostly ownership because they have a full, they can afford to have a full infrastructure team, alliance team, they have an understanding on a pan-India basis of
00:21:56
Speaker
how to deal and get these permissions and lies in and so on and so forth. So there are a couple of groups that have been in this for many, many years and are excellent at what they do and they are able to build this on a parent and their basis. Okay. When you're saying like large chains, like say DPS, I would have thought that they would do a lot of franchising.
Franchise Model in Schools: Pros and Cons
00:22:22
Speaker
So DPS. So franchising as a concept operate in schools?
00:22:27
Speaker
Yeah, so DPS is largely a franchisee model. I was talking about a podar or an iron group that have been doing this successfully for many, many years. So they have different models. I mean, their scale and their ability to do this is outstanding. And they manage the schools of their own. They don't do a franchisee model. No, they manage the schools on their own.
00:22:52
Speaker
There are a lot of groups of schools that do franchisee and they've done it quite successfully. Personally, for me, we have not gone down the franchisee way. My simple take and the example I give is, I don't think when you're dealing with children and shaping the lives of children, you can give a recipe and turn out a burger.
00:23:11
Speaker
It doesn't work that way. I think you have to be involved. You have to know what you're doing. There has to be quality control. There has to be a focus on the program, on the philosophy, the culture of the organization. And our take and route is to focus on building one school every two, three years, trying to make it the best and most sought after school in that area before we move to the next one.
00:23:38
Speaker
Coming back to land, you said that there are a bunch of regulatory requirements. So the land needs to be certified as land for school use.
00:23:49
Speaker
Is that the case or why can't you just rent any piece of land and start a school there? Let's maybe go a step back and say, if I want to start a new school today, what are the steps? What are the kind of hurdles I need to cross in terms of regulatory requirements and stuff like that?
Regulatory Processes for Starting a School
00:24:07
Speaker
What will be my zero to one journey?
00:24:10
Speaker
Sure. So I'll just answer both questions here. The first part is you don't have to have a school reserve land, but in your metros and tier one cities, if you don't build a school on a school reserve land, then it's unaffordable. So the school reserve land is like subsidized, the rent is subsidized or what?
00:24:34
Speaker
The ready record rate and the value of the land is subsidized and hence the rental or the purchase price is subsidized because you can only build a school on it. So for the developer, the landowner realizes that there are smaller group of people that can purchase it. You can only go and get permissions to build a school and so on and so forth. In terms of the steps to build a school, I think
00:25:00
Speaker
Uh, step zero or minus one for me is to identify why you want to build a school. What is the rationale with which you want to build a school and what is the key focus of your school? I think if you don't have that in place, and again, I'm coming back to what we discussed earlier, if you're looking at numbers and financial models, and that's why you want to build a school, I think.
00:25:29
Speaker
That's where you could go wrong in the long run. So I think the first step is to identify the culture, the philosophy, and why I want to do this. What is my intention of doing this? Once you kind of identify that, once you kind of build your base philosophy of what kind of school you want to build, why you want to build it, how you want to build it, then I think
00:25:56
Speaker
The step or the process is very similar to starting any business that any organization need to. You have to identify a gap. You have to identify which area you want to do it in. What is the competition? What are the other schools in that area? What is the cost of land? What is the viability around it?
00:26:14
Speaker
The permissions is a long-run process, so typically from the D-E-O con... I'll tell you, you need between 43 to 48 NOCs from 43 to 48 different government bodies to start a school.
00:26:37
Speaker
So if I start listing it, it'll take a long time in our chat. So there are a lot of different government bodies you work with to get it. And if it's a first time school, then you also have to do the first step, which is ensuring you have a charitable trust or an entity within which you can run it. That itself is a process you have to
00:27:01
Speaker
kind of present your case as to why you want to do it, how you want to do it before you get those permissions. So it is a long run process. And which is why I keep saying that people who want to get into the education business has to do it for the right reasons, which is why you've not seen too many investors and individuals jumping into the space. Okay.
00:27:28
Speaker
Very broadly, what are those 43 regulatory approvals you need? You could put them together into some categories. So there's a whole bunch of regulatory approvals required for the building.
00:27:46
Speaker
and the structure around the building. There's a lot of... The building is safe from that perspective. The safety and usability of the building. There's a lot of permissions required around the SSI that is available, which is your force flow space index on a particular piece of land. How much can you build? There are some certain height restrictions in education, which you have to follow. There's a lot of different permissions around fire safety, fire norms,
00:28:15
Speaker
There's a lot of regulations. So then you need, so that is from the building perspective and the infrastructure perspective. And these would mostly be from the municipality. A lot of it from the municipality, but they're also different departments. So you need, there's a
00:28:32
Speaker
offshoot of the municipality where you need certain permissions from the education department. There's an offshoot for the fire department. There's an offshoot for drainage. Now they have a concept of green schools. So they have an offshoot where you have to do things like rainwater harvesting. How do you kind of churn your
00:28:52
Speaker
water, how do you get certain green initiatives in your building. So that's a separate group of permissions. Some of it are linked to the municipality, some of them are not. Then you have the state government. So you go to the state government for a bunch of permissions. That culminates into eventually getting a permission call in a state NOC.
00:29:17
Speaker
which gives you a school code, which allows you to run a school. So today, if your son or daughter leaves my school and goes to another school, there's a school code that recognizes, yes, he or she was there to grade four or grade five, and another school can accept it, and so on and so forth, and which board and accept. Then you need permissions from the board that you want to do. So whether it's an international board, a local board, a state board, a central board,
00:29:45
Speaker
And there are certain requirements and permissions that are there for that. And then there are certain permissions required for the entity in which you run the school, describing the nature of the school, why you're doing it, how are you funding it, what is the process, and so on and so forth. There's a lot of state norms around the teacher qualification.
00:30:09
Speaker
the teacher requirements and so on and so forth. So you have to meet all those requirements as well to get the required permissions for the entity in which you're running it. So there are multiple, there are lots of different
00:30:28
Speaker
government departments that you lies in with. Things have got a lot smoother. The ease of doing business has really helped. A lot of these permissions now are online, which makes it easier, faster, but it is a process. It's not something that I can conceptualize today and say, hey, in three months I'll build a school.
00:30:50
Speaker
It takes its time. For example, even when you get the final permission to construct, you don't get permission for the entire building. You get it in different phases where you build the plan, they come and check it, they make sure that you haven't violated any norms. Then they give you up to a certain FSI, they come and check it, make sure you've not violated those norms, and then you build it so you can't even build the whole building in one shot. It gets very difficult to get that permission.
00:31:18
Speaker
So there's a process around it and I think rightly so.
Exploring Additional Revenue Sources for Schools
00:31:23
Speaker
I think it's important that people don't misuse or there's certain open space requirements, there's certain fire norms. I think absolutely critical and important to be checked and monitored while building anything that will have kids in it or young adults in it. So I think it's okay.
00:31:43
Speaker
It is such an uphill battle to start a school. I wonder why anyone does it at work. Say there is a school which earns 10 crores in fee revenue annually. Are there other sources also for monetization besides the fee revenue like for extracurriculars or for
00:32:04
Speaker
enabling other people like a lot of schools have these coaching classes which are also coming in and learning classes there and stuff like that. Are those significant other sources of revenue?
00:32:18
Speaker
So I think there are two different ways of doing this. Largely if you look at international schools, premium schools, the only revenue source is the fee because the way we do it is the focus is on quality and everything is part of the school program and the way we run it. There are schools that run into two shifts, for example. So then you're using the infrastructure from seven to 130 and 230 to seven o'clock.
00:32:48
Speaker
Conceptually, it's a right to have kids starting at 2.30 to 7 o'clock. I think that's debatable, but a lot of people do it. People do rent out their infrastructure after school hours. Again, something we don't do, but I know that some of them rent out their halls for marriages, for catering functions, and all of that.
00:33:09
Speaker
It depends on the nature of the school and the vision from the promoter group of what and how they want to do it. Sometimes, and again, no judgment here. I think sometimes it's important to do it. A lot of them also do it to use that revenue to subsidize the school. So they do it for the right reasons, which I think is great. Let me put it this way.
00:33:34
Speaker
I think if you have 60, 70, 80,000, 100,000 square feet in a city like Bombay or anywhere outside Bombay, I think it's up to the promoter and up to the group to eventually decide what they want to do with that infrastructure. I don't think there's any right or wrong. I think if you're utilizing the infrastructure
00:33:57
Speaker
in a positive way, in a right way. No one's going to run a bar over there in the night also, because saying, Ali, a classroom colleague will run a bar. You know, those kind of things don't happen. So I think if you're using it in the right way, if you're using it and maximizing the infrastructure and a lot of people do that, I think that's fair. I think that's okay.
00:34:19
Speaker
What percentage of revenue would be free cash flow? And you can, for example, decide to reinvest and open up more schools or build more facilities, or you can decide to take it out. But fundamentally, what percentage of your revenue could be free cash flow to
00:34:39
Speaker
use as you see fit. So I think that's a little difficult to answer. It depends from school to school and I'll tell you why. It depends if schools have taken a loan and have debt because then the gestation period is long. Second is it also depends on how they've built the school. People build the infrastructure phase wise or have they built the whole school and then started it. That's one thing. The second thing is
00:35:08
Speaker
No program starts today. If I started new school, I can't start a nursery to 12th. It's, it typically takes seven to eight years for you to build all your classes. And for seven to eight years, you're only investing and reinvesting into the program, into the school, because you keep adding more and more classes, more and more, uh, uh, facilities and so on and so forth.
00:35:36
Speaker
So I think cash flow and then the cash flow is also a derivative of the fee structure.
00:35:45
Speaker
and the number of students. So I don't think there's a standard answer. So I won't say it's 20 to 25% or 10 to 15% or 30 to 35%. I think it varies based on the kind of school you're running, the fee structure of the school with which you're running, and the initial investment and how that investment was made, whether it was made through equity or debt. And then I think the numbers vary.
00:36:13
Speaker
Understood. Understood. For a legacy school, let's say 10 years old, so all classes running, firing on all cylinders, what would be the split for them? How much would they be able to have as free cash flow? How much would be spent on infra? How much on salaries? And what are the other kind of revenue cost heads?
Cost Management: Salaries and Quality Staff
00:36:36
Speaker
So salary is the largest cost head usually for a school.
00:36:41
Speaker
Because if you're running a quality international program, I always tell parents as I said, I can make a school built of made of gold, but you're not going to come there because it's made of gold because you're going to come there because of the quality of the teachers, the program.
00:36:59
Speaker
the way things are run, the results, the placements, and so on and so forth, the safety, the hygiene. So a lot of emphasis is placed on that there's huge costs that are attached to that. So I think a large portion of the revenue, and when I mean large, I mean really large, for good quality international schools goes into the people. So just to give you a perspective,
00:37:27
Speaker
in a school of ours, that we have 1,200 to 1,400 learners. The total number of people that work in that school, I'm talking from a Didi Dada, which is a support staff. We call them Didi Dadas that do the maintenance, do all the people that maintain the security, safety, to all the people that maintain the quality in terms of admin, hygiene, et cetera, to obviously the teachers and the heads and the senior people and then the principal.
00:37:57
Speaker
A 1200 student school for us would employ anywhere between 350 to 375 feet. Wow. So that's a massive cost. Uh, again, for us, it's important. We're looking at the long run. We're not looking at short term cashflow or
00:38:22
Speaker
return per se, I think we're looking to build something that could be schools that have a different view on this. I'm just sharing what we do at JBCN.
00:38:33
Speaker
That is your majority cost. And then you have all our schools are fully air conditioned, so there's heavy costs on that. We have a lot of international programs and tie-ups. So we've tied up with an American program called RAS Plus for reading math programs. We've got programs at the Columbia Business School on Entrepreneur Share.
00:38:54
Speaker
These are like subscription costs. You have to pay an annual subscription for these programs. So we don't charge the parents for this. It's all part of the fee. As a school, the school needs to pay the bills. Yes. Then there's a huge cost of IT and technology today, whether it's your ERP system, whether it's
00:39:17
Speaker
enabling the IT program and systems firewalls. Today's learners are smarter than any of us when it comes to technology and hacking and all of that. So there's huge cost of security and tech per se and platforms around tech, which is also important. There's a huge cost of teacher training. I think professional development, upgrading teachers,
00:39:41
Speaker
We spend a lot, especially when you do IB programs and international programs. The board also demands regular training. We also as an organization put them through regular training. So I think that's really important. So yeah, a lot of costs involved in running a good program. Having said that, of course, at the end of the day, you do generate some free cash flow. You do generate reasonable profits, which I use then.
00:40:12
Speaker
for whatever reasons. Each promoter group can decide what they want to do with that. Can you give me broad percentages for the 1200-seater school as an example which you took? What percentage would be going on salary and so on and so forth? So salary would be close to 60% of the cost.
00:40:35
Speaker
Wow. Okay. So that's the people intensive business. It is a very people intensive business. Yes. Okay. So that is, that is our largest cost. Then you have infrastructure costs. Now, whether it's rental, not rental, whether there's debt, no debt.
00:40:52
Speaker
So yeah, but salary and people is the largest cost that goes into it. Okay. So, you know, I want to kind of also understand the difference between the various boards.
Why Choose IB and Cambridge Boards?
00:41:06
Speaker
You have chosen IB and Cambridge boards for JBCN, right? So just talk to me about how you reached to that decision. Why not do CVSE and ICSE and you know, how do you compare the different boards?
00:41:22
Speaker
I hope, I hope you have a couple of hours for this. No, I can, I can share. So firstly, I genuinely believe in one thing that whichever board you do and whichever board you adopt,
00:41:40
Speaker
what the focus is on the methodology of teaching. You can take a state board and teach it in the most international way, or you could take a really international board and still teach it in a very traditional way of road learning. So the board is one part of it, but I think the focus is on the methodology of teaching. And that's what differentiates the programs.
00:42:09
Speaker
To share with you why I got into the education space and why IB and IGCSE, firstly, it's from my own personal experience. I was really fortunate to do the IB program myself in 11th and 12th.
00:42:24
Speaker
And for people who don't know, what is the full form of IB? Just a little bit of a primer on IB. Yeah, the IB is the International Baccalaureate Program. It was started or founded in I think 1974, if I'm not mistaken.
00:42:41
Speaker
space out of Switzerland and it's one of the truest forms of an international education. The idea of starting IB, the philosophy behind it is that a lot of people move around the world and transfer around the world so they should have a common education system.
00:42:59
Speaker
when they moved from one country to the other rather than having to adopt to education systems of different countries. That was the philosophy with which they started and which is why they made it a truly international program because they made it country agnostic in that sense.
00:43:16
Speaker
So that's the International Baccalaureate Program. I was fortunate enough to do the Ivy Program myself in 11th and 12th. I was a pioneering student of Mahindra United World College in Buna. Didn't date I tell people it's the best two years of my life. It changed me from a young boy or from a boy to a young man. And that's the effect that the program had on me.
00:43:40
Speaker
How was the experience different from up to grade 10 versus when you went into 11th? So one is boarding school. So I think that was amazing living on your own. The second is the concept of United World Colleges. You get people from all over the world. So we were 100 kids on a hill in Buna from 64 different countries. So that was truly an international experience. And third is the actual program, which I'll get into.
00:44:09
Speaker
And then I had the opportunity to study in a really prestigious university in America called Carnegie Mellon University. So when I came back and when I was in my junior year of Carnegie Mellon is when I founded JBCN with my mother. And I said that I had, you know, I was fortunate enough to have access to this kind of education. And this is what I feel that we can do. And this is what India needs and more and more schools need to come up with
00:44:40
Speaker
these kinds of programs and opportunities for learners in the country. And that's why I chose and built schools to run the IB and IGCSE program. Now, let me tell you the biggest difference between the programs. The biggest difference in the programs, and if I have to sum it up, and I can go on about it, and that's what I said, I hope you have
Traditional vs. International Assessment Styles
00:45:04
Speaker
a couple of hours, but if I have to summarize it in one or two key areas,
00:45:10
Speaker
The first thing is the assessment pattern. Today, all of us study in a certain way based on the way we're going to be assessed. So in a traditional system, if you're going to be assessed, saying, hey, what happened in Act I, Scene II in Julius Caesar,
00:45:36
Speaker
then you're going to study in a certain way to say, hey, I just need to know what happened in the act. Versus if you're going to be assessed and a question in your English paper comes saying, what was the role of women in the 18th century? When that kind of question comes, it's not about knowing the book, but it's about understanding the text.
00:45:59
Speaker
And when I do multiple texts in English across different genres, my answer, your answer could be different because if I have studied a lot of literature from the Indian context, I would say women in the 18th century was subdued for various reasons. But if you had studied some Shakespeare or some
00:46:22
Speaker
different genres where women had a dominant role. So for example, in junior seizure, the women over there had a great dominant role. Your answer would be different. What they're looking for is your analysis and understanding of that. If I look at economics, for example, if you are asked what is the law of demand and supply, the way you study
00:46:48
Speaker
the chapter or the concept is very different, lower the price, higher the demand, higher the price, lower the demand, the point where demand and supply reaches as a point of equilibrium. We've all studied in that way. But if you are asked a question saying, hey, there's a fashion house
00:47:08
Speaker
And these examples I'm giving you are actual exam questions. I'm not making enough. So there's a fashion house called Armani in Italy. And they sell jeans for $100, and they sell 100,000 pairs of jeans. And next year, they came up with a pair of jeans for $150, but they sold 120,000 pairs of jeans. How does the law of demand and supply apply?
00:47:36
Speaker
So it's not only about knowing the law, but the applicability of the law. Because over here, it's actually elasticity of demand or inelasticity of supply, which is higher the cost, higher the sales, because it's a premium good or it's fashion or whatever the reason it's so.
00:47:58
Speaker
The apical validity, so the first biggest difference in the international programs is what we call, you don't learn by road, but you learn through understanding. The teaching learning strategies that are adopted in the education system focus on concept-based learning and not content-based learning.
Teaching Relevant Skills for Future Readiness
00:48:19
Speaker
I think today's education system, I always say the focus has to be on relevant education, not quality education.
00:48:27
Speaker
When we were in school, it was about quality education. Today, content is available at a click of a mouse. How do you interpret that content? How do you use that data? It's a skill that a learner has to learn, which brings it to the next part of the difference. Today, the international education system focuses on skill development.
00:48:55
Speaker
What are the important skills that are required for a learner to be successful as they move forward? And success is defined differently. So let me say what are the skills required for them to be relevant as they move forward. Communication skill today is really important.
00:49:14
Speaker
So your assessment patterns in schools, in our schools, for example, a percentage of your grade is also on communication skills, so your projects, your presentations. Today, we have grade four, grade five learners doing PowerPoint presentations and presenting their learning. We don't determine if a child is intelligent or not by a two-hour assessment they give at the end of the year. There are multiple forms of assessment because there are multiple skills developed in that.
00:49:44
Speaker
Today's education system or international education system focuses on skill development. Skill is acquired through multiple areas. Sports in my mind is a huge impetus in our schools at JBCN because they teach you collaboration. They teach you how to fail. They remove the fear of failure. I think these are all important skills, especially in today's learners that
00:50:11
Speaker
are wired differently. They are a digital generation. They need instant gratification. They don't have patience. A lot of the learners, including my own kids, would be more entitled than what we were when we were young. So how do you deal with that and how do you deal with that skill set?
00:50:33
Speaker
I think that's important, so communication, creativity. Today, learners cannot compete with machines. A machine will always beat you. So what is the skill required for you to compete or outdo a machine? Creativity, innovation, communication. I think today's learners have to have the right values when they move out.
00:50:56
Speaker
Today, if you ask me, the biggest strength of me or any leader that is required to run a larger organization in today's time, I would say EQ is more important than IQ, people management, compassion, respect, honesty. I think these are the values that they have to learn when they leave school. How do you learn these values? You have to display these values.
00:51:24
Speaker
So I always say that values are not taught, they are caught. You observe people doing this and then you learn this. I can't tell my son, you better be honest if he sees me lying. I have to display being honest and honesty for him to become an honest human being. So the entire outcome of education in my view has changed.
Rapid Evolution of Education with Technology
00:51:49
Speaker
And to achieve that outcome, we felt an international program which is progressive, which has a difference in methodology, which has a different pay, which upgrades itself regularly. Today, I tell learners and parents that like you learn English or Hindi or a foreign language, coding is a language you have to learn. It's no more a co-curricular program. Coding and robotics is part of life. So just like learning English, coding is as important.
00:52:20
Speaker
These are the kind of programs that need to be part of a school to make education relevant. So you said the focus is no longer quality education, but relevant education. So by this, you mean relevance to how the world is changing, like, you know, how, for example, thanks to something like an AI, you don't even necessarily need to have the ability to write
00:52:47
Speaker
fancy English because AI can write fancy English for you. So is that what you mean? Yes and no. So when it comes to, let's take the example you took. I still feel that learners have to write before they type. I still think the language skills have to be strong. While they may not have to write fancy English, but I think the relevant skill moving forward is to ask the right question.
00:53:15
Speaker
to get the right answer for me. So you still need the relevant skills. You still need strong language. You still need the ability to deduce information. I think AI will give you a lot of
00:53:31
Speaker
data and information, but you still need the skill set to be able to analyze it and use it in the right way. So research becomes an important skill. If research is an important skill, language is still important to build your research skills. So yes, when I mean relevant education, I mean something that is important to keep our learners in good stead for the next 10, 20 years, because the world is changing so fast.
00:54:00
Speaker
No one really knows what's going to happen. Every few years is a new era. It's no more decades before there's a new era. So I think, yes, I think the education system has to be ever evolving, changing.
Impact of AI on Traditional Assessments
00:54:15
Speaker
I have schools figured out how to deal with AI because a lot of the traditional ways of evaluating students through assignments,
00:54:26
Speaker
Now they can be hacked.
00:54:30
Speaker
by kids very, very easily. They just need to go to a chat GPT, type out the questions, get the answers. If you ask a child to make a presentation, again, there are now such easy shortcuts to doing these assignments. So have schools figured out what is the way to deal with education in this environment where chat GPT is available so easily.
00:54:58
Speaker
Yes, I think one is AI is here to stay. I think it's important for us as organizations to embrace it and not fight it.
00:55:07
Speaker
So I think it would be wrong for JVCN to say, hey, you cannot use chat CPT, you cannot use AI, you cannot, I think that would be wrong. It's like saying 20 years ago, you cannot use computers, you can't type, you have to write everything because that was the revolution we went through. And similarly, we are in a phase of hyper-revolution and it's here to stay. So we must embrace it.
Importance of Teacher-Student Relationships
00:55:30
Speaker
But I'll tell you one thing. And again, I'll give you an example in JVCN.
00:55:35
Speaker
because we have really low student-teacher ratios. The teachers know the learners so well. A part of their assessment is class participation, group work, presenting projects in school, and then you have your larger projects, assignments, assessments, etc.
00:55:55
Speaker
Today our teachers will know very easily if this is Kunal's work or not Kunal's work because while I may have a beautiful answer or a beautiful presentation through chat CPT, two days later when I am discussing a topic and debating something in the classroom that is discussed, my true ability and potential will come out.
00:56:16
Speaker
So I think it is important for teachers to know the learners well and their ability to, well, you don't need any screening. I know there are a lot of softwares where you put in the work and they will tell if you've got it from chat GPP or you've copied it from somewhere and all. I think it's very simple that our teachers know our learners so well that they know if it is their work or not their work.
00:56:40
Speaker
When teachers are handling 8, 10, 12 kids, the ability to know the learner well is very easy. And hence, the ability to know whether it's the learner's work or not their work becomes easy. Having said that, the way we orient our teachers is we tell them that, hey, please equip them with the right tools to use chat GPT or any AI tool effective.
00:57:07
Speaker
You won't say, hey, you cannot use it because I think I'll be doing this service.
Motivation and Retention of Teachers
00:57:13
Speaker
Interesting. How do you?
00:57:18
Speaker
you know, how do you get great quality people to stay with you? How do you control attrition? And because I'm assuming schools with low attrition are going to deliver much better outcomes simply because the stability of the teachers, the long connection which a teacher can have with kids and, you know, so how did you learn? What are some of your lessons in terms of attracting great people, retaining them? Yeah,
00:57:45
Speaker
So I think there are two or three areas, but the number one area in my view, and I strongly believe this because I also spend a lot of time doing this in our organization, is the culture and environment. Today, people that are in education
00:58:06
Speaker
I told you that promoters that want to get into education have to get into it for the right reasons. Similarly, people that get into education, a teacher, an admin staff, or any of them,
00:58:19
Speaker
get into it for the right reasons. Today, if you look at salary scales for a teacher and the kind of work that they do versus someone in the field of finance, it's not comparable. Even though teachers' salary scales have gone very, very high and they're well-paid now and a lot of teachers can make a livelihood out of it, you can't compare to a guy in finance.
00:58:40
Speaker
Okay. So people in this industry are in this industry for the right reasons. They're passionate about it. They want to be there. So the number one reason that I strongly believe, and that has worked for JBCR to maintain really low attrition and retain people is the culture and the environment you provide. I think it has to be an environment where I always tell people,
00:59:05
Speaker
I want people to come and want to come to JDCN. I don't want a teacher to feel like, oh, it's a job that I'm going to. I don't want learners to feel like, oh, I have to go to school, rather get up saying, hey, I want to go to school. I want vendors. I want everyone that enters the school to be happy, to want to be there, to actually feel that they are contributing to the growth of a learner, contributing to the impact that
00:59:34
Speaker
they will have on this individual as he or she moves along his educational job. What are some of the practices or how do you achieve this in real life, having teachers who are genuinely motivated and happy?
00:59:53
Speaker
So there are lots of things. And when I said I personally spend time, I spend a lot of time with HR. I spend a lot of time in the schools, culture building and interacting with individual teachers, groups of teachers, town halls. So there are lots of practices. The first and foremost is transparency and honesty. So I think that is something that we practice across the board.
01:00:14
Speaker
Any teacher is allowed to come give a suggestion. All the senior people in the organization have an open door policy. Today, a teacher can write to me directly. And in 48 hours to 72 hours, I'll give them an appointment unless I'm traveling. And that's applicable to any senior person in the organization for honesty and transparency is the first.
01:00:34
Speaker
Common vision is important. So we do monthly, I spend time with the teachers across the schools, sharing the vision of the school, the goals of the school, what we are here to achieve. I think it's important for a secondary teacher to know what the pre-primary is doing and for pre-primary teachers to know what were the accomplishments of secondary and the placements, et cetera.
Aligning Staff with School Vision
01:00:54
Speaker
So alignment of vision is important because then everyone knows I'm working towards a common goal.
01:01:00
Speaker
Teacher engagement is really important. 80 to 85% of our working staff are women, and it's a very women-oriented industry. So making sure they have a best friend at work, making sure they have a voice. So we do a lot of external surveys. We work with a global company called Gallup.
01:01:23
Speaker
where they do surveys where teachers can share feedback with us or not teachers, all employees. And then every year we pick up two or three areas of improvement, share it with them transparently saying, Hey, you said this is not proper in the school. This is how we're going to work on it. Sometimes we be honest with them saying, Hey, you said that we need more space. You know, the faculty lounge is not big enough. We say, sorry guys, this is Bombay. You know, space is a constraint. We can't help you in this, but at least we've acknowledged
01:01:52
Speaker
what they've asked for. So a lot of communication with the teachers, survey feedback, teacher engagement is really important. So we do a lot of fun activities in school, outside school, building relationships beyond a professional level, which is important. So teachers having friends in school, having people they trust, having seniors that they can talk to. We have an outstanding program called iConnect.
01:02:19
Speaker
So why do you have your performance program where your KRA's and KPI's are given?
Supporting Staff Through iConnect Program
01:02:26
Speaker
Evaluated regularly, iConnect is where you're up to two, sometimes three senior line managers. Talk to you every quarter on your personal requirements. So how things at home, especially during cold air and tough times, is there anything we can help you with? Are you going through anything personally? So there's a person, it's almost like a counseling session.
01:02:49
Speaker
a lot of money is invested in professional development. I think teachers want to grow by enabling a good teacher, someone who is a lifelong learner, someone who wants to learn, because only if you want to learn, can you impart that skill into the learner. So there's a lot of focus on teacher training, professional development, personal growth within the organization, plus professional opportunities within the organization. So that's something we do surely really well.
01:03:21
Speaker
Uh, and lastly, I mean, and secondly, so one is the, this part of it, the second is of course, the salary. So coming to the culture of transparency and the salary, we combine this every year, we have an international organization called asa that we work with.
Ensuring Competitive Teacher Salaries
01:03:38
Speaker
that picks out salary scales across international schools in India. So they'll pick a few schools in the city, a few outside the city, a few boarding schools, and so on and so forth. They have a mix. They give you benchmarks. We do benchmarking. Every year we do benchmarking for one
01:04:02
Speaker
a group of teachers, so it could be pre-primary, it could be the PE teacher, it could be the senior leaders, it could be the 9, 10, 11, 12 secondary teachers. So every year it's not everyone, because that's a very exhaustive process. It could be admin. But every year we do a benchmark and present it openly and say our salary, average salary is at 100, this is what the industry's at. And these are the 15
01:04:30
Speaker
schools or types of schools. Sometimes they don't want to be named. Four from Bombay with this kind of background, people kind of figured out with school. Four boarding schools in Masuri, Delhi, whatever, whatever. And we're very transparent. And sometimes we've gone to them. So two years ago, we had an instance where the pre-primary scales, ours, we were 90. And we saw the benchmark was at 100. We said, hey, guys, without a question, next year the average is going to move to 110. We want to be 5% to 10% above the industry standard.
01:05:00
Speaker
No questions asked. Now, what your individual salary will be, will be based on your KRA, your performance, et cetera, but everyone will get that bump. Will your bump be from 90 to 100 or 90 to 95 and someone from 95 to 110 that will vary based on your line management, but the average will move up. So again, a lot of transparency. We don't like to hide things. Measure performance of teachers. What's the way?
01:05:30
Speaker
Yeah.
Evaluating Teachers with Transparency
01:05:31
Speaker
So we have a very detailed performance appraisal system, which is again, very open, transparent, the goals, the end goals, the expectations are set 15 months in advance. So by March April, it is set for the next academic year, which is July to June. It's broken into two broad categories, three broad categories.
01:05:56
Speaker
The first and foremost that we assess teachers are is on attitude. For me, I think attitude brings altitude. I can build the competence of a teacher. I can't change the attitude of a teacher or of any individual, not only a teacher. So there's a lot of key focus areas on
01:06:18
Speaker
the attitude of a teacher, which things like did he or she go out of her way to assist a learner? Did they identify certain special skill sets in a learner and how did they hone it? Did they work well with their peers and how did they help a peer? And so there's a lot of criteria. So the first and foremost is attitude. The second is the technical aspect of it. So how well did they deliver
01:06:45
Speaker
the content, the curriculum, the program that we set out to achieve. And of course, we have an MNE process where we have teacher observations, classroom observations by their line managers, senior managers, et cetera. So how creative were they? What was the use of technology? What was the class response?
01:07:08
Speaker
lots of different aspects in terms of the technical aspect, which is the delivery of the program. When I say program, it could involve.
01:07:17
Speaker
Co-curricular, we have a strong program that teachers have trained on, something called quality circle time. So we spend a lot of time on EQ. Twice a week our learners go through a program that our teachers run called, which is focused on EQ. So we talk about bully, open communication, sex education, hormonal changes, social media and the effects of social media. So it's a design curriculum that our
01:07:47
Speaker
We have an enrichment program in the school, which is designed by the counselors, the psychologists, the child psychiatrists, and all of that. And that's delivered. So when I say the JBCN program, it includes everything, not just the academic program.
Encouraging Innovation in Teaching
01:08:03
Speaker
And a part of the assessment is on
01:08:08
Speaker
teacher initiatives. So did you step up and say, hey, I want to volunteer to take up this particular event and do it? Did you step up and say, hey, there's a new program on design thinking that we've introduced for this age group? Can I get trained and take a lead on it? And so on and so forth. So new initiatives, innovator solutions. Did I find an innovative way of teaching the same topic?
01:08:37
Speaker
So innovation, creativity, initiative, there are three or four parameters that we assess them on, which we say has a percentage. And again, it's the line managers and the people that are involved and the seniors that say that, yes, this is what the teacher did, or this is what he or she did differently, uniquely.
01:08:57
Speaker
he or she went and actually did a mini workshop with the rest of the teachers to share something that worked in their classroom. Classroom management, behavioral management, these are aspects that teachers deal with bullying, language,
01:09:14
Speaker
How did I deal with it in a positive way? So when I say program, it entails all of this. So a teacher's job is very, very hard. I always tell parents that my job sitting in my cabin is easier than being in a classroom for that 20 minutes with your learner. Yeah. So true. So true. This is how we evaluate. Okay.
01:09:33
Speaker
I want to end with spending a couple of minutes on understanding your journey.
Kunal Dalal's Personal Journey and Inspirations
01:09:39
Speaker
You don't come from like legacy wealth, right? And you spoke of how a school is a high capital investment business. You need to do a lot of initial capital investment. And today you have five schools in like five campuses. So how did you do that? Just take me through the journey of, you know.
01:10:01
Speaker
So my biggest inspiration has been my mother. She is the founder and chairperson of JBCA. I think we just rebranded ourselves recently in JBCA and calling ourselves the change makers because we believe that every learner is a change maker. He or she is going to become a change maker when they move forward. But every teacher has a change maker because they are bringing in change every day into the classroom. So the teacher-learner relationship in our school
01:10:31
Speaker
uh, is so important that we said that at JBC and we believe that we are change makers. But the foundation of being a change maker, I believe is my mother because 40 years ago, she broke the glass ceiling by being a young woman entrepreneur who followed her passion, was a teacher initially
01:10:58
Speaker
out of experience of being a mother said that I think the education system, the preschool system in Bombay can change. So when I moved out of preschool into a high school, she started her own preschool and then made that one into six preschools and she was running it all by herself. A first school was built in 1984. We still run that school under the brand of children's work. A preschool is also a play school?
01:11:28
Speaker
a play school. Yes. We call it preschools. Okay. Understood. So a play school, which we call children's look, she started in a small premises with 12 learners, a leaking roof. They used to be dust bins over there so that the water would ripen it because she didn't have the capital to kind of build on that. So for me, my mother is an inspiration and is
01:11:53
Speaker
the original change maker to be a woman entrepreneur. She was the first one to bring in a Montessori system in South Bombay. She was the first one to bring a PYP program and an IB program in Bombay. She's the first one to build a group of international schools. So there are a lot of firsts that she has done. But coming back to the journal, she did this very successfully.
01:12:18
Speaker
and was a very available parent as well for me. And the reason she only ran preschools is because of play schools is because they run from 7.38 in the morning to 1.30. So she was always there when I came back from school. And she was very clear. She got a lot of opportunities.
01:12:38
Speaker
to build franchisees, to run a business, to start high schools. And she was very clear that my balance of me being a mother and an entrepreneur is very important. I always say that people in the education space are social entrepreneurs, not entrepreneur entrepreneurs. So I think she's an example of a really successful social entrepreneur.
01:13:03
Speaker
I mentioned a little earlier that I had the opportunity to do the IB program and study in Carnegie Mellon. And that's when I told mom that I want to get into education. I want to start an organization that can do this.
01:13:17
Speaker
Being the only kid, my mom gave me a bait saying, okay, if you don't stay back in America and come back to India, then I'll help you. So it was a win-win situation for mom and me. And that's how we started GBCN in my junior and senior year. I wanted to take a gap year, build this. My parents gave me one on the backside saying, please go back and finish graduation. And I'm glad they did because I don't think I'd have graduated otherwise.
01:13:43
Speaker
We started JBCN, but we didn't have the capital to build schools. We didn't have the funds. So we started off by consulting and building programs to be a management arm for schools.
01:13:56
Speaker
And the focus was always international education. And from 2003 to 2008, 2009, we consulted and supported about 12 international schools all over the country in Hyderabad, and Ahmedabad, and Bombay, and Rachi, and all over, built some really successful schools and some really successful programs.
Building JBCN Schools with Integrity
01:14:19
Speaker
And then we realized somewhere along the line that our philosophy, our long-term vision, our core ideology of running successful schools started getting compromised by promoters. Once the numbers came in, once the students came in, the decision-making became different. The intangible decisions were not taking place. And that's when we set out and said, hey, we need to build our own schools.
01:14:49
Speaker
My mom, through a common connect, knew Mr. Rakesh Dunjunwala, the late Rakesh Dunjunwala, and then met him a couple of times. He had approached her once to start a school, but that project didn't go through. And she told me, Sriraj Kunal, I've met him a few times, but he's a man with a golden heart. And I have a lot of respect for him, and the few interactions I have with him, I'm enamored, and I really respect him.
01:15:20
Speaker
So I'm going to just pick up the phone and call him and say, Hey, I'm Pinky Dalal. I don't know if you remember, but I want to come meet you. And of course he remembered, he called us in, we had obviously a bunch of meetings and came up with a plan and he said, okay, Pinky and Kunal, if you want to start your own schools, I'm going to invest and support you and let's build a JVC and schools.
01:15:45
Speaker
And that's how the journey of JBCN started in 2008 and nine he invested. He is still our largest partner. I still believe that he is looking upon us and making sure that we do good work. He was more like a godfather to me personally, but to JBCN as an organization. We've seen some really difficult times when we started off. A lot of our school projects were stalled.
Lessons from Early Challenges in School Projects
01:16:13
Speaker
We had court cases.
01:16:15
Speaker
initial phase, we bought certain, or we got into certain properties, which we later realized were disputed. It was a learning phase, lots of learnings, lots of tough times. There were times where we were not sure we could pay a salary for the next month, but he was there. God was kind and we went through that phase. And I'm glad I went through that phase because when Mr. Jhundjhunwala invested, I was all of 26.
01:16:41
Speaker
and 25, and I feel that at that time you feel, oh, nothing can go wrong. I wanted to build an education institute. I started a company. I consulted so many schools. I got funding. I got funding from the largest, most successful investor in India. You know, things can't go wrong. But I'm glad I went through that four year period of real struggle, real tough times. None of our school projects were taking off.
01:17:06
Speaker
But he was a good patient investor who always told us that, don't worry, this is part of life. This is a journey. You've always known how to build curriculum and academic programs. You have to learn how to go through the whole government process. We failed, we faltered, we made mistakes. We had to learn the whole process of building infrastructure and good infrastructure. And that is a journey and a process we went through.
01:17:33
Speaker
And today I can say that we are at a stage where we can continue to build schools very successfully with lesser and lesser effort. And that's been the journey of JBC and it's been
01:17:47
Speaker
a very satisfying journey. I think in the space that we are today, learners and parents come up to us literally and meet them socially and they'll hug me and they'll take mom's hand and kiss her hand and say, you know, Mrs. Alal, because of you, my son is where he is today, my daughter is where he is today. She has over 10, 15,000 alumni from children's look.
01:18:11
Speaker
We have a large alumni base now from JBCN because we find many graduating badges across our various schools. So it's been a journey full of learning, lots of ups and downs, lots of learnings. One thing I do is I document a lot of our learnings and mistakes we make every time we do that. And I like to refer to them once in a while whenever we are building a new school.
01:18:38
Speaker
And we make mistakes every time we build a new school as well, but hopefully we don't repeat the same mistakes. For me, it's important that we don't repeat the same mistakes. And overall, very fulfilling, very satisfying journey. One thing I forgot to mention is when I started JBCN and I was in Carnegie Mellon, everyone was applying for a job. So I said, Chalo, I should also experience what it is to interview and get a job. And I actually got a job on Wall Street with Morgan Stanley in investment banking in New York.
01:19:08
Speaker
And I turned it down because I said, no, my calling is to come back and get into education. All my friends said, you're crazy. $40,000 living in New York. You're single. I mean, what's wrong with you?
01:19:21
Speaker
But I think the universe has a way of telling you what's right and what's wrong.
JBCN's Growth and COVID-19 Resilience
01:19:29
Speaker
And I'm glad I followed my path and my journey. And we sit today with five campuses, over 6,000 students, close to 1,000 people working in JBCN. And like I said, it's a very fulfilling and satisfying journey. Amazing. Do you plan to expand beyond Bombay?
01:19:50
Speaker
I think we can still build a few more schools in Bombay. I think each suburb is a mini city, is a micro market. We believe that there's a lot of potential to build quality educational institutes in those areas. And because we build schools where we are involved in
01:20:08
Speaker
We focus on it for a couple of years before the next one. I think there's a huge opportunity. But yes, eventually, we will exhaust Bombay and we will kind of have to move out to different cities. You did try once, right?
01:20:27
Speaker
in, opening a school in another city. We tried to open a city. So one of the mistakes and learnings we made very initially, what I was talking about is we thought that when we build schools and we got this funding, we should build one in different parts of India so that we're banned here. Not realizing the operational challenges, the government challenges, and so on and so forth. I don't want to get into it. So we bought a land in Nagpur and Chennai and everywhere, thinking we'd open schools everywhere.
01:20:57
Speaker
The Chennai land we bought ended up being disputed and we got caught into buying that. We had to sell that land at a cost lower than what we bought it. The Nathpur land we bought because everyone said there's a Mihan project and an IT project coming up. Nothing came up. We ended up selling the land 14 years or 13 years later at the same cost at which we bought it. We bought it in 2008 and sold it in 2022.
01:21:21
Speaker
at the same price that we bought it at. So yeah, we did try and we realized that we need to build schools in Bombay. And even today, if you ask me that when we move out of Bombay, I will always look at a city where I can build three or four schools, rather than building one school in four different cities.
01:21:40
Speaker
Okay, so you have the ability to invest enough management bandwidth without needing to travel all over the country. How was Covid for you? Was there financial stress, fees not coming in? Did you experience those kind of stresses? Or because you are in a slightly more premium category, so you would probably not have seen that so much?
01:22:05
Speaker
Yeah, I think fortunately, while everything that happened around us was really unfortunate, I think as an organization, COVID was the biggest learning period for us. And I'll tell you why there are two or three reasons. One is we actually understood the true potential of the people in JBCN. On March 20th, COVID lockdown was announced.
01:22:32
Speaker
and on March 27th of Monday, we had four and a half thousand donors and 600 faculty online running an outstanding program.
01:22:43
Speaker
I had never stopped for 15 or 16 months that we were locked down. It kept improving. We kept adding new softwares. We invested a massive amount in technology because when you're online, you need to make sure the program is engaging. So it was not about just delivering a program, but using lots of different tools. And I don't want to get into it, but we invested in 20, 25 tools or more. We invested in the Wi-Fi of all our teachers to be up to a certain
01:23:11
Speaker
standard, we managed to deliver laptops and computers to all our teachers that didn't have devices at home that were stuck in lockdown. So the way our teachers pivoted into the digital age and the learning we got as an organization of what the capability of our team is was tremendous. We had belief and faith that we can achieve anything in JBC.
01:23:36
Speaker
The second is the use of technology and this entire program allowed us to realize how we can bring in efficiency into JBC. We realized that there's a solve for a lot of things in JBC and through technology that we were not accessing. And it actually allowed us to reflect on bringing in efficiencies, improving our systems, improving the output from individuals in COVID.
01:24:05
Speaker
So that was the second day. And largely, I think we were one of the few school groups who had a number of learners in JBC and increased through the two years of COVID. We had set up a health test for parents that had challenges with fee. It was a very, very small percentage. We gave a lot of levies for them to pay the fee. If there were delays, it was okay. We worked with them.
01:24:32
Speaker
We were very transparent with parents in terms of we didn't increase the fee for three years. We were very transparent. I must have met between 600 to 800 parents online in the first two months of COVID through Zoom calls explaining the rationale. We didn't reduce the fee.
01:24:49
Speaker
We didn't reduce teacher salaries. Everyone got salary on time for the 15, 18 months. We didn't fire anyone. We paid our bus drivers. We paid our security guards. We paid everyone and the rationale was
01:25:04
Speaker
that and we explained to parents that why the fee is not reducing is because we said that maybe we want to, all our bus drivers, for example, know your kids, police verify. Do you want a situation where you have new bus drivers 15 months or whenever COVID opens up?
01:25:20
Speaker
No, we don't. Safety and security is of paramount importance. So parents were with us. We worked with them closely. We worked with the PTAs. And it was, I think it built the bond, it built the relationships. Even today when we meet parents, we talk about those meetings that we had in COVID and how they went and how we supported each other. And I think it was apart from everything else in the unfortunate part that happened in the world and for families that suffered,
01:25:49
Speaker
I think as an organization, it was a really successful 15 months in terms of learning and understanding of the organization. Amazing. Thank you so much for your time, Kuna. It was a real pleasure. Thank you, Apsai. Thank you so much for having me.