Online education giant VIPKid, a Beijing-based tutoring platform that has raised $1.1 billion in capital since its founding and was at one point valued at over $3 billion, will end its flagship education program in China by early next month.
The announcement, which first appeared on the company’s online teacher portal on Oct. 15, comes after months of tumult and change in the multibillion-dollar online tutoring industry, precipitated by new education regulations from the Chinese government that effectively ban private tutoring lessons with foreign educators. Started in 2013, VIPKid mostly hosts live, one-on-one language lessons between native English speakers, many of whom are American, and children in China.
Since August, VIPKid has warned its teachers, who during its heyday numbered 100,000, that the company would experience major upheaval to its operations in China. Dozens of its competitors have relayed similar messages to their tutors—in some cases letting them know that they would be winding down operations in the coming months, and in others, such as with the company GoGoKid, informing teachers abruptly that all of their classes from that day on were canceled and the platform was shuttering.
Still, many VIPKid teachers, who depend on the platform for part or all of their income, hoped the end would not come this quickly. VIPKid had most recently suggested that families in China who had purchased bulk class packages—some of which booked out six months, a year, and even further into the future—would be able to finish those classes with foreign educators.
The message sent a few days ago, however, marked a sudden departure from that plan. By Nov. 5, the announcement said, “students in the Chinese mainland will no longer be able to take … classes with foreign teachers living outside of China.” The last date that parents could book live classes for their children with foreigners was Oct. 19.
“We are disheartened and sorry to share this update as we know it will immediately impact the livelihood of teachers in the community and we know that you treasure your teaching relationships with your students in China,” the notice from VIPKid read.
‘Grateful But Frustrated’
Teachers who had stuck with VIPKid this far, knowing an end was near, expressed disappointment but not surprise. Many doubted that they would actually be permitted to teach until student packages ran out, given the Chinese government’s ban on the arrangement.
“It will hurt financially, and it’s sad because I’ve had some of the same students for years,” says Kelly Tagliaferri, who has been teaching for VIPKid since 2018 and lives in Northern Virginia. “But I have other things now.”
Tagliaferri had joined Outschool, a U.S.-based tutoring company that serves mostly American children, during the height of the pandemic in 2020, just in case something ever fell through with VIPKid—and because Outschool was heating up, she says. She also works part-time at a private Christian school in her area and occasionally accepts freelance video production gigs. She always tries to keep a few opportunities open, in the event one or two fall through—an approach that has shielded her from the most severe effects of China’s online tutoring collapse.
By contrast, most teachers have found themselves scrambling over the last few months. Some tutors have found part- or full-time work elsewhere. Others have joined some of the hundreds of tutoring companies that now exist outside of China, in markets such as Eastern Europe, the Middle East, Southeast Asia and others. A smaller but still significant group has begun tutoring their Chinese students privately, in clandestine arrangements, setting their own schedules and pay rates, though many find this option to be too risky for the families and won’t consider it.
Tagliaferri, who makes about $20 an hour on the platform, plans to teach through her very last class with VIPKid, which is scheduled for Oct. 29. She is currently teaching six to eight classes each morning.
Melissa Miller, a longtime VIPKid tutor who lives in La Grange, Ga., is in the same position. She’s teaching till the end and has even opened up more slots than usual in hopes of seeing her “regulars” one more time and telling them goodbye. VIPKid has created e-card templates where teachers can tell their students goodbye more formally, whether they see them again in class or not.
Both Tagliaferri and Miller have found that their bookings toward the end have been filled not with their regular students but with students they’ve never met before or have taught only a couple of times. This, they guess, is because those students’ tutors have left the platform for other opportunities, and their parents still want them to take live classes while they still can.
“I’m grateful but frustrated,” Miller says. “We’ve been stuck in this tango for the last few months, where we were hopeful but always knew this end was looming in the background. I’m grateful because at least I have work, but frustrated because it’s like, ‘I wanted to say goodbye to Hanson,’” and instead she sees unfamiliar faces appearing on screen.
So-Called AI Courses Replace Live Tutors
VIPKid must have known—or at least suspected—that the government would not allow foreign educators to continue teaching until the last prepaid class was taught, because a few months ago, the company invited select tutors to record themselves teaching classes for additional pay, in an effort to build out its so-called “AI courses.”
These courses can host up to four students at a time, rather than one, and do not take place in real-time. For teachers, just recording a lesson earned them $20—nearly double what many are paid for each 25-minute live class (hourly rates are advertised as between $14 and $22). If the recording was accepted and added to VIPKid’s library of classes, the teacher would get another $20.
This may have seemed like a sweet deal to some, but to Miller, it was a nonstarter.
The company had high standards for accepting a recording, she says. They’d often ask teachers to go back and try again, using more props, more encouragement, and less personalization. Of course, teachers recorded themselves with an audience of none.
“I didn’t feel like they were paying us what it was worth,” she says. “They’re going to use this over and over and over again, but all we’re ever going to see is those two payments.”
She adds: “I didn’t think I could live with myself knowing that in a year there are students still watching my recording, and I only got $40.”
The Future of VIPKid
Though these changes will mark the end of the tutoring program that VIPKid was built on and is widely known for, it does not, apparently, mean the end of VIPKid.
The new policy in China, known as “double reduction,” prevents foreign educators from tutoring children but not adults. So VIPKid is leaning on adult English lessons for some of its future revenue, as well as a partnership with the American company BookNook, which tutors K-8 students in the U.S. in English language arts and K-5 students in math.
BookNook has contracted with VIPKid since summer 2020 in an arrangement that allows BookNook to open its tutoring opportunities to teachers already working with VIPKid. Tutors with VIPKid can book lessons with BookNook when it’s convenient with their schedules. It has been one of BookNook’s primary methods of sourcing tutors, apart from when its district partners provide their own.
“VIPKid is dealing with one of the all-time hard pivots in education technology,” says BookNook founder and CEO Michael Lombardo. “But we believe they have a strong leadership team capable of navigating this moment … and we expect [our partnership] to continue into the future.”
These existing arrangements—adult English classes in China and the BookNook partnership in the U.S.—are unlikely to keep VIPKid’s current slate of many thousands of teachers booked up and compensated enough to continue renewing their contracts. The company’s ability to navigate that challenge will depend mostly on the success of a new “global platform,” which aims to bring English language lessons to children around the world and about which VIPKid has so far released few details.
VIPKid declined an interview request from EdSurge and would not answer specific questions about the company’s future, but a spokesperson for the company did provide a short written statement.
“While VIPKid’s next chapter may look different, we remain confident in our future and steadfast in our mission to inspire and empower every child for the future,” the statement reads. “Our dedication to creating opportunities for online educators is stronger than ever, which is why we’re accelerating our international expansion efforts, broadening the reach for teachers to teach students globally.”
The student base outside of China, according to a spokesperson, has grown to include tens of thousands of children over the last year. By contrast, VIPKid at one point claimed to serve more than 800,000 children in China alone—and that may not have been its peak.
Many teachers, including Tagliaferri and Miller, have re-signed their VIPKid contracts and are sticking around to at least see what happens with the global platform. But hardly anyone speaks optimistically about it.
“I’m open to doing it. I’m hopeful they can get something going. But I’m skeptical,” says Tagliaferri. “They’ve tried to go to other countries before”—referring to a tutoring program in South Korea—“but they haven’t been successful. Other markets are not as competitive as China.”
Miller, who has devoted herself to VIPKid for the last few years, would like to see the global platform take off. She has joined the new “Teacher Network” where VIPKid plans to keep its teacher community connected and informed of upcoming opportunities.
But even in that group, which she calls “teacher purgatory,” she can read between the lines. For those who join, the company is offering free webinars on stress management, building your professional portfolio and “looking ahead,” and “aligning your purpose and passion.”
To Miller, that suggests VIPKid is priming its remaining tutors for a future that does not include itself. She hopes that’s not the case, but just in case, she’s heeded the warning—and is actively applying to jobs.