In business, timing can be everything. And for husband and wife founders, Tony Hsieh and Cathy Hsu, it certainly was.
Hsu and Hsieh are the brains behind Jiliguala — which translates to "babble" in Chinese — a children's English language app which boasts more than 25 million registered users.
The couple started the business in Shanghai in 2014 in response to what they saw as a gap in the Chinese market for affordable preschool English lessons. But it was their marketing strategy that helped the business take off and won them one million users within the first month.
"The first one million users that we got actually came just after the launch of the articles feature on WeChat," Hsu told CNBC Make It, referring to China's answer to the Facebook-owned WhatsApp messenger app.
"Really early on, we noticed a lot of parents were sharing parenting tips featured in these articles. So my team and I went out and contacted every single parenting publication we could find and asked them to write about Jiliguala."
"It did wonders for us," Hsu said. "It drove so much traffic that our server actually crashed multiple times."
That tactic of spotting and capitalizing on social trends is something Hsu and Hsieh picked up in their early days working at software start-up Slide, a U.S. app developer initially used by Facebook and later acquired by Google. The tech giants are renowned for being at the forefront of the latest tech crazes and dedicating entire teams to following emerging trends.
"I think it helped that we had a bit of a background in the Facebook days of looking at what viral growth means early, early on," said Hsu.
"We actually have two or three guys now who spend most (of) their time looking at different trends and the new wave of short video that's kind of blown up all over China and how we can leverage that to grow traffic," Hsu continued, referring to TikTok, a Chinese short video-sharing app that's similar to Snap.
A strong marketing strategy is nothing without a killer idea, however. And, like many great ideas, Jiliguala was born out of a problem.
The couple, originally from San Francisco, had been living and working in Shanghai for about four years when, following the birth of their first child, they saw the vast appetite for early-years English education in China.
Three-quarters (76%) of Chinese parents start getting their children to learn English before their fifth birthday, according to a joint report by online news portal jiemian.com and Jiliguala. But the costs can be great: Typical Chinese parents spend around 20% of their annual income on their child's education. International schools, meanwhile, can cost closer to $30,000 per year for full tuition.
"We wanted to do something that could disrupt that," said Hsu, who, along with her husband, had been looking for an opportunity to start their own business.
"When we looked at the different sectors in early childhood education, language was one of the areas that parents had a real burning desire to look for something that could help them," she continued.
That issue was particularly prevalent among older parents and those from remote communities, where knowledge of English tends to be poorer, Hsu noted.
The market was only set to grow in 2016, with the eradication of China's decades-long "one-child policy," which limited many families to just one child.
So, Hsu and Hsieh decided to use their tech backgrounds — and $100,000 of their own cash — to come up with a solution.
Both Hsu and Hsieh spent around a year studying the curriculum at U.S. and Chinese schools, before coming up with an app to teach English via interactive videos, games and songs.
The app aims to help children in the "fundamental" early years — between the ages of 0 and 8 — before they face other commitments.
"Chinese kids have a lot of things on their plate when they get to elementary (school)," said Hsu, listing piano lessons and other extra-curricular activities, "so we felt it was important to start early and build the foundations."
- Each 15-minute lesson begins with a short video designed to replicate a real-life experience, such as going to the shops.
- The child is then presented a series of key words and sentences and asked to respond to interactive tasks using the app.
- Every lesson culminates in a song or short story to help reiterate the core ideas. Parents also receive a progress report at the end of the lesson.
Jiliguala, which in the past four years has raised $20 million from the likes of publishing house Penguin Random House and U.S. venture capital firm Sequoia Capital, is available for a one-off annual fee of around $76, with additional upgrade options available.
The app started off free, but switched to a paid model in 2017 after Jiliguala started to produce its content with in-house actors, and drawing on the expertise of its now 200-strong team of education experts, child psychologists and video producers. Previously, the company relied on existing language content.
Hsu said that decision was a conscious move to make Jiliguala a memorable experience for children.
"When I think about all the IPs I've grown up with," said Hsu, listing Disney among other so-called intellectual properties, "I want Jiliguala to offer that as well, so that when they look back and think about learning English, they remember having this family of Jiliguala characters."
Building on from its aggressive Facebook-inspired growth strategy, Jiliguala is now growing organically at a current rate of 1.2 million new users per month.
Today, the company claims to have reached "one in six children" across 2,300 cities, towns and villages in China. But with the Chinese market continuing to expand, Hsu sees no reason to slow down.
"China is a very, very competitive space," said Hsu. "You have competitors and if you're doing something well, they're right behind you."
"They will go after you if they feel like you're onto something. So we'll continue to watch the market and look for opportunities to grow."
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