Very interesting interview with Khalid Muhmood on The Business of Family podcast. He has been active in the business of education since 1994 when he and his wife, Arabella Peters, co-founded Apollo English and then the British University Vietnam. He talks about his entrepreneurship journey, the evolution to a holding company model and involving the next generation of his family in the business. Some notes from the conversation are below (these are for personal reference only and any mistakes in transcription are my own).

On his family’s history with education:

His mum is from the UK and his father is originally Iraqi, but he was brought up in Kuwait. His parents founded, but didn’t own, an international school called the Kuwait English School, which is still running today. His parents are also still operating it today, working very closely together with the owners. He was fortunate to have that exposure as a child and that is where the seed was planted in terms of how rewarding and purposeful it can be to operate in the education field. One thing he learnt from watching his parents, however, was that if you want to be in control of your own journey, you need to be the owner and not the manager.

On founding Apollo English and why Vietnam:

There was no plan to build a family business in the beginning, but he was very fortunate to meet his wife at university and they both ended up building the company together. In his early 20s, he was based in Singapore teaching mathematics, while his wife was in the UK at the time, leading the marketing function at an insurance company. They both jumped into Vietnam together to start their initial business of English language training, and they eventually spent 18 years in Vietnam building up Apollo English and then British University of Vietnam (BUV).

Neither of them had any connection at all with Vietnam. But they had travelled there a few times to get the lay of the land. This was in 1992/93, when Vietnam was not on anyone’s radar. Everyone was looking at Indonesia back then. But they believed in the country and the people, felt it was really worth them giving it a go to see what they could do with their limited seed capital. They spent the first 8-9 years in Hanoi and then another 8-9 years in Ho Chi Minh. When the Asian Financial Crisis came along, everyone thought they were the losers operating in this part of the world but today they are seen as the visionaries. They put their heart and soul into building the business, but the reality is there was a lot of luck involved. Every single issue you have while building a business they faced while also learning how to operate in a country that was back then a foreign land to them.

Was there always a grander vision for a holding company?

No. At the very beginning, it was about building a sustainable business. You are busy just surviving and trying to get the business on its legs. Only when they moved from survive to thrive, which took a while, that they started thinking about what they really wanted to do. Nearly all their competitors at the time had been acquired by PE. That is when they realized a big advantage for them was that they didn’t have to think about exiting in 5 years, they could actually think about what is best for their various stakeholders over a medium- to long-term horizon. They decided not to sell out after coming to the realization that many people get hooked on money and it is often never enough. They realized they were happier building and growing their business versus selling out and becoming money managers, which didn’t appeal to them at all. They are lucky they have found a sense of purpose building a business in the education sector and making it sustainable for the next generation.

On the evolution of their holding company model:

That came out of the realization they needed to diversify. If you look at how successful family businesses operate, many of them diversify either through geography or business line. So for them, it started with English language training under the Apollo English brand, then they started looking at what they wanted to do beyond that. BUV was a separate entity that took them from English language training to higher education. The third pillar is now looking into math enrichment centers and preschools. Then they also do some investing in education businesses where they feel they can add value to the founder’s journey. They are very selective, maybe only make 1 investment a year. The other realization has been about making the transition from being the operator to the owner and learning how to be good owners. Making sure they set up a board, supporting the management teams under them etc. They are also very risk averse with financing the business, have zero debt. Outsiders may look at the business and say that is a lazy balance sheet but when Covid-19 first hit, that is what protected them and enabled them to stand strong and figure out a way to come out of it.

On lessons from Covid-19, thoughts on online learning?

They were very fortunate through Covid-19 that they were able to switch to online learning. But it was easier to do that with the older students at BUV, much more challenging with younger students at Apollo English. Younger children really like and benefit from the social element. On top of that, the parents were already stressed and then you are placing an additional burden on them in supporting their child’s online learning. So it worked more as a stop gap to keep things going during Covid-19. But it also opened their eyes to the various pros and cons of online learning. Pre-Covid, they saw a lot of pure online education businesses raising significant amounts of capital (particularly the Chinese startups), so they were looking over their shoulder thinking are they going to get completely wiped out. But the big learning was no, if they can get the balance right in terms of a blended model, that is going to be the future for them. 

On bringing his children into the business:

Even though their kids are still very young (10 and 8), they involve them a lot in the business. It is never too early for them to start learning about the values, how the business works, how it can be a force for good etc. The way they think about their children’s involvement is that the key role for them is to be a good owner. That puts some pressure on them, but it also takes away the pressure of them feeling they have to be an amazing CEO or leader. To be a good owner, you have to understand the business and do various roles within the business, but it is not about becoming the CEO and leading the day to day running of the business. If they want to do that, fantastic, but if not, they have already shown that they have good people within the group that can step up in management roles. 

Advice for raising well-rounded, motivated children:

One piece of advice he got on bringing siblings together was that if one of them does something wrong, you punish both of them. The great thing about that is that it helps cement in their minds that they are in it together. If one of them does something wrong, they both suffer the consequences. The second piece of advice was to never put one above the other because it creates a barrier between them. It is very common to do this even with the use of everyday language – eat nicely like your brother, study well like you sister etc. Number three is if they are arguing, try to let them sort it out, rather than jumping in to play judge.

On their investment strategy:

They generally make two types of financial investments. The one they prefer is when they can buy a controlling stake (or have a pathway to control) and then support the founders in their journey. The second is where they are one of three or four shareholders that a business has taken on. They have found the second type often doesn’t work out as well, because the main benefit they bring is their experience, not their capital. When someone is raising money from several shareholders, often what they are looking for is just the capital. It can also be harder to achieve financial alignment when you have several partners in a deal, each with different time horizons. In terms of geographies, they are focused on the ASEAN region. One of things they are also looking at is working with other families, potentially franchising Apollo English by finding a partner in other countries (ideally a family) and then working closely with them to build up Apollo and make it successful.

On a failure they have learnt from:

They have made quite a few mistakes, but one that comes to mind was their diversification from English language training into other areas of professional development (e.g. sales skills, customer care and other soft skills). That happened when they were doing a staff training for HSBC and the CEO came to them asking if they can also do customer care training. So they moved into that space, and next thing they knew, they had also won a contract from Nokia to train all the teams at Nokia outlets in Vietnam. That was a huge mistake, because it distracted them from their core competency, which was English language training under the Apollo brand. Eventually they decided to shut it down. What they learnt from that experience was the power of focus. His team has since made the business even more focused, focusing on English language training for children (rather than corporate training).

A lesson for his children:

Look for the good in life, because if you look for the good, it really helps you enjoy the journey. Even when things turn bad, you can look for the good in that and there will be something there, you just have to find it. He thinks that is something that doesn’t get spoken about enough.