Cindy Mi leans forward on a couch in her sun-filled Beijing office to explain how she first got interested in education. She loved English so much as a child that she spent her lunch money on books and magazines to practice. By 15, she was good enough that she began to tutor other students. At 17, she dropped out of high school to start a language-instruction company with her uncle.Today, Mi is 33 and founder of a startup that aims to give Chinese kids the kind of education American children receive in top U.S. schools. Called VIPKid, the company matches Chinese students aged five to 12 with predominantly North American instructors to study English, math, science and other subjects. Classes take place online, typically for two or three 25-minute sessions each week.

Mi is capitalizing on an alluring arbitrage opportunity. In China, there are hundreds of millions of kids whose parents are willing to pay up if they can get high-quality education. In the U.S. and Canada, teachers are often underpaid—and many have quit the profession because they couldn't make a decent living.  Growth has been explosive. The three-year-old company started this year with 200 teachers and has grown to 5,000, now working with 50,000 children. Next year, Mi anticipates she'll expand to 25,000 teachers and 200,000 children.

Over the years, education experts and traditional teachers have criticized online learning, arguing that nothing can duplicate the face-to-face interaction of a physical classroom. In China, parents are so bent on getting their kids the best education possible they're sometimes willing to try untested methods that may or may not provide high-quality education. Mi hired top people to help design VIPKid's curriculum and has recruited academic advisers from respected American universities, but she's mindful of the challenges.

"What keeps me up at night is not growth, it's quality," she says, wearing a bright orange workout top with her company's logo and name in large block letters. "We need to be responsible for the learning outcome."

VIPKid has big names betting on its prospects. The company has raised $125 million from firms including Sinovation Ventures, Northern Light, Jack Ma's Yunfeng Capital and Sequoia Capital China. Basketball legend Kobe Bryant invested and advises Mi. Sinovation, led by former Google China chief Kaifu Lee, funded VIPKid when it was just an idea in Mi's head and incubated her team at its Beijing headquarters for 15 months before product launch.

"We really felt education could be reshaped with the power of the Internet," Lee says. "The moment we met Cindy we knew we had to invest in her company."  

VIPKid's office sits in a former Taoist temple in the midst of a quiet hutong, a traditional neighborhood made up of narrow alleyways and run-down homes. The temple is on an axis that runs through the Forbidden City and, according to legend, traces the back of a dragon trapped beneath the ancient capital.

On a chilly December afternoon, employees spill through the doorway and squeeze along tables inches apart to work on coding and curriculum. Mi's office, crowded with a desk, couch and stuffed animals, looks out onto the old temple grounds. A guitar, which she is trying to learn how to play, sits in a corner.

Mi was born in Hebei, a northern province that surrounds Beijing, but then moved to Heilongjiang province, a remote northeastern region that borders Russia. At her new school, the math teacher took an instant dislike to the outsider and would never call on her. So one day Mi began reading a science-fiction magazine in class. The teacher grabbed the magazine, tore it into pieces and threw it in her face.

"She said, 'Get out of my classroom. You are the worst student in the universe,'" Mi says, then pauses for a few seconds to consider the memory. "I love skydiving, bungee jumping, extreme sports. There's only one nightmare that I have and it's of that teacher. Every couple years."

That experience convinced her that teachers have outsized influence on children's lives—for good and ill—and pushed her into education. She left high school before graduation to work with her uncle at a traditional tutoring school, with brick-and-mortar classrooms. She helped open a half dozen learning centers in Beijing over about a decade.

After years of hard work, she dreamed of making a bigger impact. She went back to school and studied at Cheung Kong Graduate School of Business and spent a semester at Cornell University in Ithaca, New York. In 2013, she pitched the idea for VIPKid to Lee, and his firm invested that December. Mi and her three co-founders moved into Sinovation's offices and spent 15 months working on the software and curriculum.

There are many options for learning online, of course. Rosetta Stone Inc. offers inexpensive classes where students study languages at their own pace and never interact with live teachers; China Online Education Group, known as 51Talk, began connecting Filipino instructors with Chinese students for English classes online four years ago -- and went public in June. It has 102,000 students across all ages taught by 8000 teachers. TutorGroup Co., which works in China under the VIPABC brand, boasts Singapore’s Temasek Holdings Pte as well as Goldman Sachs Group Inc. among its backers. The company, which hit a $1 billion valuation in late 2015,  offers maths and language tutors with many North American instructors and says it has spent almost two decades in the market.

Mi's goal was to deliver not the cheapest way to study, but rather the most efficient way to learn for the time and money invested. She knew Chinese parents would pay if they saw their children actually learning, rather than wasting time with poor teachers or programs. Most parents have a single offspring because of the country's one-child policy, they value education and they want their child to be able to work beyond China.

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