Paper's former CEO and co-founder Philip Cutler, pictured in 2021, has been replaced on an interim basis by veteran Silicon Valley-based education technology executive Rich Yang.Christinne Muschi/The Globe and Mail
Online tutoring company Paper Education Co. Inc. has cut nearly half its head office staff and replaced CEO and co-founder Philip Cutler as it contends with multiple challenges after experiencing explosive growth during the pandemic.
The Montreal-based company cut 45 per cent of its roughly 180-person staff in late July, weeks after Mr. Cutler was replaced on an interim basis by veteran Silicon Valley-based education technology executive Rich Yang, co-founder Roberto Cipriani confirmed in an e-mail. It was Paper’s fourth work force reduction since early 2023, bringing its ranks down from peak levels of more than 500. Paper also employs about 2,000 part-time tutors.
“The market for Paper’s business has changed significantly” postpandemic, Mr. Cipriani, Paper’s chief operating officer, wrote. He said the board decided “to accelerate the actions we have taken in the past 18 months to ensure our operations are best-positioned to support our business today and set us up to better deliver on our mission and return to growth.”
While Paper had disclosed prior job cuts on social media, it said nothing publicly about the latest reduction – save for a work-status update by Mr. Yang on LinkedIn two weeks ago – until The Globe reached out after social-media posts by terminated employees.
An internal e-mail from Paper’s board to employees in July leaked on Reddit stated the leadership change was “part of our ongoing efforts to re-establish Paper’s position as a market leader” and “bring fresh perspectives and renewed energy to our team.”
“The board believes that Rich’s leadership style is what Paper needs now” because of his experience “in repositioning companies for sustained, profitable growth,” said the e-mail, sent before the layoffs.
Mr. Cipriani said Mr. Yang, who previously held leadership roles with Education.com, IXL Learning and Learneo, would stay as executive chairman once a permanent replacement is found. Mr. Cutler remains a company director. “Phil’s passion for helping students succeed has left a lasting impact on the company and hundreds of communities,” Mr. Cipriani said.
Mr. Cutler co-founded Paper 10 years ago after growing up in privilege in Westmount, Que. He attended private school, played football at McGill University and earned an education degree. In his 20s he started a summer camp and was elected as a city councillor.
Despite his comfortable circumstances, Mr. Cutler was struck by inequities in the classroom as he began his teaching career. He saw that wealthier students had better access to tutoring and felt he could use technology to level the playing field, offering a cost-effective learning-improvement tool to bring tutoring to the masses.
He and Mr. Cipriani set out to build a tutoring-by-text service. While Paper’s tutoring sessions were one-on-one, tutors would be able to handle multiple students at once, which would be less expensive and more scalable than conventional tutoring.
By early 2020, Paper had 30 employees, 100 tutors and annual revenue of less than $2-million from schools in the United States and Canada. Then the pandemic hit. Educators and politicians fretted about the impact of learning loss from online studying, particularly among socioeconomically disadvantaged students. The U.S. government committed substantial aid to provide free tutoring.
Paper had the right product at the right time. Demand soared. Paper signed hundreds of U.S. school districts, selling unlimited, 24-7 tutoring services in contracts that could run into the millions of dollars. Paper became one of Canada’s fastest-growing startups. Investors including Softbank piled in as Paper raised US$380-million in 2021 and 2022, valuing the company at US$1.5 billion during a frenzied market for online companies.
But Paper encountered growing pains as the pandemic subsided. With federal funding set to expire, several districts suspended plans to buy online tutoring. Some clients didn’t renew.
Perceived value-for-money was an issue and Paper faced questions about its efficacy in improving learning outcomes. While many school officials praised Paper for providing students with greater access to tutoring, low utilization and awareness were chronic challenges.
Meanwhile, those who used it most were often “the most engaged students, not the lowest performers” who needed the help, Mr. Cutler told The Globe in late June. He did not respond to messages this week.
Meanwhile, Paper has faced discontent among its tutors, who have taken to Reddit to complain about working conditions as they juggled multiple students, had irregular shifts and lacked job security. Tutors in Ontario and Quebec voted this year to unionize.
This month, Paper sent a message, obtained by The Globe, to tutors telling them its back-to-school return date “must be further postponed while we work through a larger go-forward plan for the business to navigate these financial and organization challenges.”
Paper has embarked on a new strategy this year to offer “high-impact” tutoring targeted to students who need it the most, priced on a per-usage basis as an alternative to its unlimited, around-the-clock offering.
With the new offering, students work on dedicated plans with the same tutor at set times tied to specific goals. The tutor works with up to four students, who are grouped together within districts. “It’s obviously more costly for each individual student but it’s very tailored,” Mr. Cutler said in June. “We’re seeing a lot of districts saying, ‘Actually, that’s what we want right now.’”
But it was unclear then how many districts would take to the new offering, or how many overall would renew. Mr. Cipriani declined to comment on how the summer selling effort was going, saying only that Paper’s “immediate priorities” include building on “a strong start” to sell its high-impact learning offer, winning and retaining clients and “re-engaging our work force.”