W20910

UBITS (B): FEED YOUR SKILLS

Guo-Liang Jiang, Lorianne Dueck, and Johan Angulo wrote this case solely to provide material for class discussion. The authors do
not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Our goal is to publish
materials of the highest quality; submit any errata to publishcases@ivey.ca. i1v2e5y5pubs

Copyright © 2020, Ivey Business School Foundation Version: 2020-11-19

No one spent a penny in May in Latin America.

Julian Melo, chief executive officer and co-founder of UBits

THE COVID-19 PANDEMIC

Business development at UBits was utterly disrupted by the COVID-19 pandemic in the first half of 2020.
The coronavirus was a large family of viruses found mostly in animals. In humans, these viruses could
cause diseases ranging from the common cold to more severe illnesses, such as pneumonia and severe acute
respiratory syndrome (commonly known as SARS).1 According to the World Health Organization (WHO),
reports on “pneumonia of unknown cause” in Wuhan, China, first surfaced in December 2019, and the
Chinese authorities determined that the outbreak was caused by a novel coronavirus in early January 2020.2
The first confirmed COVID-19 case in the Americas was reported by the United States on January 21, 2020.
On March 11, 2020, the WHO announced that COVID-19 could be characterized as a pandemic due to the
alarming levels of spread and severity.3 The number of confirmed cases worldwide reached 5.9 million by
the end of May, with nearly 1 million in Latin America (LATAM).4 The situation in Brazil was the most
severe in the region, with 512,000 confirmed cases by May 31, 2020.5 Authorities in other LATAM
countries faced equally daunting challenges. By May 31, high levels of COVID-19 cases were confirmed
in Peru (164,000), Mexico (85,000), Colombia (27,000), Chile (95,000), and Argentina (15,000).6

1
BC Centre for Disease Control, “What Is COVID-19?,” accessed July 4, 2020, www.bccdc.ca/health-info/diseases-
conditions/covid-19/about-covid-19.
2
World Health Organization, “Timeline of WHO’s Response to COVID-19,” accessed July 4, 2020, www.who.int/news-
room/detail/29-06-2020-covidtimeline.
3
Ibid.
4
World Health Organization, “WHO Coronavirus Disease (COVID-19) Dashboard,” accessed July 4, 2020.
https://covid19.who.int.
5
Ibid.
6
Ibid.

This document is authorized for use only in Frank Jiang's Strategic Concepts 34167 - STGY 5903 V at Carleton University from Jan 2024 to Apr 2024.
Page 2 9B20M201

DEVELOPMENTS AT UBITS

A wide range of non-essential private and public sector activities were halted in LATAM in response to the
COVID-19 pandemic.7 The lockdown in LATAM resulted in a level of recession that had not been seen
since the 1930s. UBits’s target markets were hit hard. In Mexico, more than 12 million people lost, or were
suspended from, their jobs in April 2020.8 The Brazilian gross domestic product was expected to drop by 4
per cent in 2020 due to China’s significant slowdown, lower commodity prices, and tightening external
financing conditions.9 The Colombian peso lost 20 per cent of its value against the US dollar, causing crises
among many manufacturing firms that depended on imported raw materials.10 For months, it was difficult
for UBits’s business development managers to meet clients and make in-person demonstrations. Moreover,
many firms froze their budget for new technology and innovation. In June 2020, Julian Melo, the chief
executive officer and co-founder of UBits, noted that “People did not know what was going to happen in
the future. The CFOs [chief financial officers] control everything and they stopped investing. No one spent
a penny in May in Latin America.”

However, while many industries suffered setbacks because of COVID-19, online learning was one of the
few sectors where investment had not dried up.11 By March 2020, nearly 1.4 billion students around the
globe were affected by school closures, and many of them were forced to transition to online learning. Some
researchers believed that many changes caused by the COVID-19 pandemic could become permanent.12
For UBits, its current customers were renewing their contracts after the initial shock dissipated, and an
increasing number of potential new clients were inquiring about UBits services.

The number of daily active users and the amount of time spent on the platform also increased significantly.
By late March, daily active users had increased from about 300 to more than 1,000. However, the
unprecedented rise in online traffic increased the cost of maintaining the information technology infrastructure
and strained the existing capacity. By June, some companies recognized their need for a training solution in a
remote work environment. UBits closed some business deals that had remained open when the pandemic
began. As Melo remarked, “The growth we thought would happen in three years is going to happen this year.
So that is the good news of COVID-19, but in the short term it was not that positive.”

A major initiative at UBits in response to the COVID-19 pandemic was to offer free one-month trials to
interested companies. Melo described this move as “a very aggressive campaign through Facebook,
LinkedIn, Instagram, and paid media.” Approximately 250 companies received free trials that allowed
potential customers to get to know the product without any contractual obligation. The sales process also
became more predictable for the business development managers, who could contact each potential client
near the end of the trial. Melo noted that the sales pipeline became more efficient and scalable: “We could
grow faster in other markets [this way].” UBits carefully monitored the rate of conversion from free trial to
fee-paying accounts, noting that its next steps included ideas on how to increase the conversion rate.

7
John Holman, “Mexico to Start Reopening from Lockdown amid Rising Infections,” Al Jazeera Media Network, May 31, 2020, accessed
July 3, 2020, www.aljazeera.com/news/2020/05/mexico-start-reopening-lockdown-rising-infections-200531192729093.html.
8
Eric Martin, “Mexican Economy Plunges the Most on Record on Virus Lockdown,” BNN Bloomberg, June 26, 2020, accessed
July 3, 2020, www.bnnbloomberg.ca/mexican-economy-plunges-the-most-on-record-on-virus-lockdown-1.1456908.
9
Andressa Anholete, “Brazil’s Much-Needed Economic Reforms Are Being Blown Off Course by the Coronavirus,” CNBC
News, May 15, 2020, accessed July 4, 2020, www.cnbc.com/2020/05/15/coronavirus-brazil-economic-reforms-are-being-
blown-off-course.html.
10
Sruthi Shankar, “Colombia Peso Hits 2-Month Low as Crude Slides, Leading Latam Currencies’ Losses,” Reuters, February
10, 2020, accessed July 4, 2020, https://fr.reuters.com/article/emerging-markets-latam-idINL1N2AA0W5.
11
Cathy Li and Farah Lalani, “The COVID-19 Pandemic Has Changed Education Forever,” World Economic Forum, accessed
June 30, 2020, www.weforum.org/agenda/2020/04/coronavirus-education-global-covid19-online-digital-learning.
12
Ibid.

This document is authorized for use only in Frank Jiang's Strategic Concepts 34167 - STGY 5903 V at Carleton University from Jan 2024 to Apr 2024.
Page 3 9B20M201

UBits continued to develop new courses during the pandemic. Instead of filming in the studio, UBits sent
subject matter experts a production kit to film courses (or Bits) at home. An audiovisual producer controlled
the technical aspects of remote filming (e.g., lighting) via a mobile application. A teleprompter and the
instructional designer were connected to the expert via Zoom, the popular cloud-based teleconferencing
platform. Melo realized that the new production method was lowering costs, noting, “We are thinking, in
the future we may not need any studio and we can use a kit to film in whatever country we want to produce.”
UBits also started a weekly webinar series called “UBits Live” that consisted of calls with industry experts
about a specific topic lasting 40 to 60 minutes. The UBits library had expanded to include “NanoBits,” 10-
minute Bits with easily applicable content.

In the meantime, UBits revised its mission in the face of unprecedented uncertainties and opportunities. Melo
and his colleagues recognized that one of the world’s most serious inequalities was education, and LATAM
was the region with the widest skills gap in the world. They believed that a renewed mission should connect
UBits to its real purpose, and guide and inspire the company for the years to come. The new mission they
decided on was to empower every person and every organization in Latin America through education. UBits
wanted to empower individuals to grow their careers and become better people, while empowering
organizations to close the skills gap and align employee professional development with organizational goals.

LOOKING BEYOND COVID-19

“In the mid-term, UBits will be a real need for companies,” Melo remarked in June 2020. “They won’t train
people in the offline, traditional model because [there] is a high risk of [catching] the disease. Companies
are already exploring [online training], and they need to have a learning platform.” Other leading service
providers were also quick to capitalize on the changing market dynamics. For example, Microsoft
Corporation, the parent firm of LinkedIn Inc., announced that it would release a learning mobile application
in its own cloud-based teleconferencing platform, Microsoft Teams, to allow corporate clients to integrate
content from LinkedIn Learning and other content providers with their own content.13 Melo knew that UBits
still required funding to scale its technology infrastructure and business development. With increasing
market demand and intensifying competition, he wondered whether the UBits management team should re-
evaluate the strategic alternatives the company had outlined only months earlier in the February meeting.

13
Mary Jo Foley, “Microsoft to Add a New Learning App to Teams,” ZDNet, June 30, 2020, accessed October 22, 2020,
www.zdnet.com/article/microsoft-to-add-a-new-learning-app-to-teams.

This document is authorized for use only in Frank Jiang's Strategic Concepts 34167 - STGY 5903 V at Carleton University from Jan 2024 to Apr 2024.