This document summarizes PrepEngine's customer development process over several weeks. It discusses interviews with customers in the tutoring industry, lessons learned from market research and feedback from mentors. Based on this, PrepEngine pivoted from vocabulary learning software to a test preparation platform offering content, student tracking, analytics and communication tools. The document outlines PrepEngine's business model, targeting different customer segments like franchises and individual tutors.
1. PrepEngine
Vaibhav Rachana Praneet Ashray
Customer Interviews
This week – 8 Founder of InstaEdu
Total – 103 COO of RevolutionPrep
Next week – 7 ex-COO of Mathnasium
2. Here is what we started with
Vocabulary building software for standardized tests with
features such as mnemonics, images, etymology, customized
revision and progress tracking to learn vocabulary in an
efficient way. Currently used by over 7000 customers!
3. Our E-245 Journey
Refining
PrepEngine
Refining the UI Customer Partners
Motivation
Segments
In Search of PrepEngine Business Targeting
Vai Vocabulary
Pivot? Deep Dive Economics Franchises
5. Vai Vocabulary Version 1
“Mnemonics are definitely useful in remembering difficult words. Ability
to classify words based on difficulty can be a very helpful feature for
revisiting the words in a short time.”
– Lu , Student
Customer Interviews
“The integration of mnemonics and images would be useful to
remember the words. However, book-like interface would be better
instead of the student required to click for next word each time. Captions
for images should be provided.”
– Ingrid, Student
• All customer feedback seems to be focused on user-interface.
Lessons Learnt We would have to design a better user-interface for it to be
appealing
• The product might be useful in terms of its features
6. Refining the UI
“Vocabulary affects only 150 marks out of possible 2400. To be much
more useful you have to concentrate on other areas of SAT as well”
Customer Interviews – Ryan, Tutor
“Aren’t you the team who ran out of colors for customer segments?”
– Steve
Teaching Team “The market size that you are dealing with here, might be very small”
– Steve
TAM
SAM
Market Research Target
$44 Mn
$31 Mn
$13 Mn
• Our current product has certain strengths in terms of its
Lessons Learnt features. We need to leverage these strengths to pivot to a
much larger market.
7. In Search of Pivot
“Most of the vocabulary learning takes place in the middle-school.
So, integrating it into school life, possibly from KG might be useful.
Customer Interviews Language acquisition is also a possible extension of your idea”
– Dennis, Teacher
“You should have a product in mind. Do not use customer discovery to
Teaching Team come up with your product. ”
– Ann
• Explored competitive landscape to find compatible entry points in the
EdTech market.
Market Research • Explored websites in the language learning domain to find out if
vocabulary can be supplemental to those sites or vocabulary itself can
be used for language learning
• Customer interviews should be primarily used to
Lessons Learnt
validate/invalidate hypothesis and not to define a product
8. PrepEngine - Motivation
“ Ability to track progress on your vocabulary tool is great. What I’d
want is to be able to track the progress of all our students similarly, not
just vocabulary but everything else.”
– Taylor, Program Coordinator, Tutoring Institute
Customer Interviews
“We spend about 15 mins with the student trying to teach them
vocabulary each week and then the student is supposed to spend 2 to 3
hrs by themselves. For everything else we teach for an hour and the
student spends around 4 hrs.”
– Eric, Founder, Tutoring Institute
Explored different companies catering to the supplemental education
market, explored the landscape for products related to our idea
Market Research including content providers, data analytic apps, and other tools targeted
at high schools.
• The private tutoring industry is large, fragmented with only a
few startups trying to serve their needs.
Lessons Learnt • There is a need for a solution to help the tutor with tracking
the student during the self study time
9. Our Pivot - PrepEngine
One-stop shop for test preparation. Top-of-the line content
coupled with features such as self-study tracking, data
analytics and content management that facilitates
teaching, learning and seamless communication.
10. PrepEngine – Deep Dive
“Our core competency is teaching if someone can handle all the
technology for us, we would be very interested.”
– David, Director, Tutoring Institute
“We use multiple legacy systems to manage our students and tutors. We
Customer Interviews use Google calendar to keep track of calendars, Minute 7 to keep track
of tutor time entry and billing, Solve360 for tutors to enter their session
notes and manually enter student progress and Socrato for student score
data analytics.”
– Aaron, Founder, Tutoring Institute
• Validated the need for data analytics for student progress
tracking
• A bigger customer pain point is the lack of an integrated CRM
Lessons Learnt
solution to handle various tutor/student management tasks
• Content is not the primary value proposition, and only with
official content will it be something on the top of the
customers mind.
11. Customer Segments
“You do not seem to understand your customer segments very well. You
should not look at the tutoring market as a whole. You need to work on
Teaching Team your product-market fit.”
– Steve
Based on our interviews, we realized that the needs of the tutoring
Customer Interviews institute differ based on the number of students they cater to.
Estimated number and size of tutoring institutes across US using Yelp
Market Research and other tutor-student connecting platforms (Wyzant, Tutorspree)
• Our customers can be classified into 3 segments
1. 50 Franchises (average number of students : 5000)
2. 3000 Mid-size Tutoring Institutes (average number of
Lessons Learnt students : 200)
3. 100,000 Individual Tutors (average number of students : 5)
• Value proposition & Revenue model varies for each segment
12. Business Economics – Revenue Model
“Per student charges do not make much sense since the tenure of a
student is widely variable. We would be willing to pay $3-5 per test
report”
– Aaron, Founder, Tutoring Institute
Customer Interviews
“Per report model discourages me from getting more reports. I would be
willing to pay $20/student”
- Anthony, Individual tutor
“A variable subscription fee, based on range of students is a much more
simpler way to charge us”
- Mark, Founder, Tutoring Institute
• Pricing numbers are in the correct range for mid-size tutoring
institutes and individual tutors.
Lessons Learnt
• The revenue model needs to cater separately to each customer
segment
13. Business Economics – CAC
“There are very few industries where Inside sales is not effective. It is
Customer Interviews much more cost effective to use inside sales”
- COO of Sales as a Service Company
Calculated the sales cost for Direct, Inside and online (LinkedIn and
Market Research Google AdWords) sales for different customer segments taking into
account the complete CTC of sales team and conversion rates.
Teaching Team “Direct and inside sales together is a rare combination in a startup”
– Ann
Certain customer acquisition techniques work for certain
customer segments
Lessons Learnt • Franchises: Direct Sales
• Mid-Range: Inside Sales
• Individual tutors: Online Advertising
Mid-range tutoring institute will be our initial focus followed later
by Franchises and Individual Tutors
14. Partners
“Our choice of which tutor to hire for our son was primarily based on
Customer Interviews
what his counselor suggested”
- Jon, Parent
• “Inventory Management Startup Stitch Labs Integrates With
Quickbooks Killer Xero To Simplify Accounting”
- www.techcrunch.com
Market Research • Tutoring associations have partnered with companies providing
technical services to tutors / tutoring institutes
- Nation Tutoring Association
• Counselors can be gateways to tutors and mid-size tutoring
institutes
• Tutoring Associations can certify our products providing
credibility to the tutors
Lessons Learnt • Strategic Alliance with new company like Xero can help to
make complete product offering to customers
• Partnership with content suppliers can be useful to provide
content to the individual tutors
15. Franchises
“We have a custom-built CRM platform that we have developed over
years using Salesforce as the backend. The only motivation for us to shift
to your system would be an appealing pricing structure.”
- Whitney, Former COO, Franchise
Customer Interviews
We have invested considerable engineering resources to develop our
platform. However, I strongly feel that there is a need for such a solution
in the existing market. Another big franchise approached us for licensing
our CRM Platform.
- Claire, COO, Franchise
A big thank you to Michael Borrus and Jim Greer for using their LinkedIn
Mentor Help contacts to connect us with key decision makers from this segment. We
have an interview with CTO of PrepMe
• It’s a much harder task to reach out to key decision makers
from Big Franchises
Lessons Learnt • Use Stanford Alums in these Franchises and Network Solutions
tool to get the key contacts in these companies
• Franchises may also need our product, but this segment needs
further verification. We have 3 interviews scheduled this week
26. Other learnings from the Educational market
An analogy with the Supplemental
Healthcare market Educational Market
(Platform / content /
analytics technology)
Physician:
Teacher/Tutor
For schools For private tutoring
Patient: Insurance Company: • Large number of • Not too many
Student Parent players in the people are
market targeting this
segment
• Referrals extremely
important
27. Big Picture
Global
US
$5 Bn Market $54 Bn Market
$33 Mn Revenue ~$330 Mn Revenue
Top Countries: Brazil, China, France, Germany, India, Japan, Russia, UK, US
Despite the differences in tutoring markets across countries, our product is scalable with
a few modifications
28. PrepEngine
Thank you!
Teaching Team: Our Mentors:
Prof. Steve Blank Michael Borrus
Jon Feiber Jim Greer
Ann Muira-Ko
Rick Barber
Stephanie Glass
We will miss E245!
Editor's Notes
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
Need to come up with a standard format for Biz Model
As complex as healthcare: PPP modelSupplemental/Primary market: No one targeting supplemental marketChallenge: Fragmented marketMajority of penetration in the Edtech market Referrals play a major role.
BrazilChinaFranceGermanyIndiaJapanRussiaUKUS
Product video - http://www.youtube.com/watch?v=yCF2UTmcFBcHitler video - http://www.youtube.com/watch?v=RQDQgxp21fw