Welcome to Scaled and Failed! My name’s Amil Naik and I’m an aspiring VC and founder at The University of Texas at Austin. I write about startups that scaled and startups that failed to draw insights about the patterns of startup failure and how to avoid them. Everything is clearer in hindsight, so it’s worth looking back.
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TLDR
Today’s Topic 🎓: Tutoring Services
Scaled 📈: GoStudent; Built an incredibly fast-growing platform connecting students to tutors online and providing tools to make digital learning easier. Recently became a unicorn with plans for expansion out of Europe.
Failed 👎: Tutorspree; Created a marketplace connecting students and tutors for in-person tutoring sessions in major cities in the US. Shut down after a few years and had its assets purchased by a competitor.
Lessons Learned 💡: Any marketplace or platform needs sufficient exit barriers and stickiness that makes it valuable to participants. This is easier to achieve with a digital focus and proper tooling included from the beginning rather than as an afterthought. The best quality product won’t make a winner; ease of access and usability combined with “good enough” quality can often be a better substitute.
Today’s Topic: Tutoring Services 🎓
Hi everyone, I’m excited to be back!. It’s been a hectic week returning from San Francisco with an unhealthy dose of missed flights and packing struggles (I couldn’t believe how much more stuff I took back than brought), but I’m back in Austin and ready to get back to it!
I’m sure many of you can recall getting tutored back in school, whether it be individually on a tough subject or in groups when preparing for special exams. I remember spending Saturdays grinding out SAT practice questions for a few years in high school to make the test second nature. Some of you may be using tutoring services right now to prepare for the MCAT, the GMAT, or the plethora of other qualifying exams in higher education. Of course, quality can widely vary, but many people I know look back thankfully on the discipline and structure tutoring instilled into their studies. Nowadays, you don’t need to find a local class or find a bright teacher in your network; the Internet has made it easy to find world-class tutors that can come to your door or provide their services online.
Tutorspree was a startup that pounced on the opportunity to streamline tutoring access. Founded in 2011, Tutorspree was called the “Airbnb” for tutors (how many times have I read “Uber for X” or “Airbnb for X” now) and was based in New York. The startup graduated from Y-Combinator in 2011 and raised several million dollars from the likes of Sequoia. Similarly, GoStudent was founded in 2016 in Austria as an online individual and group tutoring platform and raised a €205M ($244M) Series C just a few months ago. The two had similar ideas, but some key differences led GoStudent to scale and Tutorspree to fail. Let’s dive into these two startups.
Scale: GoStudent 💯
Vienna is known for many beautiful things in America, but being the home of unicorn EdTech startups isn’t usually one of the first to come to mind. GoStudent operates on a subscription model that allows students to book a certain number of tutoring sessions or group classes based on their subscription. The startup offers a web and mobile app platform that online individual sessions and classes are held on along with a plethora of tools to support teaching and learning. It offers tutoring in a wide range of school subjects for students (K-12 initially and now college too). Rather than just operating as a marketplace, GoStudent views itself as a teacher-centric educational infrastructure platform using technology to scale a great digital learning experience for students. It aimed to bring together the ease of digital access and the trust factor in in-person interaction and through larger tutoring agencies.
The company was founded in 2016, and it took a few years for the team to get its stride. While initially focusing on the needs of students, GoStudent realized it needed to sway parents and tutors as well and refined its business model. It pivoted from a studying Q&A network and class organization towards the current 1:1 tutoring focus. From there, it picked up steam in German-speaking Europe as well as funding, especially amidst the onset of the Covid pandemic as online learning became the best option for many. In mid-2020, GoStudent raised an €8.3M Series A as it surpassed 55,000 monthly session bookings and over 1,100 tutors on the platform. With plenty of money in the bank, the startup was set to expand beyond German-speaking countries in Europe and take on the larger market.
Later in the year, the Series A was pushed upwards with an additional €5M invested, bringing the total capital raised overall to €16M. GoStudent had begun making inroads into France, Belgium, Luxembourg, and Spain with more countries to come. In just a few months since the initial Series A funding, the platform had nearly doubled in size to over 100,000 monthly sessions and over 2,000 active tutors. 2021 has been no less explosive for GoStudent; Q1 saw England, Ireland, Italy, Greece, and the Netherlands as new markets and a lofty goal of 800 employees by the end of the year. A €70 million Series B round followed in March on the heels of hitting over 250,000 sessions booked monthly. With the amazing growth GoStudent has seen, it’s no surprise then that just a few months ago, its €205 million Series C gave it a €1.4B ($1.7B) valuation. The horizon is bright with overseas expansions and acquisitions in the works. The 800% revenue growth since 2020 is showing no signs of stopping as it continues to carve away at the face-to-face market; 400,000 monthly sessions, 18 countries, and the unicorn club are still just the beginning for GoStudent.
Fail: Tutorspree 📚
Tutorspree was launched at the beginning of 2011 as a marketplace for K-12 tutors to match with students for in-person local tutoring. Students could search for tutors in their area, hire vetted tutors after seeing their credentials and a profile, and rate and review their experiences with them. Back then, there were far fewer digital competitors; online forums and sites like Craigslist were a gamble on trust, and large agencies dominated much of the in-person space. The space was ripe for a disruptor that could provide quality control on a more individualized basis via the power of the Internet. Tutorspree’s services were initially available in San Francisco, Washington DC, New York, and Los Angeles (the typical YC startup launch hubs).
By the end of 2011, the company had raised a $1M seed round with over 3,000 tutors on the platform and hopes of moving beyond just in-person sessions and providing tools for online learning as well. By 2013, over 7,000 tutors across the country (primarily metro areas, now including Chicago in addition to the originals) were on the platform with new and Tutorspree had implemented a matching system to better meet the needs of students. Tutorspree raised another $800k early that year to continue developing its platform and recruit more tutors; those efforts did not last long. In the latter half of the year, Tutorspree decided to close its doors and return the remaining capital to investors. Ultimately, the founders could not achieve their ambitions of scale with Tutorspree and shut it down. Wyzant, a competitor, acquired the remaining assets after its own raise and brought Tutorspree’s story to a decisive end.
Edit: A reader informed me that Wyzant was acquired itself earlier this year by IXL Learning. Wyzant faced many of the same risks as Tutorspree in terms of tutors moving off the platform but succeeded in its early days. As it was a successful bootstrapped business for many years prior to venture funding, it didn’t face the same revenue and scale expectations from investors. It managed to make a successful expansion to online learning as well with proper tooling to support digital learning. Not every great business needs or should seek venture funding!
Lessons Learned 💡
The idea behind Tutorspree was valid, but like many “Uber/Airbnb for X” companies it failed to build switching costs and stickiness into its platform. This was exponentially compounded by the fact it was an in-person, local service; nothing would stop good tutor-student pairs from leaving the platform and continuing offline to avoid Tutorspree’s fees. It offered some payment processing and scheduling help, but those aren’t exactly huge barriers to overcome. These barriers and tooling that offer an incentive to stay shouldn’t come later; they’ll hamstring your retention early. GoStudent benefited from its online platform and investment into learning tools and infrastructure that made tutoring online easier; there were real barriers to moving off their service and things to lose from leaving.
The pandemic has definitely brought EdTech and online learning into prominence, but those trends were already accelerating even without Covid as a massive catalyst. For the long term, Tutorspree was just barking up the wrong tree. With as many competitors have popped up since those days that are digital-first, it was chasing the wrong value prop. In-person teaching beats online learning for many, but online learning is often good enough and helps reach the outcomes expected. For GoStudent’s customers, it is a valuable substitute. Quite often, ease of access and usability for consumers will outweigh the best quality. The best product won’t make a startup scale if alternatives are a lot easier to get and aren’t worlds apart in value.
More Reads and Info
On This Topic
Other Good Reads
DocSend’s Startup Fundraising Playbook (A lot of interesting research, trends, and do’s/don’ts for pre-seed to Series A)
Thanks for reading! Any other hot EdTech startups you want to read about? Let me know in the comments. If you found this interesting, consider sharing it with friends and subscribing if you haven’t already!
Cheers,
Amil