It’s been two years since PrepClass updated us on their experience after their 2014 TechCabal Battlefield win. We decided to give Olumide a chance to tell us all about their journey and boy, did he have a lot to say.
Alright, let’s get to it.
I’ll begin by saying that I am not much of a blogger; there is absolutely no time for it. The startup wars are stressful enough. I just figured it’s important to document our journey so far. That way, I can laugh about this article in 15 years saying, “what the heck were you thinking?!”. Plus, I’ve heard a number of people say we’ve been really quiet. The reality is that we’ve just been really busy.
Prepclass is an online tutoring marketplace where clients hire the services of home tutors. The business model is pretty simple: clients pay us, and we pay the tutors a significant percentage of the earnings while retaining a commission for our administrative overhead. Now, I’m not sure where to start. A world of things have happened in the past 2 years, so I figured it’s best to break it into segments.
What has been happening over the past 2 years or so…
- First, we won battlefield for our test prep product, got a shit load of Free PR and $20k.
- We went on to win quite a lot of other competitions (won around 40k) that literally took us round the world (MIT – USA, WBF- Paris, Anzisha – South Africa, IndiaAfrica – Ghana, and there was something in Morocco).
- While we were selling the test prep, we realised parents were more interested in having a physical tutor that would assist their children rather than just some electronic interface. So we started experimenting around the tutor marketplace and it turned out to be more interesting than we anticipated; so much that in 2015, we served about 14,000 hours in billable tutoring hours paying tutors around 6 dollars per hour.
- We raised over $100K in a seed round funded primarily by Africa Angels Network and Venture Gardens Group and moved to a nice new office space along Herbert Macaulay road, Yaba (yeah, we are in the Yabacon valley…hehehe).
Why we pivoted
The decision for us to pivot was centered majorly on 2 things really – impact and reality of the market we are playing in.
Impact: Few months into launching our test product, students, and sometimes parents, were calling to request detailed answers to some of the questions on our platform and some even went as far as asking for the presence of a tutor. It was then we realized the demand for physical tutoring in Nigeria. The truth is that it’s far easier to build a VAS solution that auto-bills students per day (whether or not they asked for it) but we knew that was just going to make a few bucks without driving any real impact. Sooner or later, people would get tired of paying for VAS services that auto-bill them without leaving any real impact. We figured the presence of a physical tutor that is rated monthly would drive more significant impact instead.
Reality of the Market: REALITY CHECK! Nigeria is still an offline market. Except you are in VAS, Content, Financial or SaaS business, your business operations would still largely involve a significant amount of offline processes. We noticed that those selling pirated offline JAMB CDs (these guys have the biggest chunk of test prep products market, by the way) were generating way more revs than us with our awesome features that we spent blood, time and money to build.
It was then we learnt lesson #1 of the Nigerian entrepreneurship wars – make it simple, build fast and generate revenue. Our first tutor marketplace product was built in 20 minutes with Google docs and it turned out to be very successful. Within 3 days we got client requests worth over $6,000 from our first attempt at marketing it. In our first month of pivoting, we made more money and got more testimonies from tutoring than we were making from test prep so we pivoted.
So is home tutoring that big sef?
At first we were scared that the market size was too tiny and that we would soon run out of prospective clients. We were so wrong!
In Nigeria, we would consider Lagos, Abuja and Port Harcourt as the regions that show significant potential, with about 50% of the market based in Lagos. We can estimate there are 3 million families in Lagos alone, and if we were to assume only 10% would be capable of subscribing for a tutoring service, our addressable market would be about 300,000 families. From research we have done speaking with teachers, about 2 of every 5 students who attend schools where they pay over $1000 as annual tuition, either have lesson teachers or have had in the past. Considering that we don’t only provide tutors for kids but also for exams (even professional exams), skill learning, language learning and even adult learning, we can estimate our target market to be about 150,000.
So about 150,000 potential clients in Lagos and 300,000 potential clients in Nigeria, when you multiply that by possible annual lesson tuition fee which varies from as low as $900 per year to $3000 yearly (per tutor), depending on how buoyant the client is.
One can then say Nigeria is a $250 million – $400million tutoring market. In other parts of the world, it’s much bigger. In 2012, Forbes estimated tutoring industry to be worth $102.8 billion with South Korea alone worth $13.9 Billion. It’s estimated to be worth over $7billion in the US and about $8.59 billion in the UK.
In Nigeria, and largely Africa, this market is largely untapped. The annual value of the total number of requests we have received on our platform in the past 18 months is over $1.8million. We are currently by far the biggest player in the tutoring industry in Nigeria even though we haven’t even scratched the surface. The industry is young and there’s a lot of space to conquer. At the moment, we have worked in over 500 homes providing tutoring services to tutors that earn an average of $200 per month.
Growth! Growth!! Growth!!!
Growth has been very impressive; we have been growing our client base and revenues at an average of 25 – 30% month on month over the past 6 months. To put that in perspective, we double our revenues every 3 – 4 months. Even though we have investments, the business is self-sustaining and the impressive growth means we are practically able to cover all our costs monthly. So we invest quite a lot into growth and it comes back in roughly a month.
We have over 16,000 tutors registered to work with us. We go above and beyond just verifying tutors online to actually doing physical interviews and background checks for all our tutors, and this guarantees clients of their safety and security. We have physically interviewed about 2000 tutors and have through this, verified the best strategies on how to scale this to an online process.
We have gotten requests from over 1,500 clients from within and outside Lagos, and we have worked with about 500 clients in Lagos. We are also very particular about our rate of client retention which averages at 90% month on month. We have an incredible team of 13 phenomenal people and hundreds of tutors working for us who we pay monthly as well.
No jokes, some of our tutors earn $500 per month
At least I personally know of about 3 tutors that do. Our accounts guy would know all of them. That is one of the reasons we are certain tutors won’t want to boycott us; the assurance that once you are good tutor with great reviews, you would always have a client from us. For the clients, there is a huge peace of mind knowing that a reputable company with an address is in charge of managing this “stranger” that visits my home. In cases where they are displeased, they know they can count on us to warn or replace the tutor smoothly.
Are we an online business or offline sef?
The honest answer to that question is that we are a hybrid. A lot of the processes that make it possible for the business to handle the sheer number of relationships that we have are online and built on our backend platform, but our tutors deliver the actual service offline. So internally, we make use of a lot of tech to search for good tutors that meet specific requirements, bill clients (the hardest part hehehe), record reviews and rating, and market to prospective clients.
We are now on the verge of making it a complete marketplace that allows clients to choose the tutor they want by themselves. But there is no way we could have started out that way as this product only lists tutors we have worked with over a period of time and have reviews for, or tutors that we have conducted our in-house tests on and have passed our background check tests. Once launched, it would effectively solidify our position as the largest tutor marketplace in Nigeria. Clients would be able to choose tutors based on their budget, the tutors’ experience and skill set, reviews and ratings of the tutors, etc. thus making us a full blown marketplace.
Milestones and Plans?
We are going to hit annual revenues of $500k – $700k this year. It’s a crazy target for us right now cause that would require mad month on month growth, but we are going to do it and we are on track to doing it. Already, by April end, we would have hit our entire 2015 revenues.
Asides completely opening the marketplace before ending of Q2, we want to make available more learning resources for tutors and tutees. Eventually we want to carve a brand in the education sector, sort of like a Prepclass style to learning, much like the Slyvan Learning of Canada. That means investing a lot in tutor training and in the content that they teach with, and investing in having physical locations at every corner. We are aiming at being a hybrid model, somewhere between the “Uber of tutoring” and the “Health Plus of tutoring”, so clients get get tutors on demand or stop by at a Prepclass center close by
Experiments
We experiment on a daily basis the best ways to improve our processes (we literally have a guy for that). We test, kill or adopt these experiments. This allows us make very intelligent decisions as regards scale and budgeting. We experiment on ways to improve our service offering to generate more revenue and offer beneficial value.
Priorities
So we don’t talk, blog or appear at public events as much as we used to when we started, and that is intentional. We have decided to keep calm and build epic shit! I would personally advise any entrepreneur at the beginning stage to find the balance between being a “Davido” startup founder and actually building shit.
In order of priority, we are focused on:
- Customers/Prospective Customers: These ones hear from us as often as possible.
- Team: Let me say here that we have the most hardworking and dedicated 13-man full time team and hundreds of tutors that you can possible ask for.
- Investors: They support our dreams
- The rest!! hehehe
Okay, now I feel I have typed too much. Adios! Hopefully the TechCabal moderators would allow us do this again. Next time, I’ll talk more about what we’ve learnt in this journey so far.
Editor’s note: Olamide Ogunlana is a co-founder at Prepclass, an online education platform that seeks to increase the performance of students at all levels.
