A Textbook Case Study of Capital Efficient Entrepreneurship: Bhavin Parikh, CEO of Magoosh (Part 1)

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Bhavin Parikh and his now departed co-founder Hansoo Lee have built Magoosh with textbook diligence and great discipline. Along the way, Hansoo died of lung cancer, a tragedy that hangs over the company both as misfortune and as inspiration. Read this wonderful story of young Berkeley students pulling together a great business and executing with straight up common sense.

Sramana Mitra: Let’s start at the very beginning of your story. Where are you from? Where are you raised and in what kind of background?

Bhavin Parikh: I was born in Pittsburgh, Pennsylvania. My parents are from India. They’re both physicians. At some point, I thought about becoming a doctor but during an internship, I fainted. So I knew that path wasn’t for me. I went to Duke University for undergrad and pursued degrees in Economics and Computer Science. Then, I moved to Philadelphia where I worked for Deloitte in technology consulting, right at the intersection of business and technology. It allowed me to utilize both of my degrees and work with people.

I did that for five years before I got an itch to do something different. I decided to apply to MBA programs and attended Berkeley. I wanted to be in California because a lot of interesting things were going on here in terms of technology. I was hoping that I’d come out here and be able to work on a product. It was during that time that I founded my company Magoosh, which helps students prepare for standardized tests like the GMAT. I’ve been in Berkeley for the last six and a half years.

Sramana Mitra: What year did you start Magoosh?

Bhavin Parikh: I was in business school between the fall of 2008 and May 2010. I started Magoosh during that time with a few classmates. One of my classmates actually came to business school with the idea of Magoosh, but it was slightly different. The idea was crowd-sourced test prep. As we started working on the company, we realized that students wanted to learn from experts. That was our first pivot. We approached the expert model. We started working on it full-time in May 2010 after graduating.

Sramana Mitra: How many of you were in this group who founded the company?

Bhavin Parikh: Myself, two business school classmates, and another one from outside the business school.

Sramana Mitra: How did you get it off the ground? How did you finance the beginning of the company?

Bhavin Parikh: Pejman and Bikram invested their own money early on. Then, after we saw that wasn’t working and when we pivoted, we started using our own money. We realized that we didn’t really want to invest into something until we validated that it’s working. We already had an experience where we invested time and money into something that didn’t work. The second time around we thought how we would validate.

Early on, since we were at business school, we were surrounded by people who had taken the GMAT. We created a fake website using PowerPoint and asked our classmates to click through and see what their experience was like. We would get great feedback from them. We would iterate on the PowerPoint until people consistently said, “This is an interesting product. I would actually buy it.” That’s when we dipped into our savings and started development. We used an outsource company in India.

Sramana Mitra: Does that mean that you were focusing on GMAT test prep?

Bhavin Parikh: Yes, early on the product was exclusively GMAT test prep. Over time, we expanded into new verticals.

Sramana Mitra: How much time and how much money did the Indian outsource developer firm cost you to get the minimum viable product out?

Bhavin Parikh: Overall, it cost about $10,000 to $15,000. We found a firm who Pejman had worked with before. Instead of asking a team of people to work on our product, we asked for one dedicated resource. I would have nightly Skype calls. We’d be in business school. At the end of the day, we’d have a Skype call to go over the feature list and what we wanted to advertise. In a way, that person was almost an extension of our team. He was fully dedicated to our project. We didn’t want anyone else working with him.

We knew that the code being written was great. We weren’t looking for the best developer possible. We were just looking for someone to create something for us to validate that people will actually use it and buy it. We knew at some point that we would have to scratch that entire product and rewrite it if we were successful.

This segment is part 1 in the series : A Textbook Case Study of Capital Efficient Entrepreneurship: Bhavin Parikh, CEO of Magoosh
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