Helping Failing High School Students Pass: Revolution Prep Founders Ramit Varma and Jake Neuberg (Part 5)

SM: In terms of revenue, what is the size of your company?

RV: Our SAT business is at $11 million, and we are just over $13 million in total.

SM: Looking at the size of your company, I have to ask one question. Why you are in so many businesses?

RV: We have violated all the rules of business school. We never took on any investors, and we have only recently started hearing people give us the advice that we are not supermen and we should not do everything at once. As entrepreneurs, we have had to learn that we have a limited amount of mindshare and a limited ability to execute on everything.

Our first business was the SAT training. Three years ago we built TutorSource and the high school training platform together. There are synergies there that are not all that obvious. One of the reasons we were able to get the larger school district contracts is because we were able to provide training for their staff very quickly, because we happened to have this other business that has its feet on the ground.

These separate entities are now starting to blend together. Our ultimate vision is to build a virtual high school. Right now, a lot of the virtual schools out there are based on late 1990s technologies. A Web 2.0 integrated school with social networking, crowd sourcing of content, and collaborative learning and teaching just does not exist.

We have found that going fully offline or fully online is perilous. As the market continues to develop, it will be a hybrid. We see RFPs all the time for online tutoring solutions that we will be able to address through TutorSource. It seems like a lot to bite off at once, but we think that they are intimately related.

SM: Based on what you have described, you have bootstrapped your company using the physical tutoring business. That is what gave you the cash to develop the online product.

RV: That is 100% accurate. When we started the business, we were just out of school. We did not have any capital, and we had $50,000 each in student debt. We started out the business on credit cards.

SM: Bootstrapping your business is great because it gave you the cash to do all these other things without losing control of the equity. You have now grown, and I would caution you against investing any more in the physical business. You now have a product that you can scale to a $100 million business, but that will require making many more of those $500,000 deals across the country. That type of sales process will really take some energy.

RV: We agree with you. It took seven years for us to build up to the point we are at with our management team and our skill set. Over 60% of our employees are in the live business. That unit has a president and a management team, and they run it. Jake and I now spend 80% of our time with the online businesses.

SM: Have you thought about selling off the physical business?

RV: We have. Right now the markets are not where we want them to be.

This segment is part 5 in the series : Helping Failing High School Students Pass: Revolution Prep Founders Ramit Varma and Jake Neuberg
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