Tutoring a revolution
K. Ganesh closed his e-mail and leaned back in his office chair, permitting himself a small smile of satisfaction. Another parent had written to him, thanking TutorVista for helping her child catch up in school and feel a new sense of accomplishment and optimism.
Such testimonials always warmed Ganesh’s heart because the business he had founded in November, 2005 made a positive impact on people’s lives. Not only does TutorVista help students in various countries learn, it also provides enriching, satisfying jobs for some of India’s bright, well-educated talent.
In less than two years, TutorVista (www.tutorvista.com) has grown to employ more than 400 instructors who serve more than 10,000 students across a wide range of subjects. As the first online tutoring company focused on serving the US consumer from India, TutorVista had a lot of room to grow by expanding its range of subjects, its geographic footprint, and its links to strategic partners. However, Ganesh believed that the sector was entering a critical period where one or two firms would establish themselves as the dominant service providers. Could TutorVista grow rapidly enough to be one of the big winners?
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"Our ultimate dream is to become part of a household’s monthly budget if the family contains a student who is studying something. We chose $100 to go for the mass market. Sure we could price it higher, but we wanted the pricing to be a no-brainer. We want it to be part of your monthly budget. Americans pay $19.99 a month for broadband without thinking too much about it. We are trying to make tutoring on demand a part of the household monthly budget, like a health club membership." — K. GANESH |
K. Ganesh: serial entrepreneur
K. Ganesh grew up in India and attended the University of Delhi, where he earned a bachelor’s degree in mechanical engineering. He then attended the Indian Institute of Management in Kolkota, and upon graduating in 1985, married an IIM classmate. He joined HCL, India’s leading computer firm, while his wife Meena joined NIIT, which pioneered high-quality information technology education in India. In 1990, he became CEO of his first venture, which he started with five partners from HCL. Their company, IT&T, specialized in maintaining and integrating computer systems and also sold machines for Digital Equipment (DEC). Started with Rs 97,000 (about 5700 US $ at the time) from the founders, the firm grew until it employed 400 people in 16 locations by 1996. Ganesh became a non-executive director in 1998, and IT&T went public in 2000 before parts were purchased by iGate.
His wife had joined Microsoft in 1995, so Ganesh moved to Bangalore in 1998 to be with her. He became CEO of Wipro British Telecom, a VSAT company that became Bharti British Telecom, bringing it from near-bankruptcy to breakeven in two years. In April, 2000, Ganesh and Meena started a company together, Customer.Asset, one of India’s early BPO companies, which they grew to 2200 seats within two years. This firm was acquired in May, 2002 for $19.3 million by ICICI, which renamed it ICICI OneSource. The couple continued running it for a year and doubled the staff before Ganesh stepped aside to ponder his next entrepreneurial venture.
Touring the US and the UK, he heard Western parents criticize the education their children were receiving, and realized that through the Internet, well-trained Indians might help address this pain point. Other entrepreneurs had pioneered online tutoring services, but none had directly targeted the US consumer, who still largely turned to bricks-and-mortar companies such as Sylvan Learning, which charged fees up to $150 per hour. In July 2005, Ganesh launched TutorVista with $2.15 million in first-round financing from the Indian operation of Sequoia Capital, a famous Silicon Valley venture capital firm. The service went live in the US in November, 2005 and in the UK in mid-2007
TutorVista’s business model
Ganesh pioneered a business model based on flat-rate pricing. For $100 per month, a student was entitled to an unlimited amount of tutoring in any of a wide variety of subjects or to prepare for a specific test, with a money-back guarantee if s/he was not satisfied. He hired Indians who either had master’s degrees in the subjects they taught, or a bachelor’s degree in the subject plus another degree in education. The tutors use a Webex platform, using a shared computer screen, whiteboard, text chat and microphones to link with their students online 24 hours per day. Tutors can work part time or full time, and are paid an average $350 -400 per month for full time work from their homes, an attractive arrangement in cities such as Bangalore where commuting to work could take up to several hours each day. Before receiving certification, they take 60 hours of training from TutorVista, on accents and idioms suited for the US market, an overview of the US educational curriculum, and US pedagogy: the ways in which American children learn and being the guide on the side, instead of the sage on the stage.
Why choose a business model based on flat-rate pricing for unlimited usage? Ganesh explains:
"What is the biggest challenge in starting a consumer business? In my opinion the single biggest challenge is whether you can acquire a customer profitably. The only two parameters that matters are what is the cost of acquisition of a customer and what is his or her lifetime value. A lot of times consumer businesses fail to take off despite good quality, good customer retention, etc. because they have a leaking bucket—the cost of customer acquisition exceeds the lifetime value of a typical customer. We asked how to launch a service that matched the customer acquisition cost with the lifetime value of a customer. I want to attract subscribers. I don’t like people who pay $100 for an hour because it cost me $300 to acquire them. I’d rather take a lower amount per month and keep someone for several years. What is the lifetime value of an 8th or 9th grade student? How much can I up-sell him as he goes through high school, college and onward?"
Ganesh feels that customer acquisition costs would be driven down over time in two ways. First, as the user base grows, the company would garner more word-of-mouth-advertising and more publicity in the media. Second, TutorVista would keep improving its online marketing capabilities. The company has bid for keywords using tools such as Google Adsense, and kept studying how various landing pages influenced the behavior of customers who clicked on an ad. Says Ganesh, “Every part of every page is designed to convert people into subscribers. We have hundreds of other landing pages, and we always keep working on Internet marketing.”
TutorVista’s pricing model was
designed to persuade customers to become habitual subscribers. Ganesh explains:
"Our ultimate dream is to become part of a household’s monthly budget if the family contains a student who is studying something. We chose $100 to go for the mass market. Sure we could price it higher, but we wanted the pricing to be a no-brainer. We want it to be part of your monthly budget. Americans pay $19.99 a month for broadband without thinking too much about it. We are trying to make tutoring on demand a part of the household monthly budget, like a health club membership. If you charge per hour, it’s like a dental appointment. You go to the dentist if the pain is large enough and stop when it becomes tolerable. In the US, parents send kids to tutoring when the pain is large and they stop when the child says he has learned enough."
Some questioned why TutorVista was priced well below the $40-$100 per hour price that many Westerners paid for tutoring their children. Says Ganesh:
"Our customers would be willing to pay more. If I were tutoring personally, I’d charge the highest price for my time, as a consultant does, but we have a different concept. To create a business, I want to make it affordable. We chose a mass market model because we have a cost advantage. We think that on the Internet you need a simple no-nonsense statement: unlimited, $100 per month, from India."
The pricing model was also designed to derail what Ganesh saw as the biggest threat to personal services businesses such as TutorVista: dis-intermediation. He elaborates:
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written by Tony, March 14, 2011
written by Zarka Zargar, September 10, 2010
My question to Mr. Ganesh is that why this cheating and discrimination towards Indian customers. This is absolutely unethical, unfair and punishable act by a company for its frauds.
written by D K Pradhan, December 23, 2009
written by Janaki, October 13, 2009
I am working for www.igtutor.com now, the way they deal with their employees is really outstanding. Their payscae is also good compared to that of tutorvistas, anyway thanks to Mr Ganesh for implementing this innovative ideas, as a teacher I must thank him for taking the first step.
written by Justin Kidder, December 28, 2008
written by Gaurav Sharma, November 28, 2008
written by Deepthi Ramesh, September 22, 2008
I have been assossiated with Tutorvista for past 2 years.It has been a wonderful journey.I am deeply indebted to Mr.Ganesh for giving me this oppourtunity.What makes me proud is the fact that sitting in a remote village of India,I virtually reach the American homes everyday.Tuorvista has opened a new chapter in my life.Thank you.
written by RK, September 10, 2008
written by Binesh Kutty, September 10, 2008
written by RK, September 09, 2008
written by rajkumar, September 03, 2008
I really appreciate his work.
I am well wisher to him
all the best to your future business.
Rajkumar
math lecturer
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