does as much to help students toward the end goal of learning the material and improving their results.”
Lee says the five-employee startup is getting “really good traction” so far this fall. Customers, who pay $129 to $199 for access the GMAT and GRE prep materials, hail from 150 countries around the world and have answered more than a million sample questions in aggregate. They’ve also racked up 10,000 hours watching video lessons.
In addition to the $50,000 in seed capital that Magoosh won in the North Bridge competition, the startup won the $10,000 second prize in the Intel+UC Berkeley Technology Entrepreneurship Challenge in November 2010, and has raised additional seed money from Lotus founder Mitch Kapor, Career Education Corporation founder Jack Larson, 3-K Financial Group president Keith Ogata, Berkeley business professor David Charron, angel investor Michael Berolzheimer, and AngelPad co-founder Richard Chen.
Alongside the new practice questions tailored to the revised GRE’s more open-ended style, Magoosh has added video lessons that help start students off at a very basic level. Bhavin Parikh, the startup’s co-founder and chief product officer, points out that many GRE takers are in their 40s and 50s and may have been out of school for decades. For them, modules on subjects as fundamental as decimals, fractions, and powers of 10 provide useful refreshers.
There’s also a new, simplified dashboard with pie charts showing which types of questions users are answering correctly, and which ones they’re having the most trouble with. “If I see that I’m getting over half of the math questions incorrect, I may want to focus on that,” says Parikh.
Lee says academic studies show that the combination of short, animated, narrated video and text-based questions turns out to be one of the most effective ways to convey test materials. “There are many studies out there showing that attention drops off after about 10 minutes—you basically don’t learn anything after that,” he says. While Kaplan and other test prep companies also offer video content, Lee says “all they’ve done is repurpose and repackage a lot their [pre-revised GRE] material and counted on their brand.” For Magoosh—the name is a play on magush, an old Persian word meaning a wise and generous teacher-the fresher material “is our way in” to a larger market, Lee says.
The great thing about the test prep business, says Lee, is that once the study materials are finished, the online tests become money machines. “We are positive net margin right now, on a unit basis,” Lee says. “But we plow that back into improving the product.” The company next plans to build up its test preparation materials for the SAT and TOEFL (Test of English as a Foreign Language) exams.
“A year from now, our goal is that when you think of the GRE, the GMAT, or the TOEFL, you will think of Magoosh,” says Lee. “A couple of years down the road, if you are studying for a professional certification exam, at that point we will have proven the model and be dominating that segment as well. It’s a billion dollar market, but it’s very segmented, and our approach is to go segment by segment.”
