Evaluating Our Competition (post #3)
To quickly review where we were, our idea was an app for professional licensing exam prep that focused on bite sized learning (five or ten minutes) that could happen anytime or anywhere (waiting in line at Starbucks, picking up your kid from soccer practice, etc.). As you used the app more we would learn about your knowledge gaps and be able to fill those in a more efficient way than a textbook can. So it would have a certain level of personalization. A textbook is the same for every person. And we also liked the idea of the hands free aspect (learn while driving) as well as the GPS (receive a notification when you enter your preferred locations). For more details, read this https://medium.com/@bradbrown019/the-big-idea-how-it-started-13cb64021bcf.
We also had interested Rob (former VP of Technology at McGraw-Hill) in our idea. At this point we had named our company Lilac because we were next to a Lilac tree when we came up with the idea. We knew the name had to change, but that was what we were calling it for the time being.
My next job was to look at competition in more detail. I categorized competitors as either direct, indirect, potential, or substitute. In my mind, we should be the most concerned with direct competitors. But make sure you don’t lose too many customers to indirect competitors. Make sure the potential customers can’t do the same thing easily and be at least better than substitute competitors. Below is a brief description of each of these types of customers.
Direct:They’re going after the same customer group as you are. They’re solving the same problem as you. Customers have to make a decision between you and them.
Indirect:They solve the same problem as you, but in a different way. They have a different target customer group, which might overlap with yours.
Potential:They offer something to the same customer group. They don’t address the same problem as you. They’re also called peripheral competitors.
Substitute:They solve the same core problem. They’re not angled and delivered in the same way at all. They don’t generally target the same people. Customers could substitute your product with theirs.
Here is the list of all the competitors that I thought were of note:
Higher Learning Technologies, Pocket Prep(only an app, very young company, apps were one time purchases of somewhere between 5 and 20 dollars. They seemed to be focused equally on bigger and smaller exams. I played with both of their apps and it did not seem like there was much of a difference between the two. I really did not see any interesting technology. But their product was solid. Their app store reviews were pretty positive.)
Quizlet (online flashcards. They utilized user-generated content, which meant that the people who were studying for the exams were making the content. But teachers were sometimes using the service as well. They also had some interesting little gamification features to make the product more interactive. They had an app. It was more in line with learning in a few short minutes. Free product with ads.)
Google (an obvious one. Google stuff you don’t know. Somewhat hard to do with math problems. Also a focus on learning in short bursts. Free product.)
Kahn Academy(short videos. Video quality quite good. Focused on big subjects like Algebra and a few big exams. Free product.)
YouTube(videos. Some short and some long. YouTube wasn’t really built as an education product, but there were some useful YouTube channels. Free product.)
Varsity Tutors(they offered a limited app, but really they had a network of tutors across the country and were focused on that. Seemed to be more focused on graduate school entrance exams and SAT/ACT).
Big publishers like Pearson, McGraw-Hill, and Wiley(focused on big books and physical classes. They were the oldest of these companies but still had big and powerful brands. Did not see them too much in the App Store regardless of exam type.)
Magoosh, Princeton Review, Kaplan, Manhattan Prep(offered an app and an online course. Princeton Review and Kaplan both offered physical classes as well. Only focused on bigger exams. For reference, the GRE online prep was Magoosh $200, Princeton Review $200, Manhattan Prep $550 and Kaplan $700. They all seemed to offer the same basic thing. Around 1,000 questions or so with feedback for every question, videos, an app that was not differentiated from the desktop version, or at least it wasn’t promoted as being different.)
Private Tutors(companies such as the Princeton Review did offer private tutors. And then there were an endless number of private tutors available. They are expected to see a CAGR of somewhere between 7 and 8 percent for the foreseeable future, growing to a $272 billion industry in the U.S. by 2025. Most private tutors have nothing to do with mobile apps, although some will use a variety of the sources mentioned above, especially the free ones.)
Direct: HLT, Pocket Prep, Quizlet
Indirect: Kahn Academy, YouTube, Varsity Tutors, private tutors, big publishers (McGraw-Hill, Pearson, etc.), Kaplan, Princeton Review
Potential:
Substitute: Google
It seemed clear that HLT, Pocket Prep and Quizlet were the most direct competitors. They were focused on mobile and they had more variety in their content (some different exams than the indirect competitors). Quizlet was free but one downside of their user-generated content is that you could not be sure if the answers were correct. Quizlet fit the model of micro-learning more than the other two.
With the indirect competitors, it seemed obvious to me that for each of them either they were not focused on mobile or they were only focused on big exams (usually SAT/ACT or graduate school entrance exams). Kahn was a valuable reference, but they did tend to be more focused on big exams or big subjects. YouTube was all over the place, but would most likely be a useful reference but not all that you would use to study. The tutors could probably cover almost any subject, but the Varsity Tutors app covered only big exams. The big publishers as well as Kaplan and Princeton Review were also focused on big exams. They would offer apps as part of their more expensive courses, but that was it.
Google I did not really see as much of a competitor, but they would be at least an occasional reference for students while they are trying to learn something.
Some interesting things that I noticed in researching these companies was that
1. There was already a lot of what was called micro-learning available. Quizlet, Kahn Academy, YouTube and Google all offered products that allowed you to learn something very quickly. They were all very popular as well.
2. Video was embedded into most of the digital products. However, none of the direct competitors (HLT, Pocket Prep, and Quizlet) had video in their offerings at that time.
3. Customization really only happened with tutors. Which meant that customization was still pretty expensive in the market. We had already been interested in customization as part of the basic idea. Combining the popularity of video and customization would be interesting.
4. There was a lot of competition around a few exams. We could avoid most of the competition by focusing on smaller exams at first. In doing this we would be competing with other startups (HLT, Pocket Prep) and books.
In my next post I will continue the evaluation of competition with the five dimensions to compare yourself with competitors on and show you the feature table we built.