Five Dimensions to Compare Yourself with Competitors On (post #4)

In my last post we discussed how we saw our competition. We separated out our competition into direct, indirect, potential and substitute competitors, with the greatest concern going towards direct competitors. Let’s continue our competitive analysis by looking at the following five dimensions:

The Core Product: Who is charge of making the product? How good is our competitor’s product team?

The size of their user base:Having a large user base has certain advantages. Anytime they launch a new feature, they can dominate the market. They have an easier time getting press coverage. It allows them to strike deals with other companies more easily. The larger the company, the better the product. 

Design:How good is the competitor’s ability to make great design? When I think of great design, I do not mean just what the aesthetics look like. I mean how does it work. Is it intuitive or fun to use? But looks are a part of that process. 

Brand:How highly regarded is the brand of your competitor? Having a strong brand is a huge competitive advantage. Strong brands demand a higher level of customer loyalty, can charge higher prices, and they get the benefit of the doubt. 

Speed:How quickly can they make changes? As a company gets larger, they get slowed down. 

I thought that all of our direct and indirect competitors were worth evaluating. On each of the five dimensions, I gave them a score between 1 and 10 (with 10 being the highest). So the highest a company could score would be 50. I put them in a spreadsheet, but here I am going to try to show my reasoning as well and so it is in written form. 

Higher Learning Technologies:a direct competitor. Their product was solid from a questions and feedback standpoint. The technology looked nice, but nothing really stood out about the actual technology. Their CEO had gone to dentistry school before starting this company. There was not a lot on their team that suggested a product focus.  The people working on product did not appear to have much experience. 

Their user base seemed small but growing. The design was solid but kind of boring. It was a slight improvement on a book. The concept of learn anytime, anywhere was what they had hit on. They were still a fairly young company. I did not think that most people would have heard of them or recognize their logo. One of the advantages of being a startup or at least a small and young company is that you can make changes very quickly. 

I gave them a four on the core product, a three on the user base, a five on the design, a three on the brand, and a nine on speed. Their overall score was 24. 

Pocket Prep: a direct competitor. To me, Pocket Prep and Higher Learning Technologies were the same company. It was hard to notice any significant difference in these companies.  So I gave them a 24 as well. 

Quizlet: a direct competitor. A very different company than the previous two. They had a much stronger emphasis on the technology. Their founder was also their CTO. They were hiring for product management positions, and it was quite competitive. Their product had gamification features that were fun and useful. The focus was much more on micro-learning. They had executed on getting a lot of teachers and students to use their product. 

Their user base had 50 million active users https://en.wikipedia.org/wiki/Quizlet. Their design was minimalist. But the product was intuitive and fun. Try to remember that we were talking about exam prep. If it’s a little bit fun, then it’s fun. Most high school and college students recognized and interacted with the Quizlet brand. I thought they were still small enough to make changes fairly quickly. Not as quickly as HLT or Pocket Prep, but still pretty quickly.

I gave them an eight on the core product, a nine on the user base, a seven on the design, an eight on the brand, and a seven on speed. Their overall score was 39. 

Kahn Academy: indirect competitor. It would be very easy to avoid Kahn for quite a while. This was not true of the direct competitors. What I mean by this is that they were focused on big exams and big subjects. We could pick exams for quite some time that they were not going to cover. Or at least there was nothing that I could see that would suggest that was where they were headed. 

Their product was and is great. The videos were short and usually fairly entertaining. However, they really were not measuring whether or not the user was learning the material and then adjusting the flow of videos based on that. Their product team was strong, with almost everyone on the product team (based on their website) with an MBA, usually from a top tier university (Stanford, Northwestern, etc.) https://www.khanacademy.org/about/the-team. Their profile photos suggest a very young team, but collective job experience that includes working for startup accelerators (TechStars), apps (Words with Friends), social media (Facebook), as well as exciting companies like AirBnB and PayPal. There are some computer science degrees within the product management team as well. 

Their user base had 100 million annual users worldwide and they had 48 million registered users http://skoll.org/organization/khan-academy/. Their design was intuitive and fun. Most high school and college students recognized and interacted with the Kahn Academy brand. I thought they were not particularly likely to make major changes to their product. They would continue to be about free education through videos. However, they could decide to make their videos more interactive. 

I gave them a nine on the core product, a ten on the user base, an eight on the design, a nine on the brand, and a six on speed. Their overall score was 42. 

YouTube: an indirect competitor. YouTube is the only company that is not focused on formal education. You have to look at specific YouTube pages to analyze their value. As an example, Doctor Dave Explains https://www.youtube.com/channel/UC0cd_-e49hZpWLH3UIwoWRAis a great channel. He has about 600,000 followers, and does a great job of explaining complicated concepts within subjects such as biology, physics and astronomy. They are really a competitor of Kahn Academy in terms of their educational channels. When evaluating YouTube, I will be evaluating channels such as Doctor Dave Explains.

YouTube has a great product and a great product team. However, they are not likely to build a product that has features that can do more than what it currently does (build interactive features). Kahn Academy might do this. Their high quality channels are comparable to what Kahn Academy puts out. They will cover a wider range of subjects than Kahn, though. 

It is extremely difficult to say how many active users YouTube has in education. We were fine with saying that that it was quite large. Their design is great. It’s easy to use. A 2018 Harris Poll https://www.edweek.org/ew/articles/2018/09/12/why-generation-z-learners-prefer-youtube-lessons.htmlfound that Generation Z (high school and college students) ranked YouTube the highest as a learning tool. It’s a very strong brand. By far the strongest brand on the list, primarily because students use the platform for aspects other than studying. YouTube is an internet staple and is not going to make sweeping changes to their product. 

I gave them a nine on the core product, a ten on the user base, an eight on the design, a ten on the brand, and a six on speed. Their overall score was 43. 

Private Tutors: an indirect competitor. The global private tutoring market was valued at approximately $96,218 million in 2017 and is expected to generate around $177,261 million by 2026, at a CAGR of around 7.1% between 2018 and 2026. https://www.globenewswire.com/news-release/2019/01/22/1703399/0/en/Global-Private-Tutoring-Market-Will-Reach-USD-177-621-Million-By-2026-Zion-Market-Research.html.

It would generally appear that for test prep tutoring, the range is usually between 50 and 100 dollars per hour https://tutors.com/costs

It is hard to rate the product because there are so many tutors. But given the growth rate we are just going to say that in general the product is very good and the demand is high. It is also impossible to rate aspects like user base, design, brand or speed. I just thought it should be mentioned because private tutors are a popular option for exam prep. They are the most expensive option, but they also customize to the user in a way that none of the other options even come close to. 

Varsity Tutors: an indirect competitor. Varsity Tutors has a mobile app but really their focus is on their network of tutors that are available nationwide. The growth in the tutoring industry detailed above applies here. Their app is competitive with the other apps, but really only focuses on a few exams and is somewhat limited in terms of the number of questions they offer. They are an indirect competitor due to their focus on tutors. Additionally, we could avoid them by picking exams that they don’t offer. 

The product team is focused on maintaining and improving the platform, which has over 40,000 tutors on it. It would appear that they are possibly moving more towards a strategy of acquiring companies that offer something different that could fit into their product line (online live tutoring) as opposed to building out something new themselves. https://techcrunch.com/2019/01/22/varsity-tutors-acquires-veritas-prep-to-expand-into-live-online-classes/.  The product looks to connect learners and tutors in a seamless fashion. There is also technology that enables online tutoring. The product team is proven and capable. 

It is difficult to find any recent information on user base size. But 40,000 tutors says something about their size. The design is good. Their technology works and their satisfaction rating is 4.9 out of 5 according to their website https://www.varsitytutors.com. Their brand is fairly strong and likely to continue to grow. They are not likely to be able to make changes very quickly. They are focused on tutors and improving their tutoring platform. 

As a side note, it would seem that Varsity Tutors has a conflict of interest when it comes to making a great app that does not involve tutors. The reason is fairly obvious. They don’t want to make a great and innovative mobile app because that might keep students from hiring a tutor.

I gave them a nine on the core product, an eight on the user base, an eight on the design, an eight on the brand, and a four on speed. Their overall score was 37. 

Big Publishers: they are all indirect competitors. The big publishers are companies like McGraw-Hill, Pearson and Wiley. They are the oldest and biggest players in the industry. They all feel the pressure of a changing educational environment. Making a great app does not appear to be their focus. A great app would interfere with their book sales (a book will sell for more than an app). This is true for their textbooks at the university level as well as exam prep books. In particular, Pearson has made an obvious attempt to become a digitally focused company. 

Each of these companies is loaded with talented product managers with a wealth of industry experience. It does not seem that they have put together a very good mobile product, though. The McGraw-Hill GRE app is rated as a 2.0 while Pearson and Wiley do not have a GRE app that I could find. The product teams are talented, it just seems that there is not much focus on mobile. The only reason that seems plausible to me is that they don’t want an app to interfere with books. Varsity Tutors had a similar issue. However, it is a lot easier for an app to be an improvement on a book compared to an app being an improvement on a tutor. 

Each of these companies is worth billions of dollars with literally millions of users. If we are just looking at their mobile apps, the design is average. Their brands are powerful, but it would seem that they have been disrupted by almost everyone on this list. You do not want to directly compete with them, though. Due to their size, these companies will be very slow to change. 

I gave them a seven on the core product, a ten on the user base, a six on the design, an eight on the brand, and a four on speed. Their overall score was 35. 

Kaplan: an indirect competitor. Within exam prep, they are mostly focused on classes. They’re all inclusive offer is $999 https://www.kaptest.com/gre/courses/gre-all-access. This means you can go to a physical class or do it online, with both live and on demand lectures. Nothing about an app is mentioned. Their app is rated as a 1.6, which is pretty bad. The app is not specific to any one exam. The app is part of a course and you cannot access it as a standalone product. 

Kaplan certainly has the resources to have a great product team. It does not seem that they have put much effort into the mobile app. It is possible that they also have some type of product line issue where they do not want the app to interfere with the class, but in their situation I would think they could package the app and the course together and therefore the app should be of high quality. 

In 2018, Kaplan enrolled over 340,000 students in its courses https://en.wikipedia.org/wiki/Kaplan,_Inc. Just from looking at their app store, the design of the app looks pretty nice. It seems like there were engineering issues like login not working or missing buttons. Part of design is how it works, though. The brand is strong but to a certain extent has also been disrupted by some of the other companies on this list. There are many ways to learn that did not used to exist. Kaplan is a big company. Change will be slow. 

I gave them a seven on the core product, a nine on the user base, a six on the design, an eight on the brand, and a four on speed. If we were evaluating the mobile app, their score would be much lower. However, their courses are still highly regarded. Their overall score was 34. 

Here are the scores:

YouTube 43

Kahn Academy 42

Quizlet 39

Varsity Tutors 37

Big Publishers 35

Kaplan 34

Pocket Prep 24

Higher Learning Technologies 24

 Notes

Without doing this exercise, I would have rated the big publishers and Kaplan as being much stronger than the rest of the companies. They have been disrupted by free digital products, the increasing popularity of tutors, online tutoring, and micro-learning. 

The top three rated companies all offer free products.

The top three companies all offer a form of micro-learning.

The top two companies are video based platforms.

Quizlet is probably the most difficult company to avoid. Due to their user generated content model, there is likely content for almost every exam. That is true for YouTube also, but with YouTube it is only video. With Quizlet, the user is testing themself on whether they understand the content. Quizlet has a lot of users, their product is free, and they have some engaging features. 

If you avoid the SAT/ACT and the graduate school entrance exams, you are avoiding what a lot of these larger companies are focused on. It would be good to find some professional licensing exams that are large enough to be interesting for us but also small enough so that these bigger players are not going to put much effort into them. As much as possible, we would like to be just competing with books. 

The hole that I saw in the market was at the intersection of micro-learning and mass customization. The only product that really offered customization was tutoring. A tutor could alter what they said based on the students answer. YouTube videos, Kahn Academy videos, Quizlet flashcards, textbooks, courses and basic apps did not really alter their material much (if at all) based on answers.  So I thought we had an interesting idea there.