Building an online marketplace for local services is a tricky proposition, especially at scale. It takes time to recruit a stable of service providers, to offer deep coverage within local markets and maintain the quality of service (and the trust of customers) as the marketplace expands into new cities. For local service providers, though, moving online can be a boon for business, reducing costs and providing access to a new pool of customers.
While products and businesses are increasingly moving online, Mike Weishuhn and Andrew Geant founded WyzAnt in 2005 to bring an online marketplace to a market where service providers still live mostly offline: Tutors. Today, following in the same mold as names like Uber, Etsy and Angie’s List, WyzAnt is building a national company that functions as a hyper-local marketplace, offering students an easy way to find and connect with tutors in a range of subjects.
Starting with college campuses in and around Washington D.C. and advertising its new tutoring service with fliers and via Craigslist, WyzAnt began building a stable of local tutors and customers, slowly expanding into new markets. Today, WyzAnt has quietly become one of the largest online tutoring platforms in the U.S., serving 500,000 tutors and over one million students. The founders have bootstrapped the business to more than $100 million in gross sales to date, with a 120 percent annual growth rate since launch.
After resisting outside investment for nearly eight years in favor of staying lean, the WyzAnt founders are looking to expand their tutoring business into new markets and beef up their team. To do that, WyzAnt is taking on its first capital — a $21.5 million Series A round from Accel Partners. As a result, Accel partners Ryan Sweeney and John Locke will be joining the startup’s board of directors.
While it’s somewhat unusual to see an initial round of funding like this come from one backer, it’s a somewhat familiar market for Accel, which has also backed online marketplaces like Etsy and 99 Designs. It also marks the second significant investment in online education the firm has made this year, following the $103 million round it co-led with Spectrum Equity in video-based education platform, Lynda.com.
WyzAnt and Lynda.com have similar stories in many respects, both bootstrapped online businesses that, over years, managed to organically turn simple business models into millions in revenue. Lynda.com, for example, went 17 years without taking on outside capital, building a huge stable of quality instructional content and leveraging a simple subscription model to not only turn a profit but hit $100 million in annual revenue in 2012, before taking money from Accel.
WyzAnt, on the other hand, has managed to survive in an increasingly crowded market by making it easy for students in any state to connect with a quality, local tutor. Rather than focusing on the SATs, or a particular subject, WyzAnt has taken a broad approach, like Etsy or Amazon, offering tutoring in over 240 subjects that range from K-12 to college, test prep to arithmetic.
The key to its service, WyzAnt co-founder and CEO Andrew Geant says, is to offer enough tutors and enough subjects to enable the platform to connect students to the “right” tutor. The best way to build trust and loyalty in tutoring, when there are now so many services parents and students can choose from, both online and off, is to keep quality high and facilitate better matches than the tutoring school down the street.
Like Yelp, customers can search WyzAnt for tutors in their local area, filtering results by price, rating and distance. Search results include a picture and profile of each tutor, including a brief resume-like description of their backgrounds and areas of focus. Profiles, again much like Yelp, also include star-based ratings and student feedback, making it easy for students to get a quick feel of what their peers are saying and their strengths and weaknesses.
Today, Geant says, WyzAnt has accumulated over 850,000 tutor ratings and reviews, which albeit small compared to Yelp’s bullpen of reviews and ratings, makes it one of the frontrunners in the tutoring industry where transparency is concerned. In most cases, students get connected with tutors based on recommendations from (family) friends, guidance counselors and schools, but WyzAnt’s system gives parents and students choice in the matter, and the ability to take more ownership of the process, rather than leave it up to chance.
On the flip side, WyzAnt offers a way for tutors to tap into a new pool of customers, while moving their small tutoring service online and bringing in more dollars. Like many other marketplaces, WyzAnt generates revenue by taking a piece of each transaction, with the percentage it takes based on a sliding scale, depending how often the tutor uses WyzAnt. In addition, by offering profiles, payment processing and some basic CRM tools, the company wants to be an easy way for tutors to run their businesses, market themselves and manage usually tedious operational pains, like scheduling and collecting payments.
With its new $21.5 million, however, WyzAnt is looking to beef up the services it offers to tutors, and is currently in the process of testing digital tools that will allow tutors to interact with their students online, like via video chat, for example. From the beginning, the company has been focused on live, one-on-one and in-person tutoring, but even as its hyper-local coverage expands, not every rural outpost in the U.S. has a quality tutor in the subject they’re looking for right around the block.
As a result, WyzAnt wants to increase its support for those without tutors in their immediate hoods, while making it easier for students and teachers to chat, message each other, share course materials and content and so on. As of now, WyzAnt doesn’t offer video support, but the founders say that it’s in the works. Similarly, while the platform is available via the mobile web, the company has yet to offer native mobile apps.
With its new funding in tow, WyzAnt plans to launch its first native mobile apps during the first half of 2014 and, as it ramps up its marketing, business development and engineering staff, is beginning to plot its expansion into international markets. In this way, it’s on a similar course to that of Lynda.com, which is also beginning to increase its global footprint, also guided in part by support and capital from Accel.
Over the coming year, WyzAnt plans to hire 50 new employees, particularly in Chicago (where the company is headquartered), and will continue to build out its “Resources” section, which offers students a range of supplementary educational content, like Q&A forums, lesson plans, videos and blog posts.
Tutoring is a crowded market and, as WyzAnt expands its platform, it will find itself in competition not only with the bevy of tutoring services out there, but other online education providers. Some of these can be prospective partners, but many won’t.
In the end, marketplaces of all varieties are subject to network effects, so, as the demand for online tutoring resources increases and competition from vertical services like TakeLessons, WyzAnt finds itself in an arms race and land grab — one that has claimed more than a few startups (like Tutorspree, for one). But with $21.5 million, the runway gets a lot longer.