Andrew: Before we get started, what can listening to Mixergy do for you?
Well, Clay Collins told me that he launched a successful software company
as a direct result to listening to interviews like the one you’re about to
enjoy. Check out one of his products at Welcomegateapp.com. Have you seen
how I ask first time visitors at my site to register? Well, if you want to
add that feature to your site, and really grow your e-mail list and
registration rolls, the get that free tool from Welcomegateapp.com.
Another fan, Owen McGab Enaohwo runs Hireyourvirtualassistant.com. He saw
a Mixergy course on how to close sales, and he sales he still grows his
sales using the script he learned from that course, which helps him sell to
the right customers. So, if you want to hire a virtual assistant, check
out Owen’s site at Hireyourvirtualassistant.com.
And those two fans just got free ads on Mixergy thanks to Scott Edward
Walker of Walker Corporate Law. What do I mean when I say Scott is the
entrepreneur’s lawyer? Well, your father’s small town lawyer, well, he
doesn’t understand how to structure a funding agreement, right? And those
big firms in Silicon Valley, they’re going to charge you an arm and a leg,
or maybe even take a big chunk of your equity. When you’re ready for just
the right fit, go to Walkercorporatelaw.com. Let’s get started guys.
Hey there, freedom fighters! My name is Andrew Warner. I’m the founder of
Mixergy.com, home of the ambitious upstart. You guys are going to love
this interview.
How does a teenager turn a $50 ad into a business that generates over a
million dollars in annual revenue? Erik Kimel is the founder and CEO of
Peer2Peer Tutors, which empowers kids through peer connections. I met Erik
through Fortify V.C., which helps grow startups in DC. Fortify V.C. has
introduced me to a bunch of great entrepreneurs, including Erik, and I hope
to meet Erik at Distilled Intelligence, Fortify’s event, on October 11th
and 12th. That’s my way of saying thank you to Jonathon of the Fort for
introducing me to Erik. All right, and in this interview, I want to find
out how this teenager built such an impressive company. Erik, welcome.
Erik: Thank you. Thank you for having me.
Andrew: Hey, your new title is what?
Erik: My new title, most recently, is the Chief Strategy Officer of
Aristotle Circle, a company we merged with in February of 2012.
Andrew: Merged, but you were able to cash out a little bit from your
business, right?
Erik: I was able to take some risk off the table, yes.
Andrew: Do you remember the day that the risk was taken off the table?
Was wired into your bank account?
Erik: Yes. You know, going through an acquisition or merger is really a
stressful process, and there’s a light at the end of the tunnel when you
finally execute all the documents. Around 3:00 on January 22nd the deal
was confirmed, but I quickly got a text message from my roommate and best
friend saying that he needed an extra guy, in his basketball league game
that night. Play off game. And so, I was like, “Sure.” What better way
to celebrate than to go play basketball. We were down by one point with
seven seconds to go and we called a time out, and we quickly inbounded the
ball, and we made four passes, and one of the guys on our team scored a
layup at the buzzer, and I tell you, Andrew, I was so much more pumped up
after winning that game than the wire that had come through earlier in the
day. It was an awesome win.
Andrew: [laughs] Why? I would think that the wire would be the highlight
of your life, at that point.
Erik: [laughs] You would think, on the surface, but one of the things this
process has taught me, in starting Peer2Peer in high school and seeing it
through for eight years, is that money is great, but it’s not the key
motivator.
Andrew: You were how old when this idea came to you?
Erik: I was a senior in high school. I was sixteen years old. Taking AP
Calculus and struggling.
Andrew: You were a senior at sixteen?
Erik: Yeah, I was always young for my grade.
Andrew: Did you skip a grade?
Erik: No, I didn’t skip. I just, you know, my parents just got me out
there a little early.
Andrew: [laughs]
Erik: I was one of those late, late summer, fall birthdays.
Andrew: So where did the idea come from?
Erik: The idea came from, you know, being in AP Calculus, one of the
tougher high school courses, but also being a struggling Reading and
English student. So taking the regular on-level, maybe even below grade
level, English 12 class, and realizing that my classmates in regular
English class didn’t even know the students in AP calculus went to the same
school as them, let alone we were in the same grade. So I just wanted to
connect these two groups of students. I thought they could mutually benefit
from each other’s help.
Andrew: And so, with the idea that this would be a business?
Erik: Yeah, with the idea that it would be a peer tutoring business. My
dad’s an entrepreneur, and so he always kind of drilled into my way of
thinking that starting a business was a really good idea, and to do it at a
young age. And I also really liked school. I wasn’t shy about doing my
homework right after school and studying for my test. I thought it would be
a great marriage between wanting to start a business and also an interest
in academics.
Andrew: And you actually had started businesses before this. In fact, you
saw opportunities where most people saw, for example, snow. What did you do
when it snowed heavily in your town?
Erik: Yeah. My best friend and I, Mike, we had started a snow removal and
lawn mowing business called Yard Kings just before… maybe six months
before thinking about Peer2Peer, and it was a great startup.
Andrew: What did it do?
Erik: When it snowed in the winter, we would make a killing, going out,
bundling up, and shoveling all day. And then we decided, “Well, that’s a
great winner business. Let’s build some revenue during the growing months
of the summer.” So we went around all these neighborhoods, and we got about
20 families to sign one page contracts with us that they would pay us
weekly to mow their lawn for the growing season. We got our equipment
together. We mowed the lawns once and realized that we were not equipped to
handle this. I mean, literally, we were loading a riding lawn mower into a
Dodge Caravan with these two planks to get the mower in, and when one of
the planks gave out and you had this blade half way in the air, we said,
“We are not ready for…”
Andrew: [laughs]
Erik: But we were smart, and we sold the rights to these contracts to the
big landscaper in town. So we had a mini exit… [laughs] the junior year
of high school.
Andrew: How much?
Erik: Fifteen hundred bucks.
Andrew: Fifteen hundred bucks for this business that you only worked at
one week of… One week of actually doing the work, but a lot of the time
selling it. What strikes me as clever in this business is, first of all,
you were thinking both winter and summer, but second, you signed your
customers up to contracts, to agreements to do work for more than one week
at a time. Where did that idea come from?
Erik: Maybe… Probably from listening to my dad negotiate contracts in
the car. If we were in the car going to a basketball game, going to a
family event, I mean, he was on the phone and so it kind of just got
drilled in. They say getting an MBA at the dinner table was kind of like
how I grew up.
Andrew: [laughs] Do you remember one of the stories that your dad used to
tell you about business at the dinner table?
Erik: [laughs] “You’ll never make it working for someone else.”
Andrew: [laughs] You know what? My dad used to say stuff like that.
Erik: And he’d always say, “You only get paid for a closing.”
Andrew: Oh, really?
Erik: And I found that to be applicable to things beyond just business.
Andrew: For example?
Erik: For example, girls. For example, anything you’re trying to get done.
You only get paid for closing. And you shouldn’t talk about stuff until you
know it’s pretty much a done deal or a done deal.
Andrew: You know what? You strike me as a guy who’s extremely confident. I
wouldn’t have expected that considering how intellectual you are, and
that’s what kept coming through in all my research. Are you someone who is
able to date a lot? Were you someone who was able to walk up to girls as a
younger than average high school kid?
Erik: No, I was pretty shy, and still I am pretty shy.
Andrew: So where did this come from? Most people, frankly… You and I got
on camera. I usually take some time warming people up, getting them
comfortable. You didn’t need it, so I just zipped into the interview. Where
does the confidence come from?
Erik: A lot of practice doing…
Andrew: How?
Erik: …different presentations and interviews.
Andrew: Okay.
Erik: In college, for example, Stern School of Business [??] has you take
Organizational Communication, sophomore year, first semester, and they get
you in front of the class giving PowerPoints. And from starting Peer2Peer
at a young age, I always had to think about how to answer questions not
just from great PR opportunities, but from my clients, from mentors, from
advisors. I remember when a guy once told me answering questions is like
batting. And so your goal is, when that pitch comes in and the pitch is the
question, for you to hit that ball out of the park.
Andrew: [laughs]
Erik: So whenever I walk into something, I try my best to hit a homer.
Andrew: I took that class at NYU. It is one of the better classes at NYU
Stern. All right, the $50 ad. Do you remember what it said?
Erik: Yeah, of course. I have it in my, my mom has it in my room in the
house we grew up in. It said, “Peer2Peer tutors, any K-12 subject, we come
to you. Role model relationships. Call Erik.” You know, one inch by one
inch. Very simple.
Andrew: And had your cell in it?
Erik: Had my cell in it. And honestly, Andrew, it’s the same, more or
less, same three bullet points we use to this day.
Andrew: What are those three bullet points?
Erik: Any K-12 subject, we come to you, role model relationships.
Andrew: What’s a role model relationship?
Erik: Well, what we’re offering to a family and to the student is not just
a tutor who can help with a particular academic subject, but really someone
that they can look up to, an older student mentor.
Andrew: OK. So how many responses did you get to this ad?
Erik: [laughs] So I placed my ad, and I got two calls, and I converted
one. So I had my first client and I was very nervous and excited, and you
know, just by chance, this family happened to live really close to me and
their student, who I was going to tutor, happened to go to the middle
school I had gone to, and would go to the high school that I was at. So it
was a great connection.
Andrew: I see, and do you remember what that experience was like?
Suddenly, you have to walk in and be the authority and teach.
Erik: Yeah, it was quite an eye-opening experience. I’ll never forget, I
walked into the house, and the mom, she immediately pulled me aside into
another room, and although she had told me what her son needed help with,
he needed help with his pre-Algebra. He was in the 6th grade, but she
pulled me into another room, and said, you know, my son, he’s hyperactive,
he had ADHD, she showed me a copy of what’s called an Individual Education
Plan, and IEP, which I did not know what it was, and frankly I’d really
only heard of ADD or ADHD once or twice. It wasn’t as widespread at the
time. About 15 minutes passed, and I hadn’t even started tutoring, and I
started to get a little nervous. So finally I met James, my first student,
and he was wild. He was running around the living room. He did not want to
sit down next to me. He was poking me with his pencil. He’s saying, “Why
are you here?”
Andrew: [laughs]
Erik: Twenty minutes goes by and we still haven’t tutored, and I finally,
I said to him, “What are you interested in, James? What do you like outside
the classroom?” And he started telling me that he loved basketball, and
although I wasn’t the best player on the basketball team, I was on the high
school basketball team at the high school he was going to attend. So as
soon as we had this mutual interest, we immediately connected, and he
wanted to learn from me. I was able to convince James that if we sat and
did his math work, and practiced and studied for his math tests, that I
would shoot baskets with him after the sessions, and so we started to play
Horse following the appointments. That’s really how Peer2Peer was born.
Andrew: I see, and that’s the difference between Peer2Peer and maybe a
more professional instructor or, of course, the teacher in school?
Erik: Yeah, exactly. We’re closer to the curriculum and we can relate.
Andrew: All right. Did you get any referrals as a result of this? I
mean, you did some pretty incredible work with James. Is that what we’re
calling him? I’ve got a different pseudo name for him here in my notes.
Erik: Yeah.
Andrew: James is what we’re going with.
Erik: We’re going to use James.
Andrew: OK.
Erik: Once, after a few appointments, James’ mom immediately noticed he
was more engaged, he was more motivated towards school, and she started
telling all her friends about this wonderful tutor she had found. So I
started to tutor other families in the neighborhood, and very quickly I
just couldn’t handle all the hours that were coming in, and that’s when I
started to actually set up my friends from Calculus class with gigs that I
thought really matched, not just their expertise, but also their interests
outside the classroom, to preserve that same king of basketball -mutual
interest I had with my student.
Andrew: I see, and then at one point you decided to offer free tutoring.
Why? Why would someone who’s so good at business, who actually creates and
sells a lawn-mowing service, who then puts up an ad that becomes this whole
new business, why would he offer free tutoring?
Erik: Well, we wanted to really get the word out, because you know, when
you start gaining some traction, you want to gain more. You want to get
more clients and more tutors, and we thought a great way to engage the
community would be to hold a free tutoring day so families could come in
and bring their students and meet our tutors. I went to the local
community center, you know, where I’d been dropped off many times just to
play basketball in open gym hours, and I asked if we could rent the all-
purpose room, and we held a free tutoring day.
Probably the smartest thing we ever did in that whole process, beyond
connecting the dots of you’ve got to give to get a little bit, was we
contacted the local newspaper a couple of nights before the event and we
said, “Hey, we’re a couple of… “I wrote, “I’m a high school student.
We’re holding this free tutoring event. Would you, by chance, want to come
take some pictures and maybe feature it?” And they came and they ended up
writing a cover story in the local paper. And I know that for the first,
maybe, two or three years that I had the business, parents would
continually call and say, “I stored… I saved that article for when my
child would need this, and I knew we had to use you.” And it was a little
bit of luck, but it’s been a strategy that we’ve continued to use over the
past eight years.
Andrew: To give free tutoring so that you can get publicity?
Erik: Yeah, we give free tutoring, now, not just to gain publicity, but
also to school districts to help students who can’t afford private tutors,
to silent auctions, for PTAs, different non-profit events. All these
different vehicles that we can give back to the community. And we found
free tutoring to be probably the best way we can do that.
Andrew: All right. Before I continue with the story, I’ve got to ask
you… I mean, I’m seeing a guy here who’s in control of the interview, who
doesn’t feel awkward that there are people walking around behind him. Most
people, in my interviews, they will look over their shoulders, they’ll feel
a little uncomfortable if they’re in a room full of people who are judging
them. Was there a time when you put yourself out there by either putting an
ad and ending up in a stranger’s home, or by offering to put on free
tutoring, when you were nervous, where you actually fell on your face
because you weren’t comfortable because you didn’t know how to express
yourself, you did not hit the ball out of the park, in fact, you just stuck
out? Give me one time?
Erik: Yeah. Sure. When I got to NYU, I’d started the business in the
middle of senior high school. I wrote about this [??] at NYU. I got in. I
asked a student, who was a great tutor, to be the manager while I first
went off to school, And I immediately, when I got to NYU, entered a
business plan competition. I wanted to get involved in something
extracurricular at such a big place. And I loved the business plan
competition; it was so fun. I learned so much about this education service
industry.
And at the time, I was the first freshman to make it into the finals. In
the final day, you pitch in the morning to a small group, and then they put
the top four or three in the final afternoon session with all the bigwigs.
And I got into the afternoon session, and I was a team of one and I was so
nervous. And all my friends were in the audience. And I’ll never forget, I
went through my PowerPoint. It didn’t go great; it didn’t go terribly. And
then it was the Q&A. And Bill Berkley, who’s name is on the Berkley Center
for Entrepreneurship and is an extremely successful entrepreneur, asked me
this question about how many managers do you need at 200 markets. I don’t
exactly remember, but it was a scalability question, and I gave him the
answer and he told me I was wrong. And I said, “No, Bill, you’re wrong.”
[laughs]
Andrew: [laughs]
Erik: And, to this day, I still get made fun of by my friends for telling
this guy, who’s the big deal, that you’re wrong. And then suffice to say, I
didn’t win.
Andrew: [laughs]
Erik: And I fell flat on my face. It wasn’t pretty.
Andrew: I want to come back to that because he brought up an issue that I
think was a good one for you. But let’s go back to before college as you
were building this business up. So first version of the company was,
essentially, you and an ad that you placed in a local paper. Second version
was a website. What did that website look like?
Erik: Version 1A was just a really simple text website with a contact
form. You couldn’t even buy sessions. You couldn’t really do much, but…
Andrew: Did you buy your own domain?
Erik: Yeah, yeah. Now, had our domain. Got on Go Daddy.
Andrew: [laughs]
Erik: [??] Email accounts. Did all of that. But basically you could submit
a form if you wanted to be a tutor and if you wanted to get contact for
services. And we were able to put a logo on a really simple site long
before WordPress made it easy for you, or any of these kind of build-your-
own-site functions existed.
Andrew: It was just standard HTML?
Erik: Exactly.
Andrew: Okay.
Erik: And I had a buddy in high school do that for me because I didn’t
know how to do it.
Andrew: And there is something else that you told Jeremy, our producer,
that you sold. In addition to offering tutoring sessions like the one that
you described, you sold notes?
Erik: Yes. So we came up with a product which was basically taking my
notes and other top student’s notes, and putting together front and back
kind of cheat sheets for mid-terms and final exams, long before we even
knew… In college that’s a standard practice. You could bring your one
sheet in. But we were selling them to high school students during mid-terms
and finals, maybe, selling $500 to $1,000 worth of one sheet notes for AP
NSL, for AP Micro Economics, for the Calculus 1. Especially any of the
tests that were county-based, because then we could sell them at other
schools.
Andrew: [laughs] How would you sell them at other schools?
Erik: We’d have a tutor be kind of like a rep. We’d meet them at the
local Starbucks, give them some things, and it was kind of honor system,
bring us the cash when you’re done. It was a great experience. It didn’t
work out to be the product that lasted, but it certainly, it was cool.
Andrew: It was hundreds of dollars worth of sales, not thousands or
millions.
Erik: Right, right, right.
Andrew: Surely not millions. You know, it occurs to me that, I remember
when I was a kid, my parents were telling their friends how proud they were
that I sold one of my toys to my younger brother. Like in their minds,
they were thinking “Look, our kids know not just how to play, but how to be
entrepreneurial.” It was just a sense of pride that came from it, and I
remember the look of horror on their friends’ faces, like they should just
be sharing their toys, they shouldn’t be selling them, you know? And I
get both sides, but I’m glad that I didn’t have this sharing and money is
dirty look. Did you get any of that? If not from your parents, who seem
like they were very entrepreneurial, from other people who said, “Hey Erik,
if you have something that can help other students, why don’t you just give
it away? Why are you being so cheap? Why are you being so cut-throat?
Erik: You know, we really, in high school when I started, it was kind of
like, there’s a lot of cash changing hands before AP Stat and there was a
lot of cash changing hands before AP Macro Economics, and all the teachers
knew what I was doing and no one really gave me a hard time. I think that
over time, we’ve been able to really rise to the occasion and kind of
mitigate those sort of, kind of push back, because we create jobs for
students. You know, because we also put money in the pockets of top
students who normally wouldn’t be able to find paid tutoring opportunities
while they’re still in high school.
Andrew: I see.
Erik: So the whole youth job creation angle has really helped, and our
philanthropy, you know, giving free tutoring hours to basically anyone that
hits us up and says we’re holding an event and need donations, we say yes.
So that’s been how we’ve really handled all that sort of thing, and I have
to always beleve that if you want something that’s quality, you do pay for
it. And we’ve been able to, each and every year, justify why our rates are
what they are and put a lot of quality behind what we’re doing.
Andrew: Between January and June of your senior year in high school, you
did how much in revenue?
Erik: We did a little over $10,000.
Andrew: And how much of that actually ends up in your bank account?
Erik: You know, at the time, well, I can say that within twelve months
after that, any money that was in the bank account was reinvested. That
happened a few times throughout college.
Andrew: Invested in what?
Erik: A lot of technology. A lot of website and back-end technology to
scale the matching and coordination and tracking processes behind our one-
to-one tutoring model.
Andrew: All right, so we talked about the original version of the business
was just you and an ad, then it becomes you and a simple website and other
tutors, right?
Erik: Right.
Andrew: Then, it becomes freshman year of college, you spent how much
money to build your more ideal version or your ideal version of the site?
Erik: Yeah, after that business plan competition, I really realized I
needed a website, and I think I spent, on that first version, $10,000.
Andrew: $10,000 to have someone else build a site?
Erik: Yeah. Where we could take payments, and one very simple
administrative back-end login. A client could log in, and a tutor log in,
but the client could basically just pay, and I don’t really know what the
tutor could do at the time, but not much.
Andrew: So you’re dealing with all these different tutors, each one of
them has their own personality, their own approach, and no experience. How
do you ensure that they do a good job? What format did you give them, if
any?
Erik: Yeah. Well, one common misconception is that high school students,
even when they join our team and it’s the first time it’s a paid job, many
of them do have experience tutoring. Whether they’ve been tutoring their
siblings or through a community service program, but what we feel is a
really rock solid hiring process that combines both telephone and in-person
interviewing, reference checking, transcript reviews, and then we’ve built
an entire orientation program that all of our tutors go through, where
they’re able to learn different strategies and techniques.
Andrew: What are some of those strategies?
Erik: Well, if you’re working a student, who, like I started with, like
James, who had ADD, you know, we recommend to a tutor to bring one of those
stress balls. You know, and after about 15 minutes of the appointment, or
if the student you can tell is kind of itching to get up, let them squeeze.
Or for that same student, walk around the room three times and then come
sit down after 15 minutes. We even have more simple techniques, such as
when you’re in a tutoring session, you need to sit next to your student,
not across from them, because even if you have a 4.0, it’s just hard to
read upside down. We always tie, at the end of an appointment, we try to
tie a lesson up by asking a question based on what was just covered, that
ties back to some sort of mutual interest. We ask our tutors to be really
creative.
So, I remember, we like the example of the student who loves airplanes, and
is now starting to take high school science classes, and using the
principles of geometry and physics to talk about angles and velocity and
how you actually get this plane, with this speed, into the air and why it
doesn’t just crash. So we take a lot of best practices and, you know, we
invest a lot of money with specialists to tell us, on the cutting edge of
tutoring and teaching, to tell us what’s working.
Andrew: I see. One of the things I learned when I worked at Dale Carnegie
& Associates was to give people that quick win, because then they trust
you and they feel more confident about their ability to master everything
else they’re teaching. But you’ve got to give it to them quickly so that
their skepticism and insecurity doesn’t set in. Do you do anything like
that, and if you do, you’re nodding, do you have a way of giving people a
win who are afraid?
Erik: Yeah, I mean, it’s part of our orientation process, you know, we
suggest to our tutors that win method. You know, ask them easy questions,
warm it up, and then dig a little deeper. Spend some time initially
getting to know your student before you jump in, so that there’s some trust
there. And then, everyone that’s working in our HR department are all
former tutors, so they’re even able to lend a lot of their experience when
they’re running their orientation sessions or their telephone interviews.
We really warm the tutors up to it as well.
Andrew: I see. How much money were you doing by the time you left high
school? What size revenue? How big did the business get?
Erik: Well, that’s about that 10 thou-, you know, at the end of high
school, we only had about one semester and a month of school and tutoring,
actual business time, so we did about ten thousand.
Andrew: Often kids who have girlfriends or boyfriends, and senior year of
high school, think that they’re going to continue with that relationship in
college, but it ends up falling apart because other interests take hold.
How did-, was there a time when you started to lose interest in your baby,
when you started to say, well maybe there are other things going on in
college I should explore, or maybe I can come back to this? There was?
Erik: You know, no. Really, each and every semester, or every day I kept
getting more into it, because starting something so novel in high school
and seeing it get traction was always so inspiring. Then, freshman year
of college, when entry into business plan competition got me even more
interested, because I learned, you know, for like twelve months it’s really
hard to think outside of just the high school I went to and our rival high
school. I didn’t understand county systems, state systems, federal
systems, how many students go to school nationally, how incomes break up.
I mean, just learning about how big it is was inspiring.
And then, everything I learned in class was so immediately applicable to
the business, that I felt like I always had a real-life project to work on
after I was studying something. Everything from financial accounting to
integrated marketing process, I was just on the edge of my seat, because I
knew we needed better marketing. I didn’t know how to do the books, I
didn’t know how to manage people or managers. And then my friends all
thought it was cool, and so they all wanted to be part of it. So it was,
each and every year, it’s always been more motivating and externally, the
system, I think, in education, needs disruption, I think needs Peer2Peer.
Andrew: Managing friends is tough for anyone. Can you talk about one of
the early challenges of working with your friends and having them report
back to you and so on?
Erik: Yeah, I mean, you want to keep it light, but you also need to make
sure the client’s happy. So you –
Andrew: Give me a specific example of a challenge, of course without using
the person’s name.
Erik: Well, I worked with one student who helped actually build that first
version of the website really 1A, not the one that could even take
payments. You mentioned the notes that we used to sell and this student, he
was a friend and we would have business meetings in his bedroom and his mom
would bring us cookies and milk like we were literally in a boardroom in
the suburbs, he started to just give out the notes for free and that
completely undermined the entire model. I had to say, I can’t work with you
anymore because it’s hard to trust somebody who’s just giving away the
stuff and everyone else is on board with and that was really, really hard.
That was like a huge, management crisis at the time but I learned from it
and over time have tried to each and every year get better. Learn how to
frame things in the right way, leave a lot of…
Andrew: How did you frame it back then?
Erik: I don’t know, I probably said “Dude this is completely messed up,
you’re an asshole and we can’t do this anymore”. I don’t know what I said,
it probably was not polished. It probably wasn’t, I noticed that why did
this happen, all the things they try to teach you once you get into school
on how to maybe frame negative feedback or constructive feedback.
Andrew: Were NYUs, they make you take a management class there if you go to
Stern undergrad.
Erik: Yeah
Andrew: Was that one any use to you? How did you know how to manage people?
Erik: Well, the actual management course they first give you, I wouldn’t
say is the best and is going to put you well on your way to be a great
manager but again in this business plan competition I had been told by a
professor that there’s a professor in the graduate management program who
is really interested in peer to peer and he wanted to help me.
I immediately, the next day find this guy’s office, Ken Preston, and I go
in with my backwards hat at the time, I had an earring and I said Professor
Preston, my name is Erik Kimel, I heard you’re interested in my company I’d
love to talk with you. He looked at me up and down and said, “Can you just
get out of my office, please”. He was an old guy and right as I’m leaving
he said to me what’s your business by the way and I said Peer2Peer and he
said, “No come in, come in.”
I spent Thursday afternoons with Professor Preston, and he’d say what’s
going on and I’d tell him and he’d give me suggestions on how to handle
situations and that relationship as a mentor and an advisor was critical.
He taught me so many things that were so valuable and then was able to
advocate for me to be able to take some additional management courses in
the MBA program as an undergrad that really helped me sharpen my skills and
got me to read all the Peter Drucker books and all these things that I
would have never known about…
Andrew: Or that you might have been dismissed as an entrepreneur…
Erik: Right.
Andrew: …and say that’s just for middle managers.
Erik: Yeah, totally.
Andrew: Recommend one to the audience if you could.
Erik: There’s the Drucker Bites. It’s the Buffet Bites but there are the
Drucker Daily tips, short quotes short principles that kind of resonate
very quickly. You don’t have to read a 300 page book to get the ah-ha
moment.
Andrew: In other words, Drucker is an author you recommend?
Erik: Yes, definitely.
Andrew: What else, oh one, we asked you what your biggest challenges were
in preparation for this interview and one of them actually came out during
that NYU business plan competition which was scalability.
Erik: Yeah.
Andrew: What were the original; tell me a little bit, if you could, about
the scalability issues.
Erik: Well, tutoring by nature is, at least in-person tutoring, it’s a
service business. There’s moving parts and any service business versus a
product or online business is by nature less scalable. To this day we
continue to face the scalability question.
What we’ve done in order to continually answer and rise to the occasions of
the scalability constraints is build out the people and the process and
keep it simple so that we’re able to hire 500 peer tutors in a new
community without committing too many resources to it and building a lot of
technology behind the scenes to really help streamline the business
operationally but still deliver a really personal, grassroots, hyper-local
product, because at the end of the day, we still believe, and I still
believe, tutoring is an in-person exchange, and if a parent has a choice,
today, they’re going to choose a tutor who can come to their house or can
meet them at the local library versus maybe somebody over Skype. For the
vast majority of tutoring use cases.
Andrew: You’ve talked about the back-end a few times. What goes on back
there? Give me one challenge that you wouldn’t have anticipated years ago,
that you’ve solved?
Erik: One feature, for example, is when we were first looking at where a
manager peaks out, how many clients and tutors they can handle, we noticed
that they were spending a lot of time on Map Quest, trying to figure out
where the client lives and who’s close. Then, one feature we built in our
system, is we can put in an address and now see through a Google map. Some
integration, and some other things. Who’s the closest tutor within a mile,
driving directions, how many hours they’ve tutored. All these different
factors that help us kind of be like a great dispatch.
Andrew: Ah-ha. I see. How do you know if that’s an issue? That’s the
kind of thing that if I had that problem, it would be invisible to me. I
would just deal with it.
Erik: Well, you know, I learned a great management lesson when my first
manager quit. She said to me, “Erik, you know, it’s great you checked in
with me a lot via email, and although I used a lot of exclamation points,
things were going so smoothly in our email correspondence, it would have
been great to see you, to meet with you, to talk with you in person.” So,
I’ve really taken an approach of always being very collaborative, checking
in, over communicating, and spending a lot of time in the communities that
we serve meeting with out managers. Just by being there in person, you
get to see, you know, show me exactly where this pain point is.
Andrew: I see. You’re watching them as they do it.
Erik: I’m watching them as they do it. I’m checking in with them a lot,
and I’m not hiding behind a phone or a text. You know, I’m going to meet
you for coffee. We’re going to sit face-to-face and talk about it. And
I’ve been about to figure out a whole lot more about the model, the areas,
the issues, the great things, what to build on, what to improve, just by
being there, you know.
Andrew: Eric, one of the challenges with that is if you’re there for
people, then everyone else expects you to be there for them, too. How come
Erik is having coffee with Jack, but when I need to talk to him about my,
you know, just to shoot the s— with him, he’s not around for me.
Erik: Yeah. Well, you’ve got to make it a priority. So I put the people
first, and part of the technology back end, part of the building, (?)
department bills on tutors, basically not even having to have an accounting
department, because everything is automated, it lets us basically spend our
time on the things that we care most about and are most critical to our
success, which is being with out managers. I’ve had to learn tricks, such
as holding conference calls as opposed to calling everybody up on a Monday
morning for a weekly check-in, creating knowledge base online to be able to
share materials, things that are useful to our people. But at the end of
the day, you know, and not over promising. If I say I’m going to meet with
you once every month, in person, I can stick to that. But if I say we’re
going to meet every week, then I’ve set myself up for sleepless nights and
being really tired.
Andrew: I remember talking to the founder of a publicly traded company,
who was in his twenties, who admitted to me that he was having issues just
bringing himself to talk to his CFO, because his CFO was older. He felt
like that guys really an adult, and I’m not really an adult, so he wasn’t,
he was tip-toeing around him. Here you were younger, not just trying to
manage one person who was older, but at some point many people. How did
you get to do that? How’d you do that right?
Erik: You know, I just never played scared. You know, in basketball, I
always liked to play with the older kids. A lot of people have asked me
that question. Isn’t it awkward, because in our model our peer tutors
report to their local regional education advisor, who is an adult.
Basically, I help manage and support our local managers in each community,
each of these REAs, so I always keep it on talking about the business. And
I don’t really let there be much awkwardness because of age.
You know, we realize that the client is a parent so they probably want to
talk to another adult about setting a tutor up for their kid. And as long
as we’re talking about the grade tutor, how we’re going to get the
students, how we’re going to give to the community, and have the
conversation be about that and not the fact that maybe we’re 20 years
difference in age or whatever. I’ve got grandmas and people with grandkids
working of us. You know, it’s all good. And they look at me and they
think, “He’s a brand, and he’s closer to the tutors.” I think that’s part
of it, too. And it’s cool.
Andrew: They used to manage or the people who work for you used to
organize themselves, I’m looking at my notes here, using Microsoft Excel
and a pad of paper, which is the way that often people get started. And
then you saw what they did and how they were using those simple tools and
you built your tools around that. In retrospect, it that the best way to
go, to let them use whatever tools they have, watch how they use it, and
then build solutions afterwards, or should you have started out with a
clear system that would have scaled better?
Erik: I think you 100% have to wait and see how people are going through a
process and then build technology that helps automate, make it a whole lot
easier, versus kind of guessing that that process is going to look like,
because especially in our model, there’s so many moving parts. There’s so
many details that if you don’t have actual… These three people are
running into the same challenge. Okay. How do we fix this? You’re going
to end up probably spending three times as much for half the results.
And we found it to be really useful to kind of build the tech once we
realized, “We’re going to hit a wall. We need to build more capacity. How
do we use technology to automate this?” And I did spend a lot of time
sitting at a computer in the suburbs looking at this stuff and thinking,
“Gosh, how do we do this better? How do we do this better?”
Andrew: What’s one thing that they did that you wouldn’t have known to
build that you wouldn’t have known needed to be included in your software?
Erik: I’m continually reminded of more things that we need to build. Just
a few nights ago I was talking to one our managers who just interviewed 26
new tutors and there’d be great if there was a button that we could change
the status in one fail swoop for a mass group of students which we never
had before. But I know personally one feature that we built that I really
benefited from was, for a long time in college, I would track a spreadsheet
that had all the tutoring session history. And we even, it was probably a
bad idea, but we started to sell to some parents packages because they had
said, “We’d love to be able to get a discount if we bought bulk.” And so I
was tracking package balances in a spreadsheet which was really, really
meticulous.
And so on a Thursday night I would send an email out to our tutors and say,
“Hey, send me an email. Report your hours so you can get paid.” I’d enter
all this stuff into the spreadsheet until probably 11 o’clock at night. I
would go out till 3:00, and I’d wake up on a Friday morning and I’d run a
payroll and get it done. And I finally showed that spreadsheet to our web
developers and they figured out a way to build an on-line dynamic reporting
system. And I tell you, Andrew, that was for me the best feature we built,
because it was everything that I was doing but the site does it for us now.
Andrew: Was the business bootstrapped or did you take outside funding?
Erik: Bootstraps.
Andrew: Oh, bootstraps.
Erik: I invested 50 bucks in paid-in capital and that’s it. Yeah, I had
no investors or anything.
Andrew: I haven’t talk to you about customers. We talked a little bit
about how you got your early customers. What else worked for you for
getting new customers?
Erik: Education services is a word of mouth business. And we’ve been
leveraging word of mouth ever since. So, we use, you know, just we really
believe great service to our clients yields more referrals. And in new
markets, you know, we’ve experimented with all the different online kind of
lead generation kind of stuff. But, I’ve really tried to build meaningful
relationships with people in communities, get influencers to either be our
managers or be supportive of the business, and use more or less word of
mouth tactics in each new market. And we have a nice mix now of how we
enter a market depending on the external factors and who we have on our
team, but it’s a word of mouth thing. It’s…
Andrew: What do you mean by influencers? Who’s the typical influencer in
a new market who can help you get customers?
Erik: You think about who’s that parent that other parents look to for
advice.
Andrew: I see. So, who is that parent? How do you generically know that
there’s going to be that parent? How can you tell from a distance who that
parent is?
Erik: How can you tell from a distance? That’s a great question. You can
pick up things from someone’s LinkedIn profile, you can pick up things
basically by getting on the phone with someone and how they talk about
their area, what they do, how they find resources themselves, what they’re
involved in. I surround myself, you know, we build from within, so I try
to incorporate the managers who are being successful to talk to new
managers, to figure out and make a judgment call if they think they’re
going to work.
Andrew: Are there indicators, like the parent who’s active in the PTA, is
going to be like –
Erik: Yeah.
Andrew: That’s the kind of thing you’re looking for. And then, if you
find that person is an influencer, you make them a manager, and let them
hire underneath them?
Erik: Right. If that’s something that they’re interested in, and we
think they’ll be a good fit for.
Andrew: You also said that you have a certain way of entering a market.
How do you do it?
Erik: We start with that person, and then we develop a plan based on that
market’s characteristics and how close it is to a market we’re already in.
If we know people in the administration of the district, and we hold
anything from…Just a few weeks ago in Chicago we held a great cake
cutting, meet the tutors event at a local work share space, and the mayor
came and the we had kids and there were tutors, and it was awesome. In
other markets we’ve simply held an open house, or we’ve really tried to
advocate for write up in a local paper. Or we’ll do a huge buy in a local
newspaper that still people read and latch onto. I really enjoy learning
about each of the markets and what’s going to work. Then we have a nice
profiler, so we know basically where to go.
Andrew: Oh, what’s that? How does that work?
Erik: It’s neat. You know, my investment banking friends who, at one
point in college, I was the guy who knew how to use Excel the best, and
now, since, I’m the guy that barely knows how to use Excel and they’re all
creating these crazy things. So, I said to them one day, “Hey guys,
education data is free and public on the ‘net. I kind of know from a
sample size of districts we operate in where we have found traction, can
you score these 17,000 districts for me some way?”, and I got some good
free consulting out of it and we had a nice document.
Andrew: So they score the ones that have worked for you, identify what
works about them, and then tell you how to find others like that?
Erik: Exactly.
Andrew: What’s an indicator of a market that’s going to work for you?
Erik: Size, the number of students in school, income, we even look at
farms rates, that’s free and reduced price lunch. We look at average
number of students per school, and we weight the factors, and we give
everybody a score. Then we’ve kind of gotten fancy and started to look at
the rankings of high schools, and how does that play into it. All these
different things. Our parents, how well educated are they. You know, all
these different factors. I like size. I need big places. I need places
where there are a lot of students in school, all living in a close
proximity to each other so it’s a feasible kind of thing. If it’s too
small, you don’t need us. If it’s too spread out, it’s hard to place.
Andrew: You even have big customers who are school districts?
Erik: Yeah.
Andrew: How does a school district, how did you find a school district as
a customer, and then what’s your relationship with them?
Erik: Well, in college I’d been told by some advisors and mentors that the
U. S. government does pay for tutoring and you can get into these programs.
Basically, by going through an RFP process with different non-profits and
school districts, we’re able to show that our services are research-based
effective and would benefit a population of students that the district, the
non-profit, or the school is interested in serving the services. Then,
we’ve been able to bid on some of these proposals and get them. But
probably the most important thing that we did five years before ever trying
to work with a school district, was adding that reporting system, so we had
a log of our tutoring sessions, and could show people over 100,000 hours
of tutoring, of data, showing what we’ve been tutoring, how long we’ve been
doing it, who are the kids that we’re tutoring, who are the kids we’ve been
serving, to show that, hey, this thing works.
That tracking tool has been really helpful, but Andrew, the reality is when
it snowed a couple of years ago in D.C. for a huge blizzard, I spent three
days writing a No Child Left Behind RFP in my PJs and hot chocolate and
when I wrote that thing up, you know, I found that that was really get
helpful to then get more No Child Left Behinds now basically done. You
know, there’s waivers in every major state and it’s a whole game that we’re
not really that good at playing but we have a great proposal showing
everything about what we do that we’ve been able to leverage and serve
students who can’t…
Andrew: I see. So you’re saying that schools had a No Child Left behind,
had money because of No Child Left Behind and you pitched yourself to them
and that’s how you got some of that business.
Erik: Yeah. So states have it, school districts have it, nonprofits have
used their operating budget to sub-contract this.
Andrew: How did you find out about this? Most entrepreneurs at an early
stage are so busy focused on their day to day problems that they don’t
notice those big opportunities and if they even think about them they think
that’s for someone else who’s more connected, who’s in a different space
who’s not in the hustler frame of mind and they pass it up. How did you do
that? How did you make the connection to your business?
Erik: Well, I think I passed it up, you know, probably the first three,
four, five times that it was mentioned to me, and then as I got more
confident in what we were doing and could understand the language of these
RFPs which are just kind of hard to understand just in general. You know,
I said there’s a certain point where I just said, OK, you know, we can do
this and we just did. Being open-minded, you know, being stubborn enough
to know, you know, there’s a path I’m on and something we’re trying to
build, but being open-minded enough to step back and think about what
you’ve been hearing, what I’ve been hearing and consider other
opportunities. It all hopefully aligned around the same concept.
Andrew: So then Aristotle’s Circle presents an opportunity to you, why do
you sell? You didn’t sell out, right? You got cash in, actually, what is
the structure of the deal so that I can ask a question about why you did
it?
Erik: So, we’re now one company. I am, Aristotle’s Circle and Peer2Peer
Tutors are now merged in one business and I am an equity owner in the
combined company and have a large stake in our success in the future.
Andrew: OK.
Erik: What I, and I wasn’t looking to, this wasn’t something that I sought
out, you know? I knew, I’d known for a very long time that we want to get
this to a lot of students. We want to get the volume, the national, maybe
even the international volume so that peer tutoring becomes widespread and
I do believe first mover advantage in the space is a big thing and when I
moved, I moved up to New York about a year ago, literally a year ago
basically to this day.
Andrew: From the Washington, DC area.
Erik: Yeah, from DC, so I was kind of a ping-pong ball. I grew up in DC,
went to NYU, moved back for three years, now I’m back in New York, and I
was trying to raise money because I realized without having any external
investment, any debt, I had no debt on our books whatsoever, everything
funded through profits. You know, to be able to open the number of markets
that we wanted, that I wanted to see get opened was really just going to be
really impossible or extremely difficult without, you know, raising some
money, having a partner, doing something, and so I started exploring
opportunities and what I really liked about the Aristotle’s Circle
opportunity was, and is, that they had already taken the next steps that we
needed, having the client service team, having the internal marketing
people, and having two principals in Susie and Sue who are extremely savvy
with the investors and the (?) and all these different financial partners
that I really found to really dislike.
I really didn’t like being in those conversations because I felt that it
took me from the passion and running the business that I more enjoyed and I
believe their model is extremely innovative and its different than private,
you know, academic tutoring because it’s college admissions consulting
which, at a bird’s eye view, is all bundled in this education services
sector, but really quite different, you know? I had noticed that in
visiting hundreds and arguably maybe 1,000 different high schools, that
these ratios between guidance counselors and students to one guidance
counselor are extremely large and the need for having another resource is
definitely apparent and no one had done it on a national basis, so just as
we’ve built a network of top students who are in high school, the Aristotle
Model has built a network of the top experts nationally and internationally
that helps students gain admissions to college which is actually a really
cool international business as well which I thought was cool.
Andrew: You didn’t feel comfortable raising money, but you thought that
this would be another way to grow the business?
Erik: This would be, you know, it wasn’t that I probably couldn’t raise
the money…
Andrew: It seems like you could have.
Erik: Could I have raised the money and been able to continue to keep the
bus moving, and not mess it up in the process, I think, was going to be
really hard. And when I found this opportunity to also gain another two
sources of revenue, as well as the people, the management experience, and
the speed to market that we were going to be able to do, I said this is a
great opportunity. We fit. The cultures really fit and we’ve been able to
really, just since February, we’ve opened ten new markets, Peer2Peer
markets, since then alone, which I never would have been able to pull off
alone. You know?
Andrew: Do you own more than 25% of the combined business?
Erik: I can’t really comment on that.
Andrew: OK. Did you take more than a million off the table? It seems
like you did.
Erik: I can’t really comment on that, either.
Andrew: OK.
Erik: But you’re good. You’re good, Andrew.
Andrew: [laughs] I’m not good enough on that. I think the rest of the
interview actually flowed really well. I usually am very critical of my
own work, but as I’m looking at this interview, I’m feeling especially
proud of it, and frankly, it’s not just me. That’s what sucks about this
business, is that my interviews, a lot of it depends on the guest. You and
I never would have met if not for Jonathon of the Fort, so it depends not
just on the guest, but a past guest in Jonathon, in introducing us. But,
once we’re here, I could do all the work I want, but if you’re not
articulate, if you can’t tell your story, if you don’t trust that a story
is better than facts and better than just advice, then it just doesn’t
flow. If you can’t put two sentences together, it doesn’t flow and it’s
painful. If you’re angry at me for some reason, for interrupting your day,
then it doesn’t work.
Erik: [laughs] Yeah.
Andrew: Let me say this, and then I want to come back and actually,
speaking of advice, I do want to ask you about one piece of advice that you
would give to your earlier self based on your experience here, so that we
can give it to the audience of entrepreneurs who are listening to us.
But first I have to say, the most important part of any interview is the
part where I tell you guys to go to Mixergypremium.com. Now what is
Mixergy Premium? Well, if you buy into this whole idea that you can learn
from someone else instead of trying to figure everything out for yourself,
then Mixergy Premiums is the site to go to for entrepreneurs. That’s where
real entrepreneurs come in, they teach you how they built their businesses,
and they show you how you can do it, too. Mixergy proper is interviews,
Mixergy Premium is courses. And by the way, Erik, have you ever heard of
Nicholas Green from IB Insiders?
Erik: Of course, Nick’s my boy.
Andrew: A good friend.
Erik: Yes.
Andrew: He built a similar business to yours, except he was focused on
getting people into college, letting people take college entrance exams.
He’s one of the teachers at Mixergy Premium. I asked him, “How do you
organize your business in a way that allows you to lead so many people who
other interests, college, and side interests, and still keep them all
focused and productive?” He showed actual screen shots of the software
that he used. He showed how he managed them. It’s been terrific for me,
and I know other people have used it to systemize their businesses. He’s
one of dozens of real entrepreneurs who teach at Mixergypremium.com, and if
you use those courses, you can do what I did, which is systemizing your
business or help generate more sales, or improve your business in other
ways. Go to Mixergypremium.com. I guarantee you’ll love it. Thousands of
others already have.
All right. So, one piece of advice. What would that be? Actually, you
had something that you wanted to say about my pitch. I always ask
entrepreneurs about feedback on my pitch. Not so much to put you on the
spot and ask you for feedback, but I hope that you would, but also to
signal to the audience that I’m open to feedback, so send it over. And
many people do as a result of me asking, so I’ll ask you. You heard my
pitch. You’re a good salesman. What feedback do you have?
Erik: Oh, I like your pitch. It’s good. I’m ready to sign up.
Andrew: [Laughs]
Erik: I’m going to subscribe to Mixergy Premium. Yeah. No, it’s good.
Andrew: I’ll pause the interview right here, just go to
Mixergypremium.com, do you have a credit card handy?
Erik: And, I can say that I’ve watched Nick’s presentation on your site
before, and his is excellent. So his is excellent, and he’s a systems
master. He really, with the amount of time that you can get one of his
branch managers up to speed and delivering a course is very small, and he’s
the devil’s in the details kind of guy. He’s the man.
Andrew: And he does. He manages every part of the process, all
structured, he knows how to give people rewards before they actually get
the full payoff for the hard work, he goes, “Look”-
Erik: Yeah.
Andrew: Sometimes in the early part, people have to put in a lot of work.
There isn’t a reward there, but we need to recognize that, and so he
created a point system,
Erik: Yeah.
Andrew: And we talked about that using, basically a lot of it was off the
shelf software. Unlike you, who had a developer. How do you know him by the
way? You seem to have a lot of advisors around you; I didn’t even get into
that in the interview.
Erik: I wrote to Nick during college, because I learned that a lot of our
peer shooters were then joining his program, and we became kind of like pen
pals and buddies. Talked on the phone about challenges. And that’s really
my advice, I think, building a panel of advisors and asking for help and
not being afraid to email or call somebody who’s a big deal or runs the
dream company that you love and just say: Hey, I got this idea. I got this
business. It’s growing. Can you help me?
Andrew: Well what’s in it for them? I mean, a lot of times no one gets a
response to it because the big deal person really is a big deal to other
people to, so their busy. And then you’re an entrepreneur trying to help
you out, to basically work for free, to give you advice for free. How do
you get them to say yes to something like that? What’s in it for them?
Erik: [?]
Andrew: What did you do? You go to [?]
Erik: [?] Yeah, well, I never asked for too much. I’m surprised at just how
much people are willing to help. I would say, hey, just meet me for coffee
once every six months. I’m not asking for an every week call, a monthly
thing. You don’t have to come to some meeting. But just know, I might call
you when I have an issue and I found that people, if you can get their
attention, and sometimes you have to be persistent or borderline annoying
to the reply to that email, they’re willing to help. People have big
hearts, especially those who can empathize and picture themselves in your
shoes.
Andrew: All right, that is great advice. I’ll leave it there. I was
actually going to tell them to go to peerstotutors.com, which is the domain
you use for your email address. But, right now it looks like it leads
automatically right to peers.arostatlecircle.com. And if people want to
connect with you, what’s a good way for them to say hi, to thank you for
doing this interview, and maybe at some point in the future ask you to be
an advisor in their business.
Erik: Sure, you can email me e_kimel@peertutors.com. You can tweet at us
at Peer2Peer. And I’m on Facebook or LinkedIn, so you can hit me up anyway
you want. And I’m sure I’ll get back to you.
Andrew: All right. Awesome. And you got a great Twitter handle.
Erik: Yeah
Andrew: Eric, Thank you for doing this interview.
Erik: Thank you, Andrew, very much.
Andrew: Cool and thank you to Jonathon of the Ford. I’ve got to thank him
for really introducing me to you. There is no way I would have discovered
you otherwise.
Erik: Yeah. Yeah. No. When I heard about it and I had seen Nick’s thing, I
was like, I got to jump on this. This is awesome.
Andrew: Cool. Thank you all for being a part of it. Bye.
Erik: Bye.
