TutorSpree (YC W11) shuts down | Hacker News Reader

TutorSpree (YC W11) shuts down

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63 pointsasanwal45 comments

I worked at a startup that was an alternative to TutorSpree and midway through our attempt at creating traction as a tutoring marketplace I spoke with a VC who had previously invested in a online tutoring marketplace. He told me he found the biggest challenge in the space is the sheer number of people who want your services but do not wish to pay/do not have money to pay. In his words "There are a few people that will pay anything to give their children the upper hand and they trick you into believing there is a market for something like this."

The other problem is the people who will pay the most for tutoring are not going to use your platform. With Airbnb people find ways to spend money on travel because they want to travel and Airbnb makes it more affordable. Starting a business like this you hope the more affordable access to a tutor, the worse-but-better alternative to high priced tutoring agencies, is your app but you're competing with increased self directed learning and schools that are trying to provide tutoring to their students for free (both my high school and undergrad institution provided this and my HS was public). You're left with people who don't have free options, some of whom can't afford any private tutoring and people who want something nicer than the available free options but don't quite want to spend the money and it ends up being not much of a market.

As someone who worked as a private tutor in a high demand area and knows this industry very, very well, I think everyone is missing an important dimension here: the existence of dozens and dozens of competitors, both offline and online, many of which are a.) much bigger b.) provide IDENTICAL functionality.

The cost to entry of building an online marketplace for tutoring is pretty negligible, to the point that many have done this already. Consider these alternatives for parents, many of which come up on top in a google search for tutoring: wyzant.com, universitytutor.com, revolutionprep.com, veritasprep.com, preply.com, etc. etc.

I'm no expert in this field, but it seems to me that it was very similar with airbnb. I.e. lots of big competitors with the same functionality.

The room rental industry isn't something I'm familiar with, but it seems to me like Airbnb was strongly differentiated from other services in the industry, in a way similar to how Lyft and Uber are different from traditional taxi services.

By contrast, there are tons of websites that offer exactly what tutorspree offers, both in terms of customer experience and quality of service provided. When I say identical competitors, I really meant identical.

Official link: http://blog.tutorspree.com/post/60655061386/thank-you

I was puzzled when they switched from the marketplace model to an agency model. From the tutors' perspective, it was much better to have direct control over interaction with the students, scheduling, and the ability to adjust and test pricing dynamically. They switched to being an agency, which meant tutors started getting paid significantly less and now had to deal with a middleman to work out scheduling and decide whether it made sense to work with a particular student.

When I was in school, I tutored a significant amount for some pocket money (all freelance). Towards the end, I tried Tutorspree for a bit, just to see what it was like.

I was disappointed, because I really wanted them to succeed for so many reasons. But scheduling was a nightmare, because going through a third-party, by definition, will always be less efficient than speaking directly. Also, after a while, this pattern emerged:

1) They call me (or send me an email), asking me if I could take on a student for $SUBJECT (usually Python or Machine Learning).

2) I respond and tell them that I can

3) I never hear back from them

I imagine they were calling multiple tutors and trying to find a combination of low price and good reviews, and then recommending that tutor to the student, but this process was incredibly frustrating.

I eventually just stopped responding to their emails and phone calls, because they had a lower signal-to-noise ratio than unsolicited recruiter emails sent to group mailing lists!

Also, their payment was handled entirely through Paypal, and I would have to send them an email to tell them that I had tutored the student (so they could pay me). I almost never logged into the website. For a tech startup, it was surprisingly reliant on old technologies. Not that this is necessarily bad, but for a market of college students and (primarily) young tutors, this is a poor fit.

Finally, they cut they took was HUGE - 40% at one point! That's more than I pay in taxes, and I live in one of the most heavily taxed cities in the country! On the very first day, my first client asked me before leaving if I would be interested in continuing tutoring outside of Tutorspree if we could split the difference.

That is a very bad sign for any agency or marketplace: if the fees are so high that they actively drive away repeat business, you're walking up a down escalator.

This is interesting - that was exactly what was happening to me as well. I got quite a few referrals from them when they were doing the marketplace model. Once they switched to the agency model, my experience was exactly that - they call or email me, I call or email them back, I never hear from them.

Something tells me the clarity.fm model would have been perfect from a flow perspective.

Exactly. When it started, it was completely online and automated, and the fees they charged were reasonable, considering that the system provided leads, helped with scheduling, and allowed the commercial part of the transaction to be politely abstracted from the educational part, which I liked. I guess the margins with that weren't high enough.

Wait, they would ... call you? It's a startup and this is the internet. Whats the point with taking VC money if you want to be another agency.

Because starting a startup is not about using the "coolest technologies", but running a business. In many ways, a typical old-fashioned business. Startups that revolve around the "coolest technologies" will almost always fail.

One of Tutorspree's selling points was their human touch.

http://mystartuphas30daystolive.tumblr.com/

this one?

No.

It's not fair for me to second guess this move without knowing details, but this is a bit odd to me. Here's what I'm trying to figure out... If it was actually a business, but just a slow growing one they wanted to get out of, why didn't they hire someone else to run it? What am I missing here?

Anywho, they sound like smart guys. I'm sure they'll move on to something bigger.

It seemed like it was scaling pretty well to me, so I was a bit surprised that scalability was cited as the problem. What went wrong?

Lots of these marketplaces face the same major challenge of offline commerce once first contact is made. Basically, there's little to nothing to stop the seller from taking the relationship offline and make 2x the money as the relationship continues. Services try to mitigate this with value adds like scheduling services and providing more leads, but it's so difficult to police that most just try to continue to fill the funnel.

Airbnb is different because the relationship is long distance and trust, payments, insurance, etc are a much larger issue. It's also typically a one-time transaction and there's little need to take the deal offline. I'm sure they deal with this with people wanting to stay beyond their trip date or trying to book directly, but Airbnb can easily track this stuff with the scheduling feature and seeing discrepancies when users try to go offline.

"I'm sure they deal with this with people wanting to stay beyond their trip date or trying to book directly, but Airbnb can easily track this stuff with the scheduling feature and seeing discrepancies when users try to go offline."

Just curious, what recourse does Airbnb have when discovering these discrepancies?

They could disallow that host from listing their space. Small revenue loss to AirBnB. Big revenue loss to the host. Not really worth the few bucks to not be able to use airbnb.

If you bypass AirBnB, you will not benefit from their insurance coverage. I have heard of cases where recurring guests would try to arrange the next deal directly, and that factor was always the decisive reason for the host to decline.

Up until the the SF incident, I'm pretty sure AirBNB didn't even offer insurance.

I'd imagine it's hard to tell the difference between offline bookings from other sources, and repeat guests. We list our room on Airbnb and occasionally on work email lists, CL etc, for longer-term sublets. We have never taken an Airbnb guest offline, but from the surface it would look pretty similar, with the balance of insurance vs someone you have had enough contact with to trust (and the fees/tax aspect), I can certainly see why people'd do it. Especially given a recent experience with unexpected underpayment from them :/

You raised a very good point. The thing about tutoring is that it is a very personal service. Good tutors are hard to find, and a lot of the time it's about how well a tutor can relate/communicate with a particular student; nevertheless, once the fit is established, then the relationship is quite steady and last a while.

For the tutor as well, once they find a good client, they may get many other referrals from the same client. For example, if Jimmy's math grades all of a sudden improved, his parents may attribute it to the tutor, which gets the tutor a lot more calls for work within that community.

All of the above means that beyond a finders fee, there isn't too much of an ongoing role for Tutorspree.

Except there's so much that TutorSpree could've done in the marketplace model. They could've built a better scheduling system. They could've built a better way for tutors to offer discounts for purchasing packages. They could've built a bidding model where tutors could pay to show up higher in the rankings. They could've built a content network (e.g. various blogs about tutoring or education) and have tutors pay a fee to have their profile featured on those blogs.

You know what I hate doing? I hate printing paper that says "Tutor available" with my name and credentials on it, and those little paper tails that you rip off on the bottom with your email and phone number, and then going to the local university and posting it up everywhere. I will pay money to a service that solves that marketing problem for me.

Edit: to put it a different way - dating sites have this problem even worse than tutoring sites, because the presumably monogamous members of a couple meet each other, they don't need the dating sites anymore. Tutoring sites have a smaller problem because the tutor-tutee relationship isn't exclusive.

> I hate printing paper that says "Tutor available" with my name and credentials on it.

Are you willing to take a 40% cut in your rate for someone to do this for you?

I think this illustrates nicely why the market is a graveyard. It's competing with a super-simple task that cannot be replicated at scale.

I think the tutoring industry is a readily attackable problem. It might not be just like BnB inns, but there are plenty of varied markets that companies have cracked. Freelancing markets, used good auction sites, and all sorts of other examples abound. The fact that the tutoring industry has its own really tricky wrinkles just means that it takes a team uniquely attuned to the market to pull it off. Maybe they just didn't have the right ideas or execution. As a founder, if you're not bringing your own runway, you only get so many missteps. I'd bet on someone breaking this market open sooner or later.

That definitely is a problem marketplaces face, but it actually wasn't the problem that we had. When customers started working with us, they stayed with us - repeatedly booking new lessons and packages.

As strange as it feels to say it, we had a business that could grow over time, and that's something we'll always treasure. What we didn't have was something that we could grow at the rate we wanted, at the economics that we thought made sense.

When you say it that way, it basically sounds like greed.

You assert to have had a good, long-term business going; but screw that when you can take another spin of the VC wheel, right?

I guess if the yard stick is always "become the AirBNB of <random industry>..."

And this basically sounds like passing judgement. Not everyone has to share the same goals. Some want to go for the billions, others are happy with a few million. It's not your place to judge someone else's goals as greed. Just like it wouldn't be Aaron's place to judge your goals as settling.

True.

I suppose I was mostly nit picking on the portrayal of "oh, hey, we had a good business, but, meh, so what."

When, for a lot of people, myself included, that sounds pretty nice. E.g. (from another reply) 2-3% monthly growth is meh? I suppose...

But, yes, as you said, different goals and circumstances (I of course know nothing about the company/VCs/etc.).

So, yeah, akharris, sorry for being an ass--shutting down a company definitely sucks, and you have to do it in front of your friends/hecklers on HN. Good luck on the next thing.

You make it sound like they had a choice. They'll never be able to say it publicly, but even if they were happy with slow growth I'd bet a lot of money their VC investors weren't.

Wait, let me understand this... You're implying that investors have more than 50% voting shares then right?

It doesn't just come to voting share. You'll be taking their advice if you want that next round of funding.

So they did have a choice...? If the business goes bust, then why do you need another round of funding?

Or maybe they have other things they want to do with their lives than grind it out at 2-3% monthly growth for 5 years.

With great power comes great responsibility.

If they can apply themselves to something that has greater economic benefit to themselves, and thus society, they are doing a disservice to society by underutilizing their abilities.

If the only person in the world who can cure cancer decides to be a janitor and nothing more, is he not greedy, or is he lazy?

You're misjudging them and treating them as if they are somehow stealing money through their startup(s). Not making enough money is just a way of saying they just feel they can contribute to society in a bigger way.

If you think the business would grow overtime, doesn't it make sense to sell it to someone rather than shut it down?

We've seen this same behavior @TutorUniverse, student-tutor pairs aren't as flaky as you would think. Since we have thousands of tutors to choose from the students sometimes switch between tutors to find a lower rate, different schedule, etc. but rarely do we see them going offline. Aaron, hats off to your team for doing a wonderful job building TutorSpree. Do you have an outplacement plan for your tutors? We're recruiting :)

Having worked for Kaplan, I can say that a few bottlenecks would be screening tutors (Kaplan does an in-person audition but these guys might have done it virtually) and customer service (you will always get parents calling to complain and demand money back). Their site also said that a Tutorspree educational consultant would help tutors schedule lessons, which is odd...I would put that burden on tutors to input their availability and then let students pick available time slots. Also, as with Kaplan, students will sign up for the first few hours through the company, and then just pay cash directly to the tutor, cutting out the middleman.

I hope they do a more detailed post-mortem. No doubt there is more to this story - why didn't the business scale, why did they fall out of love with it etc?

Aaron is a dick and after meeting him I immediately wondered why anyone would view him as a good CEO/invest that much money in his empire of greed.

wow. just a year ago I was using this site as a role model for another 'dual market' project.

although, this isn't the first time a similar startup in this space died - teachstreet survived for a couple years before shuttering and the founders joining the amazon local team - https://en.wikipedia.org/wiki/Teachstreet

i think they would have sold it off. Their idea seems amazing and would have worked even in Kenya where I live and thats saying something. But it seems they had passion which may serve them elsewhere.

how about crowdsourced tutoring, where tutors pay for the app, and students apply and pay for tutors who teach at most 5 students a session? Could it feasibly work?

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