With an unfair move towards its competitors YongoPal won the big price of $25k in the Business Plan competition. Their plan for YongoPal is making money from the beginning by charging its customers. Can you believe that? Charging your customers for a service?
All joking aside, YongoPal the start up from Seattle that connects Korean students with native speakers in the US won the UW Business plan competition although they were the black horse in the race according to Christopher Griffin, one of the judges.
I think YongoPal stands for a new generation on online education startups that are very niche, built around a single idea and focused on making money from day one. Lenguajero was of course one of the first examples but according to August Flanagan, one of the Co-Founders, the community for Spanish and English learners is a failed start up as they did not have the charging of customers built in the DNA of the product right from the start.
It seems like investors are getting a bit tired of hearing predictions “if we get 1% of the market and then start converting our free users to our premium service we will get break even in 2020″.
[...] Why did I push the case for a zero-IP startup with few customers?
It’s called CLARITY, folks. And while we can argue all day long about the market prospects for a small startup with zero IP, commodity technology, and better-funded “professional” competitors, what YongoPal did was present an incredibly clear picture of its market, the reasons for choosing it, the things that make it unique, and how they plan to attack it. And they did this with a clear-eyed confidence that wasn’t arrogant, but evinced the street-level research they had done to understand just what the heck they were aiming for.
In nearly every other case—specifically in the cases of all the finalists in the bio-medical space—huge assumptions were made, from revenue projections to time-to-market estimates to purchasing dynamics. And given the time-to-market for many of these products, a few-degree variance becomes the wrong side of the galaxy by the time 2014 or beyond arrives. In contrast, YongoPal was aiming for a time frame closer to, say, next Tuesday. [...]
Christopher Griffin about YongoPal
I think there are some good takeaways in this piece. Build a business on what you know, not what you assume. Darien Brown, the Co-Founder of YongoPal actually lived / studied in Korea and was having paid conversations with college students for $40 USD per hour. YongoPal is charging the students $11 USD per hour during the closed beta and will later on higher the pricing. Hence the business model of YongoPal is based on real life data and not on statistics that someone somewhere published someday.
Of course the proof will be in the pudding but then again, YongoPal is using guerilla marketing tactics. They are not targeting their users via the internet but by connecting with “sellers” on the campus. Right now they are targeting universities and colleges in the Seoul area only, a potential 120k customers. To reach those students YongoPal is connecting with the student organisations on the campus and offering them a cut for every paying student they refer.
I am looking forward having Darien Brown for an EDUKWEST interview the coming Monday as to me this is one of the most promising start ups in online education right now.
- Christopher Griffin on Startup Thinking: YongoPal and Why Dark Horses Sometime Win
- Xconomy Seattle: YongoPal, UW Business Plan Winner, Looks to Cash In on Video Language Lessons—and Some Lessons of Its Own
- August Flanagan: What it feels like to fail