Pasadena-based Cramster (www.cramster.com) recently announced $3M in a large angel round for the firm's online study communities. Cramster is looking to create online study groups, to help high school and college students study math, science, and other topics. We spoke with the two founders of the firm, Rob Angarita and Aaron Hawkey, about what the site is all about, and the interesting way in which they connected with their angel investor.
First off, tell us what Cramster is all about?
Aaron Hawkey: Cramster is an online study community, built around students and educational subjects. What we're trying to emulate is the face-to-face study group. You can come on to Cramster, and get all of the benefits of a study group.
Rob Angarita: When we talk about students, we're talking about college students and high school students.
How did the company come about?
Aaron Hawkey: Essentially, the company was built off an idea I had in college. I was an electrical engineer, and had a tough time at UCLA getting access to resources I needed. I built a piece of software to help find solutions and examples, categorized by textbook, and after I graduated in 2001, I figured it could help other students. It took about a yaer to put online, and we went online in 2002 to provide help for college students. After that, Rob and I took a year or so to gain traction, and in 2004 we committed full time to the business. Since then, it's grown into a big study community.
What kind of information can students get on the site, and how do they use it?
Aaron Hawkey: Students can get access to content, specific to a textbook--the equivalent of an online solution manual, or lecture notes to help them. They can also ask questions about their homework or what they are studying. We've also just released a new website where we have a database of over 50,000 practice problems. Students can come online, and if they are taking a test in differential equations tomorrow, they can check a few boxes and we generate a dynamic test with full solutions. What we've found from our customers, is the more practice they get the better they do.
Rob Angarita: At the end of the day, students are just looking for better explanations of steps in problems.
What kind of subjects do you cover?
Aaron Hawkey: Mainly math, science, engineering, electrical engineering, computer science, civil engineering, and physics, which is our biggest topic. Lots of kids have problems with physics--it seems to be the toughest subject that freshman in college have.
Rob Angarita: We cover from algebra through precalculus, calculus, all the ways through advanced math. We're also finding more and more high schools are offering college level math to seniors in high school. We've been expanding downwards, and actually starting a relationship in high school. They use us right into college, because it's a natural extension.
You've got quite an interesting angel investor for the firm. How did you run across your investor?
Rob Angarita: Aaron and I were looking for funding, to grow the business over the last year. We were going through the traditional route of seeking venture capitalists both here in Southern California and flying to Sand Hill road. We were at the tail end of it, and not until the 11th hour with one venture capital firm, when Shai just showed up. (Editor's note: Shai Reshef is the firm's angel investor, and sold his last company to educational firm Kaplan). We received an unexpected email from him that said -- "Please come talk with me." We asked Shai -- how did he hear about us? He told us that he felt like homework help is the next big opportunity, and went to Yahoo Answers. He asked on Yaho Answers about where he could get the best homework help, and people told him Cramster.com. So, he called our office, then called me and sent us an email. We met in New York, and it all went really, really quickly from there.
So you've raised a big round--$3M--what are your plans for that money?
Aaron Hawkey: We've been around for awhile, and customers know about us. However, to become better known in our target market we are going to need to market more aggressively. We want to be more proactive marketing, and want to broaden our subject areas. We are going to be moving into the business are this academic year, and are also thinking about other areas where we can help students with our web site.
Rob Angarita: We're also going to make a few key hires to remove some bottlenecks in our business.
You've been around for awhile, why now for angel funding?
Aaron Hawkey: We bootstrapped the business for almost six years, and we've had revenues from day one, from the first day we launched form Google Ads. We originally were a pay-only site, and it wasn't until a couple of years that we moved towards more of a free site. Unlike with a traditional Series A company, we've been around, had real revenues, and had that all in place before this came in.
Rob Angarita: We are also seeing new companies entering the online education space, and this is an opportunity to claim our stake. We've been doing this for a while and capitalize on our head start.
What's the business model behind the site, if ads are not the main thing?
Rob Angarita: We've been adding more ads, and our customers are really receptive to it, but from the beginning, it's been a subscription service, a premium subscription service. Nowadays we'd be categorized as being "Freemium."
Aaron Hawkey: We see ourselves as a viable alternative to tutoring. When you sign up for free, you can ask one question per day. You get access to the content, but if you need extra help its $9.95 or $39.95 a year, and you get access to more content and higher priority when you ask questions, plus you can also ask more questions. The majority sign up for the free version, but enough sign up for premium that it's allowed us to do pretyt well for the last six years without having to raise money.
Rob Angarita: Back to the idea of this as an alternative to tutoring, you find that parents and students can find an online tutoring service for $15 an hour, but here you get the equivalent benefit and it only costs $10 a month.