Los Angeles-based Docufide (www.docufide.com) is an angel backed startup, which is developing services to help move high school transcripts to colleges. John Reese, the firm's Chairman and CEO, recently told us about the firm's growth and expansion, and its efforts to raise its first institutional round. We thought we'd hear a little bit more about what the firm is doing. Reese spoke to Ben Kuo.
For those not familiar with Docufide, describe what your business is and the services you offer?
John Reese: What we do, is act as a trusted intermediary for this country's educational institutions - high schools and colleges. We allow them to outsource the labor intensive, and not-so-much fun task of ordering, delivering, managing, and analyzing students records, including transcripts and admission documents. You can think of us as a FedEx for student records -- that's phase one of the business. Transcripts are the crown jewel of student records, they contain a lot of information critical to a lot of functions, including admissions for college, transfers of kids between one school or another, background checks, scholarships, and financial aid, as well as the No Child Left Behind government programs. It's a very important part of the process in educational systems. Our job is to migrate records from paper to the electronic environment. It's not only more efficient, you can also dissect and analyze it. That's the fun part, and the second part of what we're working on--the utilization of that information, not just the delivery.
What's the history of the company?
John Reese: I came on board in June of 2003, after acquiring the assets of the old company which became Docufide. We have had essentially high net worth individuals, primarily from the Pasadena Angels and Tech Coast Angels, as our investment group--myself included. We are getting ready for our first institutional round, whether that is a strategic investor or someone else. That's about to happen right now.
How have things been going with the company, where is it now?
John Reese: We originally started by providing services to high schools. We'd go off and sell our services to high schools--it's free to the high schools and colleges--with students paying a nominal fee of $5 to send a transcript. What happened over the last couple of years, is that states started to provide these services to students in a subsidized manner. We are now in nineteen states and delivering transcripts to over 2,100 colleges, nationwide. Since we started selling direct to high school districts in 2005, we have been competing in and winning statewide initiatives. For example, in Indiana, we won an e-transcript initiative through competitive bid, where we've been rolled out to ninety percent of high schools in that state. That's providing services to 55,000 seniors. In Indiana, any student who wants to send a transcript to any college in the state can use our service, free of charge, subsidized by the state. If they need to send it out of state, they pay the nominal $5 fee. Base on that win, we rolled out to MHEC, the Midwest Higher Education Compact--it's a consortium of states in the Midwest covering eleven states. We won a competitive bid there, so that we can roll out our services to any state that is interested. Minnesota did that, and a couple of weeks ago, I was back in Nebraska with their Governor, David Heineman, launching their e-transcript initiative.
What's your background, and what drew you to Docufide?
John Reese: My background was, many years ago, I ran sales, services, and banking for Citicorp. I was lucky enough to design and deploy the first ATM in New York, the first systems in the U.S. in the mid 70's. I ran all of their home serviecs systems, pay-at-the-pump gas stations, and was a zealot for 30 years of getting rid of paper, empowering the end user, and self-service delivery systems. I got involved in Docufide because I see a huge opportunity and need for moving paper-based student records--the core of our educational systems--to electronic data. Once you do, you have the opportunity to do more than just move data from place to place--you can analyze that data and provide valuable services to school and students. That's what got me excited about this.
Let me explain. What we do is take transcripts from any school, and any database system, and bring that in internally and store it in what you would know as XML. We deliver that information in whatever format the college is ready for, whether that is paper, XML, or PDF. However, just because that is in XML, doesn't mean you can do anything with it. If you're comparing 3 apples and 5 cherries, what do you have? You've got to be able to normalize that data. We've got a patent pending on a process for normalizing transcripts. Where that gets you, is you can do things like check for requirements like they have in the U.C. systems--if you don't take 4 years of English, 2 years of a foreign language, and 3 years of math, you just can't get into a U.C.--no matter what. So there are certain criteria which you can analyze automatically from transcripts when you are able to normalize them.
If you have that information, you can give back that information--not just to kids sending their transcripts, but all through high school. We can look at their transcripts, analyze what they have been taking, and report back to high school guidance counselors on how they are tracking on taking the right courses to get into college that they want to. In today's world, there is a terrible shortage of guidance counselors. Kids don't have enough counseling, and many, many kids don't get into schools just because they took the wrong courses and don't graduate, or they do graduate and don't get into the schools they want to.
How big of a market is this, and how much growth is there here?
John Reese: In our initial line of business, we think that is a $50 million to $100 million dollar line of business. That's phase one. Phase two is the utilization of that data for things like feedback to schools, recruiting databases for companies. Right now, colleges pay around $2,000 per freshman for recruiting their freshman class. It's a huge need to do a better job recruiting their freshmen. The data we have becomes a valuable tool for them in the process. We think the database and analysis business is an order of magnitude bigger than the delivery-only business, $500M to $1 billion over time.