An end to raised hands: Understoodit’s app changes highschool and university classrooms to show teachers what students understand
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Classroom and audience engagement software
In an age when many tech startups grow at breakneck speed in the hopes of hitting the buyout lottery, Liam Kaufman is taking things slowly.
His company, Understoodit, is in an enviable position. Many startups require huge amounts of capital before they can develop a usable product. Kaufman, meanwhile, has managed to build Understoodit’s application entirely on his own, and with very low overhead.
It’s a simple, web-based tool that allows educators to gauge how well a class understands a presentation. Rather than raising hands, students click buttons on laptops or mobile devices. A readout on the teacher’s computer graphs the results, helping them tailor their lessons to a class’ level of comprehension.
The fledgling company has raised no venture capital. It has no offices, no servers of its own, and no paying customers — yet. It’s all part of a minimalistic, if risky, master plan.
The company must attract 8,000 paying customers to achieve liquidity before existing capital runs out. Otherwise it will need to seek outside funding, or fail. Finding that number of buyers will be especially difficult because Understoodit charges only educators, not students. This means that, unlike some of its competitors — who could quickly reach 8000 users by partnering with a handful of universities or highschools — Kaufman will need to reach thousands of educators at hundreds of schools to make his business viable.
That’s why he’s starting slow and minimizing costs, bankrolling the company himself, working from home, and only hiring two other employees — an IBM engineer and a PricewaterhouseCooper accountant — who both work part-time in exchange for equity, although the plan is to bring them on full-time soon.
“The biggest cost is time,” says Kaufman, a former neuroscience graduate who started programming after teaching himself math from library copies of high school textbooks. “Most of the startup capital is for my living expenses. We don’t have crazy costs at the moment.”
The 8,000-customer threshold is based on a simple calculation. When the app launches, educators will pay a minimum fee of $3 per month, with more features available at an additional cost, while students will have access for free. The 8,000 signups at $3 each would generate gross income of about $24,000 per month — not bad for a three-man operation with high profit margins. A couple thousand more users would allow the company to start expanding.
“Really, the limiting factor for growth is software developers, in terms of adding features,” says Kaufman. “With 10,000 paying users we could probably afford another developer.”
Understoodit stands a decent chance of reaching that goal. About 2800 people are already on a waiting list to use the app, with registrations growing at about 12 per cent per week. Students don’t have to register, meaning all of those signups are potential paying customers.
But whether they fork over credit cards will depend upon the soundness of the app itself. It works like this: a teacher signs up for an account, and creates a webpage with two giant buttons, one marked “Understood” and the other marked “Confused.” During a class or presentation, students visit that site, click a button, and a graph on the teacher’s screen updates to reflect the ratio of “understoods” to “confuseds,” giving educators real-time feedback on the effectiveness of their lessons.
Kaufman conceived the product as a solution to a problem he noticed during his academic career.
“Being someone that’s relatively outgoing, I noticed I didn’t put my hand in classes that were larger than 100 students,” he says.The prospect of speaking in front of large crowds was intimidating. “Most students are not outgoing, so they definitely didn’t participate at all.”
Crowds are also a problem for the company itself. Keeping costs low means a marketing budget of zero, and the 2800 users were signed up through word of mouth. This puts Understoodit in a bind. If it spends too much acquiring new customers, it could run out of capital before earning enough revenue to make up the difference.
But Jed Schneiderman, vice president of partner development for online marketing firm Live Insite, says the business could work.
“If he understands what marketing is working and why he’s grown his business — and he can scale that — it sounds like he’s in great shape,” says Schneiderman.
Kaufman is convinced the process of finding more users will be simple and inexpensive.
“Everyone that uses it becomes a salesperson for the product, because they’re always using it in front of people,” he says.
Assuming Understoodit is able to market effectively and for little cost, Schneiderman thinks the company’s decision to delay outside investment will end up being a good one. Plus, the possibility of raising venture capital will still be on the table later, when the app is more established.
“VC is certainly something that we’ve thought about,” says Kaufman. “It is on our radar.”
In the meantime, he hopes to bide his time, and grow Understoodit at a natural pace.