Making Millions on Crowdsourced Homework
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The irony isn't lost on Sean McCleese, a high-school dropout at 14 who now, at the ripe old age of 26, finds himself heading a thriving online tutoring business that specializes in helping students along the very academic path he spurned as a teenager.
"True, I didn't take the traditional, practically government-mandated academic path," says McCleese, president and co-founder of the Glendale, Calif.-based online tutorial company Student of Fortune. "But I think the path I took, while it was untrodden and rife with large pitfalls that sometimes weren't evident ahead of time, navigating through it has helped me as a person and as a business owner."
McCleese's journey from precocious kid with a prodigious IQ who found high school "boring and not for me" to co-founder and president of a booming, self-financed tutoring venture with annual revenue between $5 million and $10 million has indeed been wildly unorthodox. And perhaps not coincidentally, his relatively short career as an entrepreneur has been wildly successful.
"He's dynamic, he has a vision and he's driven to stick with it," says longtime friend Nikhil Sreenath, Student of Fortune's co-founder and chief financial officer. "He's always been about doing what he wants to do in his own way, as opposed to [doing] what people expect. I think that helps the company be its own beast, and be successful. We took an uncommon approach and that has brought us to the point where we can continue doing things the way we want."
McNeese dropped out of Flintridge Prep, a nonprofit independent prep school in La Cañada, Calif., after ninth grade with the reluctant support of his academically well-decorated parents (his father has a doctorate and his mother two master's degrees) McCleese took, and passed, the California high school exit exam, recalling it as "awe-inspiringly easy." Rather than lament the proms, physics labs and study hall hijinks he'd miss by foregoing high school, McCleese forged ahead to blaze his own path. At 15, despite the gaping hole in his academic résumé, he became the youngest person ever accepted by Occidental College, the Los Angeles liberal arts school from which he graduated in 2005 with a degree in physics.
It was while trying to tackle a particularly tough problem for his final physics course at Oxy that McCleese had the idea for Student of Fortune. He sought a quick answer to a very specific, complex problem, but nowhere could he find a resource to help him. His idea for filling the void has become a fast-growing, 5-year-old business, essentially a new form of crowdsourcing that connects students with tutors. "It's not about selling a tutor's time but their expertise," he explains.
At no cost, users post a question on Student of Fortune's website, along with the amount they're willing to pay--in some cases as little as 25 cents--for a tutorial to help them find the answer. The site then circulates the question across its network of tutors. Next, members of that network who are experts in the subject area develop custom tutorials to address the question. After reviewing previews of those tutorials, the person who posed the question then can choose to purchase one or more of them. Most of the purchase price goes to the tutor, with Student of Fortune taking an 18 percent cut. If the tutorial is solid, it will stay in the site's virtual library for other users to purchase, thereby providing tutors with a potential ongoing source of income. Student of Fortune's highest-earning tutor has made more than $125,000 on the site.
Meanwhile, Student of Fortune has seen dramatic growth year over year, particularly in 2009, when revenue doubled roughly every quarter.
McCleese attributes the venture's success to an unconventional approach. He and Sreenath have built the company "without a single cent of outside investment capital." By bootstrapping the venture, "We were profitable very, very quickly," he explains. "And every cent we make is ours. That tends to make us very frugal and practical in our approach to growing the company. Having no debt also means our expenses are low, so our profit margins are fantastic."
All of which puts the company in a strong strategic position, not only to fulfill McCleese's vision of becoming "the destination for study and homework help on the internet," but also in fielding offers from would-be investors. "If an investor does approach us," he says, "we can be extremely judicious."
Thus far, he says, the offers he's received have all been unsolicited--and politely rejected. Still, McCleese says he's willing to listen.
Now McCleese is taking his uncommon entrepreneurial and educational journey back to academia. He's enrolled at the University of Southern California to earn a master's degree in technology. McCleese concedes it's a surprisingly conventional turn for someone who has largely avoided academic conformity. But now, as master's candidate, boredom isn't an issue for him. McCleese says he's motivated to be back in the classroom.
"I like school and I miss the learning," he says. "And I also know that [pursuing an MBA] will give me better insight into the students who are our customers."