Revolution Prep Founders Learned from Company Turnaround

Classmates Jake Neuberg (’02) and Ramit Varma (’02) built a thriving tutoring platform
Revolution Prep Founders Learned from Company Turnaround

Jake Neuberg (’02) and Ramit Varma (’02) founded Revolution Prep with a vision of transforming education. After earning their MBAs at UCLA Anderson and tutoring hundreds of students, they realized the key to great tutoring was great tutors. At the moment, the largest segment of Revolution Prep’s business is with the high school population, though the elementary and middle school markets are the fastest growing.

  • Revolution Prep began as an in-person test tutoring service
  • The company’s founders developed a nimble online platform for tutoring in a variety of essential subjects
  • A willingness to pivot proved crucial to the company’s success

Asked to explain his company’s business, Jake Neuberg (’02) keeps it simple: “We do online tutoring. We help students from elementary to middle school to high school be better students.”

Long before the current pandemic forced students to adapt to an online learning environment, Neuberg and his co-founder and classmate, Ramit Varma (’02), were evangelists for Zoom learning. Why? Because remote learning allows students to be paired with the best tutors, not just the best tutor within driving distance of their home. The best tutors also prefer the online paradigm because, instead of generating billable hours only between after school and dinner in their local time zone, they’re able to earn a living tutoring students throughout the day. But, says Neuberg, “At our core we are a company that is about changing students’ lives through high-quality online instruction.”

Q: This might seem simplistic, but how does Revolution Prep differ from, say, a for tutoring, where you might simply match tutors to students based on subject matter?

Ramit Varma: What you’re describing is a model that’s common in our business, a marketplace model where tutors list themselves. There are some user reviews, and then parents have all the information that think they need. But there’s no training that comes from the company.

The thing that differentiates us is that our tutors are trained by us. Their sessions are reviewed by us against the standardized rubric. So there’s a tremendous amount of consistency and accountability in the way the tutoring is delivered. We account for the skills of every tutor that we work with.

Q: Do you create curriculum?

RV: In certain subjects, we do have some curriculum. But in our business, parents generally aren’t looking for additional work for their kids, particularly at the high school level. Their kids are kind of overworked.

Our tutors’ role is to help reduce the stress on those kids, to help reduce the anxiety, to help them with some of their executive functioning so that they’re actually able to be more efficient and better students. We mention the term “better students” many times, and it’s something that’s really core to what we do. It’s about giving these students better lives. They’re going to feel more successful as students. They’re going to feel more on top of their work when they work with the Revolution tutors we keep accountable through training sessions.

What we’re providing is a unique way of doing tutoring that’s different from the tutoring you find on Craigslist, whose incentive is twofold: to keep you paying and to just make the parent as happy as possible. We’re not like that. We have a very high ethical bar and the ability to enforce it through our accountability metrics and systems.

Q: How did you two meet?

Jake Neuberg: I’d done investment banking before business school, taught at Kaplan, and I wanted to do something entrepreneurial. I was 24 and knew that I needed to learn how to run a business and was attracted to the strong entrepreneurial program at UCLA Anderson. In my interview, I said I wanted to start a tutoring company when I graduated. In the first month, Ramit and I were introduced by an Anderson classmate and started talking about this business. Ramit had worked in consulting. So we both came from very traditional backgrounds.

Q: You’ve been partners ever since?

JN: We became friends and we took some classes together. When we were graduating, Ramit came over and said, “Hey, I’m thinking about starting a business that helps women get back into the workforce after being out starting or raising a family.” I told him I was going to start that tutoring thing that we talked about at the beginning of our first year.

I was wondering what he knew about helping women get back into the workforce, and at the same time was thinking, I sure would love him to work on this thing with me.

We both knew that starting a business and having it be successful would be so much likelier if we did it together. And so we started it 50-50, basing the partnership on mutual respect. It was literally a handshake deal. We didn’t really have a more official operating agreement until eight years later, when we raised $15 million from a VC at a $50 million valuation.

Q: How did you decide who does what in the partnership?

RV: In the beginning, when you’re feeling each other out, there’s a good amount of testing. It turned out there were some things that Jake was way better able to do than I was, and some things I was way better able to do than he was. But we both believed in each other’s skills and abilities.

I’m actually really good with the technology stuff and he’s really good with the sales stuff, and that ended up creating a division of resources. But it’s not as easily bucketed as “he’s the sales guy and I’m the product guy.” We’re both in both things, depending on what the business needs and depending on where, psychologically and personally, we’re at.

Early on, we decided the money all goes into the pot. We’re all giving it our all and we’ll split the revenue. The decision to be 50-50 partners and to figure out how to work through conflict leads people to ask what we do when we argue. Our deciding factor is, whoever feels more strongly about something, that’s the direction we go. And in 18 years, I have never said, “I feel more strongly so we’re going to go this way.” It’s always “Because you feel more strongly, we’ll go that way.”

JN: I think we learned “our best” is actually when we’re not dividing and conquering. When you divide and conquer, one plus one equals two and that’s great, two are better than one, especially when you’re getting started. We’re best when one plus one equals three or four or five — we’re collaborating on things. It accelerates the curve and prevents us from taking a left turn down a rabbit hole.

Q: You set out to be entrepreneurs. What was the transition from entrepreneur to manager like?

JN: I’m not sure I knew I wanted to be an entrepreneur. Rather, it was something that intrigued me. Ramit, when he came in to business school, he was probably going to Wall Street. He did an entrepreneurship in venture capital, I worked in entertainment.

One of the most valuable parts of business school is the opportunity to explore for two years. It took talking to people, doing internships, doing part-time jobs for Ramit to learn he didn’t want to be on Wall Street.

RV: It’s just over 18 years that we started the company and we look at it in phases.

The first year was definitely its own phase, but I would wrap the next five years into that, the entrepreneurial high-growth phase for the business.

In 2009, we started transitioning to a company on a larger scale. We hit $10 million, $12 million in sales and we had to make the transition into being managers. We happened to take our private equity investment right around then, in 2010.

We were still growing very rapidly. We reached about $20 million in sales and we took a chunk of cash, put some in the business, made an acquisition, took a little bit out for ourselves ... We hired a chief marketing officer and a chief of this and a chief of that.

We blew a ton of money. We scaled up the people side of the business and just started losing money hand over fist. Two years after we had taken that private equity money, it was all gone and then some. We had to put all the money we took out back into the business, and we spent the next three or four years digging ourselves out of that hole and rebuilding the business in a new format.

Q: How did the business change?

RV: It used to be a face-to-face, in-person tutoring and test prep business, and we turned it into an online tutoring business in any subject. We spent from about 2015 or 2016 until now building and growing that business, and about a year ago we hired a CEO. Jake and I have transitioned into roles as board members and founders. We’re each involved in some other business venture.

JN: What’s interesting to me, and what’s most rewarding, is that I don’t know if I’ll be a 0-to-1 entrepreneur again. I’d rather come into a business that is, frankly, where we were a couple of years ago, which, despite $20 million in sales, is kind of a broken business that I can fix.

There are three different types of business executive. There’s someone who gets a company from 0 to 1, there’s someone who manages (Steady Eddie) and there’s the turnaround guy. This last is what I think I’m probably best at and Ramit probably is best at.

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