If we had a nickel for every business that was started in a Stanford dorm room....well, we'd have bucket full of nickels. And if we added a dollar for everyone heading to business school instead of wallowing in a miserable job market, we'd be on Easy Street.
In one of those Stanford dorm rooms, in 2005, Eric Bahn was studying for his Graduate Management Admissions Test (GMAT). "I thought that my study strategy could be useful for other GMAT test takers to follow, so each day I blogged about my GMAT prep -- down to the page numbers and practice questions that I reviewed from books."
That idea became a part-time venture called Beat the GMAT, which Bahn worked on after college while he was a product manager at Intuit. In the fourth year of Beat the GMAT's existence, Bahn, now 29, left Intuit to work on the business full-time.
Bahn describes Beat The GMAT as "a social network for MBA applicants, serving two million unique visitors per year. Our mission is to provide a free social platform for MBA applicants to learn, share, teach, and encourage one another throughout their business school admissions journey." The company projects revenue of $700,000-$1 million this year, driven primarily by marketing partnerships. The social networking aspect of the site is as important as the test-beating tools, Bahn says.
"We are trying to build a social network where all people interested in the MBA experience -- MBA applicants, experts, students, and administrators -- can meet, share knowledge, and connect with one another around our common interest. We've developed a number of social aspects already, including the ability for members to curate their own profiles and discover and follow other members with similar interests. We have the largest collection of GMAT/MBA prep articles, organized by community social proofing -- that is, content with the most Facebook "likes" get sorted in higher priority in our large GMAT/MBA Library. We have the largest aggregation of current MBA applicant data anywhere, where this year's applicants share their stats and where they are applying in a single database called MBA Watch.
Of course, there's a big difference between academic tests and tests in the real world. Bahn cites as his biggest mistakes:
- Picking a weak technology platform. "I am not a technology person, and in the early days of Beat The GMAT, before it was even a business, I simply used open source software -- whatever was free. There's nothing wrong with open source software per se, but some of the technology I selected ended up being painful to build upon later on when I scaled my business. When I started my site, I should have consulted with a tech person and been a little less cheap.
- Taking criticism personally. "Running a startup is very emotional -- your work is a direct representation of you as a person -- at least I think so. In the early days of my site, when I got complaints or criticisms from people on my site or other observers, I took that feedback personally. And that created a lot of stress for me outside of work as well, as I would obsess over these criticisms. Over time, I've learned that you can't, nor should, expect to serve everyone. Take criticism with a grain of salt and don't let it stress you out too much."
Hiding my identity. "When I initially started Beat The GMAT, I tried to hide my personal identity on the site. But the more the website grew, the more my community became interested in learning about me and seeing me as a persistent personality. After three years of running Beat The GMAT privately, I decided to switch gears and let my face and name become prominent on the site. After doing that, I think that the quality of community engagement dramatically improved because my members and I felt more personal connection to each other when we talked. The quality of our community is much better for it."
And, since Bahn and his business are still around, he must have made some good decisions:
- Getting a business partner. "For the first two to three years, I was running Beat The GMAT by myself. It was a lot of work -- at the time I also had a full-time job. When you run your business by yourself, it's easy to feel burned out. Additionally, it gets lonely not having someone else to bounce around ideas. Getting a business partner was a very smart decision for me. My business partner keeps me sane, and the ideas we go after are far better than what I could come up with myself."
- Forming a limited liability company. "I waited about two years to form a limited liability company (LLC). I advise other entrepreneurs to do this as early as possible. Not having an official company entity presents a lot of risk to you -- if someone slips and falls at your place of business, or you get sued, then it's your personal assets at stake. Forming an LLC is easy and it offers a lot of protection for you."
Quitting his day job -- at the right time. "I ran Beat The GMAT as an evening and weekend project for three years and slowly built my business model. Only once I was earning a side salary that was equal to my day job's salary did I quit my job. Taking my time to quit was a good decision for me because it allowed me to hedge my risk and not worry about jumping into a venture with uncertain revenue potential."
Now that Beat the GMAT has a foothold in the aspiring MBA market, what about other wannabe markets: lawyers, doctors and the like?
"It's really tough to predict where we're going to be even in six months. One thing that I love about our startup is that we live in the present and that we are constantly adapting our strategy based on new data and tests that we're constantly running. Right now, I do think that we are going to stick with serving MBA applicants, students, and administrators. We love the business school space. I'm a big believer in picking one niche and serving it exceedingly well, rather than spreading yourself out too much -- and too soon."
Beat the GMAT is member of the Young Entrepreneur Council (Y.E.C.), an invitation-only nonprofit organization comprised of promising young entrepreneurs. The Y.E.C. promotes entrepreneurship as a solution to youth unemployment and underemployment and provides its members with access to tools, mentorship, and resources that support each stage of a business's development and growth. This is part of an occasional series reporting on some of its members.