When the Princeton Review met Facebook by Jessica Shambora @FortuneMagazine January 4, 2010, 11:23 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons At Grockit, students study for standardized tests together, sharing tips via real-time chat. Grockit marries social media with standardized test prep. Despite the controversy surrounding standardized tests for college admissions (Are they fair? What do they measure?), exams like the SAT and ACT remain a necessary evil for most college-bound students. The same might be said of the process of preparing for these exams, a phenomenon that has spawned a multi-billion dollar industry led by two companies, the Washington Post Co.’s WPO Kaplan and The Princeton Review. But like the music and publishing industries before it, the test-prep sector faces disruption from scrappy Internet startups. One such company, San Francisco-based Grockit, is determined to leverage the assets of the Web—real-time, on-demand, adaptive, global, social—to make practicing for tests more effective, and maybe even a little bit fun. Founded in 2006, Grockit has raised $10.7 million in venture financing from Benchmark Capital, Integral Capital Partners and angel investors like LinkedIn founder Reid Hoffman and Zynga founder Mark Pincus. One reason the opportunity is attractive to Benchmark’s Mitch Lasky: “an infinitely renewable source of customers, who will take many important standardized tests throughout their educational lifetime.” Taking a cue from offline test prep Grockit founder and CEO Farbood Nivi, a onetime teacher of the year for The Princeton Review, designed the site based on his classroom experiences. As the only instructor in a room with 20 or more students ranging in ability, he broke his classes down into groups where weaker students could learn from stronger students, who in turn reinforced their own learning by teaching. Such collaborative learning assumes the guise of social game-play on Grockit (note the investment of social gaming icon Pincus). At any time, students can login for free and join SAT or ACT “games” already taking place, or start one of their own. Using real-time chat, participants discuss strategies for questions or explain the reasoning behind answers. Players can then award each other points for particularly helpful comments. Students also accumulate points and badges for answering questions correctly. The equivalent of “street cred,” these point totals can be seen by other Grockit users, and badges like the “Hot Streak Badge” can be posted to Facebook. Leaderboards on the homepage show the profiles of students with the most points. Solo study is another option if students want to work on their own, with Grockit serving up questions that adapt to a student’s ability. Or users can pay for one-on-one sessions with a tutor to address weaknesses identified by Grockit’s diagnostic tests. And unlike test prep companies where students are randomly assigned to instructors, Grockit users can view tutors’ test scores and areas of proficiency, and the testimonials and star ratings given by other students, before committing to working with them. Graduate school applicants can also prepare for the GMAT and GRE on Grockit, but after an initial free trial, must pay for access ($50 per year). Going digital in a paper-and-pencil world Six months after launching its SAT curriculum, Grockit has 50,000 registered users in 78 countries. Still, it’s too early to say whether this startup or other online contenders like BrightStorm will succeed in upending the test prep industry. The entrenched bias toward face-to-face, hierarchical teaching is the greatest challenge Grockit faces, according to Benchmark’s Lasky. “I once heard an executive from a well-known test prep company say of the SAT, ‘It’s a paper and pencil test, it requires a paper and pencil pedagogy.’ That’s just crazy.” While Grockit may find displacing industry incumbents to be a steep task, it has a good shot at stealing some share of the lucrative market. The site’s anytime, social, and game-play elements will appeal to future generations of test takers for whom this type of online interaction comes naturally. And Grockit has the advantage of the Internet’s operational efficiencies, such as viral and search marketing, scalable curriculum platforms that can be modified in real-time, and the biggest edge of all: No brick-and-mortar locations. “Kaplan’s assets are all tied up in real estate, while the cost for running our servers is very low,” explains Nivi. The idea is that Grockit can provide a more affordable option while achieving greater profit margins. However, profits are still only theoretical for Grockit. Taking the premium services approach, Grockit gets most of its revenue from tutoring fees and subscriptions for its GMAT and GRE offerings, and over the next few months the site will roll out courses that charge students a fee, says Nivi. An SAT flashcard mobile app is also on the way. And Grockit is considering licensing a white label version of its platform to another test prep company. After all, Grockit has big plans beyond test prep. Nivi is preparing what he calls a “hostile takeover” of the K-12 education system, with curriculum that adheres to the standards set by each state for its public schools. Schools will also be able to create private networks, delivering their own content via the Grockit platform, similar to the way another buzzed-about startup, Ning, provides tools for communities to build their own social networks. An eBay for tutors and students? The long-term opportunity for Grockit is in matching teachers with students, says Lasky, who compares the inefficiency in today’s educational system to the auction market, pre-eBay . “The best algebra teacher in America may be in Mobile, Alabama, and she sees a random collection of thirty kids who happen to be in that grade, in that place, at that time,” Lasky explains. “I think if we could liberate education from these constraints using the Internet in the same way that eBay liberated collectibles from local flea markets and garage sales, it’s a multi-billion dollar opportunity.” After all, while standardized tests may not be around forever, algebra is seemingly here to stay.