Shmoop raises money for Asia expansion
FORTUNE — Shmoop, the digital education publisher founded by the Silicon Valley powerhouse couple David and Ellen Siminoff, has taken its first venture-capital investment in order to expand into Asia.
The Siminoffs, he a former portfolio manager with the mega-billion-dollar Los Angeles firm Capital Group, and she an early executive at Yahoo (YHOO) and former CEO of search-ad broker Efficient Frontier, likely will be displeased with the factual nature of the humorless first sentence of this article. After all, their ridiculously named 5-year-old company, despite being a perfectly legitimate producer of education guides and other electronic learning materials, aims for information to be as fun as possible. Their “basic notion” of learning, they say, is that it “is often too hard — so we carry gallons of academic WD-40 which we squirt on the tracks whenever we can.”
Humor, you might have gathered, is Shmoop’s favored form of lubricant. The company hires contractor-teachers to write its guides, and David Siminoff says he holds them to high standards. “They have to make me laugh twice per paragraph,” he says.
After finding considerable success in U.S. markets — Siminoff says Shmoop.com has 10 million visitors per month and that its guides are used in 11,000 high schools — the company is taking its act to Asia, Korea in particular. It has struck a partnership with AKA Study, a popular mobile app maker there, which will translate and distribute Shmoop’s materials. To expand into Korea, the Siminoffs took an investment from Formation 8, a buzzy new Valley venture firm with deep ties in Asia. (Fortune featured Formation 8 recently as “the hottest VCs since Andreessen.” Neither Shmoop nor Formation 8 disclosed the size of its investment.)
It is common knowledge that Korea, home of the cram school, is crazy for math and science education. Shmoop and its backers are betting the country will have an increasing appetite for cultural learning as well. The country, says Brian Koo, a Formation 8 partner and scion of the massive LG Electronics fortune, wants to train its youth to be citizens of the world. Humor is a means of achieving cultural citizenship. “When I came to Stanford I could communicate,” says Koo, who speaks impeccable English. “But whenever there was humor the concepts were hard for me to understand.”
Shmoop is part of a broader push for online education. But it is going after the K-12 education market rather than higher education, like well publicized startups Coursera and Udacity. It also is paying anywhere from $200 to $5,000 per teaching document and then retaining all rights to the material, a departure from publishing industry norms. Siminoff describes the opportunity in terms of typical Silicon Valley disruption: “We want to turn this $50 billion industry into a $10 billion industry that we own 5% of.”
The company began as a non-profit, but the Siminoffs, progressive-minded capitalists to their core, quickly saw the profit potential. With retired Capital Group head Gordon Crawford as the only previous investor besides themselves, Siminoff says they have funded Shmoop so far to the tune of about $10 million. He describes it as “cash-flow neutral,” bringing in money from course-material licenses and web-site advertising from the likes of Disney (DIS) and others.
As for the name of the company, Siminoff says it was inspired by his Yiddish-speaking grandmother, Gertrude King, who would tell him to “shmoop me my chocolate — and shut up.” What that has to do with education isn’t clear. But it is funny. I think. So that’s something.