The summer months are a good opportunity for taking a new approach to the market, said Farb Nivi,

who founded Grockit in 2007 after working at Kaplan and Princeton Review. In May, the company
started the Summer Enrichment Academy, a program that lets students hop in and out of a Web site
on their own time, working through problem sets in language arts, calculus, probability and other
common high school core subjects.

Along with readying high schoolers for college entrance exams, the academy is designed to reduce
the "memory loss" that students suffer when they're away from school, said Nivi, who serves as chief
executive officer. Kids typically lose the equivalent of 2.6 months of grade-level ability during the
summer, he said, citing an academic study.

"Every year a kid takes one step forward, and over the summer the kid takes a quarter-step back,"
Nivi said. "You can avoid that with a minimal amount of exposure to the material."

Grockit also is trying to get its service into school districts. The company says it's in talks to offer one
or more of its online programs to schools in the San Francisco Unified School District and Mount
Diablo Unified School District.

The challenge for Grockit and other test-prep startups is their lack of name recognition, which is an
important consideration for schools and parents, said Kate Worlock, an analyst at Outsell in
Burlingame.

"If you're a parent trying to ensure their kid passes the test they need to pass, you are very often
going to go for an established player," she said. Rather than eat into chunks of the market owned by
Kaplan and other large companies, these startups are likely to "nibble away at the edges" and
potentially become acquisition targets for the bigger fish, Worlock said.

The basic Grockit service is free for anyone to use. It lets students play learning games with others on
the site.

A charge for features

To unlock customized features - such as one-on-one tutors, algorithms that learn a student's
strengths and weaknesses, and detailed progress reports - Grockit has started charging a fee.

At $99.99 per student, the Summer Academy subscriptions will play a "critical part" in spurring
revenue at the 3-year-old company, Nivi said. Grockit, which isn't profitable, has raised $17.7 million
in venture capital investments, including a $7 million round closed in May led by Atlas Ventures. It
also counts LinkedIn Corp. Chairman Reid Hoffman and Zynga Game Network Inc. CEO Mark
Pincus among its investors.

Even so, Kaplan has overcome competition from Internet startups before, said Carina Wong, a
spokeswoman for the company, a unit of the Washington Post Co.

"What we're seeing in test prep is similar to the early days of the dot-com boom, when investors
rushed to fund seemingly innovative startups only to recognize, after losing a great deal of money,
that sustained and profitable execution is far more challenging than coming up with a good concept,"
Wong said.
Princeton Review, based in Framingham, Mass., didn't immediately respond to a request for
comment.

John Flannery, a high school senior in California, will use Grockit to improve his SAT and ACT
scores this summer. He'll spend a few hours a week studying math and reading online, with a class of
hundreds of like-minded students from around the world.

Customization is key
His mother, Marylou Flannery, says the ability to customize the program was a big draw.

"If you wanted to put your kid into an SAT prep class, they don't really have the ability to adapt or
change that curriculum for individual needs," said Flannery, an assistant principal at a high school in
Richmond. She decided to enroll her son in the summer academy after trying out Grockit with her
students.

Kaplan also is developing more personalized approaches to test preparation, Wong said.

Mitch Lasky, who serves on Grockit's board, sees room to grow. The average college-bound student
"takes something like 21 standardized tests in a 10-year education period that all have economic
meaning," he said.

"We felt like there was a good base market," said Lasky, a general partner of Menlo Park's
Benchmark Capital, an early investor in the startup. And because a weekly SAT prep course can cost
more than $1,000 per student, Grockit looks cheap.

Big players in test preparation aren't the only competition for Grockit, which has about 18
employees. A field of online education startups are vying for outside-the-classroom learners. That
includes PrepMe LLC, an online aid for takers of the SAT, PSAT and ACT, and Brightstorm Inc. of
San Francisco, with troves of online tutorials and practice tests.

"There is a shift in more and more students learning outside of the school in informal spaces," said
Cheryl Lemke, president and CEO of the Metiri Group, a Southern California educational-technology
consulting firm.

Summer business is just getting started for Grockit. Only 1,000 students have enrolled in the
academy so far, but Nivi expects more than 20,000 by the end of August.
(C) San Francisco Chronicle 2010
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