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The Princeton Review's John Katzman On The One Thing He Did Right (And What He Did Wrong)

John Katzman reflects on his best and worst moves in the early days of his first startup.

John Katzman founded the test-prep giant Princeton Review in 1981. After taking the company public and increasing annual sales to more than $110 million, he left Princeton Review in 2007. Since then, Katzman has launched two other education companies: 2U, which partners with universities to offer degree programs online (hear from his co-founder, Chip Paucek here) and Noodle, which offers advice to students seeking schools, tutors, and classes. He is also an angel investor. Katzman recently spoke with Inc. editor-at-large Leigh Buchanan about his early decisions and mistakes. 

When I started Princeton Review, there was one thing I did poorly and one thing I did well.

What I messed up: I did not pay enough attention to understanding my balance sheet. I did not make sure I had real-time financial information or good projections about where the company was going. Now, when I work with startups, I really question them: What are the drivers of your business? Where are you now? Where are you going to be in the next couple of quarters?

What I did well: Set the price. A lot of entrepreneurs believe they have to have both a premium product and a discount price. At the Princeton Review, we were offering a premium product and charging a premium price. That meant our margins were good enough that if we messed something up, we could fix it. If somebody needed some extra tutoring-if for whatever reason it wasn't clicking-then we could go in and provide it. We charged what we charged, and we did not apologize for that.

Previously in Inc.: John Katzman was featured in an April 1995 article about his rivalry with a competitor ("Enemies, a Love Story").

IMAGE: Courtesy Company
From the July-August 2014 issue of Inc. magazine

LEIGH BUCHANAN | Staff Writer | Editor-at-large, Inc. Magazine

Leigh Buchanan is an editor-at-large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture.

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