2017 INC. 5000 RANK: 1010
HEADQUARTERS: Berkeley, CA
YEAR FOUNDED: 2009
2016 REVENUE: $9.6 million
Bhavin Parikh and Hansoo Lee became two of the founders of Magoosh in 2008, when they were MBA students at UC Berkeley's Haas School of Business. Propelled by its leaders' complementary strengths, the Berkeley-based online test-prep startup slowly gained momentum. Then Parikh found himself suddenly--and tragically--alone.
--As told to Leigh Buchanan:
Hansoo, our CEO, was the visionary. He was the one who thought we could change the world by making test preparation affordable to everyone. As chief product officer, I was more practical and risk averse. I would always ask: How are we going to do this?
Our commitment to the business drew us together. During grad school, we both forwent the traditional summer internships to work on it. We took as much independent study as possible to maximize time spent on Magoosh. After we graduated, a third co-founder left for a job in a big company. But Hansoo and I stuck with it.
We landed our first paying customers in 2009, but we had a hard time getting many more. We had high hopes for a partnership with an online GMAT forum that promoted our product to its audience. But that delivered only about 10 percent of the business we'd anticipated.
By the fall of 2010, we were making about $10,000 a month and spending down prize money from some business-plan competitions. It was not enough to sustain our expenses and grow traffic. One day, we took a two-hour walk around campus while Hansoo tried to persuade me we needed to raise money. He said, "Look, we can keep grinding it out, but we don't have the resources to turn this company into what it could be." I said, "I'd be happy with a small company with five or six people and $1 million in sales." He said, "But we are capable of so much more." I said, "I respect that. Maybe you should move on in this way, and I can move on to something else." He said, "I'm not letting you not do this. And I'm not letting you think small." He persuaded me.
We started fundraising that November. Hansoo built the relationships with investors, but he made me come to the meetings. At one point, he said, "You can no longer just come with me. You have to be part of it." I said, "Can't you do it, and I will think about the business?" He said, "The two of us together are better than each of us individually." He made me read books about pitching and power dynamics. We practiced together so we knew exactly who would talk when. He got me to a point where I became very comfortable talking to investors. We raised $500,000 from six or seven angel investors. By the end of 2011, we were down to about $100,000 and burning $30,000 a month. We started fundraising again. Then, around Christmas, Hansoo was told he had a rare lung cancer. I was in shock. "What can I do for you?" I asked him. "What should we do about the company?"
Hansoo stopped coming into the office. Once or twice a week, I would walk over to the apartment he shared with his fiancée to see how he was doing and update him on our progress. Even after he could no longer work, he remained my thought partner.
I had to do the fundraising alone, and it was nerve-racking. It's a good thing Hansoo had dragged me to all those meetings, because at least the investors knew who I was. For those who didn't know me well, Hansoo's absence raised some red flags. But one who did know me said, "I believe in this company, and I'm willing to give you another $50,000." That helped build confidence in the rest. I raised $250,000.
For the first few months, I believed Hansoo would get better, that he would come back to work. When it became clear he wouldn't, I thought, OK, I have to keep moving down this path myself. We had four employees at the time. If I turned back, what would happen to them? What would happen to Hansoo's legacy?
We started to grow quickly in May 2012. Hansoo passed away the following March. He got to see that first year of great growth. Together with his fiancée, I created a fellowship in his honor for students at Haas who want to start companies.
As CEO, I sometimes wonder whether we are growing fast enough. I am still somewhat risk averse, so I have felt like we are probably not. I know if Hansoo were here, he would be pushing us even more. And Hansoo set the foundation for our culture--the weekly one-on-one meetings with employees, the transparency, codifying our values. I loved what he did, and I have run with it.
As you grow, there are always challenges with people. Are we hiring the right ones? Sometimes, you have to fire people or they decide to leave. That's when being the CEO can be very lonely. Then I think, Man, I wish he were here.