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BusinessOctober 29, 2019

The Crimson Education enigma

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Ambitious families are spending big money on Crimson’s services – but top New Zealand schools say they provide the same advice for free, and are sceptical of what the highly valued startup provides. Business editor Maria Slade reports.

Crimson Education has been a darling of the New Zealand startup scene since precocious teenaged co-founders Jamie Beaton and girlfriend Sharndre Kushor launched the venture in 2013. The tutoring and university admissions service, which promises to give your child a fourfold greater chance of getting into top schools like Harvard, has attracted a dazzling array of accolades and headlines – from being ranked number three in the 2017 Deloitte Fast 50 list with 1005% annual growth, to featuring on Forbes and the BBC. It has raised millions from heavyweight backers including US billionaires Julian Robertson and Chase Coleman, and Sir Stephen Tindall’s K1W1 fund. The company even employed former prime minister John Key’s son Max

Yet New Zealand schools say the much-hyped Crimson programme isn’t offering anything they don’t provide for free, and that parents are paying through the nose for an unnecessary service. Large high schools, both private and state, are increasingly investing in their networks with overseas universities and in professional development of careers staff, and question the need for any external providers of such advice.

How successful Crimson is in reality remains a mystery because it refuses to share any details about its revenue or profit. It is also no stranger to legal action. Much of Crimson’s early growth came from acquiring other businesses, and it ended up in a bitter stoush over its deal with Dunedin-based UniTutor. Crimson went all the way to the Court of Appeal to try and keep details of the dispute secret, but it eventually emerged that UniTutor founder Samantha Berry had accused Crimson of breaking its agreement with her and undercutting her business by stealing staff. Crimson strongly rejected the allegations and the proceedings were settled privately.

Now a fresh commercial fracas is making its way through the courts. Online education technology business Eurekly is suing Crimson for alleged breach of contract, after a proposed joint venture between the two firms soured. It is also taking action against a Crimson employee who previously worked for Eurekly. Crimson is arguing the dispute should be dealt with by the Employment Relations Authority rather than the High Court, with the full hearing of the matter yet to play out.

Kushor and Beaton started Crimson when they were barely out of school themselves. (Photo: Supplied.)

Sharndre Kushor is fluent in corporatespeak. The 25-year-old wunderkid chief operations officer of Crimson Education is quick with a carefully curated response no matter the question, and uses the word ‘excited’ four times in the first 60 seconds of our conversation. She tells me that she’s “excited” seven more times over the course of the 20-minute interview.

I’m speaking to Kushor because Crimson Education has just raised another $31 million in funding, including $15m from a Hong Kong-based education group, CTF. Crimson employs 260 staff in a network of offices from Kazakhstan to Sao Paulo and is now planning a further push into Asia. “We’ve been really excited about the progress we’ve been able to make,” Kushor says. “With this new capital what we’re really excited to do is use a lot of information that we’ve learned, about how students learn, what drives all the progress, to be able to have broader reach.”

Crimson will use the $31m to “double down” in its Asian markets and expand into a new “business vertical”. Can she give us a hint what this new venture will be? “We’ll let you know as soon as we’re ready to talk about it a little bit more, but it’s going to be really exciting.”

We get it, she’s excited. Most business owners would be if ambitious parents with deep pockets were prepared to pay them as much as $15,000 to assure their offspring’s place at an elite overseas institution. Since 2013 Crimson says it has achieved 193 offers to Ivy League universities, 57 to Oxbridge and 950-plus to top 50 US colleges. Its website is adorned with success stories such as that of up-and-coming New Zealand soccer player Willem Ebbinge, who is now at Harvard. “I initially had no idea how to get the whole process started and Crimson were great when it came to helping me leverage my sporting and academic credentials and shaping a dialogue with the coaches,” he tells the site.

Soccer player Willem Ebbinge is now studying at Harvard. (Photo: Supplied.)

The question is, however, what are you paying for? On the whole, prestige high schools tend to offer students pretty much the same university application support, and at no extra cost.

Auckland private school St Cuthbert’s prides itself on the mentoring it gives to its girls, and starts working with them early on. It clearly pays off – 43 of the 157 students in its class of 2018 are studying overseas. St Cuth’s is an accredited SAT testing centre (the test students must sit to get into US universities), and liaison people from colleges such as the University of Pennsylvania and New York University are regular visitors to the school. It works with the American government agency Education USA and head of careers Rhonda Vink is a member of the International Association for College Admission Counselling (IACAC). Helping elite athletes seek sporting places is also something the school does, Vink says.

But it’s not just the pricey private schools that are developing this skill set. St Cuth’s feels a responsibility to share its know-how with the wider sector, and in March it hosted 42 schools at a career and college counselling conference, principal Justine Mahon says. It works closely with local schools such as Avondale College and Mt Albert Grammar, and state schools are becoming savvy in supporting their students to apply for overseas study. “I think it’s really important to make sure that parents understand that schools can offer this service, that their children are well served by ethical and experienced teachers.” Asked if families need to pay for extra services like Crimson, Mahon’s reply is polite: “I know that good schools can offer exactly what students need to get into top universities.”

State-run Auckland Grammar starts careers education in Year 10 (fourth form), headmaster Tim O’Connor says. “The school then works with students on an individual basis through their senior school years to assist them with their decision making process, which ultimately leads to completing applications to universities in New Zealand or abroad.”

It’s up to the parents and students of course, but he is sceptical of the need for external college admission advice services. Grammar offers its students support for any three domestic and two international college applications, at no cost. “We are fortunate to have a great team of four counsellors who work individually with students and their families,” O’Connor says.

None of the schools The Spinoff spoke to works with Crimson.

Co-founders of Crimson Education Sharndre Kushor and Jamie Beaton. (Photo: Supplied.)

So why are parents willing to pay so handsomely for Crimson’s services? “What we’ve noticed is that when the learning experience is really personalised to an individual, whether it be through individual leadership coaching, or individual support for a specific subject, it helps the student to progress a lot faster,” Kushnor says.

Crimson says its point of difference is that its service covers every aspect of the complex overseas university application process, including test tutoring, and mentoring in extra curricular activities, personal essay writing and interviews. School counsellors do a good job, but it is unrealistic to expect them to do all of this for one child, it says.

It is difficult to isolate the impact of Crimson’s programmes, however. “Students who work with us for two or more years are four times more likely to get into the universities they want to get into,” Kushor says. In a follow up email the company claims Crimson students “are up to four times more likely to gain entry to the Ivy League universities and/or Oxford or Cambridge”.

But four times more likely than what? I go back to Crimson again. “This year the average applicant admissions rate for Brown was 6.6%, but the Crimson student admission rate was 31.7%,” comes the reply. (That’s five times, incidentally.)

“In the case of Harvard, the admissions rate this year was 4.5% but Crimson students who had been with us for the last two years of their school life were accepted into Harvard at a rate of 20%.”

What this means in real numbers of students is obscure. Crimson says it’s achieved 27 offers from Brown University and 23 from Harvard since 2013, and in that period it’s supported 2000 students with college applications and provided services to a total 20,000. It’s not clear how many of these students applied to the top tier schools, however. Education USA can’t say how many New Zealanders are at individual institutions but confirms there were a total 1785 students from New Zealand studying in the US in 2017/18, up a third on five years ago. Going by these numbers, if Crimson has achieved acceptances to 1150 Ivy League and top 50 US universities as it claims then a sizeable chunk of the Kiwis who’ve studied at elite American colleges have it to thank.

But it is also not possible to say what role Crimson played in these students’ success. “Unfortunately, we have no way of providing an exact answer to this question as once again every student’s level of service is tailored specifically to that student’s individual needs,” the company replies.

When I ask Kushor how many students Crimson has helped, her answer is oblique. “What we really focus on doing is making sure that every student who works with us is applying to a really good range of schools that are a good fit for them,” she says. “Ninety-eight percent of our students get into one of their top eight schools. That’s probably the best reflection that I can give you in terms of overall success for them.”

If it’s hard to get a handle on the specifics of Crimson’s student success rates, the company is even more coy about its financials. 

Based on recent capital raises this rapidly expanding enterprise would be valued at over $380m. I ask Kushor if this is correct. “Can I come back to you?” she says.

What about annual revenue? “We don’t share that. But we have been growing at a really awesome rate year-on-year for the past seven years and we’re really excited about how quickly we’ve been able to scale.” 

I try another tack. It’s common for high growth companies to chase expansion at the expense of profit, Xero being a notable example. Is Crimson profitable yet? “We have been investing a lot in making sure that Crimson continues to scale, but I can’t really talk more about that,” she replies. So, is that a yes or a no? “I can’t comment.”

I’m not holding out much hope for light to be shed on the really gnarly stuff, but I ask anyway. Why was it so important to keep the details of the UniTutor case under wraps? “I can’t really comment on any of our media around the court case,” Kushor says. Where is the Eurekly dispute at? “I can’t comment on that either.” Is there anyone else in the company who is able to comment? “Unfortunately no.”

As excited as Crimson professes to be it seems that delight does not extend to sharing the finer details of its remarkable growth journey. Its quest for privacy may be taken out of its hands, however, with key documents in the Eurekly case set to be made public. Parents prepared to go the extra mile and invest in their child’s chances of a place at an elite university may want to watch this space.

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Mad Chapman, Editor
The Spinoff has covered the news that matters in 2021, most recently the delta outbreak. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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