How Skillshare CEO Matt Cooper grew to $14.4M revenue and 100K customers in 2017.

hello everyone my guest today is Michael cartoon a popcorn he is the founder of a company called Skillshare which is a learning community for the new economy Michael are you ready to take us to the top yes for sure thanks for having me good you bet man so tell us first what is Skillshare doing what's your business model how do you make money yeah so Skillshare is a website where you can take online classes so kind of works similar Netflix where you can take go 17,000 online classes for about you know $10 a month and we really specialize in professional skills within creative business of tech so our business models description so we take a percentage of that which is how we make revenue and so is it a pure sass player can people buy one off courses sure SATs so the idea for us is as we add more classes the possibly becomes a much better value for students so you know the early days we're offering like hundred classes for ten dollars and now you have seventeen and I think the future will have hundreds of thousands of courses and what so what's the other constant man you per month would you say so you can it's either fifteen dollars a month or one hundred dollars a year so about half of our users often to one of those two points so we could say it's somewhere between well so what probably so looks a month something like that yeah yeah and what is the have you seen a direct before get more of your back strong curious have you seen a direct correlation to increase for attention have you have as you have like significantly grown your content base yeah for sure so every year we're seeing the amount of well we track four engagements like minutes watch so every year as we have more content we see that number to go up which also drives up engagement and rubs on bread and churn so we definitely see a correlation for sure so how many minutes does somebody have to watch per month where you're like I know for a fact they're sticky and they're paying again next month about an hour which is roughly maybe one in half classes okay interesting give us more about your back story when did you launch company yes my back sore I was born here in the US but our family goes to Korea so that's where I'm telemetry school move us back here to go to go to school go to the US and you know did everything you're supposed to do with TV Bridget Virginia which really no we I have to end this interview now man I'm a Hokie I'm a tech guy but the funny thing is it's like you know that's what gotten you really ensuring education because like my whole life was about getting to school and while had a great experience a graduates degree and you know kind of shot opportunities I wasn't really really interested in which is what led them to sort of thing about Skillshare and then from there it just worked in tech and I volunteer orleans for about a year where tennis term competes with the guy Bielski i got acquired by Adobe and worked in another star called hot potato which got acquired by Facebook so I liked it those two opportunities kind of like getting an MBA and startups and then started Skillshare with us and start working on in 2010 and then we launched in 2011 and the idea is to provide access to learn especially learning that you know which around real-world skills that were needed in the new economy and what is the like why go into it like you you're young how old were you in 2011 said maybe 27 28 so and are you single do you have kids no not single but don't have good okay so okay so yeah and a relationship and okay yeah so you you still generally have like almost complete freedom like why decide to go into a space where your moat is not gonna be a technical architecture it's gonna be how much quality content you can get yeah that's a good question I think you know you know I think when I when I was thinking about what to do next I had an excel file like over 100 different business ideas and I had a really hard time filtering those down because you know some of them were really good well your sounds very good I'll see this was one of them one of them's not tech related one I want to kind of start like a Soho House but New York there's like a private member's Club but like kind of like lunch that are on the world I realize have no experience no sleep whatsoever cells not a good idea and I think we hadn't remember the other one but you know to narrow that list down you know the filter I had was like would I be able to work on this for ten plus years and the narrowed it down to things are very impact a mission-driven and that's even better launched a for-profit forked company and that was also really passionate about education that's what led to the formation still chair as far as the defense ability so we do look at it as in two or three different ways one is two sided network effects so leveraging the internet you have to cider marketplace one side pulls the other now the tech side we do invest a lot to do science machine learning so as people use them we invest a lot it's personalization and so so those two things working in unison together is how we how we create our mode also we've got a strong brand and we have no great value and all those things but we really focus on the two sided network effects and do science give us an update where you are today how many folks do have paint in a platform every month we have about three three and a half million registered users seventeen thousand online course classes for about five thousand teachers we're pretty much half of our user base is international you know business is doing really well we're doubling your a year revenues and you know you know way about 10 million so it's doing really well I think the next stage of the company it's really run growth and scaling so I think you know the early days is around product market fit and then we started figuring out how to lay down the foundation to scale I'd say like we are we are in that you know scaling things right now and yeah there are phases of that are you over a hundred thousand folks paying yet yep you are okay great but can you put a cap on that like below three hundred thousand below five hundred thousand below one of those two numbers below and make it vague enough where your competitor will still be wondering yeah big enough where everyone's mind wander along what they take that number is that's good that's good that's good that's good no yeah congratulations on that so yeah I mean look at a minimum if you got a hundred thousand people at twelve bucks a month obviously people can do the math and and and kind of you know back a little bit into why it's easy for you to say you're well about ten million bucks and a are at this point tell me more about the data side of this so when you have video and audio content in your platform are you doing things like transcribing it and then actually using your search and recommendation algorithms tied to the actual text data or do you have something that ties directly into the voice data we do some of that but it really we really look for quality content right so we look at engagement with hand classes so let's say you upload a class and you know ten people watch it but they all watch the whole thing so we can signal notes that's pretty good and based on you know another user pads of you industry let's say you're really to a senior you know back when you have like psychology let's say you early into that we can pull that class out and recommend it to you because we we feel pretty confident real good if you like it you know that class funnels over to the top so that's one example on the class layer but our vision is to create what we call this an ecosystem for the new continent so we want to add clear layer where we serve recommend jobs other pieces of content for you other people you should interact with so the idea is that we can create this like personalized like school for you around everything you want to learn and who you want to interact with so that's kind of the vision and that's where a lot of the data and these kinds of companies content company specifically it's always a struggle I mean you've got a massive obviously content-based but churn is always a struggle I mean it's hard especially at this kind of price but I imagine you're mainly probably selling to consumers or people just out of school wanna get educated maybe not a ton of just you know income they can just throw away well what is your annual retention right now and what are some things you're doing them next year or two years or drive that debt up yes sir our trenches pretty high I think when we look at the retention curves they all kind of like you know they all start flat lighting at a certain point every year the region typically does it's pretty good I would say for b2c so I think when people you know think about subscription churn you know a lot of what's right out there is about SAS term so those are b2b you know especially Enterprise so you're looking at one or two percent annually which is really good consumers much different so I think a terrible turn for consumer subscription business would probably 15 plus you tend example Oh like people churning or the revenue that make up those people either so we track net subscription because we don't have a little time we don't have different price points we just have one so so we look at a subscription turn fifteen percent per month is really high ten percent is okay you can kind of and then I think five percent is like world class right so that the monthly churn for consumers this is great and you can really build a humongous business doing that and I think David Pakman who's a vfc in rock wrote a great article on just consumer subscription churn so I would say we're definitely you know in the single digits for monthly churn it improves your year but yeah really good engagement right so people don't use your product they're gonna cancel five percent monthly yet are you world-class or almost there yeah I would say we're within spitting distance okay what do you do like that's not interested in you've already gone churn kind of down below ten percent not as those five percent below ten percent monthly what are like the other levers you pull to go from eight percent turned down wl5 I mean a lot of it's just engagement right so I mean it's just about getting your you know people use the product it's finally value I'll see there are a lot of pro tacky things you could do there as well like you could know you know they're they're little things you can do to drive sure and I'm like swipe people you know if their card bounces swipe in on the first or fifteenth you know when they get paid there's little things you could do that that might get you know some like incremental improvements in churn but the big stuff budget changes in Sharon are just core product experience yeah having bootstrap dystrophy raised capital so how much have you raised um we originally bootstrapped it so we launched Skillshare with you know less than 25 K your own money our own capital honestly we've only spent five five K of it and then today we've raised about 25 million to date who's we what's the founding team look like so started this company with a co-founder named Malcolm who was more the technical background I didn't bought the product design business and least today we're you know about 50 to 60 people faces here in New York and with a distributed team all around the world I'm sorry how many of the 50 to 60 are in New York all of them and the rest to distributor I would probably say like 89 percent of companies based in New York antenna to Riverside distributed and got it talk to me more about about how you're winning these consumers over you know a tree house on the coding side or you to me on that you know business side or a creative live on the creative side like how are you winning these sectors I think one way you think about it just our audience so we focus on what we call the independent class so these are you know either you know independence we entrepreneurs small business owners freelancers and you know there's two concentric circles the other Millennials so we feel like we've built the best product and the best ecosystem for that audience and the second one is just kind of like we know you know you asked me earlier about moats you know because what we do is digital content right at the end of the day just it's just an mp4 file that we're delivering you know if you really strip out what you know you know that it's a class if you think about publishing you think about entertainment thing about music all those businesses on there and then you know they all fell into subscription models that have the biggest libraries and those are the ones that usually win over time so it's more Spotify than iTunes you know it's more Netflix than going to Blockbuster so we feel like you know today with you know we have the biggest catalogue for one price and we think as we add more classes we'll have a hundred thousand of a million courses on every single skill from one set price and that's a great value for our members what are you what are you paying right now to currently apply our customers like full elated I would say up until this year a lot of our growth was word-of-mouth and organic we started spending money on marketing in this year so yeah I think it ranges you know I think for our price point for any consumer SAS subscription business you'll see you know CAC rate from anywhere from 10 to 50 dollars for a price point anywhere between let's say five and twenty dollars come on so we're within that range and ideally you want to get to a minimum of three to one you know CC LTV ratio so that you can scale so if you're assessing let's say you spend the max on that Rangers needs let's say you say 50 bucks to get an average $12 per month kind of customer you said a lot of your customers are paying under bucks up front so I mean it's fair to say you're recovering most of your cash will kind of do it on a weighted average remember most of it in less than four will less than three months right yeah yeah so that is a good good business model to have when you have customers paying you up front for your yes what do you assume like when you do lifetime that or do you do lifetime by calculations and do you use that to inform how aggressive you can be on that for sure I mean the more the name of the game it like for a company is like if you can make your business pretty predictable that is I think the holy grail of scaling so if you can accurately say that I'm invest extra and I'm again why I'm out with you know with high probability of confidence you're higher than the percentage of confidence and then it comes down to how much risk do you want to take and how aggressive you want to be and I think you know on one in the spectrum it's like uber where they're you know they're going really aggressive because they feel so confident in their curves and the other businesses that aren't predictable like you know they're not you know they're not taking that much risk or being that aggressive or you know even sticking you know being around in a couple years so I think the name of the game is you know the more principal you can make your business the better and if you could do that then you can be really aggressive last question before we wrap up with the famous five do you guys think you need to break the the thirty five million dollar an hour mark this year I'm not gonna make a comment but I definitely feel very confident that we'll continue to double your beer okay that's your that's your that's your modeling is doubling your rear that's a minimum doubling their beer and they will be it will be pretty piece will be in that range for you are you comfortable sharing justices I mean so can I backtrack and go back a year in December of 2016 I mean are you on track to double your rear which means about a year ago you were you know somewhere in the oh it's sixteen seventeen million range yeah so we can't look at the January McCain race our busiest spot so every January generally January for sure doubling every guy you're on you're on track to do that this year yep awesome all right let's wrap up Michael with the famous five number one what's your favorite business book I would say my favorite business book comes to mind it's pretty non business book but I really drilled Tim Ferriss his books around like life hacking bio hacking productivity so a really drill was number two is their CEO your phone or studying right now for a while I did follow Reed Hastings especially what he took Netflix because there's less simulator business as of late I've been doing a lot of research into the sea of something if you really go to his history and how he started softening twenty thirty years to work where he's melted it is a phenomenal source what's the best piece of content I think rain around his stories there is some secret documentary there's a great YouTube interview that just came out about a month ago where they interviewed but for about twenty to twenty five minutes about it was like story and how he starts off fake and how he started a hundred billion dollar picture fun yeah you don't watch that and get inspired then you know you're in the wrong business number three what's your favorite online tool for growing your business I would say my favorite online tools were growing our businesses are analytics dashboard and we used to are do so just being able to track all your data and look at it pull out insights and see what's moving what's not good thing based on all things you're doing gives you a really great place in your business number four how many hours of sleep do you every night I get between seventy eight I'm actually a huge proponent of sleep actually think it's the most important foundational thing you need to do for your health and well-being number or last kind of question here what's your situated or your you're not married but you're also not single you have no kids and an old are you I'm 35 35 okay last question take us back 15 years what he was your 20 year old self knew I wish my 20 year old self knew too I guess focus on a few things especially if I was really excited for this versus spreading myself really thin I think I spent a lot of 20 25 like doing a lot of different things where I you know went really and so if I was 20 years today I would go all in on crypto watching right so rather than like you're sort of should I do descriptive inch I do this I would you know focus all on the blockchains if you're 20 I would literally go read the Bitcoin white paper and they they're my paper and you know buy $10 worth on Queen base and and just got cert going as deep as you can from the guy that had over a hundred ideas and an excel sheet before picking out Skillshare michael says focus and go all-in on one thing he's lunch Skillshare back in 2011 is now serving well over 100,000 consumers paying on average 12 bucks per month again to learn many many many different things as millions and millions obviously of folks using the tools for free obviously a significant portion of those folks paying as well twenty five million bucks in terms of funding they're doubling a year over year with our team of fifty to sixty spread between New York and other remote locations Michael thank you so much for taking us to the top yeah thanks for having me