How Disco CEO Candice Faktor grew to $3M revenue and 400 customers in 2024.

hey folks my guest today is candace factor she's the co-founder of disco.co a platform for knowledge creators to build a live learning empire she's also a serial tech entrepreneur who's a passion for learning and community before launching disco she scaled wattpad to 80 million users making the world's largest platform for creators to share their stories wattpad was sold in january 2021 for 660 million bucks candice you ready to take to the top absolutely all right so give us some more clues here what was your role at wattpad and how did that role help you discover the need for disco absolutely so um i joined wattpad i was the first non-technical employee and i joined to help scale the business so i was the head of business and the global general manager and uh you know it was so great to be able to work with such talented founders to bring something that was really social and engaging to something that you know we always thought of as you know isolated which was reading right like most people think you read alone well actually what we learned at wattpad is it's really really great to read with community and also to read on a serialized basis and so when you think about disco it actually so much of what i'm bringing to disco i learned from wattpad which is learning especially virtually in an old world all used to be about learning alone right watching pre-recorded courses and consuming content alone and what i got really excited about um during the pandemic when we all had to sort of work from home we learned that we can actually learn live together and so just like we did at wattpad which was bringing a social element to reading we're bringing a social element uh to learning because the science of learning is that you actually learn better with people because people hold you accountable they give you support you're able to reflect more with them and so lots of learnings from wattpad uh in disco why did you feel like you couldn't build this inside of wattpad before the sale obviously oh so i left wattpad a few years ago um i i helped scale wattpad to as i said 80 million people and then realized um i wanted to do some other things at that point and so this was you know after a few years of uh what year was that by the way that you left yeah so i left wattpad in 2000 2017 okay and we started uh disco in 2020 and what's interesting is when i left hop out i became incredibly interested in learning because you know i was so aware that the skills that people are going to need in the future are so different with than what they're being taught in institutional ed uh and i actually built my very own live learning community after wattpad and what disco is really solving for is it's actually really hard to do that it's hard to bring a live element and a social element to learning with the existing tools that exist oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founderpath and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if you wanna check this tool out if you wanna jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview i i love this use case because like communities have time struggling all the time slack doesn't work circle's even sometimes tricky gather round right whether it's one person meetups and it's random people videos also sort of tricky i know actually i have friends i'm looking at your interface right now i have friends that use you guys i mean did you guys sort of start in the pat flynn sort of amy porterfield sort of world and expand from there did you start somewhere else yeah no you hit the nail on the head like we we started with knowledge creators who really wanted to build community-based learning um and it's expanded you know from solarpreneurs who are you know uh individual knowledge creators putting learning communities together to like really big now organizations are using us like makerpad which is the largest no code school it's owned by zapier we are the os for their entire learning community um dribble the world's you know one of the world's biggest product design communities they're using disco to be the os for their entire dribble university and i think what you know um knowledge creators and organizations are realizing is it you really want a seamless and branded experience for your learners to go to just one place right one place for chat one place for live video one place for content and it's really helpful if you can have mission control to run your entire business from marketing and selling these live learning experiences to merchandising and monetizing different live learning products makes complete sense to me i understand the pain point let's circle back to products in a second because i want to see if i can get some hints at you in terms of where you're taking the disco product but first help us understand how you've gotten yourself funded today customer fund or you decide to raise some capital yeah we've raised some capital um we have had you know a really um we haven't was the last round and how much was it for yeah so our last round was our seed round um we raised that last time this year and uh amazing investors from funds like inovia quad capital um we also how much did you decide to raise uh so in our last round um we raised 5 million u.s and we have incredible angels as well lots of interesting folks from shopify um lambda school selena endeavor very interesting people who are participating so smart round great capital was that your only round of date or have you raised other capital precede maybe yeah we raised a pre-seed round we raised a safe um as well because there was a lot of interest and uh we'll we'll be sharing some some further funding uh in in when was that pre-seed round closed was that in 2020 uh that was in 2020. okay so first year in business really so so 2020 and how much was that for uh that was just a friends and family 750k did you get did you get alan and ivan you're you're watching i do i have i have i i've been listening esther um huge fan of of uh the wattpad team also like the head of product touring sec devo is an investor well those are good signals i don't know though if your former founders you worked with cut you checking your pre-seat round like you got my ears perked i'm interested so launched in 2020 you raised some money early on to get going you raised another 5 million in 2021. um what gave you the leverage to raise the five million like were you guys pre-revenue still or did you have a lot of you free user growth that let you get that evaluation or i mean we were you know we were three times oversubscribed for that round uh we had you know 15 million of interest um i think two things one a a really clear vision for where we want to take disco and lots of interest from knowledge creators and organizations uh that wanted a tool like this um can you quantify that candace where were you like what in what was an important metric to you last year when you raised there on is a number of active users number of courses created number of live sessions what's the metric uh for a seed round it really was uh the product vision okay got it so you weren't there wasn't a deck where you were saying i'm making this up ten thousand monthly active users with a thousand live events per week it was really i'm candace i'm from wattpad here's what i believe about the world and here's how we're making it happen yeah and i have an amazing co-founder uh chris zukornik his sixth startup uh serial entrepreneur and so i think we're both you know mission driven lots of complementary skills um and you know you guys nice at the beginning you split 50 50 or was that a big debate no 100 50 50 all the way 50 50. you didn't try man i would have fought like hell you know i'm candace wattpad 80 at 55 to me no way uh he's amazing we're very values aligned very mission driven and uh a massive market opportunity that we have a lot of conviction is you know just getting started so talk economics to me pricing is tough to go to market with i'm sure you experimented a lot about this at wattpad what do people pay you today to use the technology per month on average so we actually have a really interesting uh pricing model uh one is we have a free plan where we take 10 so you can build your entire live learning experience and and just only pay us when you make money so i think that's really appealing to some people but what's really appealing to the knowledge creators and organizations that are making a business out of live learning is they don't want you to take a huge chunk of their revenue they want to pay you a sas fee and so we have a pro account uh which is 85 a month or we have team accounts and an enterprise account uh for bigger customers and so you know we really scale with your business in the way that you want to scale and then we have a very interesting new arm of our business called disco studios where live learning is actually hard it's a new phenomenon to build an immersive and engaging live learning business is very very attractive for a lot of people they want to do that it's a tremendous unlock of value for thought leaders for even sas companies for businesses but they actually need like an agency or a pro-serve model to help them design the experience operate it scale it and so we actually have a really nice business line as well that helps brands and organizations and thought leaders create and scale these experiences and that's why i want to go i want to go deeper into the your new product that live studio concept but i want to get more detail on the free plan and the sas component as well i assume free plan maybe came first what do you guys track i mean i mean is it is the right question how much how much live learning ticket sale volume did you process in january is that the number um so we are creator focused right so yes we we on the on the free plan we're taking ten percent of what our knowledge graders are organizing and how many are on the free right now hundreds of customers are on interrupting but how do you define a customer is it someone that's made at least a dollar of ticket sales uh somebody who's actively building live learning experiences on our platform so some no sales yet uh some have no sales but the majority of you they're okay and i mean are you close to getting to the point where you're doing like five or 10 million in crater ticket sales per month or like what's the metric you're trying to hit there yeah i would say so we have some creators that are on track to do seven figures this year oh wow okay very cool very very cool okay cool so that model you're taking you're taking 10 percent um i imagine you have power laws there i imagine your top 10 creators are going to make 80 of that total volume and at some point they're all moving to a flat sass because the economics makes sense so your funnel works naturally here how many do you have not on the free plan but are on the sas fee model already yeah so we don't break out our customers per plan but we have hundreds of customers across our plans so on this class but you know how many are on the sas fee right i'm curious how many have made the switch because i want to ask questions about how you drove the conversions yeah i would say we're really early right so we we're we're quite early in our in our evolution of even being live off our wait list so you know we anticipate lots of people will switch over but we're just not sharing i see i see i see okay that makes perfect sense by the way everyone has to start from zero so it's very like maybe under 100 on the 85 a month plan you're just now launching your storytelling around and you're still learning uh yeah we're i mean i we have a significant number of pro plans and enterprise plans um but absolutely growing a lot and what's interesting is a lot of people prefer just paying you a set amount of money per month totally makes complete sense that's why i ask it makes complete sense to me can you tell me the percentage so you have hundreds of customers can you tell me the percentage split of the pie like is it 50 50 or 90 10 or yeah i would say it's about like in the range of between 30 to 50 percent 30 to 50 are on the sas fee correct oh i see okay got it so so 70 down to 50 are still on the free tier but you anticipate more moving over that sas model you got it that's very cool okay um talk to me a little bit and i guess i want to understand timeline too you guys mentioned your early um when would you have your first dollar revenue is that last year is that this year uh it was last year um we only started the company in august 2020 so pretty pretty new um and we are just you know moving off of our wait list um we had about a thousand customers on a wait list looking for access to the platform can you break a million bucks in revenue this year uh we are absolutely on track i love that how many folks dennis you have on the team today uh again we don't share um data on the size of our team but it's growing significantly um we've scaled the team 10x since last year okay but as you know when you go from one employee to 10 it's fancy and nice and you're well trained to say 10x doesn't mean it doesn't mean a lot no we'll be over 20 people okay fair fair got it over 20 and the reason i ask is i'm curious how engineering heavy this is right how many engineers of the 20 or is it more about onboarding and helping people train them how to do a live course uh it's very engineering heavy we're building a pretty robust platform uh which we're really excited about i mean if you think about it we're being the os and a very essential part of people's business so our platform's quite expansive in terms of what it does today and what our vision is uh for tomorrow and you've been through it at wattpad you understand what dilution is and what it means and how it means the whole cycle through exits so as you now in control right you and your co-founder of disco how are you thinking about managing dilution at the same time managing bringing strategic partners in the form of investors you know we we're big believers in bringing in strategic capital um and you know i think you want to have the right amount of traction so that you have evaluation that allows you to do that with as little dilution as possible and we're we're well on our way uh to do that most folks in their seed rounds past 24 to 36 months are selling sort of 10 to 20 percent of the business were you sort of in that standard range or did you do something super unique uh very similar um we uh we're very lucky our evaluations have been very very strong do you ever go gosh i hope we can grow into this bad boy we don't want to have a down round uh i think we're thoughtful like for us it's not just about getting the highest valuation where we're very thoughtful around how much we raise and when uh for that exact reason i don't know if you know this but i'm a venture partner at a silicon valley based series a firm and so i'm all too familiar with understanding the the dynamics between you know raising too much raising too little having enough traction not having enough traction so i feel very lucky to see this is why i asked the question because when i talk to most folks that fit your same pattern and the pattern that i'm picking up is early employee at a very successful company wattpad raised 50 million about 50 million on a 400 million valuation two years before sale the sale was 660 so slightly above the last round valuation i know you left in 2017 but i assume you were fully invested at that point so you had some financial windfall from that and if you really believe in this disco idea ignoring the strategic aspect of your investors you'd want to own as much as possible and fund it with your own money um that's why i asked the question you're very smart and absolutely we're we're big believers in what we're doing and we also understand that in a competitive market you want to have enough capital to scale the business appropriately how much was that a factor when you raised the 5 million that everyone knowing that you were early at what pattern you could probably do the whole round yourself if you wanted to i think it was great i mean i think um you know whatpad was an incredible place uh to learn about scaling uh a very global business uh in the creator economy so it definitely definitely helps and i would say a big part of it is the dynamic between my co-founder and i um he's also sold companies and had great exits before and we're very complementary and mission driven i think that the the combination between you know our passion for what we're doing and the growth in the market and our backgrounds made uh you know our funding three times oversubscribed how do you pick off people from liking the hopkins the bizabos the v fares i mean all those companies are moving in on one side on you you're sort of building a wedge right in the middle but like hopping just pitched me yesterday on sort of a live studio event experience because it's clear there's an enterprise play there you're doing the same thing what's your wedge to a company like hopkin yeah i mean i think you know as far as i understand hopn is still very event focused right we are really focused on learning communities and giving knowledge creators and organizations the merchandising tools uh to actually build a recurring revenue stream of business against knowledge and learning and that's really really unique and different in terms of the the tools you need to do that versus having an event experience so you know we're we're like there's an entirely new breed of school that's being created today with like micro schools boot camps virtual academies learning communities and it requires a different set of uh tools to actually operate it as a you know entire empire and and business journey from you know marketing selling creating these products having great experience for your learners scaling it and so we do all of that tooling it's actually quite complex for people to to sort of piece together a hoppin with a slack with a you know curriculum tool and so we just make it super simple in one in one place last question here how did you build the thousand person wait list um you know my background is in building community so wattpad you know it actually was when i left like even more than 80 million was 100 million user community and so there's some really important design principles when it comes to building community i give a lot of credit to a friend of mine kai soto if you wrote the book get together but one thing i learned is design with your community invite them to actually design your product with you and i think we did that in a really really powerful way and we also got some of the most interesting thought leaders and people who are the true pioneers of this new learning format like seth godin like jerry colona like some of the sort of leading investors to to really participate in thinking about what it means to learn live together and i think we uh had an amazing round of you know angels and investors uh who d care deeply about what we're doing and we invited them to participate in uh helping us build a community of this future knowledge creator and learning experience and not just literally organically proliferated into a thousand person wait list yep yeah very cool all right let's wrap up here with the famous five i'm gonna skip the first one because it's what's your favorite book i also love get together i highly recommend it let's go to number two yeah he's kai's great is there a ceo candice you're following or studying really like um amy emirat uh she's the ceo at madison reed um she's also a partner at um i think it's uh true ventures i'd say out of the ceos i've just really i just have a lot of respect for her she's you know she she came at it from she was an investor for a long time i've also been an investor in my life and sort of thought do i am i only an investor i'm an operator and i i just believe in you know seeing things from different lenses makes you better at whatever lens you're wearing and she's very mission driven and passionate about community and building iconic brands and businesses she's incredibly inspiring i love that number three favorite online tool for building disco beside your own well slack went down yesterday and i was mind blown about as to how much of an essential tool that is for our remote first team so we are a remote first company my co-founder lives in costa rica i live you know in canada and our team is all over north america and quite frankly we were quite dumbfounded on how uh essential slack has been in our in our communication all right slack number four how many hours of sleep to get every night a lot i'm i i believe deeply in good sleep so i i think i must sleep for at least eight hours a night love that and what's your situation kenneth married single kiddos all of it so mary two kids uh nine and twelve uh puppy uh so yeah full-on can i and can i ask how old you are yeah i'm gonna be uh 44 next week so cool and and the reason i ask is for context so now take us back to your 20 year old self what's something you wish that she knew do not be afraid to fail like uh you know i i look back now and i was like i can't believe how much of a perfectionist i used to be uh it does not get you uh where you need to go guys uh candice one of the first time employees at wattpad really led building a community of over 100 million active engaged passionate community members and she left in 2017 and said you know what there's a product here she launched disco went out and raised 750 000 bucks in a precedent round to get it going another 5 million last year to keep scaling grew a thousand personal wait list just now opening up revenue they either take 10 from folks on their freemium plan these are creators doing live learning on the platform or you can move up to an 85 a month plan if you don't want to pay the 10 because it obviously gets very big if you're successful so she's experimenting they're scaling hoping to grow to a million bucks in revenue this year we'll see what happens 2021 on the team today as they look to continue to scale candace thank you for taking us to the top thank you one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the 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