How EssayJack Inc. CEO Lindy Ledohowski grew EssayJack Inc. to $240K revenue and 2K customers in 2020.

hello everyone my guest today is lindy larochowski now she was a former english teacher and then english professor in canada before becoming an ed tech ceo for academic writing software platform essay jack she's won numerous awards for teaching research and publications and is now an award-winning entrepreneur she's published both peer-reviewed scholarship and popular pieces on writing and offers keynote addresses on webinars related to ed tech leadership and academic writing dr lindy you ready to take us to the top i sure am nathan let's get going all right so my first question with a tool like this essay comes is who are you selling to because you're selling to students you got to figure they don't have much money yeah so that's a really great question and there are two answers to it so one uh depends what student you're thinking about so typically if you're thinking about the north american students straight up uh you do have to have a certain kind of price sensitivity absolutely particularly at college and university level if you're thinking about other regions in the world so particularly let's look at asia where english language learning is huge parents have a different attitude towards the investment in their child's education so while there's still certainly a price sensitivity the expectation that supplementary educational tools will be part and parcel of their child's education is a little bit more standardized than we typically see in a north american context so yes you got to sell to students and watch the price depends on where you're selling in the world and then of course we also sell institutionally so what what do you sell for what's the average customer paying per month yeah so if it's just a student straight up they're paying 9.99 a month or they're paying 99.99 a year if it's a bulk license at a school obviously uh you have lower pricing on a per seat basis depending on what that institutional license looks like when you look at just last month's revenue what percent came from bulk deals where it was like a school credit card paying you right or an accounting department versus a direct consumer sale yeah so if we're looking so interestingly like covet is just weird so uh the trends so the trends that we're seeing this year are not always the same as we see uh in previous years so this year it's a little bit more of a 50 50 split between our b2c or the direct to consumer and b2b which is the institution but in previous years it's been more of like a 90 10 between institutions being the 90 percent and 10 being individuals but right now uh what we're seeing at least is that uh institutional budgets are still there's still a lot of questions in terms of the investment into software so some institutions have absolute discretionary budgets they're like yes oh my god we need help with teaching academic writing particularly online where you don't have that face-to-face modeling of what's going on with with teaching in the classroom um and then some institutions are like we don't even know what enrollment is going to be like and we're letting faculty go so our budgets in terms of software look different so we're we're really being uh flexible this year to try to be like look we just we just want to help people uh in the middle of a global pandemic i mean education opens doors for you and that's really sort of our aim and objective and then and then the money stuff will sort itself out is is what we often like to say and dr lindy when did you launch the company so we launched it as a as a beta product at the end of 2015 so into 2016. we really launched it as a full um business at the start of 2019. the obvious question there is then going to be you've got real expenses personally how are you paying your bills while you're building beta between 2015 and 2019 yeah so so we did a huge shareholder loan to get us started and then we raised 500 000 canadian from friends and family so that was about 350 000 usd at the time and that was so once we start we paid out of pocket first to get a thing out there and just be like oh my god we're academics does anybody even want this thing we've created and it was a very shaky beta product we got it out there and then the traction demand was more than we could handle and so we thought oh okay there's there's something here we need to raise money we need to actually build a stable platform we need to i don't know hire some tech people so it's not uh me answering help requests and and sort of figuring out what to do from a technical level i mean i'm an english phd what do i know about about code so when did you raise that 350 2019 so that was that was uh 2017 2018. okay got it 2018. and and talk to me about shareholder loans so i assume that was like you and your co-founders how much was that looking for yeah so right now we're looking at it's about a million usd it has gone in to get us up and off the ground so the total uh share the total equity in the company to get us from sort of hey this is an idea let's get going it's about 1.5 million usd but doctor i'm curious how you structured this because you use the word shareholder loan so it's it's being paid back correct or they actually have equity um so we have we have equity in the company as the founders as well right now it's right just structured as a straight up shareholder loan once we do an external raise we may convert that loan into equity yeah so our principal focus at the start was look we've invented an entire new category of product we don't actually know if it's gonna work but we believe in it so much that we're going to put our money where our mouth is and really see where this takes us as opposed to the more typical startup approach which is how to spend somebody else's money uh but then you're also driving uh somebody else's ship with with various other co-pilots uh and our focus was well we actually know the education business and so we need to be able to respond in real time to unexpected things along the way as we figure out this business and this product and and you know we're we're not 20. so we said you know what let's let's put some real dollars into this and see where it takes us and what interest rate did you put on that loan if any none no right now it's a it just sits there sits there as a loan on them so it's literally you and your co-founders or how many co-founders too no just there's two of us in total myself and one other coach so you two together put in one million in the business of your own capital structure as a loan so you can get it paid back out at a future date if this thing works and then you raise 350 officially in early 2018 from equity investors yeah i see okay very cool okay let's jump back into the business well very cool do you mean very terrifying well well tell me about that what was terrifying for you yeah i mean well it really is i mean we had the the long hard conversations about the two paths we could take and as i say it was the one path was get uh investment in early um and and give up a a larger stake in the company um or the second is take on a huge amount of personal risk and and again you know the risk is that that million dollars we've put in never gets paid back that that you know this fantastic idea that we're seeing making a difference in people's lives uh fails that's always a possibility um and you have to kind of get okay with that and and and that's tough yep no it's tough it's part of the slog but you know if it works it works big for you guys and you still have total control so let's talk about growth right so so today how many students do you have actively using the platform on a monthly basis so over 30 000 students on a monthly basis are our active users okay that's incredible and how many of them have you converted to paid uh probably now oh i should have looked at my data just before coming a range is fine yeah yeah yeah i would say that's probably about maybe 50 of those are paying users and then some of those are um say in an educational institution so they might be on a free pilot now but they're sort of in a sales funnel and our hope is that we'll we'll move them forward and close that as an institutional sale how many consumers do our students directly pay you so not through a school's bundled package yeah so that's where right now it's it's quite small so our monthly uh individual subscriber is i think around a thousand ish so that's and that's what we've really just been launching you know in response to covid to give people that flexibility to say hey don't don't wait for your teachers or your institutions but you know you can also make sure that you're prepared for college and university uh with software that that can help you even if there are gaps in what's happening in terms of face-to-face or what's happening in terms of um sometimes students just find it hard to learn by zoom if that's all they're getting and so we're finding that uh that they're turning to us as a trusted resource no i love that now can i take a thousand paying you directly times sort of that 999 price point you're doing about 10 grand a month direct to consumer which you said it's 50 and another 10 grand a month in the bulk deal so 20 grand yeah that sounds that sounds about right that's great okay so this is not easy i mean getting your first 10 grand 20 grand a month in sales is not easy a thousand...