How Kiratalent CEO Emilie Cushman grew Kiratalent to $6M revenue and 1K customers in 2018.

everyone my guest today is Emily Cushman she's the founder and CEO of a company called Kyra Talent she founded the company in 2012 and since launching the company she's been named the HSBC women lead woman leader of tomorrow I don't have Canada's top 100 most powerful women Emily are you ready to take us to the top yes all right tell us about the company what skier Talent do and how do you make money all right so Kyra talent is the Supplemental application platform for universities so what that means is when you apply online normally you will put in your grades and your test scores we do everything else so things like the essay time video interviews timed written assessments portfolio elements really things that look into more who you are as a person not just how you did on some test with universities primarily mostly graduates as opposed to undergraduate and mostly professional programs like business schools med schools Health Sciences and engineering and how I'm trying to memorize unfortunately I'm too far removed from when I went through my college application I'm trying about how these things were processed before you so what are you competing with what's the legacy solution with a paper-based system where you actually mail and application since then that's been brought online so usually now you'll go to a school's website you'll click apply now and then you kind of just fill out or upload a bunch of forms so we've turned this into more of an experience that's a lot nicer for the applicants and it includes a lot more of this you know rich multimedia content like it's know who you are and and are you charging the applicants or the schools we filled it with schools directly so we saw the university admissions team okay and give me a general sense of like the different packages you offer and what's maybe the average admissions team will pay for this tool yeah so pretty average is we'll get a program maybe it's an MBA program or a master's in finance though 2,000 applicants and they'll pay about 20 grands and that's an annual contract value got it so 20 grand and the limiting factor on that is you can accept about a thousand applicants via this over the net goes over the year yeah that's pretty standard okay very good and so are most of the programs that you're working with kind of these online only universities or no you work with a lot of kind of work and mortar ones as well we actually work with all brick and mortar universities okay good I only have maybe one online program but for the most part these are schools these are schools like U of T you know Yale Notre Dame and you know they want more out of their application they've seen that test scores are not indicative of success so they're trying to look at other factors that you know can allow them to see who's actually gonna be successful once they show up on campus and once they graduate and go to get a job and walk me I want to get more the backstory here but it's on a timeline but how many campuses have you scaled to today three hundred three hundred great and then again put that on a timeline would you launch so we started the company in 2012 so it's been six years now the first year and a half that we were in business we actually sold to corporations so we've got about 40 corporations on board including names like Cola or some life in Canada and so some big names but we just found this sweet spot in higher ed and you know there was really no one doing this at the time so we saw that as our blue ocean and we just doubled down it'd be a minute tech company so really since EdTech was like 2014 that was the same if you have 300 customers paying that ACV you just mentioned I think my mat that comes out to about five hundred grand a month or something like that is that accurate yeah so I mean this is a big moment for you to realize I need a shift from these big logos to just doing and doubling down on on schools essentially what was that moment how did you know when identify that as a sweet spot hey you know what you know we had been selling into corporate for a while and we kept coming out and this is actually back when we were just a time to video interview player so that was our original product to market so we weren't always the full supplemental we were just the one piece but it was time to video and you know and we sold that into corporate we started coming against same players over and over and it almost became commoditized really fast and then on the side you know we had these schools that were actually coming to us and they were saying hey you know we really we want to incorporate like a video essay and this is kind of like that it's like an asynchronous video platform so we had you know U of T they were the first school that came to us and you know Canadian business school and a pre-competitive so of course once we got U of T you know Ivy and queens were next in line and after a couple months we just thought you know what we're banging our heads against the wall trying to compete against these other commoditized video products went over here we literally have you know check clients coming to us and you know they're signing up front on three-year contracts they're a pleasure to deal with and they're actually using our cold product you know they're not saying oh we want to run some pilot or oh we want to you know just use this piece over here they're using our full products right away in you know they think I just think they get it so it was it was a pretty clear decision I say are they paying the three month contract are you all up front so 20 40 60 grand all up front or no they pay annually but I mean when we were selling at the corporate need to like fight tooth and nail it was well why don't we just pay you know 10% now and you know like the headache total headache okay so 2015 you launch you get sorry 20 I think 2012 to get started on this how do you decide to bootstrap or raise capital so we ended up raising a bunch of capital we did our first rounds well we did a couple rounds we did a an angel round of three hundred thousand we did a seed round of just over two million and then we actually had a leadership change so our investments brought in a CEO to come in and run the company for couple years and in that time we had a different CEO here there was another 6 million put into the business so number 8 million in total that we had raised however the CEO did not work out so he we had to exit the business I came back at the end of 2016 and at that point we made a decision to become more of a profitable company so now we're operating breakeven will turn the profitability in from the next month and it's a whole different way of operating did you actually leave the company or you just assumed like a CEO well or something while he was running it yeah it seemed a different role kind of just bounced around different departments traveled a lot why why did so this is by the way this happens all the time and nobody talks about it so I'm hoping that we can have a great conversation here and pull some learnings out why when you're only 2 or 3 years old dude the investors say I imagine they probably like we're only giving you this money if you bring in this CEO why do they feel that yeah I mean a couple of reasons I mean I think the main reason was that myself and my co-founder we were you know 19 to 21 we started the business and first-time entrepreneurs in Canada and I think investors said you know we want someone older and experienced who's done this before before we put in this type of check sighs so you know step aside and you can learn from this person and go there so why'd you roll over why not say you know what screw you we don't need the money you know what I mean I think at the time and it wasn't that long ago but it was still you know five or six years ago and in Toronto the landscape was still it was still early so we started at a time where accelerators were very new and there weren't that many here and you know there were not a lot of companies that were getting angel and seed funding so we were one of the few and so yeah it's like we just didn't have a lot to go off of we were young and we didn't have tons of other companies to look at and say oh well here's what they did and they did it differently it was kind of well I mean everyone's encouraging us to raise this money and I mean we've been operating under the you know under the assumption that this is the right thing to do like this was also five or six years ago when you know people would glorify fund raising right like this was this was kind of thing it still is a little bit like I think we're getting better but like people really glorified like oh you made it you know you raised that you raised X million so I think part of it was just the culture that we were in at the time we were young and we kind of just said okay well I mean this is the right thing to do how old were you at the time you did this exceeded the like our first phrase where we got you know the seat where the CEO ended up coming in afterwards I was fine when we do okay that was the two million or the six million so right off the bat like we were around for you know not even a year and we raised the two million and that's when they made the switch interesting and what was revenue at that time monthly remember sub 500 a are like sub 500k a year yeah yeah yeah yeah okay and again you're at 500 a month today give me a sense of growth today so take me back a year and July 2017 what were you doing per month so I mean we grow I just didn't kind of make it on the broader sense like we probably grow 75 percent year-over-year now mainly a factor of the space that we're in so you know selling to EdTech it's like large like government sighs contracts and the other thinks you I say 20k is kind of our average or average contract but I mean now a lot of the deals that we're filling our pipeline with are actually like 200,000 250,000 like they're much larger like undergraduate widespread contract so we're actually even moving away from our kind of 20 k grad contracts to go after somebody's bigger fish that's great so if you're going seventy seventy one percent year-over-year that means about a year ago you're right around 300 350 grand that's I mean that's healthy growth for coming this size yeah and you'll be profitable in what month this year you think twelve months from now so like you know twelve months that's exciting so walk me I'm gonna imagine the summer's gonna be very low who you're sending three-year deals churn is critical in any SAS company tell me about your turn yeah negative okay so net negative twenty percent yeah that's a huge net negative number walk me through can you break that down in terms of so expansion as X lost as X and then together its net negative 220 but I will say that you know we sell into clients and every year we circle to sell more products into them our episode conversations are you know extremely easy and we build really strong relationships their clients you know they signed these super long term contracts and you know all I can say is every year we go back to them in and say hey you know here's what's coming up for next year here are all the new features and they say great press like the land and expand is the model that we've chosen to pursue and it well and it's working you know your expansion revenue has to be more than 20% of what you're cheering that's like it's a net negative twenty twenty percent so congratulations there tell me about CAC when you do bring on a new customer what are you paying to acquire that customer typically we have a three to one LTV the CAC so I mean it's something that we've been working on because you know historically kind of studying you know quotas for sales team when we were just going after 20k deals a little bit challenging because of you know their long sales cycle so I think you're doing a lot of work for a relatively small deal size so you know we started to improve our LGBTIQ at once we started going after these you know bigger fish which are more yeah like even in the graduate level it's like 50 and $60,000 tracks and at the undergraduate level looks like 200-250 doesn't other projects actually at that point it's actually going to be better than three to one but three to one is kind of a right now and what do you assume you're left in value is I know it's a dangerous number because it can go all over the place Bodhi assume I mean we barely lose customers we've been around six years so like when we do it in our numbers like we assume the customers is five years by twenty five twenty run a year yeah but I mean it's very realistic that it's even longer than that like even when we do all of our conservative projections like we'll actually just say it's a three year and that's kind of how we get the three to one is actually just based on the three your lifetime value but like the reality is its its five-year today and it's probably longer than yeah yeah so if you're assuming that again a minimum of three years of the twenty a year that 60 grand lifetime value which means you you're totally comfortable paying twenty grand to acquire that customer these are all very conservative numbers yep and what's the team size today what do you got twenty people around the dot very good and where's everybody based so we're mostly in Toronto and then we have one in Cleveland Ohio very good okay to get Toronto good place to be and in terms of payback period anything you're turned optimize for there I mean not really I mean usually that's a critical metric people are focusing on if they're trying to move towards profitability because you've got to get your payback you've got to get your cap back fairly quickly to make sure you don't have a big cash gap I mean we've always been pretty strong in that area so like it's something that I mean we try to improve on it but like there's no huge like really the the biggest challenge in getting towards profitability you know moving from like a B C back model to where we are now was just honestly managing our spend better and you know doing a better job right sizing a lot of our old contracts so when we went into like when I first came back we didn't he would exercise going through literally every single account and saying okay they're actually only paying you know five thousand or ten thousand and that doesn't make any sense because I remember just twenty you know we're gonna be go wrong there and kind of going back at some of these discounted contracts that never should have been there in the first place that kind of paired with just managing cash better like that we've always had a pretty strong payback period yeah you also I forgot us to your doing all annual plans so the cash is coming immediately so he probably yeah yeah like really what we're just concerned about is that when we invoice them they pay in 30 days yep very good Emily all right let's wrap up here with the famous five quick answers number one what's your favorite business book the book [Music] okay what's my favorite business book I mean I don't know liars but no problem number two is there a CEO you're following or studying currently I am a big fan of Emily Chang right now I know she's not a CEO birthday but dad she's got a lot of good things to say number three what's your favorite online tool for building a business no and number four how many hours of sleep to get every night oh that's great and what's the situation if I am I asking married single you have kids relationships not married no kids Emily do you mean how old you are I just turned 28 28 very good last question what do you is your 20 year old self no oh never to raise VC money I would start guys there you have it sometimes it makes sense to bootstrap again doing well the right sizing a business Kyra talent again really serving universities directly making the admissions process more fair more holistic easier for students to apply especially with things like video essays which is the brighter and brother founded in 2012 team of 20 people all based mainly in Toronto of about 300 universities they're working with mostly brick and mortar doing now about 500 grand per month in revenue that's up seventy-five percent year over year which is obviously healthy they raise eight million bucks net negative twenty percent terms of revenue churn annually super healthy numbers Emily thank you for taking us to the top great thank you so much