How LearnWorlds Reached 4,500 Customers and Raised $32M From Insight Partners After Growing 200% in 2020 (Interview with Panos Siozos)

Introduction and Company Overview

Nathan Latka

00:00Hey folks, my guest today is Panos Siozos. He's the co

00:02>> founder and CEO of LearnWorlds, Cyprus based e learning company that's transforming self paced learning through hassle free textual and video based learning. He co founded the company in 2014 during a period which the economics of both Greece and Cyprus were not conduct ive to new ventures. LearnWorlds now a multimillion dollar SaaS company based in 70 countries with a team of over 30 employees. Panos, are you ready to take us to the top?

Panos Siozos

00:24Yes.

Nathan Latka

00:25>> Okay, very good.

Panos Siozos

00:26In fact, we're even bigger right now. We're at 75 people right now and growing. Online courses are super hot. The past few months have been amazing for us.

Customer Count and Pricing Plans

Nathan Latka

00:37>> How many customers do you have?

Panos Siozos

00:39We have over 4,500 customers right now.

Nathan Latka

00:43>> Okay, and what are they paying for?

Panos Siozos

00:45If we are a software as a service people start by our lowest package is $29 per month and you get a full blown online school which you can use to sell online courses. Our most expensive package is at $799 per month.

Nathan Latka

01:00>> $799 Yes. What does the average customer pay per month?

Average Revenue Per User

Panos Siozos

01:05Average customer is around $120 right now.

Nathan Latka

01:10>> $120? Mhmm. Can I take 4,500 customers times one twenty? You're doing about $540,000 a month in revenue?

Revenue Discussion and Lines of Business

Panos Siozos

01:18No. No. That's not precise. There are some some other, like, lines of business, a mobile applications that we're selling and other stuff which make it slightly bigger.

Nathan Latka

01:29>> So you're doing more than 500,000 a month in revenue?

Panos Siozos

01:31Yes. Yes.

Founding Story and Co-founder Background

Panos Siozos

01:32>> Okay. That's great. What's the backstory here? When did you launch?

01:36We launched originally back in 2014. We have a asset team, three co founders. We go way back in e learning. I have a PhD in e learning. So we started first working together as scientists within a university setting, you know, creating platforms for the academia, publishing papers, but didn't have much entrepreneurial capacity or understanding back then. So after a few years of working in the academia and doing different stuff, we got together. We were really believing

02:04in the future of e learning and that the future of e learning is the future of learning is online, actually. So we wanted to create a platform that will take the state of the art of e learning, the things that we were studying and bring them at the hands of actual trainers and creators and and folks who want to monetize their their audience. This is how we started.

Equity Split Among Co-founders

Panos Siozos

02:24>> And and tell me a little bit more about how you guys decide to split equity in the early days. It's always a tough conversation.

Nathan Latka

02:32Well, for us, it wasn't a tough conversation. We've known each other for twenty five years. We've done several projects. And we always even when we were students, we had a joint pot, we were doing like projects and had a, you know, a little piggy bank for purchasing books, going to conferences, doing even like fun stuff together. So we split evenly. Was

02:58>> So four co founders, you each took 25? Okay.

Panos Siozos

03:03We're three co founders, we split evenly. In the first couple of years, we brought in our very first couple employees, and they got a very small part also of shares, we couldn't pay them proper salary back then nobody got a salary. So they also got into the business with some like with some equity.

Nathan Latka

03:23>> Understood. Now, you're doing if you're doing more than $500,000 a month today, what were you doing a year ago, so we can look at your growth rate?

2020 Growth Rate and COVID Impact

Panos Siozos

03:31Well, in our growth rate in 2020 was about 200%. So we were already growing by about 100% per year before that, that was the average, I guess of the entire online course industry. It's not just us other businesses as well. But 2020 COVID has been a catalytic phenomenon. Overnight, all learning became online, people started to try to find the solutions to stay online, get in touch with our customers, get in touch with our students. They were

04:05trying to find emergency solutions. So it was obviously a breakout year for us, and the growth was about 200% for 2020, and it's continuing at a very high percentage.

Nathan Latka

04:16>> So 200% year over year growth and you're doing more than 500,000 a month today. Mean about a year ago you were doing call it $250,000 per month in revenue, something like that?

Panos Siozos

04:24I think it was less than that because of the Less than that, wow. 100, yes.

Team Breakdown: Engineers, Support, and Sales

Nathan Latka

04:28>> Okay. Very cool. Now you talk to me a bit more about your team. There's 75 people today. Is that right?

Panos Siozos

04:34Yes.

Nathan Latka

04:35>> And what's the breakdown? How many engineers?

Panos Siozos

04:38We got about 30 engineers overall or in the product team, let's say, because they might include product managers and people who are like or working also on the on the back end and DevOps and all this stuff. We have about 25 people that are working on customer support and customer success roles. Very few people that are on the admin, we're quite lightweight in terms of our processes, because of all the like everything super automated as much

05:09as we can, and the rest are marketing and salespeople.

Sales Rep Quota and Product-Led Growth

Panos Siozos

05:12>> And Panos, how many salespeople do you have that carry a quota?

Nathan Latka

05:17Right now, we have five salespeople.

Panos Siozos

05:20>> Five sales reps. Very cool. And what is their quota?

Nathan Latka

05:24This depends because we are working on different segments, different geographies. So it's not a unique number for all of them. And also, would say that less than half of our pipeline comes through the salespeople. We're very much a product led company. So more than half of our funnel is automated people

05:45>> Understand that Panos, but there's a lot of people with product led growth that are trying to hire their first sales rep trying to figure out what quota to put them on. So I'm trying to learn from you here. What quota did you give your first sales rep?

Panos Siozos

05:57This is something that we cannot share. And this is something that as I mentioned, depends on the geography we are we have customers in over

06:05>> Where was the first geography you hired a sales rep for?

06:08It was The US.

06:10>> Okay. And how did you you don't have to share the exact I guess quote if you don't want to share that. But what ratio did you have between like what the full on target earnings a sales rep could earn relative to his or her quota?

Nathan Latka

06:21It's about 50%. So it's 50% salary and 50% is the commissions.

06:29>> Now my question is how much higher is the quota target relative to what their full pay is if they hit quota?

06:36It's about 50% higher.

Panos Siozos

06:41>> So you will see if I joined you today as your first sales rep, my full earnings would be about $200,000 If I had a $250,000 quota or $300,000 quota, that's 50% higher.

Nathan Latka

06:54I'm not sure how you break that down because that's not

Panos Siozos

07:00how we calculated things initially.

07:03>> Panos. That's That's what I want to learn. Give me give me the exam. That's I'm trying to learn here. You're making me more

07:07Yeah, in our in our case, just since we are learning here and the thing is, like, when we got our first people, we didn't have fixed numbers, we created the numbers along with the people who got on board on sale. So it's a it's a role that we didn't have before. Like the platform was selling itself, it was purely product led. So once we hired a few people, we started measuring what impact they had on the

Nathan Latka

07:33conversion rate, like how many of the funnel, what percentage of the funnel wanted to be sold to because not all of them want. And once we started getting this extra boost that the salesperson would add into the funnel, the conversion rates, then we started negotiating with them the commission. So it was something that we built along. There isn't once you have a company that's learning and growing and the numbers are not stable, you don't

08:06go out with like with a specific quota. This is something that we created along with sales people.

Panos Siozos

08:15>> How many demo calls do you want your account executives doing today on a monthly basis?

08:19Our account executives do about 20 calls per per week. That that's Per week.

08:26>> Okay. It's eight call it 80 per month. And and how many do they do you hope they close?

Nathan Latka

08:32We hope that they close around 30% of those.

Panos Siozos

08:35>> Okay, got it. So 80 calls per week, 30%, got it. So you're looking at like 20, you know, maybe 20 new sales per month per rep, something like that?

Nathan Latka

08:42Yes, but in our case, again, I guess it's this is unique for every company with our lifetime with our customer lifetime value and average contract value. These are usually the biggest customers and the most like the most complex product, the most complex cases, the most complex contracts, I would say.

09:02>> What your lifetime in dollars today?

09:06Sorry?

09:06>> What is your lifetime in dollars today? Lifetime value?

Panos Siozos

09:09That's not something I can share. Let's say that the as I mentioned, our like usually the people that go to our salespeople and want to be sold to and go through the sales process. Usually they buy our middle plan, which is at $2,500 per year.

Nathan Latka

09:31>> Yeah, what I'm really getting to is product led growth, lifetime values really should be through the roof if they're sticky, right, if your products keeping customers in it. So how sticky is your platform? What was churn over the past twelve months?

Churn, Retention, and Stickiness by Plan

Panos Siozos

09:43Churn is close to retention is close to 100%, slightly less than 100%. So it's not ideal. We are trying to get it with expansion that we are adding into the product. We're trying to get that above 100%, which obviously this is like an amazing scenario. We're close to that and working through the product to get to that level.

Nathan Latka

10:05>> Before

10:08>> yes, sorry. Just I I wanna I just just because we're short on time, wanna hyper focus just on churn. Before you add back expansion revenue to try and get above a 100%, what is just gross churn before expansion?

Panos Siozos

10:19Yeah, it's around 90%.

10:22>> Okay, so retention annually is about 90%. Yes. Got it. So you're churning 10% annually, you're then expanding another maybe 5%. So your net dollar retention now is called like 95% with goals to get above 100.

10:34Yes, yes. I see. As with any product with the different plans, you have different retention rates, of course, in lower plans where you have newbies and people who are just starting out the for us, the lower plans are effectively, you know, loss leaders, we're trying to give them an easy ramp into the platform, get them to start to use the tool and get into online courses. With the bigger plans, obviously, you have bigger teams, SMBs usually

11:01who have already huge content, huge audiences, which you're trying to monetize. So the stickiness there is unique, because once you load a few dozen 1,000 customers onto a platform, it's extremely difficult to switch to a different a different tool. So the stickiness there is almost 100%

Bootstrapping History and the $32M Insight Partners Round

Nathan Latka

11:19>> for Panos, have you and your buddies back from 2014? Have you guys decided to bootstrap the company or did you decide to raise?

Panos Siozos

11:25No, no, we raised we had a we were bootstrap for several years, we had a small round of about 1,000,000 Euro two years ago. And just last week, we announced a funding round of $32,000,000 with insight partners, who is an amazing partner for us, they've invested now they're invested in, Udemy, Pluralsight in the past, had invested in Twitter, Shopify. So they know both e learning and e commerce very well. And we find them amazing partners

11:57for fund for funding and continuing the next chapter of our growth.

Nathan Latka

12:02>> You've decreased your optionality by raising 32,000,000 from someone like index, you really have one path and that is growth at all costs. In other words, you and your buddies couldn't sell the business now for $100,000,000 and take $30,000,000 paycheck and go sale off into the sunset. Why do you decide to decrease your optionality by raising from traditional VC like this?

12:19First of all, it's Insight partners. It's not index.

12:22>> Sorry, Insight.

Panos Siozos

12:23Yeah. So it's not a traditional VC where

12:26>> insights a traditional VC Insight Ventures is a very large traditional VC firm.

12:30Every year in private equity. So their

12:35goal is not always you know, growth at all costs, they can be very patient in their investments, they hold investments for several years. So it's not and the goal here is to create a multi billion dollar business. The potential now in e learning is absolutely immense. Everybody through this past year, everybody has realized that the future of learning is online. We see

Nathan Latka

12:58>> Is that true? Is that true? Or was that because COVID that was the only option and so everyone saw artificial growth numbers?

Panos Siozos

13:06Well, this is something that I've studied very, it was also part of my PhD, this is something that we have been studying for years. E learning always was a revolution always five years ahead. So you never saw the true potential of e learning always something was missing. Twenty years ago, it was bandwidth fifteen years ago, it was something else. What has happened now was totally, totally catalytic to how ingrained e learning is to everything we do

13:38about just to give you a small example. A few months ago through the pandemic about 1,700,000,000 students were using one form or another of remote learning either fully

Nathan Latka

13:51>> online or Panos another because they have to. Schools were closed. My my question is simply, in a world where COVID doesn't exist, does e learning keep growing as fast as it did the past twelve months? I think it's a very valid, fair question.

Panos Siozos

14:05It's absolutely it's a great question. It's a question that we always try to validate every day. For us, it's clear and for our customers, it's clear and even as COVID subsides, we've seen that the trend continues. There is no future at least in the next two, three, four years without COVID that the business that wants to train 400 employees will get them into a hotel for five hours of PowerPoint, there will be a riot people, businesses

14:32and professionals have discovered there are so much better ways to learn much more efficient, much more effective from the comfort of your house without breaking the bank, being able to learn skills at the more interactive, more engaging way I understand better user efficiency. That's something that people realize and we see that the trend continues even this year despite all the extra outbreaks of the pandemic.

Nathan Latka

15:00>> Yeah, well, I sure hope the growth obviously continues. You've raised capital now, you can really get creative for future product development. Now, with the 32,000,000 was all of that going into the business or were you guys able to offer some early liquidity to early employees you brought on who were incentivized with equity?

15:16There was some like we had an early investor,

15:23not all of it goes into the business, but so there is some distribution with this funding.

15:32>> That's great. And look, sometimes when folks like you and your buddies get, you know, $5, $10 million, you know, out of a round, it enables you to say, you know what, I'm good, I'm set for life. Now I can go for the billion or multibillion dollar business. The reason I bring that up is because again, you can't now sell for a $100,000,000, right? You may have done that two years ago and you would have made a bunch of money.

15:51>> You can't do that now because liquidation preferences, right?

Panos Siozos

15:55That wasn't our objective to ever sell and go out of the business. We are feeling very passionate about what we do. We've been dealing with e learning for the past twenty five years. And we found ourselves for the first time at the position where we have not only the vision and the plan about what to do, but also we have the resources. So a few years ago, when we were a bootstrap company, we were trying to

Nathan Latka

16:17implement the state of the art what we had in mind with very limited resources and with lots of obviously, compromises at everything we did. Now we found ourselves in a position where we every day, it's an amazing experience to be able to help people all over the world, launch amazing online courses, launch amazing learning experiences, get lots and lots of money out of what they're launching, be able to escape nine to five, create their own business,

16:45create their own space in the world and be successful. So for us, this is a dream come true, actually. So with the right resources, with the right partner, obviously boosted by the tailwinds of COVID, which will hopefully go away soon. Will this gives us a great platform to build on top create an amazing product and help as many people as possible discover what is what is possible with with online courses.

Valuation and Minority Stake Discussion

Nathan Latka

17:11>> Panos, when you announced the deal last week, so you raised $32,000,000, what valuation did you raise on?

Panos Siozos

17:17That's not something that we can announce, but the the the investors wouldn't be happy with that.

Nathan Latka

17:25>> Most it's well known most Series A's, you know, you're selling 10% to 20% of the business. Is it fair to say you were sort of in that average range?

Panos Siozos

17:33Well, it's not too far off. So InSight invested 32,000,000 for a minority stake in the business. Let's keep it at that.

Famous Five: Books, Tools, and Personal Life

Panos Siozos

17:42>> Fair enough. All right, let's wrap up here with the famous five. Number one, what's your favorite book?

Nathan Latka

17:48Oh, it's a Hitchhiker's Guide to the Galaxy.

17:51>> Number two, is there a founder you're following or studying?

17:54A founder that I'm studying?

17:56>> Or CEO?

17:58Yeah,

18:00Not not not particularly. I'm always amazed by the job that the guys over at Stripe are doing and also with Tobi Lütke over at Shopify. These are some great cases, but we always try to create forge our own path in what

18:16>> Number three, what's your favorite online tool for building the business besides your own, obviously?

Panos Siozos

18:22I think I have to say Zapier. It's something that can it can really it's like the glue of the Internet. We just launched also an amazing integration with them. And we see also from our customers that it's one of the tools that it really saves them lots and lots of time from them and from their VAs. It's an amazing tool.

18:40>> And how many hours of sleep do get every night?

Nathan Latka

18:43Hours of sleep? I would say now with the funding and everything, I would be happy to get about five, but that's not our normal, that's not viable, obviously from the long term. So hopefully now that we have announced, and we're going back into, like getting out of the fundraising mode and going back into building mode and expanding, hopefully things will be much better right now.

19:05>> How long were you in fundraising mode? How long did the full process take from first call to term sheet to closed?

Fundraising Process: Seven Months and 60-Plus VCs

Nathan Latka

19:11It was was we took us about seven months, but not because just with this investor, we had been flooded by incoming requests from VCs, everybody was looking into online courses, we I would never imagine that we would be in such a position like to fend off VCs with a bit them back with a stick. So in the past few months, we talked with, I guess over 60 of the top VCs in US and Europe, who were

19:42trying to find the right I discovered I didn't know that that money can be had cheaply like investments can be can be found. We weren't in such position before COVID e learning wasn't as sexy. There were lots of investors around, but overnight, e learning became something like AI plus Bitcoin, whatever. What

20:05>> month did you sign the term sheet and how many months ago is that?

Panos Siozos

20:10Term sheet was around April. Okay, got it.

Nathan Latka

20:15>> So not too many, that's actually pretty quick then, not too bad there. Last set of questions what's your situation, married, single, kiddos?

Panos Siozos

20:23Oh, I'm married with a daughter.

Nathan Latka

20:27>> Very cool, and how old are you Panos?

Panos Siozos

20:29I'm 44 by now.

Nathan Latka

20:31>> 44 years young. Last question, what's something you wish you knew when you were 20?

20:36Sorry, I didn't get that.

Panos Siozos

20:37>> Something you wish you knew when you were 20 years old.

Nathan Latka

20:42Well, not much. I think I knew the things that I had to know for that, that were good enough for that part. Probably if I knew some things earlier, wouldn't have been the same. So I'm not trying to to change anything in the in the past.

Closing Remarks and Outro

Panos Siozos

21:02>> Guys, there you have it. LearnWorlds. They were doing $200,000 a month last year in revenue. Now well over $500,000 a month in revenue. Crazy growth rate they create, help you create and sell online courses from your own website. Over 4,500 customers today who pay on average $120 a month. They just broke about $6,500,000 in terms of run rate as they look to continue to scale with a new $32,000,000 in funding. Panos, thanks for taking us to

Nathan Latka

21:24>> the top.

21:24Thanks, Nathan, for having me.

21:28One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

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23:03>> See you.