How Quizlet Reached 30M Monthly Active Users and Over 100% Revenue Growth (Interview with CEO Matthew Glotzbach)

Introduction and Matthew's Background

Nathan Latka

00:00Hello everyone. My guest today is Matthew Glotzbach. He is the CEO of a company called Quizlet. He joined the company twelve years ago at Google where he was most recently VP of product management at YouTube. Before YouTube, he was on the founding team of Google Apps. Matthew studied mechanical engineering at Cornell and grew up in Fort Wayne, Indiana. Matthew, are you ready to take us to the top?

Matthew Glotzbach

00:18>> I'm ready, Nathan. Great to see you. Good to be with you.

Why Matthew Left Google for Quizlet

Nathan Latka

00:21All right. I wanna know what Quizlet offered you to get you to give up the big gig at Google. How'd that work?

Matthew Glotzbach

00:27>> The biggest the biggest part of it was the opportunity to have a global impact on the way people learn. So, you know, I I loved my time at Google, you know, had a lot of success first building Google Apps and then spent five years at YouTube and doing some great things there. But the opportunity at Quizlet as the largest consumer learning platform was, you know, really the opportunity to fundamentally change the way people learn. And it

00:50>> was just too good an offer to pass up.

Who Uses Quizlet and How

Nathan Latka

00:52So tell me more about that. Give me an example of a customer or consumer that uses you guys pretty regularly.

Matthew Glotzbach

00:57>> Sure. So Quizlet is now used by over half of US college students and two thirds of US high school students. So we're literally used by almost everybody who's learning something. And the magic and the beauty of Quizlet is it's all user generated content. So whatever it is you're trying to learn, you can use Quizlet in conjunction with that. So specific examples, let's say you're a high school biology student studying for the AP biology test. You can

01:26>> use Quizlet to help you study. Let's say you got a part time job working at a grocery store. You can use Quizlet to learn all the vegetable codes at the checkout. I was just talking to somebody who graduated from West Point and he said, Oh yeah, I use Quizlet all the time. I said, Oh, what for? He said, I've been learning Farsi as part of my training. So you can literally use it for anything.

Nathan Latka

01:50And so I just sign up to work at the cashier's desk at Target. I wanna memorize the code for bananas because I feel like everyone gets bananas and I hate opening the little booklet to do it every time. Like, why would I go home that night, log on to Quizlet and like input these codes versus using my my healthy little flashcard there on the cashier stand?

The Content Library and Learning Engine

Matthew Glotzbach

02:06>> Well, the first thing is there's a high likelihood in that example that you don't have to go in and enter it because somebody already has. So Quizlet has amassed over 300,000,000 study sets of content ranging from everything from the the banana codes for Target

Nathan Latka

02:234011, by the way.

Matthew Glotzbach

02:24>> There you go, 4,011. Organic is 4,012. All the way to organic chemistry or anatomy and physiology or anything in between. And so number one, you don't have to do the work. Somebody's probably already done it for you. Number two, though, is Quizlet really helps you learn that information in the most effective and most efficient way possible. So, flashcards are a great model. That's actually how Quizlet started out is basically digital flashcards. But then we've grown from

02:52>> there where, for instance, you're not just learning bananas, you're learning all four twenty seven vegetable and fruit codes that Target has. And we're spend the time on the ones you need more time on. We're going to bring back bananas. You know that one pretty well obviously. So once we know that you've mastered it, we'll put it to the side and revisit it less often. And we're also going to create different types of learning activities, different types

03:15>> of games, different question types. We'll do that automatically in the background to give you the most optimal path to learning that information.

Nathan Latka

03:22Yeah, was very close to Virginia Tech with the guys that created Koofers. And I remember them launching a flashcard app to basically help you. And they could never get like the network effect, the velocity to kind of take off. What have you done to make that work? Could a flywheel get you spinning?

Matthew Glotzbach

03:37>> Yeah, so Quizlet has been around for over a decade now, actually going on twelve years. And all of the growth has been really organic and viral. And there's basically two things that have happened there. One is word-of-mouth sharing. So you, me, and 25 of our closest friends are sitting in the same lecture hall at university or sitting in the same high school class. And let's say you're that diligent student. You're, you know, you're studying for the

04:03>> test two weeks ahead of time. I'm that kind of slacker crammer that goes the night before. Your Quizlet content is perfect for me. It's exactly why I need to study because we're taking the same test.

Nathan Latka

04:13Can I sell it to you? But I was the guy that would take the notes and then sell the notes. Can I sell those to you?

Matthew Glotzbach

04:17>> Not yet, but that's a great idea.

04:21>> So you get that viral word-of-mouth spread. In fact, we hear all the time, especially in kind of elementary school, middle school, high school classrooms that teachers will oftentimes hear about Quizlet from one of their students and then share that with the rest of the class. They'll say, oh, you know, Sally has created the Quizlet set for next week's quiz. Here's a link to it so everybody can study It's

Nathan Latka

04:41that equivalent to like bottoms up in enterprise sales.

Matthew Glotzbach

04:44>> That's exactly right. And then the other effect that we have is we've amassed this really rich high quality set of spam free educational content. So when you do a search for that content, that back to me the night before the test going, Oh, I need to learn that AP Biology stuff. I do a search on Google and Quizlet shows up number one or number two. And I click through and wow, that's exactly what I need to

05:09>> study and I dive right in. So a combination of that viral word-of-mouth sharing as well as SEO has really driven us to the point that we're at now.

Nathan Latka

05:16Okay, so this is all great, but we haven't talked about one big thing. And that office behind you is not free in San Francisco. How do you make money?

Business Model: Freemium, Ads, and Subscriptions

Matthew Glotzbach

05:23>> So it's a freemium business model. So the vast majority of our users use the product for free and have a great product experience. We have an ads model to help offset the costs of that for the free users. And then we have subscription products that are very low priced subscriptions for both students and teachers that upgrade you into more features. So our Quizlet Plus product, which is our most popular student product, is $20 a year. That's

05:48>> a year, not a month. So less than $2 a month. And with that, you get more advanced features. Obviously, you get ads free, you get offline on our mobile apps, but you also get some advanced creation features that allow you to create and customize the content a little bit more towards you. And then we also have a teacher offering that's $35 a year that includes all of those features and gives the teachers some additional statistics tracking

06:11>> and allows them to organize their students into classes and that sort of thing.

Nathan Latka

06:15Okay, now you joined So the company was founded in twelve years ago, said, I think in 2006, you joined, you said two years ago?

Matthew Glotzbach

06:21>> That's correct. Yeah, I joined in early twenty sixteen.

Nathan Latka

06:24Okay, and what have you guys scaled to in terms of total kind of students and teachers using you on a paid account? Think you said 5,000,000 or sorry, you said half of college students?

Matthew Glotzbach

06:33>> Yeah. So we're now over 30,000,000 users using us, actively studying on the platform on a monthly basis. And that number is growing rapidly, 50% plus year on year. And we're seeing a lot of expansion internationally. So Quizlet's been around The US and has been used throughout The US and grown virally. And just really when I started on, we started pushing for international expansion. So we've localized the product into 19 different languages at this point and now

07:02>> making it available globally. And so we're seeing triple digit growth outside The US. For example, last year in Brazil, we saw 350% year on year growth as we made the product available in Portuguese and started doing some marketing there. So we're really seeing pretty rapid user adoption.

Nathan Latka

07:20Yep. And then look, back in 2009, there are many reports my research team is so good, but Dave was talking about, Hey, look, we're in the millions of revenue at this point. Mean, can you generally sense, you give me a general sense of where you are now in terms of total customers using the platform?

Matthew Glotzbach

07:32>> So we don't disclose our financials obviously as a private company, but what I can tell you is we're focused on growing both the free user base and the revenue side equally. You know, we I very much believe in building a a strong healthy business that's financially viable and sustainable. And so we're doing really well on that front. We're seeing triple digit year over year revenue growth.

Nathan Latka

07:53So just to be clear, you're doing north of a 100% year over year growth in terms of revenue?

Matthew Glotzbach

07:57>> That's correct.

Nathan Latka

07:58Okay, great. And then funding history, how much have you raised to date?

Funding History and Investor Lineup

Matthew Glotzbach

08:01>> So we've raised 32,000,000 in venture funding to date. We did our first round of funding in the fall of twenty fifteen and that was led by Costanoa Ventures and Union Square Ventures. We raised 12,000,000. And then at the beginning of this year in January 2018, we raised another 20,000,000 that was led by ICON Ventures.

Nathan Latka

08:20And why? I mean, I know once you're on the you're either kind of stay bootstrapped and do bootstrap, but once you're on the train, you have to kind of keep raising. So maybe why is a bad question, but why raise another 20,000,000?

Why Raise More Capital and the AI Tutor Vision

Matthew Glotzbach

08:31>> Well, it's really to go after the opportunity, right? The opportunity is so massive. And we've amassed this very large user base, this massive content base, which are two key assets. But then third is we have more study data on how real people are studying and learning than anyone else on the planet, right? Do over a billion learning transactions per week. And so a learning transaction is I ask you a question, you give Quizlet an answer, and

09:00>> then Quizlet gives you feedback. So we've got literally billions and billions of data points on how people learn, what the most effective and efficient paths are. And so, where we're really directing our efforts going forward and the reason we pushed to raise some additional funding to scale the efforts, obviously the international expansion that I talked about, but then also really building up our data science and machine learning capabilities to create this AI based tutor. And so,

09:28>> the longer term vision of what we're doing is taking all of that data in this great user platform and building an AI based tutor that will help anyone learn anything.

Nathan Latka

09:37And what's your team size today?

Team Growth Since 2016

Matthew Glotzbach

09:39>> So we're a little over a 100 people mostly here in SF with a few folks scattered around. And that's been growing pretty significantly. When I started, the company was right around 30 or so people. So we've more than tripled the team in the last two years.

Nathan Latka

09:54Triple the expenses. That means triple the growth hopefully too, right? Absolutely. Want to know something because I remember, again, when I was close to the Koofers guys, they always had this issue. Usually when you have a success metric, you want that to drive wallet expansion in a user, not the finale of them using your product. When I'm studying for my AP biology test and I study you and I pass and then I graduate and move on,

10:17right? Or go get a job, etcetera. You then essentially have to convince me that you've got content for me and whatever that job is that I can learn, etcetera, or I potentially churn. So tell me about your current churn and how you think about these open hooks to drive me into the next round of learning.

Churn, Retention, and Lifecycle Cohorts

Matthew Glotzbach

10:32>> Sure. And this is where I think we've got a lot of tailwind because the way the world is going, we used to be in a world where you went to school, well, frankly, our parents' generation, you went to school for twelve years, you had a high school diploma, you were set. That was a great middle class job. You were set for the rest of your life. You might do some on the job training here and there.

10:52>> Our generation, it was four year college or graduate school, right? So you go to school, you get a diploma, now you're good to go. My kids' generation, I have two daughters, 11 and 13, and I tell them, yeah, you've got it harder than I do because we're moving into a world where learning is becoming both unbundled and continuous. So you're constantly learning, right? That four year degree probably serves you for the next year or two. And

11:17>> you've got to be continuously learning new skills.

Nathan Latka

11:19Is this reflecting though in your number? I'm curious if it actually reflects itself in your numbers though.

Matthew Glotzbach

11:24>> It absolutely is. You know, we've been around long enough now that we can see cohorts and we can look at users who, you know, signed up and first started using Quizlet in sixth grade. And then when they graduated into high school, they took us with them. Then And they use Quizlet all through high school and they go to college, they take it with them. They go to graduate school, they take it with them. They go to

11:44>> the professional world, whether that be more white collar type professions, doctors, lawyers, nurses, etcetera, or more vocational or blue collar type professions. So we're actually watching people as they age up through Quizlet continue to take Quizlet along. And I think that's a big differentiator between us and what I would call most edtech companies. So I differentiate Quizlet is a consumer learning company, not an edtech company.

Nathan Latka

12:11If we, Matthew, sorry, I'm gonna cut you off. But if we just look at the student cohort on the PowerPoint, or teachers for a second, just the student cohort, I mean, what is annual logo churn or annual student churn in that cohort?

Matthew Glotzbach

12:23>> Well, hard to pin that number. I actually don't have that number kind of off the top of my head because the user base is so vast and so broad. Like on an annual basis, we believe that the overall churn in terms of you use this this year at least once or twice, and you don't use this again next year or last year, this year is very, very low. But I actually don't have that number off the

Nathan Latka

12:46>> top of my head.

12:46Okay. That's interesting. So you don't know the churn or retention data off the top of your head. Don't focus on it at all?

Matthew Glotzbach

12:53>> We look at it on a much more granular basis. So we look at our DAU over MAU obviously we look at how frequently you're using us on a regular basis, what that engagement looks like.

Paid Conversion and Monetization Strategy

Nathan Latka

13:03Okay, but daily active users, monthly active users, those are kind of code for freemium. I guess what I'm saying is maybe you've got good confidence in what your conversion rate is at certain activation metrics on your free users into paid. So you just ignore paid and just trust it'll happen if you focus on monthly active and daily active? No, no, not at all.

Matthew Glotzbach

13:20>> Obviously we look paid a lot. One of the first things I did when I joined the company was moved from the subscription model, actually wasn't a subscription. It was a one time purchase. So we put a recurrence in place, obviously, and saw renewal rates shoot up through the roof.

Nathan Latka

13:37From what to what? Quantify that.

Matthew Glotzbach

13:39>> Yeah, we don't, sorry, we don't disclose the specifics of the financials, but I can just say it was a very large jump.

Nathan Latka

13:45Okay. It's hard for me to say guys, listen, listen what he's saying though, we can't quantify this, right?

Matthew Glotzbach

13:50>> No, no, I hear you. But my advice to your viewers, to your listeners would be, you definitely need to know those metrics. You need to look at

14:00>> every step in the funnel. So we look at a free user who comes to us in a logged out state. So, a lot of users first discover us, as I said, through SEO or through a friend sharing a link. And we actually give them a great preview experience logged out. Then we look at conversion to logged in. So, now we know who you are. Then we look at activation. And what we call activation is, okay, you've

14:20>> used the product once or you've used this to study one thing. How do we become part of your regular study habits? And then we look from an active user to a paid user. I think an important point is understanding your cohorts of users. We don't try to monetize elementary school kids. My goal isn't to try to get $20 out of the app or greater. But we look at them through that life cycle and say, okay, as

14:45>> you progress with us, when you're moving into from your sophomore year in high school and your junior year of high school, that's a really big turning point. When you go to college, you just raise the stakes, right? When you're in graduate school, it's a whole different ballgame than when you're an undergrad. So we look at the life cycle and we understand each of those different types of users and take different tactics in terms of monetization.

Nathan Latka

15:05When do you think you passed, call it, a million paid students and teachers on the platform?

Matthew Glotzbach

15:11>> When did we?

Nathan Latka

15:12Oh, did you do you or is that like an upcoming goal?

Matthew Glotzbach

15:16>> I, again, probably don't can't disclose the financial side.

Nathan Latka

15:19What's your so I'm gonna assume based off what you just said, you're past a million at this point. I mean, what is the when you guys look at the paid engine you guys are building, I know you're gonna say it's activation, it's just focused on a good product, but what's the goal when you have board meetings? You're saying, hey, is it a financial goal? Is it just a quantity of user goal? Is it expand ARPU goal?

15:37What's the kind of revenue side goal?

Matthew Glotzbach

15:39>> We have three goals that we look at and we treat them, you know, it's a three legged stool that you need to keep in balance. So there's obviously a revenue goal because that's around sustainability and drives our growth, right? The way in terms of the growth of the company. I always tell my team that we need to be a profitable, sustainable business so that we can reinvest in the mission and really fundamentally change global learning.

Nathan Latka

16:02You're not profitable now today, are you?

Matthew Glotzbach

16:04>> Pardon me?

Nathan Latka

16:04You're not profitable today. I'd be shocked because you just raised so much money.

Matthew Glotzbach

16:08>> Again, don't, we don't disclose the financials.

Nathan Latka

16:10Okay.

Matthew Glotzbach

16:11>> So we've got a revenue goal.

Nathan Latka

16:12But, Matt, on. Just to clear, hold on. There's you couldn't point out a company in history, I don't think, would that just raise $20,000,000 and they just sit on it and do nothing with it. I mean, you take dilution for that. You better be spending it, which means you're not gonna be not profitable.

Matthew Glotzbach

16:25>> Sure. I know some that have. Really? So we've got a revenue goal. We've got a overall total active user goal. So we look at twenty eight day active users, which is basically have you been active in the last four So we look at that as an overall growth metric on how many people are we impacting. And then as we talked earlier, we look at an engagement goal of like how frequently are you using us. So it's

16:48>> great if you come and use us once, but if you use us twice in a month, that's even better. And if you use us twice a week, that's even better. And we know how those goals interrelate. So we understand pretty well how as you become more active, again, depending on which user cohort you're in, what your likelihood to buy is. And we also know, you know, our free users make us money as well off of ads.

17:09>> So we actually have a pretty good understanding of the value of a free user based on their activity.

Famous Five: Favorite Business Book

Nathan Latka

17:14Yep, makes good sense. Let's wrap up here with the famous five. Number one, what is your favorite business book?

Matthew Glotzbach

17:18>> So I read a lot of business books, but given the field I'm in, also read a lot of education books, which is my business. And so one of my favorites that I read recently was a book called How We Learn The Surprising Truth About When, Where, and Why It Happens. It's by a New York Times author named Benedict Carey, and I think it's an excellent survey course on how people learn. I'd highly recommend it.

Famous Five: CEO Matthew Follows

Nathan Latka

17:39And number two, Matthew, is there a CEO you're following or studying right now?

Matthew Glotzbach

17:42>> There's not really one in particular. My view is I try to stay up speed on kind of everything that's going on. And I'm very much a believer on take the best and I can learn a lot from it. I kind of try and take more of the survey course of a lot of different things. Now I will say a good personal friend of mine is the CEO of a company called SendGrid, which recently went public. His

18:05>> name is Samir Dallakia. I have a tremendous amount of respect for him. And so he's somebody I follow closely as a friend and seek advice from.

Famous Five: Favorite Online Tool

Nathan Latka

18:13Number three, what's your favorite online tool for building your business?

Matthew Glotzbach

18:17>> I'd say G Suite, formerly known as Google Apps. Now, like I

Nathan Latka

18:21said, a little biased.

Matthew Glotzbach

18:24>> Fully admit the bias, but it's a set of products that I use literally continuously both in my professional and personal life and can't imagine a world without it.

Famous Five: Sleep and Personal Life

Nathan Latka

18:34Number four, how many hours of sleep do you get every night?

Matthew Glotzbach

18:36>> The goal is seven, but too often it's closer to six, but the target is seven.

Nathan Latka

18:42And what's your situation? Married, single kiddos? I know you've got two kiddos.

Matthew Glotzbach

18:46>> Married with, with two kids. Yeah.

Nathan Latka

18:47Yeah. And how old are you?

Matthew Glotzbach

18:49>> Well, old am I? 43.

Growth Mindset and Advice to Younger Self

Nathan Latka

18:5143. Okay. Last question. What do you wish your 20 year old self knew?

Matthew Glotzbach

18:55>> You know, I was thinking about this recently because I asked somebody else. Are you familiar with the concept of growth mindset by Carol Dweck?

Nathan Latka

19:03Haven't studied Carol, no.

Matthew Glotzbach

19:05>> So there's a great psychologist based out of Stanford named Carol Dweck. She wrote a book probably about ten years ago called Growth Mindset. And it's all about the notion of understanding how we master things and that your abilities and your skills aren't fixed, they're actually malleable. And that struggle and challenge is actually that path to mastery. And I'd love to say that I knew that all along, and I've always been that way. But I read that

19:33>> book probably right about when it came out about ten years ago, and it really was game changing for me. Changed my perspective on life. I it wish would have been out when I was 20.

Nathan Latka

19:42Guys, there you have it. Always have a growth mindset. The struggle is what helps push that stuff forward. All your skills are very malleable and you can improve them. From Matthew, again, joined Quizlet back two years ago. The company was created in 2006, has since grown to helping over 30,000,000 students on a monthly active basis. That students and teachers really learn, educate themselves. Even folks that are out of the field or sorry, they're in the field

20:03already out of school, helping them. They've got folks paying, students paying, call it $20 a year, teachers paying $35 a year. Sounds like they've passed about well north of a million customers paying over a 100% year over year growth. A team of a 100 people in San Francisco and about $32,000,000 raised. Matthew, thank you so much for taking us to the top.

Matthew Glotzbach

20:23>> Thanks so much, Nathan.