ScholarshipOwlrevenue

Introduction hello everyone my guest today is david debachnikov he is building a great company that changes the way americans pay for college by leveraging data to make scholarships more accessible and transparent he's doing this at scholarshipowl.com david you're ready to take to the top yeah so scholarship is leveraging technology to increase the chances of earning private and excellent scholarships for american students and who's paying for this the students or somebody else to use the premium features of the platform the students are paying a subscription fee which is uh 15 a month um and for that basically we save a huge amount of time for them preventing them from applying to scams or finding the scholarship that match them the best way possible and how Currently serving 15000 customers many customers do you have today we have today uh 15 000 paying customers and about 1.5 million users in general so can we take Monthly recurring revenue 15 times 15 000 you're doing about 220 000 a month in revenue so with some partnerships and other things um you know with some b2b partnerships as well we do a bit more than that okay got it and let me ask you why do students keep paying you after you help them get the scholarship dollars once you have a massive term problem so uh the thing is that um a common misconception the students need scholarships only when they're just applied to college but the reality is that students actually need scholarships more in the first year of college in the second year than in high school because many of the financial aid that they get is only for the first year and they can use private scholarships to pay for board for books and other things they need in college as well and there's no limit to how many scholarships you can earn throughout your whole education so it's still the majority of our users today are high school seniors but basically manual users are between the ages of 16 and 26 and when did you launch the company david what year so the company was launched in 2015 and and what did you what did you grow revenue to back in 2015 your first year 2015 it wasn't we didn't have any revenue we had we've been bootstrapped but we were trying to figure out what would be the model um 2016 uh we already scaled around almost 2 million um in revenue and what did you finish 2020 with 20 20 20 we finished with four million four million okay that's great and so what um have you bootstrapped the company today Raised you're still bootstrapped so uh until until now we never took any external funding uh only in generally this year we took revenue based funding in order to accelerate our growth and how much did you raise we took uh we got approved to 1.3 million out of which at this point we took only 300 000. okay and what do you like or dislike about revenue-based financing um i love that it's non-dilutive so basically we don't give out a part of the company in general the thing is that vc based funding comes sometimes with the strategic partners or with uh you know connections that revenue-based funding does not so that's uh that's kind of one downside and um when you take revenue-based uh financing you basically start uh from the beginning to think how you're gonna pay that so basically you're locked into using most of the revenue-based financing in order to generate gold on your existing model instead of kind of experimenting with ballistic models that might um cause faster goats talk to me about how talk to me about how you got your first 1000 customers you have 15 000 today that's a lot of customers how are you getting them um the majority of our customers are online onboarding so ppc affiliate network that we started building with and we scaled quite a bit of content uh marketing so basically we started pushing out a lot of content related to our space but how did you get your first how did you get the first 1 000 customers though so if you're looking for some story of us going to do it we didn't do that right so it's mostly online the standard ways well david i'm looking for your story so when you say standard tell me what you mean did you start with ads on day one uh so we started with a blog related to the the space and started like advertising that blog and it turned into uh where did you advertise the blog um mostly on other like platforms and smaller ones on connections like more like personal connections i don't understand what that means okay so the story is that the con our product didn't start as a sas product it started actually as uh blog and content related to the scholarship space itself so that kind of got a bit of traction and on top of that the product started being built so that's why the story is a little bit confusing in that sense but it's not like we built a sas product and then started like looking for customers for that yeah it's not david it's not confusing this is a great way to build a sas company it just is what it is it started off as content in a blog you built an email list then you launched a paid membership product it sounds like yeah how large did you grow your email list before you launched the sas product uh a few thousand it's not that big okay like under ten thousand [Music] yeah okay and what's the email with size today [Music] sorry six million six million people amazing and and what kinds of things are you doing with that list to drive additional growth um so what i mentioned before that we have additional revenue other than the sus side is different partnerships of other uh other scholarships promoting them to our platform other companies in the educational space like we work with around 40 different partners at the moment and what does the pitch sound like to them can you name a partner and explain to me how you convince them to market your product [Music] there's many different ways it's a bit uh hot on uh pick one yeah it's easy it's easy if you pick a pick a story a real story so um i mean a simple example is uh nielsen for example have um does market research to scholarships uh and we work with them to basically work with the students to um like to reach out to students to um nielsen and why does nielsen help promote your product do you pay them a commission we don't basically live initially revenue share and is that typical revenue share you just split it 50 50. we do it with other other organizations for example uh ones that promote our site like we have the two-sided some companies promote us and some companies we come out as well so nielsen is an example that we promote but fastback for example is somebody who promotes us that they have you know um featured scholarships and things like that that we post our scholarships though let's go to your team how many people on the team today were almost 50 people five zero and how many engineers well 20 20 engineers and so what are they building what what is the most technical thing about this product i mean first we have two products we so far we've talked only about the student side we also have uh scholarship.app which is the uh crm for brands and organizations to offer scholarships and our product actually is very tech intensive i myself i'm before scholarship power was a senior engineer at google so i come from engineering and the whole process of matching and finding the scholarships and leveraging you know they will leverage also machine learning and ai to find the ones that you have the highest chance of winning uh and there's many different ways to apply to different scholarships to uh you know to leverage all this huge amount of data that we already have in order to um basically instead of the student applying to hundreds of different scholarships we wanted to apply to three scholarships a week but he that he has the highest chance of actually earning got it so 20 engineers in order to do that yeah i need a lot of data and a lot of engineering for us how many sales employees do you have of any we have marketing in sales we don't have any uh we don't do uh enterprise sales or anything like that today so okay so no sales reps how many folks on the marketing team eight people eight yeah eight people okay and does that include like the content writers the people managing the email list these sorts of things email us list yes content writer will work mostly with external content like uh freelancers that we work with for for a long while but social media email content brand awareness and planning um all those kind of like product side of the marketing as well and talk to me about churn i imagine with consumers like this churn can sometimes maybe get high what is your turn annually so our monthly channel at the moment is about 12 percent um so yeah it's pretty high um a large part of that is because our business is extremely seasonal as well um you know like not the students do not have all the time in the year to apply to scholarships and all that and it's based labor intensive work for them even with uh with the tools but we provide them to make it easier so the majority of our challenges and david you mentioned your land you're Customer acquisition cost spending on ppc ads what does it cost you to get a new 15 a month customer um it cost me today um sixty dollars got it so that's what a four or four or five month payback period yeah how do you make that work because your customers are only staying for six or seven months so there's only two or three months of margin there for you to make money they stay seven to eight months in most cases and okay same same question though there's only three or four months there for you to make margin on so we're doing the scale got it is there any i mean are you okay with those margins and you're just going to keep driving new volume the thing is that one of the big mistakes we've done in the history of the company is basically we started scaling before we fully nailed our unit economics and in a way we kind of woke up too late for that and we dedicated 2020 into fixing that and we are now in a much better place than we were two years ago but still not well we want to be and a large part of our roadmap this year is actually dedicated to father fixing it right well david on that note let's wrap up with the famous five number one what's your favorite business book what's my favorite uh business book um [Music] i guess what to launch zero to lunch zero to launch number two is there a ceo you're following or studying um i mean from the big guys let's say somebody shy uh no google uh number three what's your favorite online tool for building a business um let's say mix panel if that's if that could be considered that of course number three how many or four how many hours of sleep to get every night many hours of sleep uh i'd say an average of uh five okay and what's your situation married single kids um living with a girlfriend no kids okay and how old are you [Music] 36 last question david what's something you wish you knew when you were 20 um i wish i knew how to monetize my site projects when i was 20. i was so involved in engineering and i never knew how to sell what i was building guys scholarshipowl.com doing 4 million in revenue this year from 15 000 students paying 15 bucks a month to identify scholarship opportunities at scale this is very much a tech play they've got 20 people on the team of 50. they've done this all bootstrapped which is great uh scaling nicely obviously there's churn here because it's students but they're okay with that because unit economics worked nicely as they looked you to scale using content ppc and their six million person email list david thanks for taking us to the top thank you very much 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 founder shares back end dashboards their expenses their revenue arpu cac 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