How ScholarshipOwl Reached $6M Revenue and 20,000 Premium Students While Staying 100% Bootstrapped (Interview with CEO David Tabachnikov)

Introduction and ScholarshipOwl Overview

Nathan Latka

00:00Scholarship Owl is helping large brands like Samsung connect with college students or around the college student age. He also helps 20,000 college students generate and get access to over $1,000,000 of scholarship revenue. That's what they paid out last year alone, processing over a 150,000 sign ups per month right now. They got a robust engine. We're thrilled, obviously, that he used Founder Path for some nondilutive capital as he's grown totally bootstrapped to over $6,000,000 of revenue up

00:24from 3,000,000 back in 2020. Hey, folks. If we haven't met yet, my name is Nathan Latka. I launched and sold my first software company back in 2015 and went on to write a book about it, which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies. Thank you so much for that. After the book, I launched this show and one went on to create founderpath.com. I raised a large fund to do non dilutive deals

00:51with b to b software founders. So far, we've invested in over 400 software founders totaling a $150,000,000. Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go sign up at founderpath.com for free to get your offer. Alright. Let's jump into the interview. Hey, folks. My guest today is David Abachnikov. He is building scholarship owl.com, which helps connect consumer brands to Gen Z.

01:19He's got over two decades in tech, including roles as r and d manager in engineering at Google and Waze, and he specializes in bootstrapping companies and excels as a remote team expert. He travels a lot. He's got a passion for data matching algorithms and AI development long before it was mainstream, which complements his keen interest in Gen Z and content creation. David, you ready to take us to the top?

David's Background in AI at Google and Waze

David Tabachnikov

01:41>> Yeah. Nice. Alright.

Nathan Latka

01:43You gotta you have to back that statement up. So you say you were in AI long before it was mainstream. Were you doing any sort of AI stuff at Google or Waze back in the day?

David Tabachnikov

01:51>> So we did a bit at Google and Waze. We did it quite a bit in Scholarship Hall as well for a few years now. I mean, we leverage a lot of AI to to do efficient matching and kind of, like, extract intent from kind of our audiences in the most efficient way. Mhmm. So we've been doing quite crazy AI algorithms in Scholarship Owl as well.

Nathan Latka

02:14Mhmm. Now if you guys have listened to my last interview with David, which is all the way back in 2021, you will know that Scholarship Owl is helping folks. So, you know, kids that are maybe juniors, seniors in high school looking to go into college, it helps you quickly apply for different scholarships. But he's built a massive engine where there's tens of thousands of students doing this. And then and then, obviously, brands on the other side,

02:36I e, schools and institutions trying to meet those consumers. But because, David, of the updated bio you gave in this in this podcast interview, I'm gonna guess maybe you're not only working with schools anymore. Is that accurate?

How ScholarshipOwl Has Evolved Since 2021

David Tabachnikov

02:47>> So, actually, the majority of our customers are not schools at all. So I'm gonna I'm gonna collect you on a few things. So it's like we're talking about at this point, the scholarship power has over a 150,000 students,

03:02>> college bound Gen Zs, basically, every month.

Nathan Latka

03:06They they sign up every month?

David Tabachnikov

03:09>> Yes. Wow. So it's not only, like, high school students. Actually, a lot of people who are already in college are looking for ways to, you know, pay for the next year or even things that are outside of tuition itself, things like how do you buy, you know, guest money to get to campus or, like, buying a laptop that you need for school and all those things that are kind of school adjacent. Let's call it that way.

B2B Pivot: Serving Consumer Brands, Not Just Schools

David Tabachnikov

03:34>> And today, the majority of of our customers on our b to b side like, we we launched Scholarship Haul for Business about a year and a half ago, which is basically a platform that helps businesses, like, private consumer companies.

Nathan Latka

03:49Name one or two.

David Tabachnikov

03:51>> So some Samsung is a customer of ours. We work with BetterHelp. We work with quite a few big companies. We work with

Nathan Latka

03:59Samsung and BetterHelp?

David Tabachnikov

04:00>> Yeah. McGill Hill is a customer of ours.

Nathan Latka

04:04What does Samsung want from you? What are they willing to pay for?

David Tabachnikov

04:07>> So some Samsung are looking for ambassadors. So they're kind of recruiting brand ambassadors to promote their cell phones on campus or, like, among Gen Zs in general. Mhmm. So many companies are using kind of our platform, like, the product we call scholarship campaigns, which is kind of like the best of a scholarship and an ad campaign in one to do some of them, you do it for lead generation. Some of them do it as market research.

Samsung, BetterHelp, and McGraw-Hill as Customers

David Tabachnikov

04:37>> They generate UGC with it. Like, we have identified kind of four different main business objectives that companies and brands are using scholarship campaigns to achieve.

Nathan Latka

04:49Mhmm.

04:51And so how do you charge don't tell me what Samsung specific pricing is, but what do you charge brands like Samsung to access your your student base?

How Brands Use Scholarship Campaigns

David Tabachnikov

04:58>> So the charge is basically cost per application. So it's a result based cost depending on how precise it is, how targeted it is, and, you know, like, what are the actions that the consumers need to do in order to to apply. So it kind of ranges roughly between, like, dollar 20 to $30 per application, depends on on those metrics and so on. And part of that of that budget goes towards promoting the campaign itself, and part

05:33>> of it goes toward a scholarship that goes to the students. So kind of that that is split. And we take care of, like, the whole process of earning the scholarship. Like, we have our own kind of five one c fee entity that helps make it tax deductible. I mean, when was the last time you heard of a marketing campaign that actually gives you tax benefits? Right?

Nathan Latka

05:54Yeah. Sign me up. I'm ready to go. This is incredible. So how many brands like Samsung or Better Health now pay you on a monthly basis to get at least one application?

David Tabachnikov

06:03>> So on a monthly basis, we're talking about 50 blends. But on a yearly basis, it goes, to 400 because, like, some of them are seasonal, some of them are throughout the whole year. Depends on the on the goals that the brand is trying to achieve.

Nathan Latka

06:19Mhmm. How do you manage I mean, that's a big flux. So how do as you're building a company and a remote team, and I'd love to hear how many full time employees you have today, I mean, how do you manage sort of hiring, scaling up or down based off cash inflows from brands that are very seasonal?

David Tabachnikov

06:34>> Well, we don't like, it doesn't change that much. Right? I mean, at the end of the day, we still have a pretty stable ARR, and we have two revenue sources. Right? We have the premium tools for the students, like a subscription business on one side. And the other side, we have the b to b side, which generates revenue from the brands and the companies.

Nathan Latka

06:55And what's the split? Is it fifty fifty revenue split?

David Tabachnikov

07:00>> It's today, more more of it comes from the consumers, but it's quickly catching up, like evening And

Nathan Latka

07:10what do students pay to use your subscription tools?

David Tabachnikov

07:14>> So on the on the consumer side, on the student side, we basically offer many tools that help them kind of highlight where their highest chance of winning a scholarship is, like optimizing the application process, adding a bunch of transparency into that. They pay $15 a month for the usage of the of our premium features. Mhmm. So, like, things like they know like, an applicant count. Right? They know exactly how many other people apply to a specific

B2C Subscription: $15 Per Month Premium Tools for Students

David Tabachnikov

07:44>> scholarship, so they know to invest their time where they have the highest chance of winning. We give them a lot more kind of tracking over the application process itself so they know that the brand on the other side actually viewed the application and actually, you know, accepted it or who who is the winner. We make sure they know that there is a winner. Right? Like, in the scholarship space, there's quite a bit of, like, scams and

08:09>> lack of transparency and all of that. So we kind of our premium product takes away all of that. You know exactly what happens. What are your chances? You're yeah. Predictable. Like, we make the whole process predictable, transparent.

Nathan Latka

08:21Yeah. Nate Nathan, you applied for the Samsung scholarship. There are 983 other applicants. The winner is gonna be announced on March 25, and I get an email March 25 that says congratulations or uncongratulations. You didn't win, but here's the link to Sammy's LinkedIn profile. Sammy won from Samsung. Boom. Go Exactly. Click here to apply to other scholarships.

David Tabachnikov

08:39>> Exactly. But more than that, we actually optimize the application process itself. So one of our features on the consumer side, we call it kind of like the Netflix of scholarships. Right? When you apply to a specific scholarship, some scholarships require quite a lot of different, like, application process, maybe an essay, maybe, like, a social media post, maybe, like, a video submission. So we analyze all of that, and we find other scholarships that, you know, you can

09:04>> apply very quickly and easily too as well. And then we can batch them together and apply you to many different scholarships at the same time.

Nathan Latka

09:12Sounds smart. And kind of you know, we basically

David Tabachnikov

09:16>> we triple kind of the time that it takes you to apply. We kind of

09:23>> bump the efficiency, like, to three times more. Right? Like, the same you invest the same time to not only we kind of find all the scholarship that you you can apply to that are perfectly matched to you, and that's where AI comes in. Right? We use a lot of matching, a lot of algorithms to extract a lot of this data on

Nathan Latka

09:39So when you say there's a 100 when you say there's a 150,000 applicant or or consumers signing up each month, could one person count multiple times if they're applying to multiple scholarships, or is that unique? 150 unique

David Tabachnikov

09:49>> 150

Nathan Latka

09:50unique sign ups?

David Tabachnikov

09:51>> 150 students, not 150 applications.

Nathan Latka

09:53I see. So how many applications are you processing in in a given month now?

David Tabachnikov

09:58>> So I think it's about

10:02>> I don't have the exact number, but it's in the millions.

Nathan Latka

10:06Well, it's also seasonal. Right? Maybe we should ask for total 2023 stats. How many total applicants like, applications through all 2023?

David Tabachnikov

10:13>> So it is seasonal. Like, q one is the highest, q four is the lowest. And I I can tell you that students in general won over a million dollars in scholarships last year.

Nathan Latka

10:25Wow. Okay. Over so you paid out through Scholarship offer over a million dollars of scholarships through your programs. We

David Tabachnikov

10:31>> paid, you know, like the bands that are publishing scholarships paid to us a million dollars. Yeah.

Nathan Latka

10:38And then then you pick winners of students and wire that out to students?

David Tabachnikov

10:42>> Yes.

Nathan Latka

10:43I see. Okay. Do you keep a cut of that?

David Tabachnikov

10:45>> Or Student or the or to the college depends on the kind of specific scholarship and so on. But, generally, yeah, we we wire it out out to the to the recipient, whatever is the the student directly or the college depends on the specific Yeah. College.

20,000 Premium Subscribers and $6M Revenue

Nathan Latka

11:01And and how many students today are paying for your premium tools, like applicant tracking, things like that?

David Tabachnikov

11:06>> So we have over like, we have around 20,000 students now on the premium.

Nathan Latka

11:11Okay.

David Tabachnikov

11:14>> And those are the ones that are paying on the premium side.

Nathan Latka

11:17That's great. So when you say ARR is pretty stable, are you comfortable sharing what ARR is today all in?

David Tabachnikov

11:23>> So I can say the total revenue of last year was 6,000,000 in total. Great. That's great.

Nathan Latka

11:31What's your goal for this year? What are you trying to grow to?

David Tabachnikov

11:34>> So we're aiming for 10,000,000 this year.

Nathan Latka

11:37It's a And how are gonna get there? Charge brands more or sign up more more consumers?

David Tabachnikov

11:42>> No. The the focus is more to work with more and more companies and scale that side of the business.

Nathan Latka

11:47Mhmm. This is great. Can we talk a little bit more about how you capitalize the business and maybe touch on Founder Path briefly?

David Tabachnikov

11:54>> Sure.

Bootstrapped Growth and How Founder Path Fits In

Nathan Latka

11:55Okay. So are you bootstrapped or have you raised traditional equity?

David Tabachnikov

11:58>> No. We're we're 100% bootstrapped. Yes. I see your smile.

Nathan Latka

12:03I love it. I love it. So you own a 100% along with your team?

David Tabachnikov

12:06>> So me me and my partners own a 100% of the business, and Founder Path actually helped us a lot. Like, what I'll walk you a bit to kind of the the life cycle. Right? Every student that comes to the platform, they get, like, a seven day free trial of the premium features. Right? So we get our consumer audience from many different channels. It used to be quite a bit from Google, but with all the changes that

12:34>> happen with ad networks, we scale Google down, and we make most of our traffic from from affiliate networks, from all kind of promotions, from different from running scholarship campaigns ourselves and so on. But there's a pretty big gap between kind of our cost of acquisition or the point of acquisition and when we

12:57>> bring you know, when that revenue comes back to us, essentially. Right? And and because we're trying to scale very quickly and the business is very seasonal and it's subscription business, a large part of it, that means that we need to pay for the traffic today that we will return part of it in a week to two weeks and another part in four months.

Nathan Latka

13:21Mhmm.

David Tabachnikov

13:22>> So how do you sponsor that or how do you pay that when you're BoostUp company? Well, that's exactly where the founder path comes in. Right? We basically take the money today of what we would make on that student within the next year and buy the traffic now and, you know, make that money throughout the next year.

Nathan Latka

13:41Mhmm. Are you comfortable sharing how much you took from Founder Path?

David Tabachnikov

13:50>> We took from Founder Path I'm comfortable showing the kind of the last chunk, and we're gonna take another one this year.

Capchase to Founder Path: Choosing Non-Dilutive Capital

David Tabachnikov

14:00>> So last time, we took 300,000, and we plan to take another 100 to 150,000, actually, in the next few weeks.

Nathan Latka

14:09Are you are you comfortable talking about the deal we did together back in 2021, or you don't wanna go back that far?

David Tabachnikov

14:14>> No. The company has changed a lot since then. I I'd rather not talk about what was done because it was a very different kind of profile.

Nathan Latka

14:23Do you remember the use of capital? I understand that business has changed, but do you remember or are you comfortable sharing sort of the use of capital back in 2021 and how that helped you change or pivot the business?

David Tabachnikov

14:35>> So we went to a pretty major restructuring back then, but I don't wanna go into the the details of that too much.

Nathan Latka

14:44Okay. Great. So fast forward to today, you're using capital to invest in obviously paid ad spend. You've grown the business. So you're at 6,000,000 today. Do you remember what revenue was back in 2020, 2021 when you first started at Founder Path?

David Tabachnikov

14:58>> Yeah. It was was less than 3,000,000, I think, on that number.

Nathan Latka

15:03Mhmm. Okay. So you've grown the business from three to six without having to give up equity. What is that like, how do you think about a lot of David, lot of founders, like, don't think about what their equity is worth. I mean, how do you think about the sort of equity you've been able to save by using venture debt?

David Tabachnikov

15:17>> So I want to add that it's like, the goat from three to six, I mean, while it's quite impressive in an in an all of itself, What for me personally is even more impressive is that we could without taking external, like, you know, like, equity funding, we were able to launch a completely new product, build new development teams, build a sales team without any, you know, without giving out any equity for funding. And that's a huge

15:51>> win. Right? Even if we decide eventually to maybe go, you know, and bring in VC funding, our value now is so much higher. And I in a negotiation point, if we decide to go to the the VC route at some point, we're not coming from a point of weakness when we say, well, if we don't raise now, we will die. We'll not die at all. We come from a point of strength when we say, well, this

16:16>> is what we did with no VC funding. We know we can scale it a lot more. Now are you as an investor gonna bring us value as a strategic investor or, like, to your connections or your knowledge and so on? Because if it's just capital, we don't need you. That negotiation is so much more powerful. Right? Especially con like, if you look at the last three years, like, I know a lot of entrepreneurs entrepreneurs who lost

16:42>> their companies or, like, who failed or, you know, or had to do a down round because they didn't hit their projections or whatever. We never worried about any of this. This is, like, such an amazing place to be.

Nathan Latka

16:55I can feel it in your energy. You're not, you know, you're not stressed. You're building a sustainable company. We obviously love that. I also know, David, you you I mean, you did your research. You know about the different venture debt options. Not asking you to obviously throw anybody else under the bus or even name them. But when you looked at all the options, why did you decide to go with Founder Path, and what did you like

AI Roadmap: Precision Targeting and Intent Detection

Nathan Latka

17:11or dislike about the process?

David Tabachnikov

17:14>> Well, yeah. So I did a lot of research. I looked at, I think, at all the competitors. And I am comfortable showing that initially we went with the Capchase before Founder Path existed, I think, or when it was just about starting. And I think the like, working with Founder Path and, I mean, with you and your team was

17:39>> it's it's so much more comfortable, and it's kind of such a much more open communication. And on top of that, Found. Path gives a lot of additional value, like SaaS Open, like all the things around. Like, it doesn't feel like working with a banker. Right? Because it's not.

Nathan Latka

17:56So I shouldn't start wearing a suit.

David Tabachnikov

18:01>> I mean, you have the proper fintech suit. Right? So that's

Nathan Latka

18:06That's awesome. Well, no. Listen. We're we're enjoying, obviously, supporting your growth and love how you're sort of pivoting and growing the business. What do you most before we wrap up with the famous five here, how do you plan to continue to use sort of AI to help more students earn more sponsor revenue and more brands connect with the right applicants?

David Tabachnikov

18:26>> Alright. So we're already very good when we need, you know, to do very wide campaigns, when, like, anybody can apply and and that's it.

18:35>> The thing is that on those campaigns, when you have, like, 50,000 applicants to to a specific scholarship campaign, like, the chance of this like, the student of winning that is, like, one out of 50,000. Right? It's chances are very small. On the other hand, our engine today is able to kind of target a student down to, like, a specific zip code. Right? So anybody can run a a campaign on our platform like the you know, we

18:59>> have local dentist offices. We have, like, a law office in Texas running a campaign to, you know, bring in students, like, adding a scholarship. Because, essentially,

19:11>> Gen Z is kind of the level that is the point where the first decisions are being made. So somebody who chose the loyal vendor, like, in in the first year of college, they're gonna stay with them for thirty years. I mean, the value is crazy. And what we're working constantly, like, constant chase is to improve our algorithms and matching to be as precise as possible. I'd like to pinpoint the the, specifically, the audience that you are

19:39>> looking at, knowing when the person is about to go to the you know, to think of a lawyer and having them apply to a scholarship at that point. So

19:52>> the it sounds simple, but it actually pinpointing that and and kind of detecting intent on that level is extremely complicated. Mhmm. And that's our constant chase, kind of constant improvement on that. Yep. We have quite a few kind of, you know, AI systems in place if if the brand wants to earn a scholarship with an essay, which we don't recommend ever. Don't earn essays because nobody likes to review them and nobody likes to write them. Actually,

20:19>> we we have a saying inside that the only like, brands hate reviewing essays almost as much as students like, like, writing them, like, being writing them. But the point is that we're trying to kind of make that process as easy for the brands to kind of review and and award the funds and all of that and as easy for the student to apply as possible. So Yep. For the majority

Famous Five: Books, Tools, and Life Advice

Nathan Latka

20:44We'll follow we'll follow along closely. You gotta come back on in a year and give us an update, but we're out of time today. Let's wrap up here with a famous five. Number one, your favorite book.

David Tabachnikov

20:52>> My favorite book. I listened to read the the greatest the greatest CEO within, and I absolutely loved it.

Nathan Latka

21:00Number two, is there a CEO you're following or studying?

David Tabachnikov

21:05>> Can I say the big guys? Like, I'm a big fan of what Satya Nadella has been doing lately.

Nathan Latka

21:10Yeah. Yeah. That's good. Number three, what's your favorite online tool for building Scholarship Owl?

David Tabachnikov

21:15>> My favorite online tool for building Scholarship Owl?

21:19>> That might be a a bit you know what? I'm go I'm gonna go with the simple

21:25>> I'm a huge fan of Mixed Panel.

21:28>> Yep.

Nathan Latka

21:29Number four, how many hours of sleep do get every night?

David Tabachnikov

21:31>> How many hours of sleep? I get five to six.

Nathan Latka

21:34Okay. And situation, married, single, kids?

David Tabachnikov

21:37>> Engaged.

Nathan Latka

21:38Oh, congratulations. That's very exciting.

David Tabachnikov

21:41>> Thank you.

Nathan Latka

21:42Alright. And I think you had a birthday. Right? You're 37, 38 now?

David Tabachnikov

21:47>> I have a birthday on the April 29, so next month, and I'm gonna be 40.

Nathan Latka

21:52Okay. Well, man, engaged, 40, you're breaking 6,000,000 of revenue, bootstrapped. You're living the life, man. Last thing, something you wish you knew when you were 20.

David Tabachnikov

22:02>> Something I knew well, I wish I knew founder Peff when I was 20.

Nathan Latka

22:07Guys, there you have it. Scholarship Owl is helping large brands like Samsung connect with college students or around the college student age. He also helps 20,000 college students generate and get access to over a million dollars of scholarship revenue. That's what they paid out last year alone, processing over a 150,000 sign ups per month right now. They got a robust engine. We're thrilled, obviously, that he used Founder Path for some nondilutive capital as he's grown totally

22:30bootstrapped to over $6,000,000 of revenue up from 3,000,000 back in 2020. David, thank you for taking us to the top.

David Tabachnikov

22:37>> Thank you so much.