SaaS Interviews with CEOs, Startups, Founders
1,000 Schools Pay them $2m for This Unique Tool
17 Mar 2021
Chapter 1: What unique tool did 1,000 schools pay $2 million for?
Because of COVID, it actually was about 2 million a year ago, and this last year it was around 1.5 million. So we did see a little bit of a fall off. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com. When you subscribe, you won't hear ads like this one.
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He is the president of Vivid Learning. He brings a wealth of knowledge about 3D from healthcare, marketing, and technology and loves learning and finding new ways to engage learners to improve learning outcomes. Tom, you ready to take us to the top? Yes. All right. Thanks, Nathan. Really appreciate you having me on.
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Chapter 2: How has COVID impacted the company's revenue?
You bet. So if folks want to follow along, it's vividlearning.com. What's the company do? We help education publishing companies create engaging 3D interactive content To improve student engagement. As you can imagine, getting, keeping kids interested right now, especially with online learning is really difficult.
And so that's an area that we can really help improve for education publishers, curriculum providers, et cetera. And who are you selling to? The teacher directly or the school system? Actually, we're entirely B2B. So we market our solutions to, again, education publishers or 3D interactive providers. And then they market our solutions to schools, universities, etc.
Who pulls out the credit card though and pays you? Superintendents at K-12 school environments or president or provost at a university. And how much on average are the superintendents paying you per month? Per month is around anywhere from, you know, we do everything on an annual basis. So it's anywhere from $2 per user per year up to $500 to $1,000. Depends on the device.
$1,000 per user per year? Yes. So if someone has 100 students and they pay $1,000 for each student for a year... Yeah, so some of our device-specific solutions, and basically you could have 100 students run through a single device, and so that's why. Oh, got it. Who is a user? When you say $2 per user per year, what do you mean by user? I thought it was a student.
Yeah, so they're typically a student, again, at the K-12 level. Our sweet spot right now is 7th and 8th grade, so middle school, and then with our anatomy solutions, they go all the way up to higher ed. So before we go and get the backstory of how you launched this thing, I mean, what is the I guess the average annual contract value one of your customers is going to be paying you?
So one of these schools might be around $1,000 per year, per building. Okay, got it. Got it. Now, what's the backstory here? When did you launch? We are a company that started in 2007. The initial solution was desktop-based. It was an installed solution running through a projector. And then students would each have 3D glasses on.
And as you can imagine, over the last 10 years, we've really moved towards more of a web-based solution. And the offerings are now, rather than one-time sales, they're all software as a service. And how many customers are you serving now today? We are at about 2,000 school districts and probably 100-plus higher ed institutions. Got it. So can I take 2,000 times the $1,000 ACV?
You're doing about $2 million a year in revenue? Yes. That's great. Congrats. What were you doing exactly a year ago so we can calculate growth rate? Um, well actually because of COVID it actually, uh, was about 2 million a year ago. And this last year was around 1.5 million. So we did see a little bit of a fall off. Um, but we also completely revamped our system over the last year.
And so that new platform architecture is something we're, we're super excited about. Basically we're, we're currently developing a YouTube like environment. except where the content will be interactive and sometimes 3D. And so that step back, if you will, enabled us to really just kick forward on some new ideas. So 2 million in 2019 pre-COVID. You take a little hit, 1.5 million last year.
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Chapter 3: What services does Vived Learning provide to educational publishers?
Any plans to raise? You know, we've looked at it. We've entertained the idea a few times, but never really thought it was necessary. I mean, we carry a significant amount of cash consistently just to make sure that we can always pay everyone and take care of our team. So I think, you know, I think right now at least we're in a good position. What's a significant amount of cash?
Any given day, you know, we're... 500 K plus, you know, on hand. So that's, that's always the goal. And why do you, why do you run the business that way? I love it. But you know, VC back folks be like, why are you sitting on that much cash? Did you have some horror story in the past that makes you a bit more conservative on the cash side or no? Uh, no, not really.
But you know, again, we just, we always want to be ahead of the curve and really have foresight on, you know, if we come up with this new idea, that's going to be expensive. Um, and we, we start to see traction. We want to be able to spend money, right? And we don't want to have to go out and raise in order to do it. What would you value the business at today?
I know you're not looking to sell, but what would you value it at? I would say we're easily a $7 to $10 million business right now. But, you know, it depends on the valuation, depends on the brand any given day. So things like that. And what's your team size today? How many folks? Seven people. Seven people. How many engineers?
Chapter 4: Who are the primary customers of Vived Learning?
We have four engineers. Okay. And at this price point, do you have quota carrying sales reps or no? No, no. It's just myself on the sort of the sales end. And then our CEO is a professor at the University of Iowa. And so he's kind of in and out. What are you? Sorry, I thought you were CEO. No, I'm the president of the company. Sorry. What does that mean? How do you guys work together?
Um, basically I've run day to day operations and then, you know, he's, he's involved with, um, bigger high level decision making, hiring, et cetera. But are you like co-founders? Do you own equity? I do. Yeah. Okay. Okay. Got it. So you guys are your co-founders. You just split roles. Yes. And I came in later, but again, brought up a lot of these ideas of software as a service.
changing to this web-based approach, things like that. And Tom, talk to me about getting new customers. What are you paying Fully Weighted to get a new $1,000 a year customer? Again, the marketing side of it is with these education publishing companies. So our spend is really just on getting more of them. But
you know, I can imagine they're spending a decent amount of money, but they're also keeping these customers for quite some time. I mean, a couple of years ago, we were worried about churn through some of these partnerships. It got down to, I think, around 85% renewal. And now we're up around 90 plus. So it's That really is my biggest concern is if we have some fall off.
And what do you pay McGraw Hill as a kickback? Basically, every one of our partnerships is some kind of a rev share. And so, you know, some of them are, it's 50-50. Others are, you know, much smaller percentage, things like that is how we try to drive the business. I love it. Makes a lot of sense. Tom, what's the next big product you guys are working on?
Really, this roadmap that we're working on is just new templates. So we want to create different slides, essentially, that will support animation in 3D, custom models, being able to compare things side by side, adding images, video, more quiz types. We want to plug in some other APIs. So imagine like a WordPress... type plugin environment for 3d asset creation.
If Chegg came along and offered you guys seven to 10 million bucks to buy the company, would you sell? No, I mean, we're really, we're so excited about what we're doing right now that it'd be a hard time. What do you think about Chegg right now? They're in the news, you know, valuations going up, but a lot of teachers say, listen, you're helping people cheat.
It's, it's, it's not a good, it's, it's a horrible value. Yeah. Um, you know, I try to, Just stay on the periphery, especially when it comes to that. I mean, we see ourselves as more of a software-based firm. And so, you know, what happens in education right now is it's tricky. I mean, I have two kids. They're online.
There is the tendency for them to be able to look up answers and things like that. But they also have access to much more information than we did. So, you know, it's a give and take. Tom, on that note, let's wrap up with the famous five. Number one, favorite business book. Right now, I'm really excited about product-led growth.
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Chapter 5: What is the average annual contract value for Vived Learning's customers?
What's something you wish you knew when you were 20? Oh, you know, I really wished, you know, I would have come up with an Instagram, especially at that age. I was really into photography. And so I think that would have been the number one for me.
Guys, vividlearning.com launched in 2007, had their first million dollar year in 2016, took a hit in 2020 with COVID, dropped a $1.5 million run rate, but hoping to break back up past 2 million this year.
They're working with over a thousand school systems, sorry, many thousands of school systems, 2,000, that each pay about $1,000 a year to access their technology, mainly superintendents or provosts purchasing the software. all bootstrapped, which we love. Tom, thanks for taking us to the top. Thank you, Nathan. Really appreciate it.