SaaS Interviews with CEOs, Startups, Founders
942 0-50m Users Now Launching Paid SaaS Model at $120/yr To Gamify Learning
21 Feb 2018
Chapter 1: Who is Erik Harrell and what is Kahoot?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Eric Harrell.
He's the chief executive officer of a company called Kahoot, the global game-based learning platform with more than 50 million users. Before this company, Eric held several C-level roles for more than 10 years at Opera Software and VP roles at JP Morgan Co. in New York.
He's an angel investor and has extensive experience as a board member of organizations such as the Board of the Alliance Venture Spring Fund, a leading VC fund in Norway with 100 million under management. He was also on the board of Opera Software's joint venture in China. He's got an MBA with distinction from Harvard Business School and an MA and BA from the John Hopkins University.
Eric, are you ready to take us to the top?
Yes, indeed.
All right, good. So tell us about Kahoot. What do you do and what's your revenue model? How do you make money?
Yeah, well, first off, I can just say a little bit about Kahoot. So Kahoot, you know, we're a game-based learning platform. We're basically in a multitude of different environments. Kahoot is used in... Schools, you know, K-12 schools were used in corporate settings, were used in university classrooms, were used in birthday parties, sports stadiums, and a lot of different types of environments.
You know, of the 50 million, more than 50 million monthly active users we have, around 40 million of those are in K-12 school environments. So teachers are using the platform to teach math and science and those types of subjects. but we also have a million monthly active users in corporate environments.
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Chapter 2: What is Kahoot's revenue model and how do they plan to monetize?
So it's actually becomes a joy for kids to do Kahoot. And that's the feedback we've gotten from students. That's great.
So give me some of the backstory here. When did you launch the company and how much of your own money have you put in to date to get to where it is?
Yeah, so the company was, I mean, the company has been funded really since 2012. The product was launched in 2013 with a focus on schools. We've raised $26.5 million to date. And those investors include Microsoft Ventures. Disney's put in a lot of some money. We also have the two leading Nordic firms that have put money into the company. So that's how we've been funded to date.
So, Eric, my listeners are going to listen to it. Now, I know because I know your bio, but they're going to listen to that and go, wait, how the hell? I'm here working my ass off, can't get a freaking investor meeting. And this guy on Nathan's show, he's raised $26 million in 2012, and he's just now launching a paid product. What the hell am I doing wrong?
So how did you raise that much money that early on? Tell us more about your background.
Yeah, I mean, I think the, you know, I mean, first of all, I joined a CEO, uh, over a year ago. Um, and that's when, just as we closed a $10 million round. So there was money that was, was actually, no, yeah, just, we had raised $10 million just as I joined. And then we raised another 10 million just to just a number of months ago.
So we've raised about $20 million since, since I, since I joined, joined, uh, joined the company. But I think I, I,
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Chapter 3: How does Kahoot engage its users across different environments?
Yeah, it's 6 million raised early, and then there's been about 20 million that's been raised in the last 12 months. I mean, I think that the investors really see, I mean, what they've really, I think they found very exciting about Kahoot is just really the user growth. I mean, we've gone from zero to 50 million users almost as fast as Facebook, faster than Twitter.
So I think they've gotten very excited about the user growth that we've been able to demonstrate. And also, I think they really believe in our monetization story, because when you look at and the focus of the company has been primarily on user growth. And we've now switched over, you know, since I joined, we've now switched over to, OK, let's turn this into a business.
But I think they really believe in our plans around revenue. As I said, it's around this freemium model because, I mean, the feedback we get from companies, they love using Kahoot in a corporate environment. So we were very confident about building a great revenue stream around companies. And then because we are a content platform, I think they really buy into our content story.
Because when you have an audience, as you know, when you have an audience, you're going to attract content providers and you're going to attract monetization. So that's really what's helped us raise money from investors.
What do you track in terms of engagement across those 50 million users to understand how much value they're getting to then back into what you could potentially charge them?
Well, I think the biggest thing when it comes to, you know, when it comes to, you know, when it comes to the kind of the more student focused part of the market, which is where we have the 80 percent of our users. There, it's really about the amount of engagement. You know, the average session time of a Kahoot is 10 minutes.
You know, so you as a content provider, if you really want engagement, because, you know, if you look at YouTube, it's a very passive experience. It's kind of a lean back experience. Whereas Kahoot, when you're engaged in a quiz, you're really engaged in that content. We call it lean in, you know, lean in format, basically.
So I think we think that's a key metric is the session time and the place. And then when it comes to companies, I think the fact there is just sort of the – they're just seeing – I mean the companies are very focused on getting a return on investment for their training in the United States alone.
you know, there's about $70 billion being spent on training, and they want to get a good return on that investment. And this is things that, you know, this ROI, is demonstrated through driving increased sales, increasing customer retention, because we're being used in sales teams. Sales teams are using Kahoot to train their employees in sales, which directly affects revenue.
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Chapter 4: What challenges did Kahoot face in launching their paid product?
I understand that. That makes sense. Um, so how many, do you mind sharing me and how many trainers have you signed up in the, for the paid version today for across 40 days, 50 days?
I mean, I basically, I don't know. I mean, we're making really good progress.
Um, I'm curious if it's like 10 or a thousand or more.
Yeah.
We're off to a really good start.
Give me a range though, Eric. Because look, the reason I'm pushing on this is your background is not like, I mean, you're from Goldman. You're part of a fund. Everything relative to you is not relative to my audience. So when you say you're off to a good start, I have to push you on that a little bit. Can we say between 100 and 1,000 new paid in the first 40 days? It's going well.
Yeah.
You won't put a bottom or a cap on. Is that what I'm, can you do either one of those?
Well, I put it this way. I mean, we will definitely be in the thousands this year. I mean, so it'll be over a thousand for sure this year.
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