SaaS Interviews with CEOs, Startups, Founders
Edtech SaaS Breaks $4m, Looking at $10m Series B Next
24 Sep 2022
Chapter 1: What is the origin story of Yellowdig and its mission?
So we launched the product in 2019. I think we'd have hit a million revenue in 2020.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey, folks. My guest today is Shonak Roy.
He's the founder and CEO of Yellowdig, a community-driven active learning platform adopted by over 130 colleges and universities, K-12 schools, and corporate training clients. Their mission is to transform every classroom into an active and experimental learning community. Shonak, you ready to take us to the top?
Yep.
Happy to be here. All right. So who's paying for this? Is it the universities directly or is it the students?
We have both. So in some cases, universities pay for it. But a lot of the cases, students will directly pay either through the bookstore or they will pay through a credit card.
How do you manage it? I mean, those are very different sales motions. Schools are hard to sell. Students, you know, it's easy to sell, but they churn way more.
That's right. So we make it easy for our clients to adopt our technology. So if you imagine, most of our clients are higher education institutions and they have long sales cycles. So we make it easy for any professor who wants to use our technology They can either go to the institution and say they want to buy a license.
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Chapter 2: How does Yellowdig generate revenue from universities and students?
Depending on the scale with us, we give them a variety of discounts to incentivize them to broaden the usage.
What is your biggest university? How many seats do they pay for?
So, you know, we, I mean, biggest university, I would say Arizona State is a big client of us. They were one of our first users of the platform. And we have an enterprise license with Arizona. So that's a very unique model, you know, for sponsoring your clients. So usage, of course, grown over the years, you know, in the University of Arizona, but for us, for, you know,
We have over 130 universities now. So depending on every school has... Sometimes one school has three different licensing models. Sometimes the Department of Arts and Sciences actually bought the student license so the students are directly playing. But maybe for another business school, they have an enterprise license where they are paying for the entire school to us.
I see.
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Chapter 3: What challenges does Yellowdig face in selling to universities?
Got it. So I guess let's just talk about the 80% of revenue that comes from these 830 universities. I guess, how many paid seats across all 830 universities? Maybe that's the right question.
So right last year, we had about 200,000 students who used our platform in a variety of ways. So some of them were part of enterprise license. Some of them were direct student pay. So that's a total pool. And in terms of our pricing, of course, if the university has adopted us, their pricing is lower than a school that is using us in a couple of courses or programs.
Well, that's why I'm asking. So ignore the total pool of 200,000. You're saying 80% of that. So about 100 and what? 160,000 is coming directly through an enterprise deal with the school. Okay. Got it. So if I take 160,000 seats divided by what? 830, that means the average number of seats is about 200 per university.
Um, yeah, that's, uh, that sounds reasonable.
Okay. So if I, if a university is listening right now and they reach out to you and sign up, what are you going to charge them per seat for 200, if a 200 seat deal?
So for us, 200 seats, the first question is, are those 200 students in the same class? So sometimes we start with an intro level class where they have about 200 to 500 students in the same course. So in that case, it would be $12.95 per student per course. That's how they would get started.
If it's across five courses, so then let's say a student is going to use Yellowrick for the entire program, and they're taking, let's say, five courses for that program. In that case, they have to pay Yellow Dick five times. That's how it's designed. So yeah, so if they're starting small, like 200 seats, that would be our out-of-the-box, essentially, conjurer price.
But then if they scale with us, depending on how big the school is, what type of a commitment they want to make, we have contracts ranging from one year to five years. So depending on the size and length of contracts, we would probably give them some incentives to adopt us at scale.
Don't name the customer because this is a more sensitive question, but what is your largest customer pay you per year right now?
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Chapter 4: What is the pricing model for using Yellowdig in courses?
I don't have the number right now with me. Okay. Yeah. The average is definitely lower than $12.95. Yeah.
Yeah. I mean, because the reason I'm asking, right? So I'm trying to back into your revenue, right? If you have 200,000 paid seats at $12 per month per seat, it's $2.4 million a month in revenue. I'd love for you to be there one day. I don't think you're there yet, though.
Yes. So that's a good point. So just a couple of other things to mention here is the $12.95 is for per course. A course can run between three and four months. So that's one price you pay for the entire users in that particular course. So it's not by month.
Oh, it's just got it. So the course could be for six months.
it could be for six months most courses are for three months four months um so that's how we price it because you know if a student buys it for a course and if we charge them per month so this one they have access next month for whatever reason they can't pay for it it's not fair to them not to have access to that platform yeah for that particular course so we pay for the entire course so they pay for the entire course to adopt the technology um the other thing to keep in mind is that um you know it's also um you know when students are when we when i say 200 000 users i mean
These students, they will take one course in the fall, maybe one course in the spring, or they might take one or two courses in the year. So there's a lot of variety here. So essentially it's not that they are using in every month. So depending on where they're taking courses, they're using our technology and they're paying for it. So that's another thing to point out.
Got it. Well, do you remember, I guess there's a lot of complications there. It's hard to scrub back into, but do you remember the first year you hit, maybe it was recently when you hit a million bucks in revenue?
So we launched the product in 2019. I think we'd have hit a million revenue in 2020.
And what do you think you guys will do this year?
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Chapter 5: How has Yellowdig's revenue evolved since its launch?
Very cool. So, so looking at raising past called a million dollar run rate in 2020, um, you know, to be able to go out and do it, go from a 3.5 series a to 10 million, you know, you gotta be, I mean, I wouldn't say at least tripling at this stage. So, I mean, do you guys think you can get above six, 7 million bucks in ARR this contracted ARR this year?
We'll see. It's hard to say right now, but of course, we are talking to a lot of people right now. So we'll see how quickly we can grow.
Is it fair to say since 2020, though, you've grown at least 100% year over year?
Since 2020, last year?
Yes, 24 months ago. No, 2020. That would be two years ago.
That's right. If we look at, yeah, it was close to 100%. I don't know whether it's 100% exactly, but yeah, close to that number.
Around. Got it. So you go from a million to 2 million to around 4 million today, hoping to continue to scale past there.
Yeah. I mean, that's kind of what we're expecting. Interesting.
Well, that's a heck of a story. I'm rooting for you guys, though. In the meantime, let's wrap up here with the famous five. Number one, favorite business book?
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