SaaS Interviews with CEOs, Startups, Founders

EP 371: $1M Raised, $40k/Mo Marketplace For Class Notes with Sieva Kozinsky

30 Jul 2016

22 min

4405 words

2 speakers

30 Jul 2016

Audio

Description

Sieva Kozinsky, founder and CEO of StudySoup. The online marketplace now has over 5000 buyers and 1000 sellers. These sellers provide their notes and study guides for college courses. StudySoup helps their sellers learn how to be entrepreneurs and provides a unique service to college students everywhere. Famous 5: Favorite Book? – Elon Musk's biography What CEO do you follow? — Elon Musk Favorite online tool? — Slack Do you get 8 hours of sleep? — "I get 6.5 to 7.5 hours." If you could let your 20-year-old self know one thing, what would it be? — "Pay attention to the signs. If something isn't working, ditch it and move forward." Time Stamped Show Notes: 01:05 – Nathan's introduction 02:25 – StudySoup is "an education marketplace for college students" 01:55 – It's a monthly subscription 02:25 – Sellers take notes, and the buyers use those class notes 03:10 – Students get "karmas" to access notes and study guides 04:10 – the "karma" system 05:10 – The backstory 05:45 – StudySoup was tested at a few schools and took off 06:10 – Year-one revenue was $45k 06:25 – Now they have over 5000 subscribers 06:45 – 1000 note takers 07:09 – Funding is over a million 07:35 – They used convertible notes 08:15 – Team size 08:30 – The team is distributed and remote 09:05 – Slack, Google Hangouts 09:25 – Trajectory 09:55 – They will hit almost $4 million this year 10:05 – A focus on getting more note takers 10:40 – The revenue is seasonal according to class schedules 11:15 – Revenue February to May is pretty consistent 11:45 – About 4000 buyers used the service in March 12:25 – All buyers and sellers are very active 12:45 – Average purchase size is $42 13:15 – A study guide is the best-selling item 13:40 – What happens after a student graduates? 14:15 – Expanding into grad school and high school in the future 14:40 – Buyers pay 15 to 20 dollars each month 15:25 – Churn is 8% to 12%, lower than the average for the industry 16:20 – Acquisition cost 16:30 – Training sellers to be entrepreneurs 17:10 – It's too early to see lifetime value of a customer 17:40 – Contact Sieva on Twitter: @SievaKozinsky 19:40 – The Famous Five 3 Key Points: When you find an idea that works, go for it. Distributed, remote teams are very doable with today's online tools. Look for the signs that tell you the direction your business is headed. Resources Mentioned: Host Gator – The site Nathan uses to buy his domain names and hosting for cheapest price possible. Freshbooks - The site Nathan uses to manage his invoices and accounts. Leadpages – The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+ Audible – Nathan uses Audible when he's driving from Austin to San Antonio (1.5 hour drive) to listen to audio books. Slack and Google Hangouts – The online tools that StudySoup uses to stay in touch with a distributed team. Show Notes provided by Mallard Creatives

Chapters

1. What is the main topic discussed in this episode? 2. What is StudySoup and how does it work? 3. How does StudySoup generate revenue from its marketplace? 4. What is the significance of the 'karma' system in StudySoup? 5. How did StudySoup evolve from its initial concept? 6. What are the current metrics for StudySoup's success? 7. How does StudySoup manage its team and operations remotely? 8. What challenges does StudySoup face in terms of seasonality?

Featured

Nathan Latka

Sieva Kozinsky

Transcription

Chapter 1: What is the main topic discussed in this episode?

0.031 - 16.082 Nathan Latka

This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have.

Chapter 2: What is StudySoup and how does it work?

16.062 - 39.037 Nathan Latka

I'm now at $20,000 per talk. Five and six million. He is hell-bent on global domination. We just broke our 100,000 unit sold mark. And I'm your host, Nathan Latka. Okay, Top Tribe, this week's winner of the 100 bucks is Rick Siegmund. Rick Siegmund. He is stuck brick and mortar business. That is his focus. So congratulations, Rick.

Chapter 3: How does StudySoup generate revenue from its marketplace?

39.057 - 66.715 Nathan Latka

If you guys want to win 100 bucks every Monday on the show, in order to enter, simply subscribe to the show on iTunes now and then text the word Nathan to 33444. Again, text the word Nathan to 33444. This is episode 371. Coming up tomorrow morning, you'll hear from James Turner. He breaks down how to run a small, happy, profitable agency. Finally. Top Tribe, good morning.

66.815 - 69.099 Nathan Latka

Our guest today is Siva Kaczynski.

Chapter 4: What is the significance of the 'karma' system in StudySoup?

69.119 - 86.275 Nathan Latka

He's the founder and CEO of StudySoup.com. He's had many, many successes in the entrepreneur space. He's got a passion for education. Siva, are you ready to take us to the top? I am. Hello, Nathan. Hello. Hello. Thanks for jumping on, man. So tell us, tell us all real quick.

Chapter 5: How did StudySoup evolve from its initial concept?

86.295 - 91.615 Nathan Latka

Let's kick this thing off. What does study soup do and how do you make money?

91.983 - 112.134 Sieva Kozinsky

Sure. StudySoup provides an education marketplace for college students. We go to universities nationwide. We cherry pick some of the top students and we teach them to be entrepreneurs so they can sell things like their study material, their lecture notes and study guides in their own store. So think of Etsy for the education space.

112.154 - 115.359 Sieva Kozinsky

And that's really how we make money is by helping other students succeed in class.

115.659 - 119.425 Nathan Latka

Well, specifically, how do you make money? Who's paying you? What are they paying typically?

120.012 - 131.571 Sieva Kozinsky

Sure. So students that are either in the same class or in the same school are going to be purchasing materials like lecture materials, study materials, flashcards, and they're going to be paying a monthly subscription to access these materials.

132.071 - 137.38 Nathan Latka

Okay. So do you see this study soup kind of more as a marketplace dynamic or as a software as a service dynamic?

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Chapter 6: What are the current metrics for StudySoup's success?

137.579 - 143.509 Sieva Kozinsky

It's a marketplace dynamic, but it has a software as a service component where they're paying a monthly subscription.

143.909 - 162.76 Nathan Latka

Okay. So, so if we were to define quote a seller on your marketplace, the seller would be the person you've selected and chosen to take notes. Is that right? Exactly. Okay. And, and, uh, okay, good. And then the buyers, obviously the person in that class. So break down the economics on each of those. What percentage are you taking from the seller and the buyer?

Chapter 7: How does StudySoup manage its team and operations remotely?

162.74 - 179.6 Sieva Kozinsky

Sure. So the sellers are making around 70% of everything that they're selling. We do a revenue share with the note takers and we also offer some incentives up front for them to participate just to get over the hurdle of, you know, taking that first step and doing a commission job as a student.

180.321 - 190.333 Sieva Kozinsky

And then the buyers are just paying a normal monthly subscription, similar to Netflix, anywhere between 15 to $30, depending on how long you subscribe for and how many materials you want.

190.313 - 205.335 Nathan Latka

okay so if i'm signing up for the call the 30 per month uh per month plan that's giving me access to notes and then uh is each note like do i have to buy each set of notes as well on top of that

205.315 - 222.33 Sieva Kozinsky

So we actually have a karma system. It's like a credit system where once you subscribe, we'll give you 150 karma. You can use that to pick out lecture notes or study guides. Each of them are priced differently. So you can get a mix of materials from one class or another class, depending on where you need help.

Chapter 8: What challenges does StudySoup face in terms of seasonality?

222.551 - 233.46 Sieva Kozinsky

Maybe you missed a class or maybe there's a particular class that you're struggling with. So we want to give you that flexibility. We give you the credits and you can cherry pick a few sets of notes or a few sets of study guides that you need.

233.681 - 255.572 Nathan Latka

And then you can just buy more karma. yeah exactly got it and what does one karma point cost um so there's not a one-to-one ratio we give you 150 uh karma points for around 30 but it varies depending on how long you sign up for and what's the average like set of study notes for our class is it like 30 you know 30 credits or 1 or 10 or what

256.126 - 267.263 Sieva Kozinsky

Yeah. A set of lecture notes is a set of one week lecture notes is going to be 25 karma. And then a study guide that helps you prepare for an exam is going to be a little more expensive. It's going to be 50 karma.

267.584 - 276.818 Nathan Latka

Got it. So, so interesting. And so why not just call that, you know, 25 ish or 30 ish bucks? Why make, why put karma kind of in between?

277.912 - 294.471 Sieva Kozinsky

We found that giving people karma gives them a little bit more flexibility on what they can use it for. For instance, if you're a student and you just want lecture notes week to week in one single class, you can do that. If we just give you 150 karma, you can pick all lecture notes.

294.491 - 310.153 Sieva Kozinsky

You can pick some lecture notes and some study guides without having to think of, okay, every time I need to set up lecture notes, I'm going to need to pay $4 or every time I need a study guide, I'm going to need to pay $15 or something like that. It removes some of those barriers of friction.

310.575 - 316.693 Nathan Latka

Got it. Hey, it makes good sense. So tell us, give us some more, fill out the backstory a bit more. What year did you found this business in?

317.23 - 338.867 Sieva Kozinsky

Sure. So we started this business two and a half years ago. April 1st, 2014 actually was when we first tested it at three schools. Jeff and I, my co-founder, had been working on a different education company. Which one? It was called Studiously before. We used to sell a software to universities to replace learning management tools.

338.847 - 358.45 Sieva Kozinsky

We actually started this business, Study Soup, on the side, and we tested it at three schools based on some of the conversations that we had with some of our students who were asking for study materials that were being prepared by other students. So we tested it at three schools. One of them was my alma mater, UC Santa Barbara, and it really took off.