SaaS Interviews with CEOs, Startups, Founders
How Bootstrapper Made $6m Last year Using New Self-Funding Method
28 Mar 2024
Chapter 1: How did Scholarship Owl achieve $6 million in revenue?
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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 150,000 signups per month right now. They got a robust engine.
We're thrilled, obviously, that he used FounderPath for some non-dilutive capital. He's grown, totally bootstrapped, to over $6 million of revenue, up from $3 million back in 2022. Hey folks, my guest today is David Abakhnikov.
He is building ScholarshipOwl.com, which helps connect consumer brands to Gen Z. He's got over two decades in tech, including roles as R&D manager and engineering at Google and Waze. And he specializes in bootstrapping companies and excels as a remote team expert.
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Chapter 2: What is the role of AI in Scholarship Owl's operations?
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? Yeah, nice. All right. 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?
So we did a bit at Google and Waze. We did quite a bit in Scholarship Owl as well for a few years now. I mean, we leverage a lot of AI to do efficient matching and kind of like extract intent from kind of our audiences in the most efficient way. So we've been doing quite crazy AI algorithms in Scholarship Owl as well.
Now, if you guys 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 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.
Chapter 3: How does Scholarship Owl connect brands with college students?
And then obviously brands on the other side, i.e. schools and institutions trying to meet those consumers. But because, David, of the updated bio you gave in this podcast interview, I'm going to guess maybe you're not
only working with schools anymore is that accurate so actually the majority of our customers are not schools at all uh so i'm gonna i'm gonna uh correct you on a few things first like we're talking about at this point the scholarship pile has over 150 000 students um or uh college-bound gen z's basically um every month they sign up every month 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 gas 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 um
And today, the majority of our customers on our B2B side, like we launched Scholarship Alpha business about a year and a half ago, which is basically a platform that helps businesses, like private consumer companies. Name one or two. So Samsung is a customer of ours. We work with BetterHelp. We work with quite a few big companies.
Samsung and BetterHelp?
Yeah, McGill Hill is a customer of ours.
What does Samsung want from you? What are they willing to pay for?
So Samsung are looking for brand ambassadors. So they're kind of recruiting brand ambassadors to promote their cell phones on campus or like among Gen Zs in general. 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 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 um
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Chapter 4: What unique features does Scholarship Owl offer to students?
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?
Yeah.
So on a monthly basis, we're talking about 50 brands, but on a yearly basis, it goes to 400 because some of them are seasonal, some of them are two-hour the whole year. It depends on the goals that the brand is trying to achieve.
How do you manage? I mean, that's a big flux. So 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?
Well, it doesn't change that much. I mean, at the end of the day, we still have a pretty stable ARR and we have two revenue sources. We have the premium tools for the students, like a subscription business on one side. And the other side, we have the B2B side, which generates revenue from the brands and the companies.
And what's the split? Is it 50-50 revenue split?
um it's uh today more more of it comes from the consumers but it's quickly catching up like evening out and what do students pay to use your subscription tools so on the on the consumer side on the student side we basically often many tools that help them um
kind of highlight where the 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 our premium features. So things like they know an applicant count. They know exactly how many other people apply to a specific scholarship.
So they know to invest the 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 reviewed the application and actually accepted it or who is the winner. We make sure they know that there is a winner, right?
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Chapter 5: How does Scholarship Owl monetize its platform?
Yeah. Nathan, you applied for the Samsung scholarship. There are 983 other applicants. The winner is going to be announced on March 25th. Then I get an email March 25th that says congratulations or uncongratulations. You didn't win, but here's the link to Sammy's LinkedIn profile. Sammy won from Samsung. Boom. Click here to apply to other scholarships.
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. When you apply to a specific scholarship, some scholarships require quite a lot of different 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 can apply very quickly and easily to as well. And then we can batch them together and apply you to many different scholarships at the same time. And basically, we triple the time that it takes you to apply. pump the efficiency like two, three times more, right? Like the same, you invest the same time.
So not only we kind of find all the scholarships that 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.
So when you say there's 150,000 consumers signing up each month, could one person count multiple times if they're applying to multiple scholarships? Or is that unique? 150 unique signups?
No, it's 150 students, not 150 applications.
I see. So how many applications are you processing in a given month now?
So I think it's about... I don't have the exact number, but it's in the millions.
Well, it's also seasonal, right? Maybe we should ask for total 2023 stats.
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Chapter 6: What strategies are in place to scale revenue to $10 million?
How many total applications through all 2023?
So it is seasonal. Like Q1 is the highest, Q4 is the lowest. And I can tell you that students in general won over a million dollars in scholarships last year.
Wow, okay. So you paid out through scholarships over a million dollars of scholarships through your programs.
Of course.
We paid, you know, like the brands that are publishing scholarships paid to us a million dollars.
Yeah. And then you pick winners of students and wire that out to students? Yes. I see. Okay. Do you keep a cut of that?
Or to the college depends on the kind of specific scholarship and so on. But generally, yeah, we wire it out to the recipient, whatever is the student directly or the college depends on the specific scholarship.
And how many students today are paying for your premium tools like applicant tracking, things like that?
So we have over like we have around 20,000 students now on the premium. Okay. And those are the ones that are paying on the premium side.
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Chapter 7: How does FounderPath support Scholarship Owl's growth?
Can we talk a little bit more about how you've capitalized the business and maybe touch on FounderPath briefly? Sure. Okay. So are you bootstrapped or have you raised traditional equity?
No, we're 100% bootstrapped. Yes, I see your smile.
I love it. I love it. So you own 100% along with your team.
So me and my partners own 100% of the business. And FounderPath actually helped us a lot. Like what... I'll walk you a bit through the lifecycle. Every student that comes to the platform, they get a seven-day free trial of the premium features. 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 happen with ad networks, we scale Google down, and we make most of our traffic from affiliate networks, from all kinds of promotions, from running scholarship campaigns ourselves, and so on.
But there's a pretty big gap between our cost of acquisition or the point of acquisition and when that revenue comes back to us, essentially.
And because we're trying to scale very quickly, and the business is very seasonal, and it's a 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. So how do you sponsor that, or how do you pay that when you're a bootstrap company?
Well, that's exactly where Founder Path comes in. We basically take the money today of what we would make on that student within the next year and buy the traffic now and make that money throughout the next year.
Are you comfortable showing how much you took from Founder Path?
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Chapter 8: What lessons has the guest learned from bootstrapping the business?
So we went to a pretty major restructuring back then, but I don't want to go into the details of that too much.
Okay, 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 million today. Do you remember what revenue was back in 2020, 2021 when you first started at FounderPath?
Yeah, it was less than 3 million, I think, on that number.
Mm-hmm. 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, a 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?
So I want to add that it's, The growth from three to six, I mean, while it's quite impressive in and all of itself, what for me personally is even more impressive is that we could, without taking external equity funding, we were able to launch a completely new product, build new development teams, build a sales team without giving out any equity for funding. And that's a huge win.
Even if we decide eventually to maybe go and bring in VC funding, our value now is so much higher. And in a negotiation point, if we decide to go to 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're not there at all. We come from a point of strength when we say, well, This is what we did with no VC funding.
We know we can scale it a lot more. Now, are you as an investor going to 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. And that negotiation is so much more powerful.
Especially if you look at the last three years, I know a lot of entrepreneurs who lost their companies or who failed 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 such an amazing place to be.
I 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, 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.
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