SaaS Interviews with CEOs, Startups, Founders
ScholarshipOwl Breaks $4m Revenue Helping 15k Students Get Loans
10 Jul 2021
Chapter 1: What is ScholarshipOwl and how does it help students?
We have today 15,000 paying customers and about 1.5 million users in general. 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. Hello, everyone. My guest today is David Dabachnikov.
He is building a great company that changes the way Americans pay for college by leveraging data to make scholarships more accessible and transparent. He's doing this at ScholarshipOwl.com.
Chapter 2: How does ScholarshipOwl generate revenue from its users?
David, are you ready to take us to the top? Yeah, so ScholarshipOwl is leveraging technology to increase... the chances of earning private and external scholarship for American students. And who's paying for this, the students or somebody else? To use the premium features of the platform, the students are paying a subscription fee, which is $15 a month.
And for that, basically, we save a huge amount of time for them, preventing them from applying to scams or finding a scholarship that match them the best way possible. And how many customers do you have today? We have today 15,000 paying customers and about 1.5 million users in general. So can we take $15 times 15,000, you're doing about $220,000 a month in revenue?
So, with some partnerships and other things, you know, with some B2B partnerships as well, we do a bit more than that.
Chapter 3: Why do students continue to pay for ScholarshipOwl after receiving scholarships?
Okay, got it. And let me ask you, why do students keep paying you after you help them get the scholarship dollars? Once you have a massive term problem? So, the thing is that a common misconception is that students need scholarships only when they're just applying to college. But the reality is that students actually need scholarships more in the first year of in high school.
Because many of the financial aid that they get is only for the first year. And they can use private scholarships to pay for a board, for books and other things they need in college as well. And there's no limit to how many scholarships you can earn throughout the whole education. So it's true that the majority of our users today are high school seniors.
Chapter 4: What challenges did ScholarshipOwl face in its early years?
But Basically, many of our users are between the ages of 16 and 26. And when did you launch the company, David? What year? So the company was launched in 2015. And what did you grow revenue to back in 2015, your first year? 2015, it wasn't. We didn't have any revenue. We've been bootstrapped, but we were trying to figure out what would be the model.
2016, we already scaled around almost $2 million in revenue.
Chapter 5: How has ScholarshipOwl scaled its customer base to 15,000 users?
And what did you finish 2020 with? 2020, we finished with $4 million. $4 million. Okay, that's great. And so have you bootstrapped the company to date? You're still bootstrapped? Until now, we never took any external funding. Only in January this year, we took revenue-based funding in order to accelerate our growth. And how much did you raise?
We got approved to $1.3 million, out of which at this point we took only $300,000.
Chapter 6: What role does technology play in ScholarshipOwl's operations?
Okay. And what do you like or dislike about revenue-based financing? I love that it's non-dilutive. So basically, we don't give out parts of the company in general. The thing is that VC-based funding comes sometimes with strategic partners or with connections that revenue-based funding does not. So that's kind of one downside.
And when you take revenue-based financing, you basically start from the beginning to think how you're going to repay that. So basically you're locked into using most of the revenue-based financing in order to generate revenue goat on your existing model instead of kind of experimenting with more risky models that might cause faster goat. Talk to me about how you got your first 1,000 customers.
Chapter 7: How does ScholarshipOwl manage its marketing and customer acquisition?
You have 15,000 today. That's a lot of customers. How are you getting them? The majority of our customers are online onboarding. So you can see affiliate network that we started building with And we scaled quite a bit of content marketing. So basically we started pushing out a lot of content related to our space. But how did you get your first, how did you get the first 1000 customers though?
So if you're looking for some story of us going door to door, we didn't do that. So it was mostly online, the standard ways.
Chapter 8: What lessons has ScholarshipOwl learned about unit economics and scaling?
Well, David, I'm looking for your story. So when you say standard, tell me what you mean. Did you start with ads on day one? So we started with a blog related to the space and started advertising that blog. Where did you advertise the blog? Mostly on other platforms, smaller ones, more like personal connections. I don't understand what that means.
Okay, so the story is that our product didn't start as a SaaS product. It started actually as a blog and content-related scholarship space itself. So that kind of got a bit of traction, and on top of that, the product started being built. So that's why the story is a little bit confusing in that sense, but it's not like we built a SaaS product and then started looking for customers for that.
David, it's not confusing. This is a great way to build a SaaS company. It just is what it is. It started off as content in a blog. You built an email list. Then you launched a paid membership product, it sounds like. Yeah. How large did you grow your email list before you launched the SaaS product? A few thousand. Not that big. Okay, like under 10,000? Yeah.
Okay, and what's the email list size today? 36 minutes. Sorry? Six million. Six million people. Amazing. And what kinds of things are you doing with that list to drive additional growth? So what I mentioned before that we have additional revenue other than the SaaS side is different partnerships of other scholarships promoting them to our platform, other companies in the educational space.
We work with around 40 different partners at the moment. I'm very picky with sponsors I have on the show. Usually I use the show and you guys, the audience, as leverage to ask for a great deal. And I simply won't take on the sponsor unless, number one, I love the product, and number two, they're giving us a special, unique deal for our audience. Well, Zendesk reached out recently.
And you know, me personally, I've watched other tools in Zendesk, the customer support space, increase price. They try and upsell you 20 different products. It's expensive because they want to move to the enterprise to make their investors happy. Well, Zendesk is publicly traded and that means they have a lot of cash to throw around, which means they can afford to give startups a great discount.
In fact, all these enterprise tools, I convinced them to say, you know what? We'll give it to your audience, Nathan, for free for six months. So here's the caveat. If you're pre-series B, or you have fewer than 50 employees, you're eligible today. Go to nathanlaca.com forward slash Zendesk to get their best customer support tools totally free for six months.
Again, that's today, nathanlaca.com forward slash Zendesk. What does the pitch sound like to them? Can you name a partner and explain to me how you convince them to market your product? Um, There's many different ways. It's a bit hard on the... Pick one. It's easy if you pick a story, a real story. So, I mean, a simple example is Nielsen, for example, does market research to scholarships.
And we work with them to basically work with the students to like to reach out to students to Nielsen. And why does Nielsen help promote your product? Do you pay them a commission? We do basically revenue share. Revenue share. And is that typical revenue share? You just split it 50-50? We do it with Nielsen. We do it with other organizations.
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