Sramana: I think you have a tremendous advantage because you have 50,000 customers who already know you. They know what quality you deliver. They are your customers, and I think that is why you are getting the higher conversion rates.
Scott Skinger: In our financial models we were trying to be conservative. We were looking at what other companies in our space did. We projected a 5% conversion rate for annual subscribers. The actual conversion rate for the annual subscription has been 30%. That is phenomenal for us because we may become profitable in 60 days as opposed to six months. That points to the value we are offering at this price point. To the point you are making, I think you are exactly right. It is an advantage and it is very nice. We are not a true startup. We have an established brand and a huge head start.
Sramana: Have you bootstrapped the company to this point?
Scott Skinger: Yes. We have not taken outside funding.
Sramana: Is that how you want to continue building the business?
Scott Skinger: If you had asked me six months ago, I would have said yes. The climate in the education market has changed. Pluralsight is a good example of a highly profitable company. They took funding when they did not need to take it. That has allowed them to have extra funds for content growth and has allowed them to do things that other companies in their space can’t necessarily do. Strategically, I feel that TrainSignal is in that same situation. We need to take funding; otherwise, another company in our niche is going to take funding. We do not want to be in the position where someone else buys our instructors away. We are trying to get ourselves up and running with proven numbers and metrics. Then we will entertain the idea of outside funding.
Sramana: If I were you, I would play out the transition before raising money. You need a lot of metrics before you raise money. You want to have the leverage of your current business model metrics. My assessment is that if you can get back to a million dollars of revenue a month that you could go out and raise money.
Scott Skinger: That would be awesome.
Sramana: That would validate your run rate. You were at $7 million. The maximum you can get with that customer base is $2.5 a month. Potentially you could get to a million a month in the next few months.
Scott Skinger: I hope so. We have not contacted our customers yet. The only ones who know about it are the folks who have come back to the site. We have great connections through tech bloggers in our area, and we have asked them to keep it quiet for now. We do not want to have an influx of customer services issues until we have worked out those small problems and kinks.
Sramana: If you were to raise money, where would you put that money?
Scott Skinger: The number one place is content. We would also invest in our infrastructure to make sure we can develop more content. We will be an IT professionals education niche company for the foreseeable future. There are a lot of verticals there that we can branch into. I would love to have more money and funding to get into content. It is tough to find top-level developers. We will have to invest in the platform because there is a lot that can be done.
Sramana: Have you thought about an executive team?
Scott Skinger: Right now we have a team that has been here for the past four years, and they are our $10 million executive team. We need to upgrade a few positions or add some positions to get to the next level. I do not have a board of directors. We have connections and contacts, but we are missing the advisory forum.
Sramana: You could conceivably build a $100 million company with your foundation, but you are going to need to bring in some management. That will be the common wisdom if you go out to raise money.
Scott Skinger: I don’t have that experience, so to hear this advice is really nice. Thank you for the help and time.
Sramana: Thank you for sharing your story. Congratulations on building a very interesting company with blood, sweat and tears.