Sramana Mitra: That’s actually great. We love these stories of student entrepreneurs who didn’t drop out. Going back to the subscription model, how did the revenue ramp?
Andrew Grauer: It ramped really well in terms of growth rate but we were starting on a really small figure. I don’t remember the specifics. I do know that in 2010 we eventually got to a million dollars in sales. Then, we doubled every year after that. That was about $2.5 million in 2011, $5 million in 2012 and over $10 million last year. We hope to do between $15 to $20 million this year.
Sramana Mitra: Let’s get to a bit more granular detail about how you built that revenue up. Talk to me about the highlights of customer acquisition and conversion rates during the early times. It sounds like the advertising revenue was a non-event.
Andrew Grauer: Advertising was really tough to scale. Giving out content away for free was what we hoped to do first. Theoretically, that would have been great. But it turned out that the CPM adds something like a dollar. It would have been almost impossible to scale to a level to build a sustainable growth business. We switched to a subscription business. We still focused on getting amazing study resources – really high quality content – and have that drive organic traffic to the site through search engine and word of mouth.
Eventually when we got to enough traffic – we got almost a million visits a month – that’s when we started doing quite a bit more of AB testing and conversion rate testing – which proved to be very powerful in terms of learning what flows, what method would work versus what is not compelling to our users. It made a big impact on growing that bottom line for the business.
Sramana Mitra: It sounds like the content strategy was really important.
Andrew Grauer: Yes, our business was really about getting as much great content aggregated, organized, and distributed through CourseHero.com.
Sramana Mitra: Can you talk about the content strategy? How did you determine what content to go after? What is the organizing principle?
Andrew Grauer: It was communicating to the contributors to give the content that is most useful to them when they were in this course. We don’t want to define what that is because every course is different. We really wanted to communicate to them to give what they thought was most useful. Being able to communicate that and always trying to figure out how to improve the incentive model to align the interests of the contributors and the platform was key. That’s an ever-evolving, never-ending process.
Sramana Mitra: Was there any principle in how you targeted the courses that you went after?
Andrew Grauer: Not so much. We didn’t want to get too granular with anything. We targeted a number of schools in a certain order in terms of which ones have the most students. We wanted to test different types of schools. We didn’t know so we tested two-year and four-year schools, non-profit schools, and public schools. We tested different types of things but we didn’t really have a specific targeting strategy.
Sramana Mitra: In doing that testing, where did you find the sweet spot?
Andrew Grauer: The best thing is that we didn’t find a school or course that this doesn’t work for. It turns out everybody who’s in a course really wants to get help whether it’s for mastery or just getting by. That said, the best indicator or the best market opportunity was to go after the biggest schools first and the courses with the highest enrollment.