SM: What was the status of Apex when you joined seven years ago?
CV: Apex was founded in 1997. I joined in the fall of 2002. The company at the time was primarily an online Advanced Placement company. They had developed a set of online Advanced Placement courses that were delivered with the assistance of Apex teachers. They were delivered to students in high schools around the country whose schools did not offer local Advanced Placement programs.
The company was recognized at the time as one of the pioneers in online and distance learning, and they were definitely the leader in Advanced Placement. However, the company needed a strategy to go beyond what is very much a niche placement.
SM: How much revenue were they making in 2002?
CV: The company had seen its revenue grow significantly in its initial three years and was approaching $10 million in revenue, but the base was beginning to decline because of changes in the contracts for distance learning. That was a direct result of the economy affecting state budgets.
SM: Were the Advanced Placement learning projects were sold to schools or parents?
CV: Primarily to schools. Advanced Placement courses are specified by the College Board. These courses are recognized by colleges and universities. If students take the College Board’s placement exams in the subjects of their course, then these high school students can earn college credits in those subjects.
SM: Do the College Board’s differ from state to state?
CV: Advanced Placement is standardized. College Board is national.
SM: Relatively speaking, this provided you with a smaller range of content to be concerned with, right?
CV: There are a defined number of AP courses. The College Board authorizes 35, and we have 14. Relatively speaking, there are fewer annual enrollments in AP than there are in other subject areas.
SM: Did the 14 courses all exist when you came on board in 2002?
CV: Yes and we sold those primarily to schools because 40% of high schools in the country did not offer advanced placement courses. Distant learning was an opportunity to address issues that school districts had with equity of access. Obviously there are great concerns with equitable access to all students. From 1999 to 2001, many states put in place funding for these courses.
Nationally, Title 1 funding provided grants to fund AP courses for students who would not otherwise have access. As a result, we sold directly to state programs and high schools. We do have some parents who enrolled students in those courses. However our primary market remained public high schools. That was true then and today as well.
SM: When you are selling AP to high schools, what is the pricing and business model between you and the high school?
CV: When we sell AP courses in a distant learning model students enroll in a course in what we loosely call the Apex Learning Virtual School where we have an online teacher that provides instruction. Our list price is $350 per semester course enrollment. We sold courses based on student enrollment.