SM: If I have understood correctly, the primary presentation of your business occurs on two ends, with gifted students doing Advanced Placement courses on one end and at-risk students on the other end. It also seems that schools will do whatever it takes to help at-risk students to help them pass.
CV: Overall, yes. Where we find schools and educators more willing to do something different is when it comes to serving students who are not adequately being served under the current model. Many schools are not able to do everything they would like to in order to provide things such as Advanced Placement courses due to the economy and their district budget cuts. By the same token, with the at-risk students, the pressures of accountability on these schools means they must ensure they are providing adequate programs to improve the achievement of what has traditionally been their at-risk student population.
We find that districts look at virtual education and distance learning to serve alternative student populations as well. Those include home-bound and hospitalized students. There is a wide range of alternative programs, and we are seeing growing interest there.
SM: Are any of the schools that have adopted your curriculum using it for their mainstream high school curriculum?
CV: We are only just seeing that now in a few cases. That is not where we see the greatest interest on the part of educators to be innovative.
SM: What are the deal sizes that you do, and how long is the sales cycle?
CV: Deal sizes range from very small deals to six- or seven-figure deals. School districts range in size from under 2,000 to over 100,000 students. We have a national sales force with field-based sales reps who tend to call on mid-sized and larger school districts. We have an inside sales force which calls on the more remote and smaller school districts. We did just over $25 million in sales last year.
SM: How big is the sales force?
CV: Our total sales team today is 25 people.
SM: What type of growth are you anticipating over the next five years? Do you anticipate any of your assumptions changing?
CV: We have seen significant growth in the past two years since we hit critical mass with our high school curriculum enrollment. We anticipate that we will continue to see significant growth in the segments of education that we are currently serving.
SM: How large to you estimate your TAM? Can you build a $100 million company catering to the at-risk segment?
CV: Yes, we believe we can build a $100 million company serving that population. There are over 1 million students who drop out of high school every year. Keeping them is a very substantial opportunity. We estimate there are anywhere from 6 million to 10 million secondary students who are not performing at a proficient level. Approximately 70% of 8th graders are below proficiency in both reading and math. When you get to 12th grade, the data is not that different. We think the target market for the programs we offer is quite significant; there are approximately 15 million secondary students.
SM: Do you expect any acceleration in the adoption of your offerings due to the policies of the Obama administration?
CV: The current administration’s and Department of Education’s focus on supporting charter schools has the potential to be helpful. One of the roles charter schools have played is to enable and drive more innovation and new models of education. That bodes well for change. I believe there is tremendous potential for online learning in mainstream education. Virtual schools and alternative education programs create more choice.
SM: Thank you very much. This is a very exciting story. Good luck with everything.