Sramana Mitra: When you go into corporate sales situations, whom do you see in deals?
Farnaz Ronaghi: That’s an interesting question. I was telling you that we don’t exist as a tool in the corporate landscape. That’s really true. There’s another tool called Intrepid Learning that we sometimes run into. They are similar to us in the sense that they are not a learning management system but they are a learning delivery tool that focuses on gamification. We are a learning design and delivery tool. First of all, we have a great UX and a great UI. That, by itself, makes learning a lot more interesting.
Second, we bring the community to the class. Teams and groups are embedded into the learning experience. We run into them once in a while. Most of the time, our challenge is to justify the fact that the organization needs us at scale. If you think about it, they’re already buying a learning management system. The learning management system has some learning functionality. I’ve looked at all of those and it’s pretty bad. From a usage perspective, that’s coming to them at a marginal cost of zero. They can use this forever for many more classes.
Our conversation with our customers is usually about scaling with effectiveness or keeping the learners engaged. It’s about these large-scale training sessions. Let’s say there’s a new CEO who comes with a new process for doing certain things. Maybe they want to change the mindset or culture. There’s no way of doing that kind of large-scale training in person because it just takes forever. There’s no way of doing that with LMS’s. It’s going to be so ineffective and so boring that the outcome would be as if the training didn’t happen. That’s where we can actually justify our existence.
In Comcast, they have a lot of training. With in-person models, it’s very hard to get all the middle managers in the company trained because there’s so many of them. You can’t take them off their team into training for multiple weeks. Even if you would be able to do that, there’s so many of them. With us, they have all of these online programs for leadership training and different types of opportunities. It’s the same with ING Bank. When they use our solution, learners from different offices around the world are in the same class. The goal was to train them on a new wholesale banking process that they have implemented in the company.
Because they were exposed to each other, they knew each other from the class. When they run into problems with the new process, it was much easier for them to jump through those hurdles. It creates that kind of transformation. We used to say that our platform is all about collaboration and learning together. We have changed that into transforming organizations. Our customers understand that they need to create a transformation in their workforce and they need tools for that. Then we can explain how we do it by example.
Sramana Mitra: Where are you now? How many customers do you have? From a pricing point of view, what have you settled into? What are the key conclusions have you drawn from this?
Farnaz Ronaghi: One of my personal key conclusions has been that I used to be more focused on the product and making sure that we are doing good work and shipping good features. My co-founder was more focused on the business side. If I were to do this again, I would pay more attention to the business side myself. It is so important for everyone building a company to really have a similar understanding of the business model, the pain points, and what you’re optimizing for.
I think that we would be where we are today much sooner if I had my head in that game as well. From two quarters ago, we started rolling out an actual enterprise software licensing model. We have been converting our existing customers from course-based model to that enterprise licensing model. The good thing about that is we can actually project revenues reliably.
That’s the other lesson for me. When you’re running a startup, you really need to be able to plan how much you will have to be able to plan who you hire and where you hire. With the course-based model, it was very hard to do a proper financial model. It was very hard to understand that.
In the past quarters, we can really trust the numbers that we put up there and trust that that money is going to come in. The third learning has been that I used to listen to a lot of blog posts. It was my first job. I was trying to understand all the different components. One of the pieces of advice out there is that before figuring out how sales should happen, you shouldn’t invest in hiring sales people. I agree with that. That advice is great but I overdid it. I think we started hiring marketing and sales people too late.
Many years ago, marketing and sales was a different game. Today, it’s a game of numbers. You have to be looking at funnels and optimizing it. That rigor is very important to have early on. Having the practice of looking at every single deal that’s coming in and mapping it to parameters is very important. We overlooked it in the beginning.