Sramana Mitra: In the very beginning, when you were going door to door asking people to sign up, what were you charging?
John Baker: In the early days, I built a model that was based on cost per student. The faculty members that I reached out to didn’t have the budget for this. I said, “Don’t pay me. I will charge the students just like they would pay for a textbook in the bookstore.”
That was a wild success. This was in early 1999, which was long before any of my competitors adopted a usage-based model. They were thinking about websites; I was thinking about how to build an education system. It was very different.
That usage model is what enabled us to bootstrap the company. As you can imagine, having a recurring revenue stream was a great way to build a business.
Sramana Mitra: One of the principles of doing a bootstrapped company is you can’t give everything for free. There’s got to be a business model. Otherwise, it’s very difficult to build a business.
John Baker: Exactly. I was very fortunate to have a lot of folks agree to that model.
Sramana Mitra: What were the average deal sizes? You were knocking on doors. That’s really hard to scale unless you make enough money off each sale.
John Baker: I did make enough money. The first year, I went back to the university. I actually paid out two people that I had hired to help with the building of these online programs and offerings. I had to work at the same time as I was finishing my final year of university.
It started off as an experiment that turned into an actual company. The scale of it just kept on multiplying to the point where it was very clear I can do this full time. Everyone thought I was crazy doing what I was doing.
Sramana Mitra: Entrepreneurship had not yet become as ubiquitous and glamorous as it is now. Where was the traction? Was it in K12?
John Baker: Some. The bulk of the revenue was coming from the university sector. We launched three courses at the University of Waterloo.
Sramana Mitra: How long did it take you to get to a million dollar ARR?
John Baker: It was probably three years from the very start. We built pretty quickly.
Sramana Mitra: That’s very good actually. For a bootstrapped startup, one million dollars in three years is perfectly fine. What was the team size?
John Baker: We were probably 15 to 20 people.
Sramana Mitra: You had a burn rate that was not insignificant.
John Baker: I was also very fortunate that most of those people were either new grads that were working on subsidized salaries, or they were co-op students. There were folks that actually volunteered.
Sramana Mitra: We are in what year now?
John Baker: End of 2002.
Sramana Mitra: What happens next?
John Baker: We kept growing like gangbusters. In our case, we were selling to universities and companies. We started to go from running individual schools or individual companies to running a whole state. We just kept on growing year over year.