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Bootstrapping an Education Company: Tod Browndorf, CEO of Coggno (Part 4)

Sramana Mitra: So you’re a B2B platform software company.

Tod Browndorf: Correct. We just delivered 600 HIPAA compliance courses. Then we give them an interface where they can then distribute it within their organization. We didn’t create the course. We’re the distributors of the course. Our software is able to report who did what, when they did it, and how many times they did it. Then we issue Certificates of Completion based on the results that we get.

Sramana Mitra: Let’s go back to 2009. You’ve got a couple of beta customers, and then you got some friends and family financing involved. What happens next? >>>

Bootstrap First, Raise Money Later: RJ Metrics CEO Robert Moore (Part 6)

Sramana Mitra: You said you’ve raised about $22 million. Let’s talk about other strategic moves during the past four years that you’ve been a venture-funded company.

Robert Moore: One thing that we did quite recently that I think was very strategic in nature was we decided to release a second product. For most SaaS companies, your brand is also the brand of your product. It’s all nice, clean, and simple. If you’re using Zendesk, you’re using Zendesk. There are some companies out there in the SaaS universe who end up releasing multiple products for various reasons. For us, we saw a trend happening in the market where we noticed that a lot of our customers had a desire for much more control over how their data was stored, where it was stored, and what tools  they use to analyze it in addition to RJMetrics. >>>

Bootstrapping an Education Company: Tod Browndorf, CEO of Coggno (Part 3)

Sramana Mitra: Let’s talk a little bit about the specifics. How long was the period where you worked with personal savings and what kind of numbers are we talking? How much of your personal savings did you have to put in to get it to some level?

Tod Browndorf: Probably two years and about $100,000.

Sramana Mitra: In that period, what milestone did you achieve?

Tod Browndorf: We got to a beta site and then we got to a working business. We were able to get some customers.

Sramana Mitra: Tell me a little bit about what specifically was the beta product, and who were the customers you were going after.
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Bootstrap First, Raise Money Later: RJ Metrics CEO Robert Moore (Part 5)

Sramana Mitra: What were your metrics when you were putting this round together? What kind of monthly revenue run rate did you have at that time?

Robert Moore: At that time, we were less than a million in revenue. That would translate to something to the order of a hundred customers, or just below a hundred. We were profitable when we raised that money.

Sramana Mitra: Awesome.

Robert Moore: We had to file a business tax return in 2011. We raised in 2012. When we started raising money, that’s when we made the deliberate decision that a lot of SaaS companies do, which is we know that we can put $1 out and we get $2 back in. It just takes a year to get those $2 back. If we want to make $2 million, then we have to put out $1 million today. That would mean that you burn cash in the short term. We made a deliberate strategic decision to make this be a growth business rather than a traditional net present value business. It started dipping into being a company that burns cash. We grew really rapidly. That’s when we started to achieve some real scale. >>>

Bootstrapping an Education Company: Tod Browndorf, CEO of Coggno (Part 2)

Tod Browndorf: I ended up moving back to California. I went into a consulting business with a friend of mine. He was basically in high-end contingent workforce business. This is in the late 90s. We placed all sorts of different types of contingent folks inside companies. As a result, we placed instructional designers into companies that were looking to create training initiatives.

For instance, a company like Washington Mutual, which doesn’t exist anymore, might want to train their 5,000 bank tellers on something. We would find the instructional designer or course developer. We would put them all together and find someone to deliver it. We deliver these packages to these organisations. That’s how I got into what I’m doing now.

Sramana Mitra: When was this company founded?

Tod Browndorf: Coggno was founded in 2007. >>>

Bootstrap First, Raise Money Later: RJ Metrics CEO Robert Moore (Part 4)

Sramana Mitra: During that first 18 months, did you figure out that e-commerce was going to be your top segment?

Robert Moore: We did. E-commerce is a really good fit for what we can do because customers tend to come back and buy more than once. We always say that the best customers for us are people that sell pet food because every single month you buy more pet food. I think my co-founder tried to sell pooltables.com four different times and we always failed. The reason is when someone buys a pool table, they don’t come back and buy another pool table next month.

A lot of our analysis is around customer retention, customer lifetime value, repeat purchase rates, and cohort analysis. All that stuff becomes more relevant as people become higher and higher frequency buyers. E-commerce is just really a slam-dunk for that. >>>

Bootstrapping an Education Company: Tod Browndorf, CEO of Coggno (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Tod has built an interesting online education company focused on specific niche course types. Read on to learn more.

Sramana Mitra: Let’s start at the very beginning of your personal journey. Where are you from? Where were you born, raised, and in what kind of background?

Tod Browndorf: Wow! We’re really going way back. I’m originally from the east coast. I was born in South Carolina but was raised in New York and New Jersey for most of my life. I lost my father when I was 10 and a half years old. I started working very early in life. He was in the manufacturing business. I started working early through school. I travelled the world pretty extensively. I lived in Australia for quite a while. I lived in the Middle East and eventually started my career in Finance. I started off as a trader on Wall Street, then later here in San Francisco.

Sramana Mitra: What did you do for school? >>>

Bootstrap First, Raise Money Later: RJ Metrics CEO Robert Moore (Part 3)

Sramana Mitra: You got some little bits and pieces of revenues and customer validation going. What’s the next major milestone?

Robert Moore: I mentioned that we were working out of my attic. What I didn’t mention is we didn’t have any air-conditioning in that attic. We started in October 2008. It was all well and good until about June of 2009 when it was 110 degrees. We really needed an office that we could work out of. At that time, we were probably bringing in something like $600 per month in monthly recurring revenue. We looked around and found an office nearby in Camden, Jersey that we could afford. We took that. That really was our first real recurring expense.

It was at this moment when a fire was lit within us and we started to realize, “If we are able to sell this to 10 companies at this price, we ought to be able to sell it to a hundred.” We started getting more aggressive about sales. I started spending an increasing amount of energy working on customer development and customer success, and making sure that our existing customers were happy and were referring us business. That’s when we started to see this snowball network effect. That was the network effect of having really happy customers. That allowed us to grow to the point where we could afford to start hiring employees. >>>