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Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 5)

Steve Huey: Understanding that this data advantage was the key for us to talk more intelligently to students, we started hammering on that perceived advantage. Very quickly, we expanded the data set that we had so that we could talk more intelligently to them. In the next generation of our product, we created a lot of subcategories and groupings. The goal was always to continue the technology so we can develop an almost one-to-one marketing program for each student.

Sramana Mitra: When you’re working on behalf of a college, how big is the deal size? How do you price these projects?

Steve Huey: In the first couple of years, I think our average contract size was about $80,000. Now, our average is around $200,000, but we have partners who pay us upwards of three-quarters of a million to partners who pay us $50,000. >>>

Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 4)

Sramana Mitra: How did you acquire these customers? Can you get a bit more granular?

Steve Huey: Certainly. We were six co-founders. Two of the co-founders were sales people that had deep relationships with many schools. They simply called their best customers and said, “We have a new company. We’re doing this. We explained our strategy to them.” They agreed to test us. We signed one-year agreements when the industry average was three. We put ourselves out there and we said, “We’re going to do better for you than anyone else has done.”

For the first year, we worked hard and probably gave $200,000 worth of value. It proved that our methodology worked. I was not working day to day on the business at that time. I remember when in our first big meeting in May of the following year, I was amazed at the figures. Using our solution, many of the schools we worked with experienced a 2x increase in number of applicants. I remember sitting there and thinking, “This actually works.” It’s always surprising. >>>

Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 3)

Sramana Mitra: The primary business is, essentially, lead generation for colleges? Is that what you’re saying?

Steve Huey: Yes, our primary business is lead generation but for not-for-profit schools. It’s a very important distinction. There are around 3,300 not-for-profit colleges in the United States.

Sramana Mitra: Let’s start there. What is the difference between leads for not-for-profit schools versus for-profit schools since it’s such a big distinction?

Steve Huey: For-profit schools started out as trade schools. A lot of the for-profit schools you see are for truck driving, typing, etc. There are a number of for-profit schools where you can learn nursing or earn business degrees. They’re in the minority. The schools that are for-profit typically target more mature, non-traditional college students. >>>

Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 2)

Steve Huey: I relocated to Kentucky and started working in small companies again. I was hired by a group of private equity guys to help them turn around and sell a property they had. It was a listing business called Rentalhouses.com for single-unit rental properties. We sold that within about nine months to KKR and their company Prime Media. I was going to stay and help run that but my business founder found another startup in town that had been in business for a little bit and was starting to gain traction. That company was called The Learning House. It helped colleges take their degree programs and offer them online. We bought that company when it was right around the $2.5 million mark. We grew the company and then successfully sold it to a private equity firm. They were also a subsidiary or a derivative of KKR called Weld North. That transaction happened in 2011.

Just as we were in the process of selling The Learning House, we had the idea that we could take what we learned from The Learning House and help market degree programs for online students or non-traditional students. We believed we had a better mousetrap for traditional students. Just before we sold The Learning House, we formed this company that I’m now at called Capture Higher Ed. Capture’s business is helping colleges market their programs and help them find, attract, and ultimately enroll perfect-fit college students. These are primarily high school >>>

Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 1)

We don’t hear a lot of entrepreneurial stories from Kentucky. Here’s one that is scaling nicely!

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?

Steve Huey: I grew up just outside of Cincinnati, Ohio. My father was an entrepreneur. He built a nice real estate business back in the early 70s, experienced the incredible credit crunch of the mid-70s, and lost his business. That had a big impact on me because I saw the success on one side and the problems on the other. From the time I was six or seven, I’ve always loved the entrepreneurial spirit. I went to Miami University and was an Accounting and Finance major. After my undergraduate studies, I became an auditor with Chiquita Brands International. I was an international auditor. >>>

Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 7)

Sramana Mitra: That’s an interesting position because venture capitalists manage portfolios. Entrepreneurs manage their life. Your life is not a portfolio. Life is life. You can do one company. If you fail, then it’s writing off a lot of your life.

Joel Lessem: I’ve had a couple of conversations. I once said, “Here’s the problem. We have different economics.” I said to another venture guy who came by, “You’re playing with your career. It’s other people’s money. You’ve got your eggs in 12 different baskets. I’ve got my eggs in one basket. I don’t have the hurdle you have. You have to make your fund on a couple of deals. I just have to make some money.”

Sramana Mitra: For most people, making money doesn’t mean making hundreds of millions of dollars. In a lot of situations, making a couple of millions is a very happy scenario.
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Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 6)

Sramana Mitra: There are tons of unhealthy business practices. Pursuing growth at all cost tends to make people practice unhealthy business practices. We don’t believe in that. We believe in sustainable growth. We are much more in tune with what you’re doing. We actually appreciate what you’re doing. The more fundamental-driven approach is what we promote in our accelerator. Our belief is that over 99% of the entrepreneurs out there actually will never qualify for venture funding. Your TAM is not a venture style TAM, yet with $4 million in capital, you can build a $50 million to $60 million company. What’s wrong with that picture?

Joel Lessem: I employ 80 people here. We’re probably hiring another 20 next year. I’m actually on the Board of an organization called Ace Tech here in Toronto. I helped build it to a 100-member company. I did a survey and half of them are unfunded. Combined, we employ 6,000 people. Obviously, the unfunded ones are generally profitable.

Sramana Mitra: Yes, they have no choice.
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Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 5)

Sramana Mitra: Talk to me a bit about the verticals where you have good adoption. You have a horizontal platform product. What vertical is your strongest?

Joel Lessem: Investment banking is 30% of our business.

Sramana Mitra: What’s the next one?

Joel Lessem: Law firms are 20%.

Sramana Mitra: Is there any other dominant vertical?

Joel Lessem: Resources are 17%. Life sciences are 12%. >>>