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Bootstrapping an IoT Company from North Carolina: Bob Witter, CEO of Device Solutions (Part 3)

Sramana Mitra: When did you hit upon this as a key go-to-market strategy for sourcing projects and being brought into projects?

Bob Witter: It was specific to these vendors. These are the relationships that we started to build in the first couple of years of our operation. We knew a lot of these vendors through our experience in the cellular business. We cold-called on them a lot and asked them if they had opportunities come in to them looking for design teams to build their devices. We hit them up every month and say, “Anything new?”

Sramana Mitra: So very early on, you figured out that these component vendors would be good sources of leads for you in terms of new projects?

Bob Witter: That’s right.

Sramana Mitra: What was the ramp of the business? You said you started in 2003. You’ve now been in business for more than 12 years.
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Bootstrapping an IoT Company from North Carolina: Bob Witter, CEO of Device Solutions (Part 2)

Sramana Mitra: Can we double-click down on what exactly happened in the first  couple of years? It sounds like you started with a hypothesis and that didn’t get any traction in the market. You had to pivot. How did you figure out what to pivot to? What happened? What struck the cord?

Bob Witter: We stuck with our core expertise, which was RF design. We just shifted a little bit. Instead of helping people get their own designs through the certification process, we actually started helping people design. It was just a matter of a lot of cold-calling and actually seeing where it went to a large extent. Where it kept going and where people really wanted help was on the design side.

Sramana Mitra: What kinds of customers were looking for this help?
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Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House (Part 6)

Sramana Mitra: You have to pick and choose the partner that you go to business with because you’re basically risk sharing. You both have to invest to get a new brand up and running.

Todd Zipper: Yes. That’s where our expertise comes in around leveraging the brand that already exists and trying to cater to what might be a new market for them. Most of the people that are going fully online, which is primarily who we are focused on, are adult learners. Adult learners are anybody from 22 to 50. The average age is 31. Catering to that student from a marketing, enrolment, and a pedagogical standpoint is different from a traditional-aged student. It’s a shift in mindset, process, and procedures. That’s why it does makes sense for a lot of these schools to outsource. Whether that becomes a permanent trend, I think it’s just too early to know that. >>>

Bootstrapping an IoT Company from North Carolina: Bob Witter, CEO of Device Solutions (Part 1)

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

North Carolina, at one point, had a large concentration of cellular technology companies. Today, some of that talent has come together around IoT.

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

Bob Witter: I was born in Springville, New York. It’s in the western part of New York. I grew up in central New York. I went to school at State University of New York and graduated in 1981 with degrees in Computer Science and Mathematics. I started my career in Rochester with Eastman Kodak company in the medical products division that was brand new at that time. I learned a great deal about how to do medical products that has certainly served me well even today at Device Solutions. >>>

Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House (Part 5)

Sramana Mitra: Going from curriculum to a more broad soup-to-nuts set of services and, accordingly, raising the percentage of the royalties that you get paid is a massive strategic move.

Todd Zipper: It’s risky. I’d like to say we are in the private equity game because I’m going to be a million dollars in before I really know what I got. We like to think that the worst-case scenario is we could do with a million dollars. We haven’t really gotten there yet. Fortunately, knock on wood, all of our deals are working out in some form or fashion. The legacy deals are more deeper service type of deals. Once they start to get going, they pay off. That was the big strategic bet that we made. The second thing is I brought in a whole slew of operators and leaders. I just love my team. It’s a phenomenal group of individuals that can run the business four or five times the size that we are today.

Sramana Mitra: You’re doing this from Kentucky, right?

Todd Zipper: Correct. We have some outposts. We have a small operation in Pennsylvania. We have two other locations in Ohio and in Minneapolis around the school itself. >>>

Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House (Part 4)

Sramana Mitra: Is there a particular subject material or type of degree that you specialize in?

Todd Zipper: Good question. We are, essentially, generalists. Initially, my thesis when I saw the opportunity at Learning House was that I didn’t want to work with one particular subject area. Let’s say, teaching. That’s a big program online. Another big program online is nursing.

Sramana Mitra: Your competitors, like Hot Chalk, has a big nursing program.

Todd Zipper: Exactly. Hot Chalk is probably our biggest competitor. Our biggest client and their biggest client share the same name Concordia. Their biggest client is Concordia Portland and ours is Concordia St. Paul. We also have another Concordia at Texas. The approach that we took was when I go and meet with Presidents at universities, I want to take their entire school online. I just don’t want to do the MBA program. I also want to do a DBA because when you market business degrees, you want to have choices for people or else your cost of acquisition goes up. >>>

Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House (Part 3)

Sramana Mitra: Who are the customers? Is this something that you sell as a software solution to other education institutions who are trying to launch or run an online program or are you actually running this as an outsourced service on behalf of these educational institutions who have a brand? What is the business model?

Todd Zipper: The business model is simple. We charge a revenue share. The school charges the student $400 a credit hour, and we charge the school 15% of revenue for basic curriculum services up to 50% for the entire suite of solutions. To answer your second question, they outsource us essentially. It’s our marketing dollars. It’s very much a symbiotic relationship.

Sramana Mitra: Who provides the content and who provides the faculty?
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Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House (Part 2)

Todd Zipper: Around late 2005, one of the entrepreneurs bought a business that became what Kaplan Higher Education is today. This individual had an idea to start a marketing business focused on higher education using TV commercials. We called it LendingTree meets eHarmony. It had a matching algorithm. We went on to build a brand around matching people to potential education opportunities. I co-founded this business in 2006.

The next four years was an incredible journey because this was the boom period in the for-profit education space. Eventually, we got to working with non-profit schools. We had a couple of things that worked to our advantage. When the recession came, the TV market became completely open to our type of marketing messages and our price point because so many big advertisers came off. The second thing is we built one of the first call centres in education where we were advising students. We built that business over four years. We sold it in early 2010 to a competitor called Education Dynamics.

Sramana Mitra: How big did this business become?
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