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Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo (Part 2) 

Sramana Mitra: What specifically were each of you trying to do?

Venky Balasubramanian: I was trying to pull ideas for my new startup back then. The first idea I had was a click-to-call. My co-founder was trying to build a framework for these IVRs. I was trying to build a framework to basically call to India every day instead of every week.

Sramana Mitra: Why IVR at this juncture? There’s been plenty of stuff going on in IVR. What was the gap in IVR that caused you to think there’s an opportunity to build another company in that space?

Venky Balasubramanian: Being telco engineers ourselves, we’ve seen this problem in the market where if I were to build a system, it took us a longer time. You had to understand all the different protocols and all the different systems underneath. With startups, speed is everything. If you can go to market faster, the better it is. >>>

Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo (Part 1)  

Venky has built a fast growing, profitable company with just $2 million in angel financing, raised as two convertible notes. Excellent navigation, and a lot to learn in the domain of smart, capital-efficient entrepreneurship.

As we are bound to see the market crash in the upcoming quarters, these are the type of companies that will thrive in the post-bubble era.

I frankly can’t wait.

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

Venky Balasubramanian: I was born in India and was raised here. The first 10 years of my professional life was essentially all telecom before Plivo. I was in software development, a bit of sales engineering, and a bit of actual sales as well across different geographies, including Southeast Asia and Latin America. Then seven years into my professional telecom life, I got bored and I wanted to do my own thing. I was >>>

Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 7)

Steve Huey: University of Pittsburgh is a client, and we’ve had conversations with people at Princeton. Some of these schools have more applicants than they need. What they’re chasing is the right applicant. By understanding the behaviour of students and their families, you can market to them that you can assist them in finding the information they need. This has changed the game for us. In the past, we’ve had a lot of schools that you would not know. Now, most of the schools that we’re working with or are signing contracts with are playing football on Saturdays and are actually very selective schools. We still like serving the traditional schools that we’ve served in the past, but it certainly is nice to have two of your clients play football against each other on ESPN Sunday Night Football. That was the inflection point in our company. Over the last eight months, we’ve doubled. We’ve doubled the people, and we’ll probably end up doubling again.

Sramana Mitra: The company is self-funded? >>>

Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 6)

Sramana Mitra: What else is interesting in your story? Are there any other strategic moves that you want to discuss?

Steve Huey: One of the biggest things that happened was about a year and a half ago, when we were introduced to a McKinsey study that talks about a consumer’s decision journey. The story that they used is the idea of people buying a car. When do you actively start trying to buy a car? The time from when you actively say, “I need to buy a car”, to the time that you buy a car is two weeks. You can imagine car companies. If they were only going to market to you when you’re actively engaged in buying a car, they’d have to pick the two weeks out of five years. This McKinsey study talked about the consumer’s decision journey where they have your brand.

If I were going to ask you what car you’d like to buy, odds are that you probably have a few brands that you’re familiar with and are interested in. Going to college is a huge investment in the United States. In fact, most families don’t believe that college is affordable to them. The adoption of this student decision journey of where they’re going to school is a significant departure of how the industry has been run. Typically, people have >>>

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 >>>