90: Bootstrapping Vs. Raising Capital with Ankur Nagpal of Teachable

Nathan: Hey, guys, Nathan Chan here. Welcome to another episode of the “Foundr Podcast.” I’m currently speaking to you while standing on my super cool new standing desk. I heard sitting is the new smoking, so I had to get a standing desk, and I’m absolutely loving it. You can probably hear if I go down. You might be able to hear that in the background, but I’m going up and down with my desk just because I can; it’s really, really cool. But I just wanted to mix it up, mix up the flow of these intros. If you’re a regular listener, it can become a little bit robotic and a little bit repetitive.

So now let’s talk about today’s guest, Ankur Nagpal. He’s the founder of Teachable. And what these guys have done is they’ve created this amazing platform, an amazing piece of software that allows you to build and sell online courses and create your own online course. And they’ve done it really, really well. Great design, great execution, and they do a lot of training for their community. And funnily enough, I met Ankur through their head of growth, Andrew.

And it was really interesting. The way I found Andrew is, you know, we’ve been doing webinars for a while; it probably would be about close to a year now. But when I first wanted to get into webinars, I wanted to master them and I didn’t know what I was doing wrong, and it was really hard to finance this. And you know, I just got mny hustle on, and I actually found Andrew on Clairity, reached out to him. And he was such a nice guy; he didn’t even want to charge me. He taught me everything he knows around webinars, and it was just crazy how much he actually helped me. And now actually really, really good at webinars. We generate a significant amount of revenue doing webinars for our products.

And yeah, he was just like, “You know, I’ll introduce you to Ankur.” Caught up with Ankur, caught up, and he’s just like a super, super solid guy, a very, very smart guy, and these guys are disrupting the online education space with their software. And yeah, pretty much, I had to speak to him.

So this conversation, we talk a lot about how Ankur raised capital. What was interesting was Andrew told me Ankur is one of the best he’s ever seen in regards to raising capital. And pretty much no one ever says “No” to him when he’s trying to raise capital. So it was really interesting. We talked about bootstrapping versus raising capital, how he plans to scale Teachable, all the things that he’s got going on. And he’s just a really clued in, very, very smart guy. He’s built and sold a cash flow-based business where he was doing some stuff around Facebook apps and he made, I think, a bit of money doing that. And he’s got some really interesting realizations in the way he sees the world, the way he approaches business. So I know you guys are gonna love this episode.

All right, guys, so that’s it from me. If you are enjoying these episodes, please do take the time to leave us a review. All right, guys. Now, let’s jump into the show.

Thank you so much for taking the time to join me, Ankur.

Ankur: Yeah. Happy to.

Nathan: Awesome. So the first question that I ask everyone that I speak to is how did you get your job?

Ankur: It’s actually funny. I’ve never had a real job in my life. So what I do when I don’t get jobs is basically create companies and give myself a job. But literally, I’ve had one job in my life, which was a summer internship when I was 18 years old. And after that, I’ve never had what could be traditionally called a “job.”

Nathan: Awesome. And can you tell us about the work? Like, how did you find yourself doing the work you’re doing today?

Ankur: Yeah, so right now, I run a company called Teachable, which helps people build and sell online courses. And this happened, you know, pretty organically. I was teaching online on the platform called Udemy, I was building courses as a teacher, and I saw this opportunity. And I realized, “Look, I think there’s something here. I want to see what I can do.”

So I built this tool that firstly was only for myself. I never know, you know, it would become a company. So I built this tool just for myself and soon realized that, you know, after I had solved my own problem, there were other people like me. So I could then take this tool and find more people like me, give them the opportunity to sell online courses using our software, and you know, things started spiraling from there.

Nathan: I see. So when did you start Teachable?

Ankur: I started Teachable in the fall of 2013. But early on, I didn’t know it was a company. I never planned on raising venture capital. I never thought this would be anything more than my personal side project. So for the first few months, it was just like my fun little side project. I had no idea that this was what I wanted to do or this is what, you know, this is what I would spend the next two years of my life doing.

Nathan: I see. So your company wasn’t originally called Teachable. It was called…because I’m sure many people would have heard of…

Ankur: Fedora.

Nathan: …Fedora.

Ankur: Correct. Yep, it was called Fedora. We were almost sued out of existence. So we decided to rebrand to Teachable.

Nathan: Yeah, no, I know that feeling. We’ve actually been through that same path. And the company wasn’t originally called Foundr. But for us, it was a real blessing. So yeah, I’m curious, so you said that you were teaching on Udemy, and you created your own software. What were your frustrations, like, with using Udemy that forced you to want to create Teachable? What were the things that were missing in the marketplace that Teachable does?

Ankur: So to start off with, you know, what I liked about Udemy that I wanted to replicate was the fact that it was so, so simple to create an online course, right? It just made the entire process easy. It was not like a, you know, an old learning management system. It made that part natural.

But what I found terrible is on Udemy, you did not have ownership of a student. Like, you could not even e-mail them in the future. You know, anyone that’s built an online business, as you probably know, if you’re building a business where you do not have even a student’s e-mail address, that’s not a business. You’re just, you know, you’re making a little bit of side money. You’re not building anything sustainable. You can’t build on top of that. So that was the biggest, biggest frustration. I wanted the simplicity of a platform like Udemy, but I wanted to be able to, you know, own my students. I wanted to be able to contact them when I wanted. I wanted to be able to control pricing. I wanted to be able to be my own brand. It’s these kinds of frustrations that made me want to take the simplicity of a platform like Udemy, but give people a tool to power their own websites. Give people a tool to put their own brand names, set their own pricing. Get full control off their students. And that’s how Fedora, at the time, was born.

Nathan: I see. And do you have a development background? Did you code it yourself?

Ankur: Yep. I’m the worst developer in the world. I’ll be honest, I’m literally…you know, at least if you ask anyone who’s actually a developer at Teachable, they will tell you I’m the worst developer in the world. But I think…you know, I always knew enough coding to be dangerous. Like, I could build what I wanted and it would work. The problem is it was a disaster from the back end. Like, no other developer could ever use it. So all it could really do was validate whether an idea had legs or not.

But that was all I needed at the time, you know? I could prove that with my own terrible coding abilities, I could prove how to build a prototype. You know, do enough volume on the prototype that I can then take that, raise capital off the back of the prototype, and then build a real engineering team around it. Which is what we did.

Nathan: I see. And you said something that I’m sure a lot of people in our audience would be interested in, and that is you built a prototype or something that you could at least validate an idea from. Are you able to elaborate on that? Like, how did you actually know when the idea was validated? What was the process there?

Ankur: Yep. It was as simple as, you know, in general, I think as an entrepreneur, I’m pretty ADD. I go through a lot of different ideas. What I like about being able to do a little bit of coding is you can actually build your idea, you can see what happens, and see if it has legs behind it. So with Fedora, for instance, you know, at first, it was just something that I built for myself and my friend, Conrad; we’re both teaching online. Day 1, I think we did a few hundred dollars in sales and I was like, “Wow, you know, like, this is more validation than, like, my last ten ideas.”

But just seeing the progress over the first few weeks, you know, and just the fact that we found other people that wanted to use it. We found people willing to pay us to use it. And you know, my biggest mistake was I probably waited too long to consider the idea validated. Like, we only raised money about six or seven months after launching the first version when realistically, it should have been two or three months. I think it was my own fear holding me back that I just didn’t believe like, you know, like this was it. In retrospect, I should have seen the signs sooner rather than later.

Nathan: I see. And how did you get your first paid customers?

Ankur: Our first paying customers. And this is a funny story because we got very lucky. Well, I’ll do it customer by customer. Customer number 1 was very easy because he was the guy I was teaching with. So I was like, “Look, I’m gonna build a solution. Will you pay me 15% of sales to use this?” And he was a buddy of mine, so he kind of couldn’t say no. So he did it and, you know, he made a little bit of money, and then I had one case study.

And then we got really lucky because what Udemy did is they changed their pricing model, like, five or six days into when we launched our product. And it’s a complete coincidence. It’s, you know, super…we got very, very lucky, and it’s another great example of how, you know, sometimes, you need fortunate things to happen, and that’s what happened. They used to give teachers 70% of earnings on course sales. What they did is they announced a pricing change that said, “Hey, guys, you’re not gonna get 70% anymore, you’re only gonna get 50%.” And that just created…

Nathan: Wow.

Ankur: …yeah, exactly. So that created an exodus of, like, angry, angry instructors. Like, you know, people that were just…wanted to look for alternatives. And that’s when we started sending e-mails to people being like, “Hey, I know you’re doing well on Udemy, but you know, do you want to check us out?” And that kind of helped us get customers 2 through 6.

Nathan: Yeah, wow. So you were just going cold, you were finding Udemy instructors that you could see were doing well.

Ankur: Yep.

Nathan: And then just going cold. Just doing things you don’t scale.

Ankur: Yep. And being persistent. Obviously, like, our response rate was so low early on. But I mean, we’re always, you know, pretty respectful while also being aggressive and frequently checking in. Because for a lot of people, it was not, you know…they only replied to e-mail number 4 or something.

Nathan: Okay. All right, awesome. So then what happened next, man? Did you have your co-founder, Conrad, at this stage, after you validated the concept? Yeah, let’s keep going.

Ankur: So at the time, Conrad was focused full-time building a business on the platform. He was the first customer and advising us as a company. So that was…it finally reached a point about, as I said, five or six months in where I was like, “Okay, look, this is validated. You know, what next?” And I was like, “Well, for one, we need real technology to, you know, we need a team, both of which cost money.” So I decided to hop on a plane to Silicon Valley and start talking to people to raise a seed round.

Nathan: Okay. And how did you know how much you needed to raise? How do you work that out?

Ankur: So what I’ve heard from people, a rule of thumb is try in your first round to get the amount of capital you’d need for 12 months. A wild guess that…you know, and obviously, you have to make estimates, I thought somewhere in the region of $1 million would make sense. To be honest, I wish I could say there was like some kind of science to it. But you know, $1 million sounded about right, and when investors asked us “How much do you want?” As long as you seemed confident enough and come up with a logical reasoning as to why, which for us, was like, “Look, I think our burn is probably never gonna go above $50,000 a month. $1 million will give us, you know, 12 to 18 months, just right where we want to be.” That’s how we settled on the amount we wanted to raise.

With that said, any entrepreneur that tells you he wants to raise $1 million, I mean, that probably means he or she wants to raise anywhere from $600,000 to $1.5 million. You know, it’s very fluid.

Nathan: I see, I see. And at what stage, sorry, in the journey did you go to raise capital? You said, was it nine months later?

Ankur: Yeah, about six months in, we decided to raise capital. And at the time, it was still just me full-time doing everything. I was, you know, I was the only salesperson, I was the only developer, I was customer support, I was the community manager.

Nathan: Wow.

Ankur: Yeah, it was exhausting. But it left me with a very good feel and understanding of the product, right? Because a lot of times as a founder, or as a CEO, rather, you get hands off with a product. You get hands off with a customer. I did that…like, I was just so deeply immersed that I feel like that benefited me a lot in the early days.

Nathan: Now, before we keep going down this journey, I want to talk about your previous journey. Because I’m curious, you said that you had a cash flow-based business before starting Teachable…

Ankur: Yep.

Nathan: …Fedora, and that was doing quite well. Can you tell us about that?

Ankur: Yeah, absolutely. So this was a business I ran from about age 18 to 21, building Facebook applications. It was a super, super fun business. You know, we created a lot of…I think by the end, we had either created or built an app creator that, in turn, created over 10,000 applications reaching about 200 million people. So pretty much anyone that spoke English on the Facebook platform.

Nathan: Yeah, wow.

Ankur: It was a super fun business, right? Like, you were creating things that were built to grow fast. So personality quizzes, friend quizzes. Like, you’d get a notification saying, “Hey, your friend Ankur answered. Do you think Nathan is a good interviewer?” And you’d be like, “Wow, I kind of want to see what he said.”

So it’s tough…that was, you know, definitely very, very gimmicky. But it was just engineered to grow. Like, the only thing that mattered was growth. It was simul…like, it was literally my introduction into the world of business, right? It’s the reason I could not have a traditional job. It’s what gave me connections and friends in Silicon Valley at the age of 18 that I could then go back to. So it did a lot of good things for me that I’m always grateful for.

At the same time, it also taught me certain things that made it very clear what I wanted to do next. Like, for instance, you know, we were both….we were talking about this earlier. Like, I am not that interested in building a business purely for the purpose of making money. I did that already and that, you know, that was fun. But you know, now, it kind of made me look for wanting to build something bigger than myself. Even the reason why we kind of built Fedora as being different from Udemy is, like, I was personally so burnt out by building a business on another platform like Facebook, which, by the way, was a great platform to build a business on. But you’re so dependent on another platform, that’s just not a feeling I ever wanted to get. I just never wanted to build a business on someone else’s platform ever, ever again.

And that’s why we built Fedora. It’s like you don’t want to build your business on Udemy, you don’t want to build your business on something else. We want to give people the tools to build, you know, their own business. Like, with Teachable, we’re a platform, like, a technology provider. We’re not a marketplace. So it’s that kind of frustration from having done that in my past that kind of has led me to do a lot of things we’re doing.

Nathan: Yeah, okay, I see. And you mentioned that business did really, really well. Did you sell it? Like, what happened there?

Ankur: Nope.

Nathan: Are you able to talk some numbers or…

Ankur: Yeah, absolutely. So I mean, you know, we made a few million dollars, most of which I got to keep personally because we had no expenses. But the way the business monetized is it was generally advertising revenue. Towards the end, we were making about 50% of our revenue from ad revenue, the other 50% from virtual currency. So people would, you know, buy…people could create actions to earn currency that could be spent in-game.

We never sold the business just because Facebook Applications had no resale value. Like, that entire business is only worth the money it made. And again, that’s one of my other frustrations with, you know, from a purely business perspective, if you’re building a cash flow-based business and you are going to sell it, you know, you’re not gonna get more than, you know, a few months a revenue, maybe a year or two if you’re lucky. But if you’re building enterprise value, that’s an entirely different value proposition. Then you’re building, you know, actual, you know, value that can be sold for a much greater multiple.

So we never really sold…you know, we sold a couple of Facebook Applications for, like, $20,000, $30,000, which is good, but some of our bigger Facebook Applications would make $50,000 a day.

Nathan: Wow.

Ankur: Yeah, so it’s a completely different scale.

Nathan: I see. So you wound up the Facebook business, and is that when you started doing the Udemy teaching?

Ankur: Nope. I mean if only the entrepreneurial journey was so simple. Honestly, between the age of 21 and 23, I did nothing of note. I mean, I tried a lot of things; consulting for some time, I built some Android applications, had a little bit of success. But I was just, you know, ADD, doing a lot of different things. No one thing really resonating. Like, I wish it was as simple as, like, “Everything I’ve done has been successful.” But no, like, you know? In those two years, I tried a lot of things, none of them probably for more than a few months. That’s the…yes, that’s what I did between the age of 21 and 23.

I didn’t know exactly what I wanted to do, and I kind of, you know, almost in this place in my life where I wouldn’t say I was stagnant because I still felt pretty good about what I had done so far, but I just had nothing amazing happen in a couple years. And that’s when I decided that, you know, I needed a change of scene.

So I was living in San Francisco at the time, packed my bags, moved to New York City, started teaching, and that’s when Teachable happened, you know, pretty organically.

Nathan: I see. Yep. Gotcha, gotcha. Okay, so I guess the next question that I was gonna ask you and I think our audience would be wondering is if that previous business you did so well, how come you didn’t just use that…like, money that you had to self-fund and not raise? Like, what is your thoughts and take on bootstrapping versus raising capital? Why did you choose that path and how come you didn’t use your own funds?

Ankur: So honestly,  what it comes down to is the diversification of your portfolio. What I think my most important asset is, like, more than any of my capital, is my time. So I’m already investing my most important asset into the business. So I didn’t see the point of also investing my cash, right? Like, diversification, what if the company doesn’t work out?

The other reason is, a huge reason I raised the money I wanted to from the people I wanted to, is I wanted other people invested in my success. Like, I indirectly self-funded the company by not paying myself for the first year and a half or something, which was my version of kind of self-funding. Like, realistically, looking at what market salary I could have commanded. That was, you know, like, the first six months of the company, all of that was me. But why did I not, you know, put in a few hundred thousand dollars from the company? It was just, you know, diversification of my portfolio. I think my time is worth more than my money, and I’m investing 100% of my time into this.

So when I raised a seed round, I also wanted to get, you know, some of my smartest friends invested in my success. So we ended up raising capital, which I think was a great decision. I think…I’m always very impressed with bootstrap startups, but I almost feel like funded startups get a really bad rap because of the way funding used to work, right? In the past, you’d be like, “Why would you want to raise funding and give up control?”

If you look at the kind of term sheets available right now, you never actually give up control. You know, like, the way we raised our funding is we never give up any operational rights to any investor. We don’t have to report to an investor. I send a monthly report because I want to, not because I have to.

So I almost look at it as the best of both worlds. We have capital to make mistakes. Because ultimately, that’s what the value of capital really is. It buys you time, it buys you the ability to be more aggressive and make more mistakes.

So we raised capital, you know, we got that in the bank, and we still control our own destiny. We don’t have a board of directors to report to. We don’t have anyone with, you know, any kind of significant operating control. You know, it’s still our business, just better-funded.

Nathan: Yeah, wow. Look, that was a great answer. Thank you, Ankur. That was really, really insightful. So you’ve raised…you went to Silicon Valley, you actually…you said you have a lot of friends and you built your Facebook Apps business back in San Fran, so you know a lot of people. Tell us about that process around raising capital. Because we met through one of, you know, your head of growth, Andrew. And he told me that, like, you’re very, very good at raising capital. So tell me about why he says that, and also, tell me…like, tell me some notable investors, man. Tell me, like, you know, tell us about that part of the journey.

Ankur: Yeah, absolutely. So yeah, I think Andrew was just kissing my ass. But honestly, honestly, I think I’ve been very fortunate. Just because, you know, so much comes down to people…okay, let’s look at it from an investor’s perspective for a second. What investors like to see is observing someone over a period of time and watching them develop, right? Because ultimately, it’s very hard for an investor to make a decision when they’re meeting you for the first time, you’re pitching them really hard, really well. For them to decide on the spot to give you money is hard.

The advantage I had is I had a lot of people that invested in the company. I met them when I was, you know, 17, 18 years old. They’ve kind of seen my maturity, they’ve seen me develop, they’ve seen me grow. So when I come to them saying, “Hey, I’m raising money,” it’s not about giving money to someone you just met. It’s about giving money to someone you’ve, you know, known about and followed for six or seven years.

So that’s been…you know, I don’t like saying this too much because this is not really something that’s, you know, a very strong takeaway for a founder. Like, people raising money now, they’re like, “Well, you know, yeah, thanks. Like, how does that help me right now?” So I think that was one of the things that worked out really well.

The other advice in terms of something practical that I have for anyone…so if anyone is looking to raise a seed round that’s listening to this podcast, the playbook I would follow, and this is largely what we did, is find one really, really good investor. Like, one investor that’s willing to go out and, you know, fight for you. It doesn’t matter how much they’ve put in; they could be putting in $20,000, that’s fine. Find that one investor that’s a brand name almost, do whatever you can to get him on board, get her on board, and then go to AngelList. It’s that simple. Go to AngelList, have them syndicate the deals for you, and just handle the rest inbound. Let people come to you.

It’s never going to work until you have that one kind of brand name investor. But getting one brand name investor, especially if it’s a small amount of money, is still a lot easier than when you look at, you know, raising $1 million upfront.

Nathan: Yeah. Because you’ve kind of that social proof, right?

Ankur: Yep. Absolutely. So that’s what happened to us. That was our exact story. Matt Brezina, who is the founder of Xobni, one of the first Y Cmbinator companies, was the first person to offically be like, “All right. I’m in.” And then, I talked to Naval, who’s the founder of AngelList and a friend. And I told him, like, you know, “What do you think we should do?” And he’s like, “Well, we’ll just put it on AngelList and send it out.”

So our first round actually happened that easily. Like, you know, not putting money, got sent to AngelList…and what was great about AngelList is instead of going to investors and getting rejected over and over…which did happen to us; it’s not like we didn’t face that at all, we did have that. But here, people just come to you. And it creates that social proof really, really fast.

And that’s kind of my grievance with investing is it’s so much driven by herd mentality. Like, so many of the investors that didn’t want any piece of us initially all wanted to come back after the AngelList, you know, went out, you know?

Nathan: Yeah.

Ankur: That’s the thing that frankly sucks about it because…and that’s also why, you know, I really respect Matt. And in general, for me, the hallmark of a great investor is someone that refrains from asking the question, “Who else is investing?” Because that means they’re trusting their own instinct. And that’s very rare. But I found a lot of great investors don’t ask the “Who else is investing?” question. Because when they do that, it’s so easy to get bias and influence if they’re not evaluating opportunity on what it is.

To people listening, if you’re raising money and an investor does not ask you who else is investing, take that as a very strong, positive sign.

Nathan: Okay, interesting. No, this is great. So if you go on AngelList now, you can actually see all your investors. It even says how much you’ve raised.

Ankur: Yep. It did til the point that we got tired of updating it, so it’s not fully accurate. Because we were updating it early on every time we closed someone. Because we were like, “Yeah, social proof, social proof.” And then when we like kind of got to the round where we’re like, “Eh, we should maintain that profile better.”

We raised $1 million from a bunch of investors that summer. We raised a follow-on $1 million in December from Ventures taking us to about $2 million in seed capital.

Nathan: Yes. Okay, awesome. And tell us, like, where you guys are at now. How is things going? What are you guys struggling with? What’s working? What’s not?

Ankur: Yeah. So overall, I mean, I think all things considered, we’re in a very good place. I mean, right now, we’re…I think…I don’t know, it’s tempting to always feel like you’ve done the hard work. And I feel that right now like we’ve done the hard work. But you know, you’d probably come back to me in a month and I’d be like, “I knew nothing then.”

Right now, we’re at about…you know, we’re at about $2 million run rate. You know, going from zero to $1 million was super, super hard. $1 million to $2 million was substantially easier in comparison. So that’s kind of where we’re at financially. We’re trying to, you know, 5X our business annually, that’s sort of our internal goal. It’s January now, so I have no idea kind of how that plays out. But our goal is to try to be a $10 million business at the end of the year. Whether we get anywhere remotely…I’m so happy I’m not a public CEO where you’re actually held to the things you say. I could totally come back here a year later and be like, “Yeah, that failed.”

But that’s what we want to do. And more significantly, we also want to kind of be a paradigm shift in the world of online education. To me, it seems glaringly obvious that there’s going to be a growing class of teacher-entrepreneurs. Basically, people…I mean, you know, you belong in that category. Someone that’s effectively an entrepreneur…you might not identify as an entrepreneur, you might not identify as a teacher, but I would call you both beacuse you sell education to groups of people. And I think it’s inevitable that there’s gonna be large classes of these kinds of people both from people that used to be teachers, but also people that are, you know, good at any specific skill.

So we think there’s gonna be, you know, tens of thousands, hundreds of thousands of people like that, and they’re gonna need a technology platform. And we believe we’re the technology platform. Again, this could well be delusional, but I think five years from now, we’re gonna look back and be like, “Wow. That was glaringly obvious.”

Nathan: Yeah. Well, look, I see that same kind of vision as you, Ankur, in that sense. Because, like, this online, you know, teaching, online education, it’s a multi, multi-billion dollar industry. And you know, when we started Foundr, we just started off as a media company. We still are; just, you know, one arm of our business is education. And this only came from listening to our readers and users, and hearing what they were saying. They were saying, “We need more help.” So it’s like, “Okay, well, how can we help you? How can we further serve?” So I think it’s very, very smart.

You know, one thing that one of my mentors taught me…actually, I love this saying, I think you will love it, too, is during the Gold Rush, the people that made the money were the ones….

Ankur: I know where you’re going with this. I know where you’re going with this.

Nathan: …were the ones mining the gold, they’re the ones selling the tools. And that’s not to say…

Ankur: The picks and shovels. The picks and shovels.

Nathan: …that’s right. And it’s not to say building this company to…well, you are, building it to make money, and that’s not your sole purpose, but it is very, very smart.

Ankur: Yep. Well, it’s also the other thing is personally, for me, again, after the Facebook App stuff, we were effectively in the content business, and that’s something else that I just don’t want to be in at this point in my life. My motivation was to build a platform versus a content business. A content business could be a lot more profitable, personally, especially if you’re a smaller company, you know, I’d want to raise money if I was doing a content business. But yeah, our ambition was to be a platform. That way, you don’t have to worry about being in business. I think content businesses can be very successful, but you’re only good as your last hit.

Nathan: I agree.

Ankur: It might have been the movie business, it might have been music, right? Even the movie business looks like that, and you’re only as good as your last hit. So personally, you’re right. You know, we wanted to be a platform. You know, we wanted to be the picks and shovels in this space.

Nathan: Okay, awesome. So I’m curious, for you guys to want to be a $10 million business by the end of this year, what needs to happen in terms of growth? What are some channels that are working really well that are fueling your growth? I’m curious. I know you guys are doing a lot of stuff on webinars. What else?

Ankur: So what we’ve gotten pretty good at is converting our…well, not “pretty good at.” We used to convert about, you know, 1 to 2% of our free users to paying users; we’re now at about 7 to 8%.

Nathan: Yeah, wow.

Ankur: So that’s been a huge, huge driver to the degree that, yeah, obviously, we use webinars pretty aggressively to help for that conversation. But 2016, for us, our hope is this is a year we figure out paid acquisition. Because we’re terrible at it right now. We barely do it. We spend maybe, you know, $50 to $100 a day and all of our experiments are massive failures. My personal gut feeling is we’re gonna find it and we’re gonna start crushing it, unpaid, but that’s going to be a huge part of our strategy. Because I think it’s pretty cool we’ve gotten to this $2 million point without any effective paid marketing. So I look at that as, you know, the next avenue, the next channel. That’s why we might have to raise a little bit more money. That’s something we definitely need to prove out this year.

The other thing, you know, we’re gonna do and we have to do is I still think…as much as I love growth, you know, Andrew and I are on growth all the time. I think the highest leverage point we can have is building the most amazing product in the world. So so much of what we do just goes back right into the product. And on the product side, too, our philosophy, and this is something I feel very strongly about, is…you know, when we talk to people, there are certain things they really like about our product. They think it’s really easy to use. They think it’s delightful. Like, it makes them feel good collectively working in something that’s not a lot of fun, like, editing their course. And they really like how good their courses look, so these are our strengths. Our weaknesses for a lot of people are lack of certain specific functionality; like, we don’t have drip content yet. Chances are, by the time people are listening, we might have it, but there’s, you know, certain core features that people deem us not to have that are considered important.

We effectively have two choices we can make on the product strategy. We can either compensate for the missing features, which we’re doing to a degree. But what we’re really focused on, what I’m really excited to do, is yeah, we’ll, you know, eventually get all the missing features and stuff. What I really want to spend this year doing is double down on our strengths. So people think, you know, we help their sites look beautiful. I want it to be more beautiful. I want to make our strengths stronger before we compensate for our weaknesses. And I think that’s what makes a great product. Just something that does…whatever people think they’re good at, just do that better, and then worry about people that aren’t happy because of XYZ.

Nathan: Yeah, no, that’s great insight. So I’m curious around the webinar piece. You guys are very aggressive on webinars. Like, how many do you do a week, and how many do you plan to do a week?

Ankur: So we run a weekly webinar every Thursday, that’s just part of our funnel. When someone signs up for a free account, just show them advanced functionality, give them an opportunity to upgrade their account. That’s happening…that happens every Thursday on-demand.

Outside of that, we have joint venture webinars where we partner with other people, go to their audience, and deliver training to their audience. Those are scheduled ad-hoc. We try and aim for about two to three a month. We either end up doing a lot more than that in a month, or, like, just having nothing for a couple of months. But on average, I would say two to three a month.

We’re trying to figure out…the missing piece right now is what we do with our paid acquisition funnel. I think the answer might be kind of similar to your setup, where it’s a weekly webinar that’s not about the product, but rather something a little more top funnel. Like, how do you succeed with online courses. We think it’s that, or it could be a workshop that has a recorded workshop, but a live Q&A that happens every day. We’re still experimenting with that, we don’t know what the right funnel is over there. But that’s kind of the missing piece that we’re looking for is how do we…what is going to be our marketing funnel to successfully acquire…successfully spend money to acquire paid users?

Nathan: Yeah, I think webinars is very, very powerful. I only got introduced to them about six months ago. And they’re a great way to just provide a ton of value, too, to your audience. Not just to sell, but to educate and go from one to many, not one to one. And it’s a great way to, I guess, really speed up the sales process. Because that’s what everything is, right, is just sales.

Ankur: Yep, absolutely. But it’s also, in turn, that’s another thing we’re gonna focus on this year, is a lot of legitimate customer success, right? Not just selling, but also “How can we help more people achieve success?” And a lot of that…we’ll all see webinars as a tool except these won’t be sales webinars. These will be webinars that are entirely focused in delivering value.

Nathan: I see. So you’re saying you would do, like, webinars for your current…

Ankur: Yep. Like, learn e-mail marketing on your Teachable school. And it’s entirely a workshop on how to do e-mail marketing on your Teachable school. We might even make those paid features that drive revenue indirectly. So we’re not selling. But in order to watch them, you have to be a paying user.

Nathan: Yeah, yeah, we do stuff like that, too, for our…certain people in our community as well. And that’s really good. Like it’s…yeah, no, that’s really smart, too. Also, what other things are working for growth for you guys? You’ve got an amazing product…

Ankur: So the biggest…the other thing that I think works out very well is when people use our software to build their courses, when that soft…when their schools or sites get propagated outward, there’s a percentage of students every single day that see, “Oh, this is powered by Teachable. I wonder where Teachable is?” And they sign up for Teachable.

So there’s kind of this inherent…I won’t say “viral” because it’s not purely viral, but there’s an inherent, organic loop inside the product, which helps so, so much. Word of mouth referrals is also huge for us. And yeah, you know, like, the student side. Like, I think it was…yeah, two days ago that we crossed the one million student threshold, right?

Nathan: Wow.

Ankur: So we were one of the faster online education companies to get there. We definitely got there substantially faster than Udemy and Skillshare and stuff. I think Coursera might have gotten there a little bit faster than us. We’re one of the fastest companies in online education to get to that milestone. And that’s helped us a lot just because some of these students see, “Oh, powered by Teachable. What is Teachable?” and then use it. And yeah, just organic referrals from very happy customers.

Nathan: Yeah, okay, I see. That’s really, really smart. Kind of like what Hotmail did. Whenever someone sent an e-mail, it said “P.S., I love you,” from Hotmail. Yeah, “Made by Hotmail” or something. Yeah. That’s…okay, that was…

Ankur: And even with us, like, people can remove it. But you know, only about 20, 25% of people end up removing it. Because we do say it to be entirely white-labeled, but a lot of people just don’t…just still leave the “Powered by Teachable” in there.

Nathan: Gotcha, gotcha. You mentioned something about Coursera. I was reading about them the other day. Apparently, somebody was saying when I was reading it that they grew faster than Facebook, or something. Like…

Ankur: I wouldn’t be surprised. Because early on, they had a massive growth spurt where they got to two million people pretty quickly. It’s interesting, right? They had…well, they still have a very strong, inherent value proposition. Like, university-level courses taught by university professors for free. The only challenge, I’m sure, they’ve discovered….that we discovered by looking at our data is my guess is no one is watching those courses, because they’re giving them away for free. Which is almost the ultimate kind of paradox of free online education is the more amazing content you provide for free, the less people are gonna consume it.

Nathan: Yeah, that’s so true. Because when people pay for something, that makes them more accountable.

Ankur: Yep, absolutely.

Nathan: And they don’t want to waste their money. So yeah, actually, this is a really good question. From your data and the things that you guys are finding, can you give us some insights on what’s working in the online courses, online teaching, and this industry that I’m sure many people are currently tapping in to or looking to tap in to?

Ankur: Yep, absolutely. To start off with, the most depressing fact of them all is people are very bad at watching courses. And a lot of times, it’s not because your course is bad, it’s not because people don’t have good intentions, it’s because people are falliable. With courses, very often, you’re selling to people the idealized version of what they want to be.

And that’s the other kind of important thing is what we found is no one wants to buy a course. Like, no one really cares about buying a course. What they want to buy is the outcome. Like, no one is buying…like, with your Instagram course, they’re not buying the knowledge of how to set up Instagram. What they’re buying is the idea of getting those followers. They’re buying the fame. You know, that’s what they’re buying. It’s like, you know, any fitness product. People aren’t buying the fitness product, they’re buying the ripped picture of themselves, right? That’s what they’re buying. Same thing with courses. People are buying their transformation. They’re not buying iPhone programming lessons, they’re buying building their app. They’re buying, you know, the picture of them creating their own app.

So that’s one of the most interesting things we’ve realized, is when you’re a teacher, all you need to focus on is getting people to that kind of picture. And that’s what they’re buying. Like, no one really cares about your course. That’s one interesting insight.

The other interesting insight, as I said, is people are really bad at following through. The ways you can increase them  following through are by nagging them on e-mail and by charging more money. Like, those are literally the only two ways I’ve seen of actually, you know, helping people move along, with money being a very effective motivator. When people pay more money, not only do they watch more of the course, they end up having better results, they’re less likely to ask for a refund, and they report higher satisfaction ratings from the same course. So charging more money is a no-brainer, in my opinion, is most cases. So that’s been a really interesting insight.

The third interesting insight has been just the diversity of the kinds of courses succeeding. It blows my mind every day seeing, you know, how specific and sometimes how bizarre the topics are, you know, that end up doing pretty well.

Nathan: Yeah, can you give us some examples?

Ankur: Yeah. Japanese rope bondage is one.

Nathan: What is that?

Ankur: It’s called Shibari, as I recently learned. I really like…I think the site’s tagline is “Tying people, not packages.” But you know, there’s so many specific examples. Like, the Minnesota School of Firearm Training is a proud customer. We have, you know, people teaching how to play instruments we’ve not heard of. People teaching courses in languages we can’t recognize, sign them in currencies. It’s just really cool to see that kind of stuff happening. Like, you know, it’s just not all programming, marketing, and design courses. It’s a design course, it’s a digital scrapbooking course, it’s a jazz guitar course. That’s what fun to watch, right? Because so much of courses tradtionally has been dominated by, “Oh, you know, make money online.” And it’s just fun to see the other kinds of courses.

Nathan: Yeah, okay, interesting. All right, well, look, we have to work towards wrapping up, Ankur. But you know, I wanted to ask you some more things about your journey as an entrepreneur. What has been the hardest times? You know, tell us about the times that you felt like giving up and,  you know, whatever you had to sacrifice to get where you are today.

Ankur: Yep. I will caveat it with this…like, I do understand a part of me sounds like a douche bag when I say it, but the times that I found hardest were generally when I was…at this point, I was 18, 19 years old. When, you know, we’d have a successful application on Facebook, and they would change their rules, so they would change something around, and we’d lose everything overnight.

Nathan: Yeah, wow.

Ankur: That happened maybe four or five times. And it was crushing. Like, you know, it was like…after that, I was like, “I’m never going to do this again. Like, I just don’t want to do this, I don’t want to look at this, I don’t want to deal with this.” Like, just the idea of like working really hard, building something, and having it pulled from under your feet. That experience has put me in good stead now because I faced those experiences when I was relatively young. You know, I’m 26 now, I’ll be 27 next week. Now, I’m in a much better position to handle that stuff.

In the latest chapter at Teachable…I don’t want to go into too much detail for certain reasons, but the hardest stuff to deal with have been kind of the more human things, right? Like, for instance, like working with people and discovering someone’s not the right fit for instance. Especially when you’ve gone on to form a friendship for that person. That kind of stuff is, you know, ultimately what I personally find hardest to deal with. It’s not product launches, it’s not…we’re not hitting on growth numbers. It’s just, you know, the human thing and wanting to do well by people you work with.

Nathan: That’s a great one and that’s something I’m starting to discover now, too. It’s…yeah, that human part is very difficult.

Ankur: Mm-hmm, yep.

Nathan: Awesome. And what about, you know, I guess…because you said you have a lot of really successful friends in Silicon Valley, from all the entrepreneurs and these successful friends that you know, what are some of the underlying characteristics that you notice and see in a successful entrepreneur?

Ankur: I’m gonna first start by talking about one of the things that people, I’m sure, on your podcast bring up a lot, but I don’t think is that important, is kind of working irrationally hard. Because I personally get so frustrated with the Silicon Valley narrative: the founder that sleeps in the car, that puts in 14-hour days. I think that’s a load of crap. I think I’ve produced my best work by being lazy, by maximizing effort to reward. And I think the best entrepreneurs, at least the ones I relate to the most, are people that think similarly. Not people that are inherently lazy; I’m not saying…you still work a 50-hour week. But what really pisses me off is people that take pride in working an 80-hour week when they don’t have to.

And you know, just look at…I think we’ve done pretty well as a company working normal hours. Like, our story is not one of working stupidly hard. Our story is one of working smart. And that’s something that I think, you know, has helped me all through my life, and a lot of the successful entrepreneurs I know.

Like every rule, there’s exceptions. There’s some people that do work stupidly hard and also turned out to be successful, and I think it’s falsely attributed to the fact that they’re working really hard. I think those people that have been successful even without that, they just, you know, make the kind of connection that “I work hard and I’m successful. Therefore, it must be because I worked hard.”

Nathan: This is interesting. So what about someone like Gary V., man? Like, I interviewed him…you know, I’m not sure if you’ve seen, like, his stuff, or his videos and all about the hustle. Like, what is your take on that?

Ankur: So firstly, I think Gary is an amazing speaker. I watched him at Summit series a few years ago. I truly think he’s a great guy. His dream of wanting to own the New York Jets, that just resonates with me because that’s kind of my dream scenario, right? Owning a sports team.

Nathan: Oh, wow.

Ankur: I have no idea how hard Gary actually works. My guess is he’s good at prioritizing. Does he talk about working…like, I know he talks about the hustle, but every often, the hustle is, you know, working smart. It’s being willing to do anything, not necessarily putting in the maximum number of hours. Like, there’s a lot of things that I think make sense. Like, for instance, if you want something, you go out and make it happen. That’s something Gary talks a lot about. I fully believe that, I’m not discounting that. I just think if you need to work 12 hours a day to make something happen, you might want to reconsider if what you’re doing is the best path to get there.

Like, is there a way…you know, like, I think you make very good decisions because it’s based on time constraints. And if you challenge yourself to think about “Am I working on…” like, that’s something we’ve realized. Like, every so often, I just pause and I’m like, “We’re working too hard. Like, should we hire someone? Should we be kind of outsourcing parts of this business? Like, what are we doing that’s making us work so hard?” Because I think it’s very easy to fall into the trap of working very hard. It’s a different kind of laziness to get to a point where you’re working too hard.

And I would always…and I still strive…I still…sometimes, we feel, we’re like, “Wait, why are we here in the office past 7:00 every single day? Like, what we doing? Like, let’s rethink something.” And usually, there’s something inefficient in our entire setup that makes us do those things. And that’s what I’m mostly talking about. Not, like, you know…I still stand by the whole Gary V., like, you’ve got to do whatever you’ve got to do to make something happen. Like, there have been numerous times I’ve, you know, gotten…I’ve sent e-mails to potential partners saying, “Hey, I’m gonna be here on so and so date.” And when they say, “Yes, you know, buy and ticket and show up,” like, you do all of that good stuff. But at the same time, I’m personally always striving really hard to find a work/life balance. I’ve failed a lot of times. But I think that’s something everyone listening should strive for rather than falling into this kind of fake…at least in my opinion, untrue narrative that you necessarily need to be working, you know, 80-hour weeks to make something happen.

Nathan: Yeah, no, this is great. So last question…or two last questions. The first is, you know, it sounds like you’re pretty effective. What advice do you have on being an effective CEO?

Ankur: Honestly, I think it’s a combination of finding the right people. And when you have that, being comfortable, letting them make decisions. So you know, multiple people that, you know, I’ve hired, in the first day or two, I can’t remember where I read this, but what I tell them, what I’ve told them is, “Look, I’m hiring you because I think you’re very smart. And I’m also hiring you because I want you to reduce the number of decisions I need to make. Like, part of your job is making decisions on my behalf. And in return, I’m gonna allow you to make the wrong decision 20, 25% of times. So you can make a lot of wrong decisions, as long as most of your decisions are correct.”

So explicitly giving people the ability to make decisions for me, I think, has been massively, massively helpful in both preserving my own sanity and helping people feel empowered. And I think that’s what it comes down to, and that’s something that’s initially very hard to do because…you know? And it still is something that, at one level, at a cerebral level, hard for me to do because it seems like a lot of this company was my baby. But, you know, I just realized, you find smart people and you empower them. And that’s what, I think, being a CEO comes down to.

At the same time, who knows, right? I’ve been a CEO…although I’ve called myself a CEO all my life, but you’re only really a CEO when you have other employees.

Nathan: Yeah, that’s right.

Ankur: As opposed to, you know, the 18-year-old me being the Founder, CEO, Chief Marketing Officer of my own company.

Nathan: Yeah.

Ankur: That’s been my takeaway. I don’t know, I’m not…you know, I’m learning so much on the job as I go along. But yeah, find great people, empower them, be good to them.

Nathan: Awesome. All right, look, last question, Ankur, and that is where’s the best place people can find you?

Ankur: I think the best place would probably be Twitter. I’m on Twitter at twitter.com/ankurnagpal. That’s…yeah, that’s probably the best channel. Grab a hold of me there. Also, you know, check us out at teachable.com, and yeah.

Nathan: Awesome. Look, this has been an awesome conversation, man. Thank you so much for your time.

Ankur: Yeah, absolutely, Nathan. It’s been a complete blast.