Ankur Nagpal, founder @ Teachable

Ankur Nagpal

What's up y'all personally I don't know about you guys I heard there's a lot of brooklyn people here right that makes me very excited I live 5 blocks away from here and I feel like there's not enough tech happening in brooklyn so it's awesome to have you guys all here cool so who here has heard of teachable show of hands not bad who here is a paying customer of teachable there we go alright so pretty good pretty good so today I want to talk about the business behind teachable specifically how we learned to not entirely suck at growth so let's get started so at the risk of sounding a little bit douchey we had an amazing november our creators some of whom are here earned over $20,000,000 on our platform we as a company made $1,500,000 in revenue last month of which about 80% of it came through monthly recurring revenue which is our creators paying us an average of $70 a creator a month or our mrr which was $1,100,000 so that looks pretty good right look at that graph look at how beautiful look at how beautiful up into the right it is it's very easy to look at this graph and think everything was perfect it was always rainbows and butterflies and other maroon size things but no that's not how it was like it wasn't always that good 12 months in 12 months after raising a $1,000,000,000 in venture funding having a team of 10 people we were at only $10,000 in monthly recurring revenue like things were not working as well as they did after that and we were pretty concerned we're pretty concerned at the time it's not that we were completely flat like we were growing it was just very very very slow like when you zoom in on the 1st year like it again it looks up into the right but the fact is at the end of the day we were at only $10,000 in monthly recurring revenue after a year and we were we didn't know what to do we didn't know what we were not doing right we read all the blog posts did all the startup bullshit we were doing everything it was just not working at the scale we wanted it to we could basically afford one engineer kind of that's our cto noah who probably doesn't approve of me using his picture here we could afford 1 person kind of 1 year in we had 10 people like the math was not adding up we didn't know what to do we were working really hard we're working far harder then than we frankly work now we were hustling but it wasn't it wasn't working like we were trying to grow as fast as possible do everything we could we were trying to follow the startup thing have you guys heard it do things that don't scale we did all of that stuff like I was personally like uploading content for people we reached out to y combinator and like hosted their startup class on our website I was manually I went to ryan holiday took his book we ourselves converted it to a course to try and make the business work we're doing all these things that weren't scaling we even started growth hacking which is a really stupid thing don't growth hack I'm really happy that word died and small side note on growth hacking growth hack we're basically just trying to be smart asses about it and it never worked one of the things we tried is I thought it was really cool at the time but I built this bot that scraped all of udemy which was one of our competitors was a marketplace had other people selling courses so I built this bot it scraped udemy it found social media profiles for everyone who had a course on udemy right so now I have all these creators for everyone who had a course on udemy right so now I have all these creators then I took another database cross referenced it to get an email address for every single udemy creator which plugged into my gmail and it automatically started emailing people to check out teachable sounds cool right you know what this stupid bot did it emailed the founder of udemy that's the first person it found it emailed the founder of udemy that's an actual email it's like hey gagahan I found your teaching online awesome check out fedora or whatever it's called did not work none of this stuff was working 1 year in we were still at $10,000 in monthly recurring revenue but then we 16x the next year from 10,000 to a 160,000 and that's what this talk is about it's really the framework we applied and that's what I'm gonna go over the framework we applied to 16 x and the same framework that we still use today that's what this is about so here's what changed so we added a growth model what we call the every dollar model that has a picture of our team member andy who actually built this model because I think a lot of founders come up here and talk about all the things the team members do as something they did like this was not my creation this is something a team member did and this entire story by the way this entire narrative is not my doing it's really the team of people we have working there I'm just here for my sense of humor my good looks my tight t shirts that's that's the only reason I'm here so we added an every dollar model with the idea being in the past actually I was wondering what we did in the past in the past we had this epic Google spreadsheet that was our growth idea backlog don't take a photo of this this is the bad stuff don't don't take a picture of this the next thing is what you take a photo of we just had this epic list of all the ideas we had that we wanted to work on we prioritized them had owners we worked really hard to execute as many of them as possible our biggest metric then was how many of these ideas could be complete in a single month what we moved to the every dollar model which I will explain is we tried to account for every single dollar well actually no we started by setting a growth target worked backwards and tried to account for every single dollar so the easiest way to demonstrate this would be to walk through a real example that we used in august 2015 okay so the first big change we made is we stopped trying to grow as fast as possible this sounds counterintuitive but what we decided is we would pick a specific number and at the time it was about 30% was our desired growth rate month over month we were highly intentional about how fast we wanted to grow and then we worked backwards to figure out what that looks like so in august 2015 we wanted to grow 30% we were starting at about $25,000 in mrr our churn was 70 12% then which is really bad it's much much better now but then we plugged this in to some pretty basic math and figured out what amount of revenue we needed to add again this sounds obvious we went a year and a half not doing this and I guarantee there's a lot of people here that don't go through this kind of discipline so now our entire job becomes really easy now instead of trying to grow as fast as possible we have one simple goal $10,843 in new monthly recurring revenue our marketing team our growth team had one goal now one goal like the whole thing became so much simpler and then we would take this number and try and build a bottom up model and figure out where it would come from so at the time we had three things that were happening in august we would get about $100 of organic upgrades per day which should be $31100 but $3,000 in organic upgrades we had weekly webinars to our free customers that we gave an offer to upgrade to a paid plan and that brought in about $1,000 per thursday and then we were banking on an enterprise sale closing right so with this we had $8,000 accounted for but obviously there's a problem like we still have to find $28100 in revenue and this happened every single month this number we used to call it the rtbf revenue to be found this number is where we this number and the necessity of hitting this number is the single biggest reason we have grown every single marketing strategy and innovation that we have found has been us trying to work backwards to hit this rtbf number so I will I'll give you a few examples of how this applied at different stages but it was really applying this model figuring out how fast we wanted to grow working backwards to figure out what we already had accounted for looking at the difference and then focusing on how we make up the difference sounds really simple but been the single biggest reason and the single biggest reason we continue to grow so august for instance we realized we could add in a few partner promotions bring in affiliates and do a promotion to them so for instance we'll work with someone like you know theoretically tim ferris or obviously of a lower scale where they will promote teachable to their audience and that we can do 3 of those a month and make up to $3,000 so now we're going into august 2015 with some semblance of an idea as to how we're going going to actually hit these targets so the same way necessity is the mother of all invention hitting this rtbf number was where all of our marketing strategy innovation came about like in the past we were flying blind trying to like work off this big list of growth ideas but it wasn't as disciplined as like okay I need to find $2,843 and I will do whatever possible to find that amount and at different stages we've made this up in different ways right if you have revenue of less than $1,000 and by the way none of these strategies are what I want you to take away like you will have different channels that work for you but just the discipline of going through this exercise but for us this is what worked at under $1,000 direct sales I could literally find enough people email them and sell them myself at under $3,000 we could do a big monthly webinar to all of our free users make them an offer to join a paid plan we could make up an rtbf of $3,000 pretty easily then $5,000 we had to systematize it a little bit we had to like add a weekly webinar we added a weekly webinar on thursdays and we added 1 on tuesdays and that reliably could kind of add 5 k in rtbf 10 k again partner promotions layered up on top of this helped us hit the like bigger rtbf number but at every single stage as the numbers grew bigger we had to keep innovating and find strategies to actually hit these hit this goal so we went inside into every month having some idea of how we were gonna hit our goals don't get me wrong we'd missed our goals 70 to 80% of the time but this exercise of preparing ourselves and coming up with a hypothesis for how we're gonna hit our goals ultimately fueled our entire growth engine so as our rtvf increased so did our marketing innovation here's a couple of specific instances of things we found only because of rtbf so a couple of years ago we raised the price of our lowest tier which was our basic plan it used to be $29 a month we moved it to $39 a month and felt pretty good about it because we added a lot of new features the plan was better and we felt good that that was gonna raise our average revenue per user so in all the future months our organic upgrades would be a higher amount the problem with this is that wasn't gonna help us hit goals this month we still had a difference of about $10 or $15,000 to make up this month and the necessity of hitting that led to us running a campaign where we offered the old price to all of our existing users for a 1 week.

Ankur Nagpal

Just because we needed to generate this like revenue bump that specific month so we ran this campaign it worked really really well we added about $20,000 in mrr for this campaign and this is a strategy we've reused about 3 to 4 times since but the only reason we even found this strategy was the necessity of hitting this goal like the map wasn't adding up so we had to try something that had a chance in hell of hitting a 5 figure rtbf number another example is what we call the summit but back in 2015 we had to make up a lot of revenue on november but we didn't we just didn't have time to schedule enough november but we didn't we just didn't have time to schedule enough partner promotions or anything to make the whole thing work so what we did and it was experimental at the time now it's become a pretty standard thing a lot of companies do is we got by 15 to 20 partners and instead of doing one off promotions we created this massive event where all 15 to 20 people are promoting this one big event we're promoting it we're trying to drive thousands of people to this event and at the end of the event we made a one time offer to buy a teachable plan and again this whole thing when we tried it 4 years ago was a massive experiment we're just like we need to do something big like the math is not adding up there's no other way of hitting these numbers so we did this summit back in 2015 and it worked really well we added $25,000 in monthly recurring revenue from this 2015 event but what's cool about the summit is this is scaled we did 1 2 months ago and again our numbers are higher now and we added a $130,000 in brand new monthly recurring revenue from this event like the scale is fully different now we had 60,000 people sign up we converted 2,000 paying customers but the only reason we even found these strategies was the necessity of hitting a very very very specific rtbf goal so necessity of hitting this is what led to our very very best growth strategies and the best part of this whole thing is the accountability you get because as I mentioned right like 70% of the times we missed our goals but what was cool is this quantitative model like this like now we knew exactly why we missed it like oh the enterprise sale never closed and the partner promotions didn't work that well so now when we revise our model we're going into this with a lot more data and I know this sounds some of this sounds kind of obvious especially for people that have never run a software company we didn't do this for a very long time there's companies I advise and talk to that don't do this it sounds really simple but I've seen far too many companies die despite having arguably a more beautiful product than us when we first started out like better usability everything was better but they succumb to the fallacy of if you build it they will come we were very very very very intentional about all our growth ever since in the 1st year we weren't but ever since then we've applied this consistently and also the corollary to this is it helped us avoid what we call the great idea trap an example is we've wanted to have a conference call all our creators call it teach a con kinda make it like this won't be as cool but definitely will also be in brooklyn but every time we try to like spreadsheet this out and be like what do we need to invest in terms of like marketing team energy to pull it off and what is our expected roi we could never prioritize it and there were a lot of projects like this that when we applied the the rigor and discipline of a spreadsheet that again we're getting to a.

Ankur Nagpal

Where we don't have to have every project have a positive roi back in the early days it was existential we wouldn't be here if we weren't growing so this discipline again it helped us avoid so many ideas that we otherwise would have pursued so this worked really really well till about $10,000,000 in annual recurring revenue or about $800,000 monthly recurring revenue which was let's call it 7 or 8 months ago it starts breaking down at that scale a little bit just because planning 1 or 2 months in advance isn't good enough so we still use a version of this right now it just has to be a full year in advance where as you can see these are real numbers we can't do events all the time so we figure out when we're gonna do 4 or 5 events a year load more growth into those months kind of adjust for seasonality we've gotten a little bit more sophisticated about it like model or churn rate going down and the goal of this is now we have a target we need to hit every single month we're doing a full year in advance because we can accordingly like now we have a finance team we have like budgeting processes there's all this other bullshit that you have to deal with so now we have to plan this a year in advance but it's still a version of the exact same thing we just try and figure out when we're gonna push well in time so we can hire for it prepare for it and so forth and then again we have to work backwards right it's the same exact thing there's just more columns now there's just more channels the other thing that changes is organic becomes much more important because when you have to add $200,000 $180,000 and so forth unless you're getting a good organic lift from your existing customers the math doesn't work out the other thing unique to where we are now is as you can see there our math is still not working out so sadly even though the whole premise of this talk is how we grew without paid next year is when we have to learn how to spend money if we wanna still double year over year which is our goal but this stuff works and has worked for years and I strongly encourage everyone here especially those running a software company but if you're running an strongly encourage everyone here especially those running a software company but if you're running an agency it can be applied if you're running most kinds of businesses working backwards from revenue and applying the every growth model can absolutely work so in conclusion right while we were doing this a lot of people both internally and externally thought this was kind of dumb they thought that we kept doing unsustainable things to hit a local target but guess what if you do something unsustainable repeatedly and if you sustainably can do something unsustainable for years at a time there is no difference between that and like like that is a sustainable growth engine our sustainable growth engine was optimizing locally for months at a time for years at a time until we built what teachable is today so and this growth again just I don't think it needs too much repeating but this growth is what built momentum it got people excited about the company it built morale frankly like operationally we were a disaster for years when you're growing 30 to 40% month on month that's fine like people overlook a lot of stuff it helped grow our brand it's the only reason we were able to raise money my self worth still hinges on how fast we grow and that definitely helped with that so this this is the singular reason we are on we are where we are today so my parting words are don't leave growth to chance guys don't leave growth to chance reverse engineer this this worked for us and it will work for you thank you cool so the first question is from carrie who says talk description said you did it all without facebook ads is that true no paid ads ads at all how did people find out about you ads is that true no paid ads ads at all how did people find out about you it's not true that we've used no paid ads at all but all the paid ads we've used have sucked like we've still not figured out how to spend money successfully and profitably like even the second question is what's our cac whenever we try and spend money it costs us like $5,000 to acquire a customer we've not figured out paid acquisition at all how did how did people find out about us I mean as we brought up like we did a lot of these events we did a lot of partner promotions we did a lot of intentional marketing to get people to find our product so we had a free plan we had a free plan that got a lot of people to sign up and every single year we kept getting better and better at converting our free users to paying users like right now we're at about a little over 5% conversion from free to paid and we've kept growing that number every single time so converting free users is a big strategy affiliates and partners are a big strategy also when you use teachable you end up creating a website that you in turn have other students coming to that says powered by teachable and that builds a kind of nice like organic loop so so yeah most of this happened without paid ads the paid ads we did end up spending money on have not been super successful strategically we still have to learn how to spend money to grow yeah and again like the fact that we can't spend money to grow in my mind is not a sign of strength it's a sign of weakness like we should learn how to do that we've not been able to thus far cool the question is what's your cac and ltv I can talk more knowledge about your ltv our cac is still as I said we don't rely on paid a lot every time we run paid acquisition our cac comes super high but our ltv right now is about $900 and it's kind of trending to the $1,000 mark so our ltv is looking good and it's continuing to kind of ride up there and how much your paid acquisition not at all but we do want to 1 learn how to get good at it and when we do it will likely be pretty social heavy because there's not a lot of search intent behind what we're trying to find can you share the everyday model online somewhere it's awesome yeah I'll probably I'll like tweet it out later or something that might be helpful I'm happy to do that how do you stress test your model to figure out what's working and what's not working and at what stage do you bite the bullet and ditch a particular strategy so the model I showed you right there at the end of every month we would basically look at what our assumptions were and we'd look at what the reality is and then accordingly decide what needs to change so for instance partner promotions are a great example because they work really well for a while and then they stopped working at a certain.

Ankur Nagpal

When we consistently missed our partner promo line item for months on an end we're like okay this entire line item needs to go so the best way of doing this was just again applying this model looking at exactly which part of it like which parts are consistently missing a second example is at some. Next week we're gonna kill our enterprise plan because our enterprise plan still after all these years has no product market fit it's a distraction for the business we're gonna kill our enterprise plan and again it's it's the rigor of like looking at this model and realizing that we've missed our enterprise targets for like pretty much every quarter that this whole thing is not working how has having a tweet go viral impacted your life I don't know who asked that but so I had some tweet about hipster brooklyn shit reach 17 18000 people liking it on twitter it's actually impacted my life quite considerably there have been a bunch of like random press outlets reaching out we've found 3 people to apply for jobs at teachable because of some random brooklyn tweet going viral so it has impacted it has impacted my life a little but mostly it's just it's just been just been funny to look at also does anyone wanna ask any questions like just in person it feels weird to like read this stuff off a screen right like anyone wanna like just raise their hand as well and ask questions off off screen is andy still at the company is andy still at the company yes andy is still andy still at the company he's now working on all our affiliate and partner promotions yeah he is not he is not impressed with the specific picture I chose of him though but anyone wanna ask questions like it yeah yeah so this question is you talked about self worth has have has having a successful company changed your self worth okay wow honestly no like I think like you're I forget where I read this but you're always you're realistically always going to be about as happy as you are now like I don't think external outcomes really truly change it as much as I like to joke about myself worth being tied to how fast we're growing I I don't think so at all if anything the biggest thing having the business has added is it's is really the team I work with has made my life more valuable it doesn't change my self worth but my life feels more valuable for the team I get to work with every single day any questions in person yep kind of the his question is can you explain the unique metric you had I didn't quite understand it is that the rtbf okay so one more time the rtbf was at the end at the start of every month we would figure out how fast we wanna grow and then we try and reverse engineer what are the growth channels we already know are happening because chances are you'll have organic upgrades you'll have some level of growth built in rtbf is the difference between the 2 so in the example for august 2015 we needed to add $10,000 800 $10,843 but we only had about we didn't have $28100 accounted for stand up this is a purely this is a very this is only a revenue model we do expenses separately like our finance team does expenses our growth / marketing team does revenue so organizationally expenses are done by a different department and personally I was never involved with that because I'm not very good at that spending money side of things so what's it doing alright we'll take one last question here so a very good question the question is how do you ensure that short term rtbf does not come at the expense of long term innovation you don't always try and do short term one off webinars to make the difference 2 part answer 1 is at a certain.

Ankur Nagpal

It did, and that's when we realized we had to kind of zoom out and start planning things more in advance. The second thing is we've always kept product strategy out of this. Product strategy kind of applies at a different level where we try to think of strategy over a period of years, but revenue in a period of months. So the short answer is, it definitely has impacted us, and that's when we realized we had to zoom out. But we also tried the opposite, where we tried kind of ditching this entirely, and then we went back to not growing. So we still found that applying this was more good than bad. We just have to get to a point of doing it further out in advance and forecasting a year out as well. But that's a very good question because that is definitely a risk you can fall into. But at that point, chances are your company is already worth something. You've already passed the minimum viable level; like, this is going to be a business level. Alright, cool guys, this has been awesome. Thank you for having me.