Welcome to Bootstrapped, a Dingman Center podcast.
I'm Elana Fine.
- [Joe] And I'm Joe Bailey.
- And as all our listeners know,
each episode of Bootstrapped
features a funder or founder from the Dingman Center
and University of Maryland community.
Today we are thrilled to welcome Terp alum
and co-founder and president of EverFi, sorry,
take that back, yes, sorry, rewind.
Today we are thrilled to welcome Jon Chapman.
Jon Chapman is a Smith alum and co-founder
and president of global partnerships of EverFi.
Welcome Jon.
- [Jon] Thank you so much it's great to be here.
- Well just to kick things off a little bit, Jon,
can you talk to us a little bit about your background,
your specifically in education sector?
- Sure, sure, yeah.
So I really have spent my entire post collegiate career
in education in some form or the other.
I had about 10 years of operating experience at Kaplan
within the time I matriculated at Smith.
I was I guess fortunate enough to get them
to help support my tuition and getting
my traditional MBA as part of kind of moving back here
to the DC area in 2004.
And then finished out my time there in '07
and then at the beginning of '08 as we just talked about
a little over 10 years ago we started EverFi,
on January 17th 2008 and obviously
been involved with EdTech since then
and we'll talk more about that today.
- I know we have a lot to cover but I gotta ask,
2008, that's an interesting time to be starting a company.
There's a lot going on in the markets at that time.
- It was, it was interesting.
In an odd way, though it really gave us
some wind in our sales because the first content area
we started to launch the company around
was financial literacy, and even though it was
a tumultuous time with the economy and the recession
there certainly was a spotlight
on consumers' basic understanding of financial literacy
and particularly where we were focusing
which was young adults and high school.
So in that way it was difficult
from a capital markets perspective and obviously
getting the resources you needed to,
we truly had to bootstrap our business--
- [Elana] Ding.
- As is the name of this appropriate name
of this podcast.
But fortunately we did that for the first few years
and then the venture market started to kind of come around.
- [Joe] Can you tell us exactly then how you bootstrapped
and then what kind of revenue are you generating
from kind of day one?
- Well from day one we really I think,
and this served us well,
we very much focused on driving revenue.
We wanted to create a technology company
that wasn't necessarily on the traditional
get-a-lot-of-users-and-then-monetize-it basis.
We really wanted to create customers, create revenue.
And so we created a model
where we built our learning platform.
We introduced it into schools
but we got somebody else to pay for it.
And by paying for it and licensing it
they were private labeling it.
And so once we had a first MVP of our learning platform
we were quickly able to get some revenue and really
work our way through those first two years before
our fist venture raise.
- So EverFi is a well known company here in the DC area
but for those who aren't familiar--
- [Jon] Still crazy to hear that.
(laughing)
- So can you just step back a little bit
talk about what the original value proposition was
when you launched and what you saw
in the market at that time?
- Sure, sure.
So we are an education technology company at our core,
but we're a very unique one.
We saw a real need back in 2008 to create content
around critical skills.
And you know that first critical skill area
was financial literacy.
We saw a need to teach that in the classroom
using learning technology.
There was more and more proliferation
of using that type of technology by teachers.
And at the same time we saw a need
for the private sector to get involved.
Think about something like financial literacy,
its always been sort of the providence
of banks and credit unions and other financial institutions.
To support that type of learning but had been done
sort of in a way that had been phoned in.
There's been, you know paper-based workbooks,
a volunteer comes in for a day,
kids heads hit the desk out of sheer boredom.
And we said we can reinvent this, we can reimagine,
using technology, using gamification,
using the latest new media to teach kids
about financial literacy in a way
that they could understand it
and we could pass that credit along to institutions.
- So let's follow up because in class
we talk a lot about finding product market fit.
So when you talk about financial literacy for kids,
was this all kids in all classrooms
or were you going for a certain target market
who maybe their parents weren't teaching, they weren't
as financial literate, or--
- It was very much a target market.
It was high school aged students,
which is where most of the requirements
in K-12 public schools were coming to teach this.
So one of the other dynamics playing out here is
you had a growing focus on core subject accountability,
so, you know, No Child Left Behind kind of things
around math and reading and English language arts.
So that skills like financial literacy were falling
to the cutting room floor.
And teachers were wholly focused on those other areas
and so we were able to sort of bring, use technology
as a catalyst and an assistant to try to teach those
topics again in a unique way.
And so we focused on high school because that's where
we felt it was the most immediate fit.
You had students going into the work force,
maybe post secondary, taking on student loans.
They needed to have these skills under their belt.
And so we really used that as a particular age group.
We also went after communities of need.
We went after the communities who needed us the most.
We began the business across some of the poorest communities
in the southeastern part of the US.
We're talking about communities across rural Alabama,
Mississippi, Louisiana.
These were folks who we felt like they were kind of
falling at the short end of the stick in terms
of the technological resources, you know a lot of
urban centers and kind of wealthier communities
had these resources but we wanted to make sure
we provided those communities with the resources
we were creating first.
And so that was definitely a targeted market.
- So you're targeting clearly the high school
students to make sure they have the financial literacy
there's a need for this not only because
they should have it but also
because of the way the curriculum is
evolving, but where is the funding coming from?
- So that's a great question and that's really
I think where we really stuck our landing.
Those same communities I described are kind of
qualify as low to moderate income communities
based on obviously the US census but also based
on a bank's business footprint.
And we're here in Washington, DC where all regulations
are made and one of the oldest regulations of the banking
industry is the Community Reinvestment Act obligations,
where a bank has to execute on fair lending practices
and fair business practices across their entire footprint
including low to moderate income parts of it.
So they are required by law to provide education
around not only to consumers trying to take out
a mortgage if you're an adult,
but also many times this type of investment
into the youth in the community.
So we found our funder in those banks
who had CRA requirements.
- So in just, because this is really important part
of how your model works and so--
- [Jon] It's a very important part.
To dig into that a little bit, so when you went out,
so you were on one side of your two-sided market
which Joe loves, so this is like an added bonus for you.
(laughing)
So you have the students that are your target
that you're getting providing that service,
but you it sounds like a pretty real need for these banks
to be able to say, let me get the job done for you
easy because you have this Community Reinvestment Act
that while I'm sure they care a lot about it,
often not the core part of their business and something
that probably hangs over their head and you're saying
easy, you and, okay--
- Turnkey way for you to fulfill
that regulatory requirement.
Do it in a reimagined and creative way.
That, based on our value prop of our business,
we private label that learning platform as yours.
So one of our first customers and still one of
our biggest customers today I'm so proud to say,
is BB&T Bank, huge bank here in the middle Atlantic
and across the southeastern United States.
Headquartered in North Carolina.
We created the--
- And great supporter of the Smith School, thank you, BB&T.
- Oh good, yes, they're fantastic.
I give them all the plugs they can get.
We created the BB&T Financial Foundations Scholars program.
It started with a single community center
in Richmond, Virginia, where we drove $2500 of real revenue,
which at that time felt like a million dollars.
I literally remember sprinting down to the B of A here
where we just opened up our corporate account
on Wisconsin Ave, which is right near our studio here today.
And building that program for them there.
And then that expanded now expanded initially to
about 100 schools in North Carolina and now today
they're in 1000 schools across their
I think 10 or 11 state footprint.
So it was certainly filling a need for the financial
institution as well as the students and the teachers
in the schools.
- But it seems like it was more than just sticking
the landing, I mean the level of difficultly of this
is difficult because you've got to figure out
how to be scalable from day one.
So can you describe kind of scalability constraints?
- Yeah, so those were real.
I mean obviously technology is a good scaling accelerant,
as we all know.
Our ability to deploy this to a lot of schools quickly
in a remote way was there, but one of the things
we learned early on and has stuck with us to
our core today
and I think we've proven it out as a key part
of our value proposition is we knew we needed
though not just to be able to deploy
through only our technology,
we had to build a team of individuals
that could build relationships locally with schools.
So our, I started the business with two friends
of mine from Bowdoin so I went to Bowdoin
for undergrad obviously a proud Terp for my business school.
My first co-founder and I we were together
for the first year.
So our third partner, so my first co partner is
Tom Davidson, by the way, shout out to TD,
and then my, our third partner was Ray Martinez
and we hired Ray specifically or brought him on
as a partner to be our first person who could go
bring our technology to schools.
Ray really built the infrastructure of how
we work with teachers today.
And now we have almost 200 full time employees
that work all across the US and Canada
and deliver our technology to the classroom.
And that's how we were able to scale.
And it's not the traditional kind of
super high margin because these are full time employees
this is an investment, but we wouldn't have the stickiness
and the impact we've had today
if we didn't have those folks.
- So talk a little bit about what your product
and service is.
How to, how is it used and how do students engage?
- Sure, so today I'll start actually with K-12.
I'll explain three segments really quickly
but we'll focus on K-12 because that's really
the founding part of the business.
So in K-12 just today we still run
our financial literacy curriculum.
The learning platform, think of it as
a highly engaging gamified learning experience,
probably anywhere from 10 to 15 hours of content
that gets supplemented into an existing class.
So typically is high school for financial literacy
stick with that example, or in a lot of career
and technical education classes.
So teachers will use us again, back to that first
thought of teachers are really focused on core subjects,
this becomes a nice scalable engaging supplement
that teaches important skills in often required classes.
And so we are delivering that during the school day.
Our staff that I just mentioned before is working
with those local educators.
Again when we present it out it's private labeled
as an initiative, as sort of a public private sector
initiative on behalf of a bank like BB&T or
TCF Bank in the Twin Cities or US Bank or Mass Mutual
as an insurance company that we work with
all across the US.
They are taking credit.
When a student goes in they're seeing it
being brought to them by that organization,
however the curriculum itself is very neutral.
Meets all privacy requirements.
Has no marketing intention behind it
because we could not operate at the depth we do
in the schools if we had that.
But again, goes back to that regulatory requirement
for those financial institutions, that's a painpoint
or meeting for them and the value proposition
or increasingly because we work with a lot
of different organizations now today
it's also just a great community marketing
kind of, creates a nice halo effect around
their brand, that they're bringing this kind
of education technology into schools, into communities
they care about.
So providing that branding, providing that deployment
into schools, we do a lot of events
and earn media recognition to make sure
that our private sector partners know
that they're providing these types of educational
technology resources to schools in K-12.
So that's K-12.
I can stop there now and I can go into the other segments--
- Yeah so before we move on, because I think that there is,
there's gotta be a value proposition beyond
just kind of the regulatory need to do this,
I mean you're doing the private labeling, you're trying
to build community awareness.
I mean, talk about that and what your customers are saying
about your service.
- Yeah, so I think in many ways it has evolved.
I mean it's still, there's still that regulatory need,
but it's evolved beyond that.
You talked about Elana talked about the outsourced
ability to meet these regulatory requirements.
In many ways we are also an outsource resource
for meeting marketing and awareness objectives
as well.
I'll use another pretty unique example,
one that I'm really proud of and one I spend
a lot of my time on today.
Which combines a couple of passions of education
and sports for me.
So we actually run the community education programs
for all four of other major sports leagues.
The best example to that
is our National Hockey League program.
We run a program called Future Goals so it's a different
content area in K-12 than financial literacy.
It's around science, technology, engineering and math.
And in particular the careers associated with those areas,
using the game of hockey to inspire students to learn
about those things.
And so and that is again back to the private label
initiative, is private label to all 31 NHL clubs.
So if a student here in the DC area is doing it
as a Washington Capitals program, a student in Boston
is doing it as a Bruins program, so forth and so on.
- And so how is that student accessing that content.
- In much the same way I described our financial literacy.
In this case it's just a middle shool aged target group.
It's done thorough, in this case we're done through more
traditional subjects, we're typically working with more
science and math teachers.
- Okay so it's still through the schools but just
with the hockey, okay, got it.
- That's our core bread and butter, it's always, we're up to
now 20,000 K-12 schools across the US and Canada.
And we just layer in different critical skills content.
STEM careers, financial literacy, entrepreneurship,
health and wellness, and we take different private sector
foundation based partners and create private label
programs for different size communities
that they care about.
- And when you say you're working with schools,
are you working with kind of administrators that
then push it then down to, I mean, the school systems?
- It's a good question.
We take a combination approach as the way
I always like to describe it.
So yes, top down through administrators, we meet
with superintendents, curriculum directors,
other administrators.
To try to get them excited about the vision
or the resources we're providing.
But then also from the bottom up,
so classroom to classroom, teacher to teacher,
certainly school building to school building,
principals have a lot of influence over that
direction in the school building basis.
So our full time staff of implementation managers
that I was eluding to before they're building
a blend of those relationships so that's the combo.
- Just as a follow up then when you look
at customer churn or stickiness is the term
you mentioned earlier, are you finding that
once you have kind of all the different stakeholders
kind of all on board with the product
that it's very unlikely that they're gonna leave?
- From an educational perspective we have good stickiness.
However we do have challenges because the reality
of public schools is teacher turnover, administrator
turnover, changing dynamics and requirements
within a district, obviously we all know
although education in the US is very local,
a big reason why we made the decision to have those
localized staff of almost 200 folks today.
Because there are changing environments that we always
have to stay on top of.
And we have to convince our partners who actually
license our program that that's why we have to stay
on top of it, because there is a level of just churn
of just teacher and administrator that we
are managing each academic year.
And our schools team does an absolutely fantastic job
of managing that dynamic.
And I'm proud to say our churn numbers
are in good shape because of it.
But it's not without its challenges.
- So we see a lot of EdTech companies coming through
the Dingman Center presenting to our Dingman Center
Angel Investor Network and the number one concern
our angels have is selling to K-12
and creating the channels, the pipe that you have created
is probably the envy of every EdTech company behind you
is that kind of following.
So what advice would you give to other companies,
obviously no need to compete with you guys,
but who are looking to sell into for a variety tools
into K-12 what advice could you without giving away
your secret sauce but what is your advice to selling--
- I think for us it's based on our first decision
with our model.
We don't ask the district for anything.
So what we're selling them is the value proposition
of the use of our technology.
We made a bet early on that we could never scale
to the level of revenue that we wanted to be at,
by selling directly to school boards, by being
in the middle of a West Des Moines, Iowa school board
and going singing for your supper everywhere across
the company that was not going to be scalable.
We thought that the getting the private sector involved,
creating these private label programs for them
was the better way to do it.
And that's proven to be successful.
It's, I don't have a secret sauce for how to sell
directly to districts.
I mean the only think I'd probably tell fellow EdTech
entrepreneurs is if there are issues you can tackle
perhaps at a state or provincial level
where there is some funding for scaled size contracts
that might be the way to go.
But it's really never been a direction we've gone
other than to sell the value of our learning platform.
- I've got to imagine, if I'm a superintendent
and you say hey I've got a great piece of your
curriculum that's been really successful and the price
is zero dollars, you probably have that administrator's
attention.
- [Jon] Absolutely you got that exactly right.
- But there's also gotta be a feedback loop
where these students who are using it administrators
are helping you improve their product.
Can you talk about how you've evolved the product over time?
- Absolutely and from the very beginning one of
the the core pieces of our value proposition
was our ability to measure the impact
to our learning platform.
So we have always been maniacal about understanding
first of all making a bet back to our sponsors, those
BB&Ts of the world, saying we are going
measure how many students use the program,
how long they spend on it, how much they learn,
how their attitudes and behaviors change
as a result of the interface with it.
We're gonna measure that and we're gonna report that
back to you every year.
And you can hold us accountable.
If we hit our goals we keep going.
If we don't, you can hold us accountable and fire us.
So that measurability has been helpful for the sponsor,
but, to your question Joe, it's also very helpful
to the school administrator.
It's very helpful to them to understand
how does their student population think
about financial literacy or entrepreneurship.
- What are the things that you're measuring?
What are those goals or metrics?
- So there are basically two dimensions.
One is a knowledge based goal.
Around financial literacy or any other topic
we want to understand the did the student know,
does the student know coming out than they
knew coming in?
The second dimension is how did we
influence their behavior.
So we think about something like STEM careers
with National Hockey League and other partners
that focus on that.
Are we getting kids more excited about potentially
becoming a data scientist?
That they might have otherwise not have even known
existed as a career.
- And your platform is able to measure that
with all the users that are using the platform?
- As they're going through the learning experience
they're intermittently answering questions
that are kind of reflection based questions
that can capture that attitude and behavior.
- And so clearly you're very knowledgeable in selling
into the K-12 sector but you mentioned other
verticals, so I know you've expanded into corporate
and executive ed.
Can you talk about in the company,
one, what the products are there,
but even more importantly how you as a company
decided to add on other verticals and get up to speed
on selling in a totally different way?
- Well it's a great question.
So I think it started when we did our Series A raise
in 2010.
One of our main use proceeds of that round was to acquire
an existing business that was operating higher ed.
And they were operating delivering
an alcohol education course to first year students
across probably several hundred US based campuses.
But we saw very similar mission and ethos fit
to what they were doing.
They were based in Boston.
They're called Outside the Classroom.
And they were a great organization we thought you know what,
they would be a really interesting way for us to understand
the higher ed market.
Because it had the same sort of feel as financial literacy
you had a requirement, typically a mandate of the campus
to teach these types of skills.
It was done typically for all first year students.
So by making that acquisition and entering into higher ed
we understood that there were a lot of higher ed based
topic areas that were similar to financial education.
The economic model is a little different though.
Because Outside the Classroom and since forth EverFi,
had in the case of higher ed been able to license
directly to the colleges.
Issues like alcohol responsibility and more and more
important today issues like sexual assault prevention
are obviously required, they're top of mind requirements
in higher ed.
But there's budget and there's mandate to put forth
those types of earning experiences for students
and now for faculty and beyond.
- It's like concern number one of every college president
right now.
- So we created a slightly different economic model
but it had the same again kind of regulatory pressure,
helping a student and kind of faculty administration
population deal with a tough issue.
And we were able to do that starting in 2011
when we completed acquisition and I'm proud to say
through a couple of other subsequent acquisitions
we're now in almost 2,000 higher ed universities.
We are the number one player in that space
around alcohol responsibility, sexual assault prevention,
both for students and faculty.
And then what's interesting about that is in a couple of
those follow on acquisitions that have happened over the
last two years we ended up acquiring two of our
bigger competitors in higher ed who also
were doing corporate education.
So they were doing the same type
of compliance for employers.
- This is all private label right, so if I go into
a university it's gonna look like it's coming
from the university not, but what does that do
to your company in terms of branding and awareness?
I mean, you're the company that's all over the place
but nobody knows about.
- Well it's a--
- [Elana] Until they listen to this podcast.
- Exactly, exactly.
We can get to our fundraising and things like that
but that's certainly put us on the map a bit.
It's actually a label we welcome.
We've said from the very beginning you can read
articles about us back in 2009 we want to push credit
out to the edges, make this all about our partners
whether they're a bank like BB&T or a university like
Maryland, we want to give them the credit for doing this
and we're okay we always use the metaphor
we're okay being the Intel chip inside.
We don't need to be the Dell or the Apple.
- Because that's part of your value proposition, they
don't have to share the credit with you, they're getting
to take the credit.
- So when I teach my IT class I do kind of talk about
the Chris Anderson book about free and giving stuff away.
Have you considered or have you tried kind of that
give something away for everybody and take a look
at where the customers are and potentially then say
hey look University of Maryland you've got
thousands of subscribers that are using our service,
what about going ahead and entering into a partnership here.
- We did that actually as a, we deployed that
as a tactic a few years ago as we saw the requirements
around Title IX really being strengthened around
sexual assault prevention.
We, one of the things that had happened when we
originally built our higher ed course,
sexual assault prevention was sort of within
our alcohol, it was a piece within the alcohol
education experience and we said you know what,
first of all Title IX and compliance aside
it needs to be a bigger piece.
I mean this I a too important too unfortunate
an issue.
And so what we did is we create its own course
we gave it its own context and then we actually
gave it away for a period of time.
We told schools use this for a year.
You don't have to, we won't charge you anything.
It really angered the company we ended up acquiring
because they thought it was kind of a race to the bottom.
But what it did was it proved that our curriculum
could add some value, could give the campus
a necessary tool to meet a new requirement,
and they ended up eventually becoming a lion share of them
becoming paying customers after that--
- So success or failure?
- [Jon] It was a success.
- Success, okay.
- For sure.
But that's, so that's really the only time
we've ever kind of experimented with that kind of tactic
like you described, but definitely a success.
- And so since the title of our podcast
is Bootstrapped, we want to, we talk a lot
EverFi had a very big, like I think $190 million
round within the last 12 months.
Very visible, you kind of eluded to that certainly,
that certainly raised visibility.
Can you talk a little bit about one, that round, and what
I think for our listeners to understand like
their thought of our listeners are thinking
I'm trying to raise $250,000 and convince angels
or venture capitalists to give me those kind of dollars.
What do you do to pitch, raising 190 million dollars?
- Shouldn't we start by saying congratulations?
- Congratulations, yes, yes.
- 190 million.
You don't have to count out how many zeros are after that.
But that's a lot, that's, congratulations.
- First of all congratulations, now answer my question.
(laughing)
- No, no, it's all right.
- [Elana] Where was the company at that point and where
were you looking to and what was the...
- In a new venture finance was absolutely by the way
my favorite course at Smith.
- [Elana] Did you take with Mark Grovic, can you give him
a shout out maybe?
- No actually since retired Bob Baum.
- Bob Baum we were literally
just talking about Bob Baum minutes ago.
- Love that guy.
- I love him as well.
- We'll dedicate this episode to Bob Baum.
- You should, you should. - We will.
- I want you to.
- Holly, take, yes, we will, we promise.
- He was truly my entrepreneurial inspiration,
he knows that.
New venture finance is a process.
You both know this.
I think one of the threads in the process
from when you raise from when you bootstrap
to your Series A to your 190 million dollar round,
like we just did our Series D.
The common thread is you're selling stock in your company
so whether you think that stock's worth $250,000
or collectively $190 million investment you're selling
the value of your stock.
And so that was always really important to us
and I think a great lesson and my partner Tom
came from venture capital so he sat at the other side
of the table and I've just learned so much
from his perspective on that.
From now being on our side of the table
versus the other side of the table.
Is when you're raising that first round
you can't be desperate and say I, we really need this money
we're burning, we're gonna go out of business.
You've gotta believe that you know what we've got
something valuable, you're purchasing shares
in my business, in our company.
And so whether again that's $250,000, 190 million,
it's all an evolution.
And we went into it at every round knowing the types
of investors we wanted.
We always went after kind of top tier investors
not that everyone doesn't want to but we were fortunate
enough to convince them of what we were doing.
We started her locally at New Enterprise Associates
up in Chevy Chase.
They kind of lead our A venture round in 2010
the one we used to acquire that higher ed business.
And then as we kind of moved along we got lucky
with other individuals.
Jeff Bazos lead our Series B round with his
personal investment vehicle Bazos Expeditions
not affiliated with Amazon, what he used, basically
to buy the Post.
And in every stage after that
we finally got to the point last year
where most companies of our size you're kind of considering
the private equity route.
You've started to get big enough where your valuation
can warrant a private equity size check.
For us though what was really unique and what we're super
excited about going forward is we didn't just take
traditional private equity investment, we were
a recipient of a special kind of vehicle out of
TPG's growth fund called The Rise Fund.
It's a social impact investing vehicle.
Obviously designed to support businesses like ours.
And what's interesting today is there's just not
a lot of quality inventory for those, for the proliferation
of the member of those funds to go out and invest.
Especially one that it's scaled to our size
to our level of impact.
And so it was a perfect combination for us
and because it was the social impact fund
it never felt too intimidating because we were really proud
of the business we had built and the impact we were having.
And we knew that we were the type of businesses
that these type of funds were created for.
And so I think it gave us a little bit of a unique
kind of confidence and I know that doesn't really
necessarily maybe really resonate
with all of your listeners,
or others that come through Smith because they may not be
creating companies that can be a recipient of a social
impact investment vehicle,
but for us that was a big part of it.
So it made the number and the size of the round
a little less intimidating
again we just knew we were selling the value of our company,
and we were doing so to have an impact.
- And just for our listeners just so you're clear.
You're talking about Series of funding
and they're labeled A, B, C, so you're D, and frankly
we don't often get to talk to entrepreneurs
who has gone through that many rounds.
And it sound like by the time you got to D
you were, you kind of knew your audience a lot.
Which round was the hardest.
I've always wanted to find out, was it A, B, C, or D?
It's like a multiple choice exam.
- [Jon] It's definitely A or B.
- [Joe] Really, okay so this makes our listeners happier.
So the dollar amount goes up but it becomes easier.
- Well you understand the fundamentals
of your business better, right?
You understand what it takes to grow, what your risk
factors are, you just got more reps under your belt.
Like my unfortunate Patriots who lost, they've been
to the Super Bowl eight times it's easy when you've been
there eight times to not let things affect you.
So yeah, A and B's hard, A's hard because you're
you're tying to really prove you've got a scalable
concept but yet you're still really small.
B is tricky too because once you've gotten over that
you sort of go through some awkward teenage adolescent
phases of scaling and growing your business.
So I'd say those two are definitely
the more challenging ones.
- And how important was it to get somebody
like you know, your partners really for A and B, I'm sorry,
what's the name of the firm in Chevy Chase?
- [Jon] New Enterprise Associates.
- And then you had Bezos and his money too.
- I mean those were always, and in between we'd always
made a very concerted effort to create individual investors
even if they had smaller stakes in those lead folks
behind us.
We were able to collect folks like Evan Williams
one of the co-founders of Twitter,
Eric Schmidt the chairman at Google and his adventure fund,
these were--
- Pretty good list.
- These were folks that we wanted involved
in what we were doing
as well as others that are lesser known but guys
up in New York, Rethink Education that's done a lot of
great education investment and have been a fantastic
partner of ours, we had them as well.
So we always wanted to create folks that we felt
gave us strength, not just in terms of like,
we knew at the end of the day they are just giving
us capital to help us grow our business
and you never want to expect anything more than that
but certainly the strength of those, that association
was a powerful thing for us.
- And so we know when you raise that kind of money
any amount of money, there's expectations
of your investors and what growth looks like
and what the next steps are.
So what next do you guys see yourself as an IPO
prospect, is there, my sense would be like not building
this to necessarily sell it yet, but what do you think
is gonna happen?
- We're still having a lot of fun which is good.
My two co-founders Tom and Ray as well as the many other
talented folks on our executive team are ones who are
still we're really tight
and I think we have a really good rhythm.
So yeah, we're not going anywhere anytime soon.
I think there's probably two outcomes.
I think yeah, there's an IPO, that's obviously
in our company stage that's one of the potential outcomes.
We have great models like 2U, we're really close
to Chip and his team and that business and watching
them go public and really succeed as a public company.
That's one option.
Or I kind of eluded to before you see this proliferation
of social impact funds and there may be possibilities
where we could get other one of those involved
as we continue to grow and certainly any private equity
investor wants to that's a natural kind of occurrence
is they invest at one stage and may turn it over
to another fund so I think that's probably another
potential option.
But who knows, we're still.
- And you're having fun.
- [Jon] We're still having fun, yeah.
- So last question for you, Jon, is to think about,
we have, as Joe mentioned a lot of our listeners
are either in startups, want to be, thinking about
launching something.
Can you, and are in that where like
everything seems so hard.
Every part of the business, you can't look anywhere
where you say oh that's the easy thing
that I'm gonna do today.
But as you look back to get, what can you, advice
could you pass along for those entrepreneurs
who look at where EverFi is like if we could only
be where that is, like what do you think were some of
the key decisions that you made in those really hard times
that helped you get where you are today?
- I'd say a couple things.
Number one I mentioned this earlier in our conversation.
Go after revenue.
Figure out what your model is.
Whatever it is.
Ours is unique, it doesn't have to be exactly like ours.
Figure out what that is and stay focused on it.
It doesn't mean you can't be focused on your product
or other pieces of the business, but really understand
your economic model and what's gonna help you reach
the performer you've created.
Just stay maniacally focused on that.
Hold your team accountable to that.
That's number one.
Number two, and this is a little more fluffy
but at the end of the day it's true.
You have to have to always believe that you're gonna get
to where you're gonna get.
You have to walk around, when we talked about
our network back in the day I used to joke
with Tom our co-founder, he'd always talk about
our school network if we were in like five schools
in a district we'd sort of like assume that we were
gonna be in the rest of the 15 so we'd sort of say,
oh yeah we're in 20 and we're in 1,000 when maybe
we were starting to move there.
But you've gotta kind of sort of have a little
bit of swagger and belief that you're bigger
than you are.
- You're a Patriots fan, right?
- That's right, that's right, and so, that is,
a yeah, I've got a little bit of Massachusetts bravado
to me that's where I grew up.
I think that's gotta be,
you've gotta take that into the room.
Whether you're meeting with a superintendent,
whether you're meeting with a dean of student affairs,
whether you're meeting with a CEO of American Express.
It doesn't matter.
You have to show that what you're creating
is gonna be something really special and really unique,
and let that shine through.
If that happens, whatever you're in you will succeed
and you will get there but that's a big piece as well.
- Well Jon that's great advice.
Thank you so much for being in studio today.
And we're excited to watch where things go
over the next couple years.
- Absolutely.
- Thank you, Jon.
- [Jon] My pleasure, thanks for having me.
- So I thought, hearing from Jon really delivered
on what I had hoped to in this interview,
because I think that one, the way they have developed
a very unique business model, and he also had,
can articulate both sides how he's getting a job
done for both sides.
Specifically a very acute painpoint for the banks,
that when most people look at their business model
they probably don't understand.
So recognizing that there was a way to pair these two,
the need for this kind of education in the classroom,
and then all the way over here a very separate
customer for them and be able to match them together
to create this really incredible platform
is just really impressive.
- How many times, Elana, do you and I sit down
with startups, with founders, with students,
and say fall in love with the problem?
And absolutely the whole story of EverFi is,
here's the problem that was presented.
We have a financial crisis we have to go ahead
and ask these banks to go ahead and provide
some financial literacy.
Banks don't know, or they're certainly not in their DNA
to be all about education, and so he's taking his background
from Kaplan, recognizing that there's a way to
go ahead about this that's much more scalable,
it's gonna be engaging to the students through gamification,
it's just a great story.
And then of course to the theme of of course
our podcast about bootstrap the idea of saying
look, I know there isn't a very healthy capital
market out there so we're gonna go ahead and bootstrap this
get the revenue, do as much as we can to scale it out.
The white labeling or the private labeling to go ahead
and make sure that you can do it, fantastic.
- And I think that also whenever you do a, some kind of,
whenever you do an analysis of what was happening
at the time when a startup was really able to really
get traction, and put all the pieces together,
EverFi is just a perfect example of what was happening
at that time.
Because of the financial crisis because of, as he mentioned,
No Child Left Behind, Common Core, the evolution,
things changing in the regulatory environment
in both places, and like you mentioned, the team
that they had put together was a really unique
combination at the time.
And gamification being a new thing from a perspective,
EdTech and not just video games.
And so pulling that all together at a very unique time.
You kicked off the episode saying wow, 2008 what a crazy
time to start a company.
Well you know what it was the exact right time
to start this company.
- Yep, I mean, how many times has like the right idea,
even the right people but the wrong time.
I think everything kind of aligned for them
back in 2008.
- And I think my interest in watching kind of
their funding pattern is really interesting
to hear him talk about the people that he brought in
as funders along the way and all the different,
we talk about with entrepreneurs all the time,
and even students.
Anyone kind of putting a brand together.
Whether it's your personal brand or your company,
what are, where do you allocate your time to make sure
that you have certain credentials, and check the box
in certain places.
And I think they did a really good job of that
by bringing on BB&T.
They didn't just, they found a brand name bank.
They knew they needed a brand name to go with.
They went and found brand name investors
and sold their case to that when they could have taken
other capital and then let it all come together.
- Not just the way in which they're working with the banks.
The way they're working with the people helping fund them.
I mean they recognize their partners.
And you know, yes it is much more difficult
in Series A and B to go ahead and raise the financing,
but to vet your partners, to be very selective,
to understand, to have the patience.
You know how many times have you worked with entrepreneurs
who are saying I need to move quickly before somebody
copies my idea, and it takes a real kind of patience
for an entrepreneur to go ahead and wait and say
no we're gonna make sure we do this the right way.
We should have asked Jon how many times did he pass
on other banks that might have wanted to do this?
Before finally saying no this is the right fit.
- Well I think that wraps up a great episode
of Bootstrapped.
We promised Jon that we'd dedicate this episode
to Bob Baum, - Shout out to Bob.
One of our all time favorite professors at the Smith school.
So once again for listening to Bootstrapped,
a Dingman Center podcast.
I'm Elana Fine you can follow me @elanafine or through
thedingmancenter@umd_dingman.
- And I'm Joe Bailey you can follow me
on Twitter @josephpbailey.
And for all of our listeners I know I close out
the episode by encouraging you to bootstrap your next
venture, we actually invite you to go ahead
and bootstrap today so that when you're talking about
your Series D ten years from now you can go ahead
and be a guest on Bootstrapped.
So please do bootstrap your next venture.
Thanks.
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