Once: Cracking the Six-Figure EdTech Enterprise Sale with Matt Pasternack

Speaker A: Foreign. Thanks for joining us. For another founder led sales stories where founders who have successfully navigated their founder led selling journey share with those who are still in the middle of it. I'm Pete Kazanji, author of Founding Sales the Startup Sales Handbook and your host. Today we have Matt Pasternak, CEO of Once, which upskills school district staff to deliver one on one reading tutoring to kindergarteners. Matt has scaled Once to over $2 million in ARR with six figure deals and just a uh, three person sales team all while navigating the notoriously complex education tech landscape. Matt is particularly interesting because he was previously a sales leader at Clever which was acquired in a substantial outcome but had to completely rethink his sales approach when selling to academic officers rather than IT departments. My biggest takeaway from our conversation were Matt's brilliant uh, research partnership strategy to create compelling events in a noisy market, his counterintuitive focus on Only the top 500 districts when he realized that all sales required equal effort, and his insights on importing trust through strategic sales hiring when subject matter expertise alone isn't enough to get in the door. If you're selling into relationship driven markets with long sales cycles, you're going to find Matt's journey particularly valuable. So with that here's Matt. Hey folks, thanks for joining us for another founder led sales stories. I'm here with someone I'm very excited to talk with today. Uh, Matt Pasternak has a phenomenal background for teaching all of us about founder led sales specifically in the ed tech space. Uh, Matt has a particularly interesting background insofar as he was previously a sales leader but he was a sales leader having previously been a founder and doing founder led sales himself. He also has deep expertise in the subject matter that he, his current company wants is uh, is, is working on um, early childhood literacy teaching, et cetera. So all this is to say that if you are interested in enhancing your edtech, go to market. Matt uh, is going to be a phenomenal resource for us here today and I'm really excited to have him share. So Matt, thanks for, thanks uh, for joining us.

Speaker B: Happy to be here. Great to see you.

Speaker A: Wonderful. So for, for folks who aren't familiar with ones and uh, that might be probably if, if some teachers have stumbled upon us, perhaps they would be familiar with it. Um, but for folks who are not familiar, maybe you can tell us a little bit about what uh, what the problem is that ONES tackles um, you know, for what organization type and then who are the people at those orgs who really really care about that. Um, which of course will characterize to us all like what your ICP is and who the Personas are that you guys address.

Speaker B: Sure. No, great question. So the challenge that we focused on is reading. Um, and if you talk to, you know, school district superintendents across the country, reading, uh, or lack of reading proficiency is going to be, you know, there um, are students lack of reading proficiency. They're usually proficient readers. Um, is the, yeah, um, is, is, you know, is generally a number one or number two problem. Um, and the reason it's that way is just that the ability to read unlocks the ability to learn autonomously. So you know, if you can't, you know, if you're a fifth grader, a seventh grader, eighth grader, you can't read. Like you have to pay perfect attention in class. Right. You can't miss a thing the teacher says because you can't read like you have no other way to acquire. You space out whatever is not happening. If you can read, you can learn, you can follow subjects that are interesting to you, you can, you can learn independently. And so, you know, it's just been chronicled over and over again. Reading well below grade level just, you know, they're just completely capped academically and in many cases in life outcomes. So that's, that's the problem. What we do specifically, um, is we upskill and entry level, um, school support staff, uh, these are folks with titles like AIDS or paras or teaching Assistants, um, to provide one on one reading tutoring instruction, um, each day in person to uh, primarily kindergartners and in some cases first graders. And um, the reason this is compelling to school district leaders and school leaders is a lot of times these staff members, like they have them in the school, but it's highly variable what they're actually doing. Um, so you talk to CIO of a school district and you say, you know, how many paras do you have or A's, you know, they might have a number. And if you say what are they actually doing for exactly, it'll be every like, like just anything. So in a well functioning classroom, they're leading small groups and working with kids and reading and doing you know, all these wonderful things and other places they're literally stapling papers and putting up bulletin boards and you know, it's like, it's. Is that the best use of the scarce talent in the school district? And we kind of, we provide a way to sort of like mechanize that approach. Exactly. And just have, you know, you know, uh, predictable, predictable outcomes.

Speaker A: Got it. And you mentioned, I think the CAO is that the chief academic officer. Yeah. And so I, I, presumably that's the person who cares about this problem. And as a result would, would care about, um, would care about once.

Speaker B: Yes, yes. At the district level, the chief academic officer at the school level will be the principal, you know, who's ultimately in both cases responsible for the student outcomes.

Speaker A: Interesting. And so are you guys able to sell to either of those? Like you can, can you sell, can you presumably you can sell a whole district. Can, can you also sell a single school?

Speaker B: Yes, we can, we can sell the both. Uh, and in the beginning we were sort of more likely to sell the individual principals. The problem with selling the principals? Um, well, I'll say, you know, when we first got started, I mean I wanted to see, you know, is this a real thing? Right? Like, like can we stand out from the noise? Like just a little bit of kind of channel testing. And so I just bought a list of principal emails and you know, emailed every principal in America and just, you know, know, kind of put a subject line of, you know, kindergarten, one on one reading, tutoring. And until email deliverability stopped emails from being delivered, um, the open rate was, was really, really high. Um, and so, uh, I think was the beginning was like a 50% open rate. Um, and that was like, these are principals who generally don't open emails. And so that said, hey, there's something here. The people who are responsible for um, you know, kids learning like, are interested in this approach to solving this problem. And um, but then you kind of peel back a layer of the onion and you discover, you know, principal. Great. Like let's, you know, let's set up a pilot, let's get started. And it's like, well, I need, you know, sign off for my chief academic officer that I see this is aligned to our overall curriculum. I need sign off from our HR people that are, you know, paras or you know, specialists can, can engage in this kind of work. I need sign off from, you know, this team. It's like by the time you get all these sign offs for a single principal, like you've done an enterprise sale. Exactly, you've done enterprise sale for, you know, or uh, a pretty small opportunity. And so we quickly realized, no, no, these are district sales. Like this is, there's a level of complexity here. This is a district sale.

Speaker A: And so, and um, then those are those district sales. Those are the ones that are the high five figure, six figure average selling price. And so that's like the current kind of like transaction size, more or less.

Speaker B: Exactly. Yeah. Yeah. I mean even at, you know, even at a single school level, you know, we'll be, you know, sort of low to mid five figure and district, district size will be, you know, mid m.6 figures. So I mean these are, these are uh, you know, they're pretty, pretty large commitments. Um, you know, in, in education, you know, we often think if you're on the outside of education, you think, oh well, you know, school districts exist to just kind of optimize the dollars, you know, spent on helping kids learn. You know, in reality, school districts are a workforce composed of tons of adults. And school districts are really interested in educating and upskilling their adults who can then educate and upskill children. Um, and so we have a kind of strong, in some ways we're kind of like service as a product type offering. Um, at least we are today. And um, so school districts, they really want to pay to develop their staff. Um, and that's become pretty big contracts.

Speaker A: That's interesting because I would imagine, I'm sure we'll talk about this a little bit more. But like on the one hand there's a lot of ed tech software out there that is focused on, you know, the individual students, what have you. Matt, you'll get a kick out of this. My son uses Clever all the time. Um, every time he logs into Clever with a QR code, I think of you. Um, I appreciate that for, for, for folks that are listening. Uh, Matt was uh, an early sales leader at ah, at Clever, which eventually was acquired um, in a, in a fairly substantial outcome. So he's been around the block when it comes to uh, ed tech stuff. But the point is, is that there's a whole constellation of, of software that is kid facing, but once is kind of adult facing with the purpose of of course improving kid, kid behavior. So on the one hand it's probably a, um, you know, it's, it's less crowded. On the other hand it's a, ah, kind of like one step removed. It's like a little bit of like a, you know, Rube Goldberg machine there where we're like we're going to get this person to be more successful and as a result that's going to get these, these folks to get, be successful here. So I imagine that has kind of implications there. So m. When it comes to um, uh, your current size of the sales organization. How, how big is that?

Speaker B: Yeah, uh, well, we're, I mean we're very small. We're Very small today. Um, you know, I focus on sales, and we've got two other folks on the team who focus on sales. So there's.

Speaker A: And you guys are like, north of a couple million dollars.

Speaker B: Exactly. Yep.

Speaker A: Nice. And so, and then maybe you can tell everyone a little bit about, like, your background because, you know, you're a little bit of a unicorn insofar as you're a founder who used to be a seller, but previous to that you were a founder. Maybe you can help folks kind of understand kind of, uh, what you bring to the table.

Speaker B: Yeah, no, certainly. I mean, I, I, after, after college, I started off as a teacher, middle school English teacher in New York City. And then, uh, at the time, sort of a lot of the interesting. I thought a lot of the kind of interesting work, uh, in education school districts was really around kind of human capital and kind of labor law. And so I went to law school looking to sink my teeth into that. Um, but then I ended up doing an internship back in New York City where I taught at a project, um, it was called School of One. And it was basically trying to deliver a, like, fully personalized learning experience to every child in the classroom. This is very early days, you know,

Speaker A: pretty, pretty large language model. Yes, Very, very ambitious.

Speaker B: This is pre, pre 2010. And um, you know, the, the architecture of this system was sort of described. It's like almost like an airport terminal. It's very unusual, but it was very compelling in its own way. And, uh, the, the chancellor of New York City schools, you know, he's responsible for a million students and, you know, does press conferences about various topics, ended up doing many press conferences that summer on this particular pilot project. And usually press conferences were very hostile. You know, why are you firing these people, are doing all these bad things? And in this case, the, the, the, the, the press questions were, when can we tell our viewers this will be live in every, in every single school in the city? And it was just this moment because from, in, in a certain sense, the personalization of learning was really designed to kind of solve this human capital problem, which is, did I have one teacher serving 30 kids? How can I ever scale excellence in that system? But that's not how the median sort of. The viewers saw it. They saw no, every kid needs to learn what they need to learn. They need sort of a personalized journey. And so it just sort of hit me on the head at that moment that the future of education innovation is not going to be in kind of labor contracts. It's going to be in, um, A hybrid of technology and space and people and all these things coming together. We were super early. I then went on to start a couple very small startups, uh, in education, um, which uh, which, which didn't thrive. But I understood a specific problem from them about the technical challenges of just rostering students into software. Um, and so when Clever got started, I read there was like a, you know, it was still in YC and like had the little YC article in TechCrunch about what they were doing and I was like, oh my gosh, this is a problem. That's.

Speaker A: I know exactly how big of a problem this is.

Speaker B: Yeah, yeah, yeah. So it was uh, it was, it was, it was really fun. So I had six wonderful years of Clever.

Speaker A: So I mean in addition to like already being a subject matter expert and by the way folks, when, when Matt says that out of school he was a, was a teacher, uh, meant to teach for America, which you know, is a, is a hidden source of uh, very strong talent. So hiring TFA folks fresh uh, out of uh, fresh out of tfa, usually they uh, have been an inner. Not always, but like oftentimes they've been in inner city schools. So like they can definitely take a punch, so to speak. They can be for like really great, uh, they're like great SDR candidates, you know, great, uh, kind of like early CS candidates, really good communicators, really good management, uh, like classroom management. Because like if you're managing a classroom of like 20 or 30 kind of like wild and crazy kids, then you know, managing uh, a call of you know, three of three stakeholders or customers or whatever can, can be, uh, you know, that's all a piece of cake on a comparative basis there. So you know, uh, tip for folks is that if you see TFA on, on somebody's uh, on somebody's LinkedIn profile, it's usually a pretty good signifier. So obviously you had a lot of experience here around kind of like the initial product hypothesis and the fact that reading was so problematic. But like, you know, we have to validate these things and make sure that other people view that that's the case too and not just view that it's a problem, but also are ah, willing to spend money on it, um, in the short term and then also validate that, you know, they, they think that the way that you're tackling it can be um, a meaningful approach. Especially in your case where it was a human capital approach as opposed to like a pure software approach. Um, how did you, how did you go about validating.

Speaker B: Yeah, it's a good question. So, so initially it wasn't actually planning to be in schools, uh, because you know, one thing I, you know, at Clever, um, you know our customer, we were a market, uh, sort of a two sided marketplace. And so we had you know, schools and districts on one side with education vendors on the other side. And I, you know the successful education vendors are quite successful and have really strong businesses and very strong customer relationships. And it's like a great place to be the fledgling startup kind of education entrepreneurs. Um, it is one of the most challenging environments to sell into. And you know, when you sort of walk the halls of conferences, um, there'd be there, there'd be a lot of sad looks often. So I was not initially looking to, to sell the K12 districts even though I knew, you know, there was a huge pain point there. Initially our hypothesis was, you know, if we can train any adult to teach kids to read, just knock it out in preschool and basically sell through preschools. And so you'd essentially kind of like have a person in a preschool who's doing this and the preschool would advertise to the parents, the parents would pay and the whole thing would, would kind of operate inside these preschools kind of

Speaker A: like, more like a, like a wonder school go to market where like. Because um, I'm m thinking back at a buddy who ran inside sales at, at wonder school and I think that they're pretty much the dominant like attendance, um, kind of like ERP solution for these little like preschools, daycares, call it what you will, et cetera. So the, the hypothesis was before we get into public school where it's predominantly where, where the students go post preschool, post daycare, kind of get in front of it there. Uh, yeah. Okay, so what, what disappused you of that notion?

Speaker B: Totally. And I mean, I mean the things, the things you can avoid in that model, right? There's no, you don't need to sell the chief academic officers, you don't need curriculum alignment, you don't need any of that. You just basically say hey parents, I can help your child learn to read before they even start kindergarten. And that's a pretty compelling idea. And so the first step involved in that is you just need to call a ton of preschools, right? And just, and just see what the response is. And so I got a list and you know, I did one sort of local to me so if I got a hit I could drive out and meet them and you know, um, um, and it was, it Was wild. I mean it, you know, you would, you would call and the person who was running the preschool, some one of their employees is, is off that day. And so they're now working with a whole room of kids. And so like you could not reach these folks. You know, you call, the phone would just ring and ring and ring like it was, it felt impossible to get through. And then, you know, there were certainly some that I made it through too. And then I'd go and visit and we'd meet and talk. And it was just like the process was getting so attenuated for what was then ultimately still going to be a sell through to parents. I mean it was just, yeah, like this was not, this was not, this was not going to be a scalable model. Um, and so, you know, at that moment it was, look, Obviously selling the K12 is hard, but you know, I do have some subject matter expertise. Um, and you know, let's bite the bullet and do it. And it might not be as hard as selling to preschools. Um, so, you know, got it.

Speaker A: And I think a good kind of remark there regarding what you just, um, you know, noted is that, you know, ultimately the purpose of a sales motion is to figure out the highest commercial intensity crossed with the lowest level of effort path to service a need.

Speaker B: Right.

Speaker A: Um, I was uh, teaching a class at HBS recently where someone was asking, one of the students, was asking about the difference between consumer and business. And ultimately I think that the thing to remember is that utility for the most part is derived by the end user, is created at the end user level. And then the question is, who could pay for that? Are you going to go straight to the end users? Are you going to go to some sort of bundle of the end users? Um, are you going to go to a bundle of end users and then someone else pays for it? Are you going to go to a bundle like a big bundle of end users? And then, you know, and so the ultimately and where direct sales comes in is when you are addressing a large bundle of end users. And as a result there needs to be human communication and negotiation and understanding and um, education and so on and so forth. That that requires a person, a seller to, to do that, to understand the landscape, to communicate to multiple people as compared to, you know, someone walking into a liquor store and like buying a, a bottle of Gatorade. Right. Which of course does not need an individual seller to kind of convince folks there. Um, okay, so, so that, so, and

Speaker B: then, and then if I, if I could add one more sort of dynamic to that, to that, you know, two by two. You know, I think there's also, I mean I think that the qu. Like yes, the long run goal of course is to, is to offer the highest commercial value in the most uh, uh, efficient way. I think that you know, your sort of classic kind of disruptive innovations are textbook examples of doing that. Um, and so I mean when we were at clever like you know this, there was this you know, roster provisioning user accounts essentially it was this massive problem and it was particular to this environment of K12 because you know, you have kindergarteners who can't read and you're supposed to remember, you know, five different usernames and password. They can't type either. And it was just like bananas, like on the surface.

Speaker A: Amazing. QR codes.

Speaker B: Exactly right. And so you know, we got to QR codes and we solved that problem. But it was, it was a very discrete problem. There weren't clear solutions. The way we solved it was you know, a little complex because of the two sided marketplace. But it like in, in a certain sense kind of sold itself and that was product led growth. Um, and so very quickly you get to you know, an efficient sale with you know, with, with reasonably high commercial value. I think that you know, in, in kind of harder areas. Whether it's because it is you know, a um, you know, sort of a more established market, you know, like reading solutions, you know, it's been working on this for decades and decades or whether you know, you're just building something just like something to solve a really complex problem. I don't know that you can always choose both at the same time. So you're saying kind of can I get high commercial value and sales efficiency day one in certain products? You can, and that's cool. Uh, but then you can also recognize other times like in the long run, that's what I want. In the short run we're going to have a lot of sales inefficiency, um, to deliver something with high commercial value. And then over time we're going to tune the sales efficiency, um, along with sort of the market demand to where we want to get to.

Speaker A: I think there's, there's two things there. Some problems only exist in organizations that have lots of stakeholders. So that my quintessential example of this is uh, workday HRS software. There is no product led growth workday at the enterprise level.

Speaker B: Right.

Speaker A: Because you know, if you're going to, if you have a hypothesis that you're going to do a solve the problem of HRIs which is you know uh, uh, hacking your employees, paying them, onboarding them, you know, managing them, et cetera, et cetera. For a 1,000 or 10,000 or 100,000 person company, you're going to talk to a lot of people. Right. And then similarly even if you think that you may eventually be selling, serving a problem or solving a problem that doesn't necessarily require a ton, a ton of people to engage with early on and that may be the end state. Right. Earlier, uh, and then you may eventually get to a more efficient motion where it might be self serve or it might be like a one call close or it might be inbound or what have you. Early on you can paper over a lot of this like a lot of inefficiency or sorry a lot of product, um, friction if you will with magical human words. Right. Listening and then speaking to people. So it's like the YC do things that don't scale. You can do things that don't scale in a sales capacity. Sorry, you can and ought do things that don't scale from a sales capacity uh early on in order to validate that there is a non zero ability, there's an existence fruit of go to market here. And then later on we can say, we can start forming hypotheses around how we can make that either more commercially intensive or less laborious on our, on our way to do that. So on, on that, um, on that topic, uh, maybe you can tell us about who your first customer was and how you went about closing them.

Speaker B: Sure. Yeah. So. So. So you know our first. Actually our first customers was um, were. Were relatively easy to acquire which you know, gave me kind of early confidence that hey you know like there's, there's something here but. Right, yeah. That yeah, it doesn't mean it was scalable in any sense. It was just you know, um, it was like an N of you know, N of a couple. Um, but basically ah.1 I had a friend who uh, she was starting a um, separate reading company it turned out. Uh, but she's introduced me to her, to her first pilot customer and they were, they were thrilled to kind of layer this in and try this. Um, and so it was you know just a kind of a transfer of a relationship um into you know what ended up being a really successful pilot. But you know that was, that was that one.

Speaker A: So like the notion of uh, uh, having someone who has a neighboring solution that is probably not competitive but interestingly probably could be your budget maybe um, that where you see something that's Potentially complementary and then using that as is almost like a kind of lightweight referral. Ah, partner early, early, early on.

Speaker B: Yeah. Or you know, I, I, I, I, yeah. And I'd say even more broadly, you know just sort of using, using your existing network. Right. I mean if you're going to sell into some industry and you don't know a single person that industry like it's, it's going to feel a little bit more uphill than if you know a couple people you could pick up the phone and call and kind of start you know with, with, with your network. Um and then our first you know, large district partner, um came you know, sort of through one of my you know, network from, from a co founder. Um, so you know, sort of similar thing where it's like look, I trust this person and therefore I will you know try this new thing uh, even if I don't fully understand the new thing.

Speaker A: And and I think that that can be a very powerful thing when you have the subject matter expertise or you're, you're selling into a silly like my most recent company Atrium, we do sales performance management software, sales analytics software. Know a lot of salespeople. I'm sorry I know a lot of sales leaders part um, and, and I knew that through modern sales pros and a variety of other things and also um, my book founding sales, uh, etc. And so that can be very, very powerful. Now I think the important thing to kind of caveat here is these need to be people who are in your network that have the problem or at least you have a hypothesis that uh, they have the problem that you, that you solve. Because I think one of the problems that can founders can end up kind of spinning their wheels a lot on is selling to people or engaging folks that don't have the problem. I mean that would probably be pretty egregious. Um, but maybe just kind of have like the problem or a hypothesis of the problem at a secondary or tertiary uh level versus very intensely having the problem. And so I think the important thing there is at least having a credible hypothesis that they have the problem that it is that you're solving or ideally. And of course then you validate in discovery that what level of priority um, what level priority that is. Um um. And I mean I think you're an interesting cat here in so far as you know, clever you guys did a bunch of sales at or scaled substantially at at clever and um, you know to many, many many millions of dollars of, of ARR had a fairly substantial sales organization there Founder led sales. A little different than managing, you know, multiple, multiple salespeople and kind of running a sales organization. So when you think about the resources that were most helpful to you in your own kind of, you know, restart your founder led sales journey, what were most helpful for you, would you say?

Speaker B: Yeah, well, I mean, I'd say, I mean, I mean, I mean, I think the, the first resource, you know, that I relied on, I think most people would, is just your experience. And so you're absolutely right. You know, sort of Clever had gone through this motion. What was interesting though, and I knew, I knew this going in, but at Clever, you know, we were selling to District it, um, and district it is a very different buyer from sort of the district curriculum or academic side. And so district it is just more of a standard SaaS sale. Right. It's like you have this problem, you know, we've got this answer. Oh, we've got it in a way that's free and you know, one thing leads to another and we can scale very, very quickly. Whereas in academics the pace is just, you know, sort of 1/10 because, because they're just very focused on, well, is it aligned to what we're already doing and how are we already using resources? And it's hard to. On the academic side, you know, sort of the concept of ROI just looks totally different. And uh, and so in some ways, you know, although I had experience, you know, we sold into, I don't know, Clever was in, you know, upwards of 90, 95% of the top 100 districts. You know, I mean, we had sort of done all the big sales there were to do. But in this for the, for the

Speaker A: IT people, not for the chief academic officer.

Speaker B: Exactly.

Speaker A: And maybe those folks don't talk or maybe they hate each other, like, who knows?

Speaker B: Totally. No, I mean, there were times at Clever, we tried to sell products to achieve, you know, sort of upsell additional products to chief academic officers. And it was like, if your CTO or CIO is giving the academic officer curriculum advice, like, no, it's like, it's like the worst referral possible. You know, so it's like, I do not want to hear from the computer person.

Speaker A: You could literally, you could imagine you have a champion customer who's like, you know what? I would love to introduce you to the chief academic officer. And you're like, let me stop you, Bob, because while I appreciate that we're going to go into the front door because, you know, if we come in through the basement, you know, being, being, being carried by you the, the IT person.

Speaker B: Exactly, exactly. So look, I think you drive your experience and I think founders are probably more likely to be successful when the kind of sales motion they're setting out to do is similar to what they've done in the past. It's exceeded. So if I had done another startup selling to, you know, education CIOs, um, you know, I would have had sort of like a, probably a cleaner path to get there, um, than when you're kind of going out on your own. But when you're going out on your own, you know, you need, you need resources. I mean, founding sales is amazing and you know, everyone should read it. I read, read, read, read many of the early drafts. Um, modern sales pros. Um, again, just having a community where people are just constantly kind of pinging through ideas and questions. You know, you just kind of, you learn a little bit by osmosis because, um, when you're starting a company, you're really busy, so you don't have time to read that many books or, you know, sort of source every answer. But if, you know, every day in your email, you're kind of listening to other people's questions and occasionally chiming in. Um, I think it's a nice way to, you know, sort of gradually learn. Um, and, uh, you know, so those are helpful resources.

Speaker A: So as you guys, I talked about your initial customer there that was like, kind of referred. And then you had your initial like district level customer. Did you guys, you guys evolve your pricing over time at all?

Speaker B: Yeah, yeah, yeah. So, um, you know, it's interesting. It's so, you know, when I was at Clever, we were a SaaS, a purely SaaS business. Um, and as a SaaS business, essentially you're making up your pricing. In the, in the pre AI days, you know, you had zero marginal cost. Right. And so like the price was purely based on value. And in the early days you have no idea what the value is. And you know, you come up with some kind of calculator, but you really don't know. And so you sort of name a price. And I think you've given this advice many times, Pete, which is, you know, you kind of experiment on prices to your early customers. You then will change the price, but don't change on your early customers, like keep them, like, doesn't matter grandfather for referrals. Exactly. And then you kind of keep on kind of like locking in that price and it gets more and more specific. Um, you know, in the AI world, it might be a little bit different. You might have Some actual marginal costs, but it's probably not terrible, um, in the kind of business we were doing, you know, service as a product which, you know, there's sort of a larger AI vision behind it. But at the beginning, it really is kind of service as a product. Like you have real marginal cost, um, but you don't know what that marginal cost is going in. Right. Because you don't like, you can build models but, well, what's the cost of this person who's going to scale to manage these people and the resources they'll need and oh, are we doing one day of training or two days of training? Like, these decisions have big consequences and you don't know upfront. So, you know, I think it's important to set, you know, a, uh, price. I mean, you know, we're in education, we're mission driven, so we're not trying to gouge the market in any sense. But you want to set a price that shows like there is real value behind this, to confirm that people want to pay for value. And you just have to accept that the price is probably going to change over time. Um, as you, you know, in our model, as you better understand your marginal costs, um, in a, you know, in a, in a pure SaaS business, as you sort of look to optimize your price.

Speaker A: Did you guys. So how did you, did you just like set, set a price initially and then, um, you know, reserve the right to like modify that or were you just very agile as you brought on increment, like as you sold an initial customer and then you saw what your delivery costs were because it sounds like you actually have kind of some staffing costs on your back end in order to deal with. And so then as you more kind of understood the dynamics of, uh, that delivery model that then helped you update to. All right, well, I guess in the next sales conversation when they ask us what our pricing is, boy howdy, we better say 2x because we're taking a bath on our previous customer. And so were you just like you. Yeah, because you had, like, your delivery costs were unclear that you had to be super, super, super, uh, you know, flexible as you, as you sold incremental customers.

Speaker B: It might be a little, a little more subtle than that. You know, when we start with pricing, um, you know, I think where you typically want to start, you know, with a, with a small business is, you know, the simplest pricing possible. Right. And so, you know, our customers used to paying, uh, whatever they're buying. It's, you know, per student, primarily how they think about cost per student.

Speaker A: Don't fight with them on that.

Speaker B: Exactly. So we're going to sell it, you know, sort of at the cost per student and then everything's bundled in, you know, and you're going to, you intend like, of course you're going to, you know, put triple the customer success into those early customers because you want to make them really successful. Nonetheless, you've got this kind of like per student price. In our model, we provide um, like human feedback and coaching, um, based on these recorded instructional sessions that these paraprofessionals and aides are delivering in the classroom. So we have, you know, real marginal cost. We have a coaching staff that provides this coaching. Um, what we discovered in the, you know, kind of the pure per student pricing is, you know, a school district might say, great, we're going to do, you know, we're going to deliver this to, you know, 100 students. Okay, fair, fair. Um, and we're going to have, you know, we're going to have 50 people deliver the instructions. We personally be working with two students. Well, 50 people are delivering instruction. Each of the two students, I'm now coaching them. You know, we 50 people and it's the most, you know, inefficient use of resources ever because you know, that coaching is helping them teach two kids to read. Um, and wait a minute, you're put,

Speaker A: you're paying me for 100 students, but I'm teaching, I'm upskilling 50 of your people.

Speaker B: Exactly.

Speaker A: I just charge you on a per person I'm upskilling. But I buy all my stuff on a per student basis.

Speaker B: Precisely. Precisely. And so how did you manage that? Yeah, and. Well, I mean, I mean, I mean, uh, eventually it was just, I mean we found ourselves in a position where we were essentially like negotiating with our customers. Like, like we would essentially kind of like sign a customer or you know, and then, because again, it's a multi level sales, we assign the district customer, then we're going to principals and we're saying, no, I think you can serve these 20 people, you know, these 20 students with three instructors instead of four instead of five. And then you just kind of put your customer team in just this unenviable position of their very first interaction with their customers is like negotiating over ratios. And it's just, it's not, it's, it's not the right thing. And so eventually, you know, we, we needed to move to a model that kind of more reflects our costs, which I had always thought was a. No, no, you price on Value, not costs. But, you know, when you actually do have costs, you need to take cost into account and then that, that ends up streamlining everything like that is better for the customers as well, because then you meet with the principles and it's tape. You know, we, the district has paid for this many, you know, this many staff. And so that's not even a discussion. We're just like moving forward. So we now price on kind of staff and students. So it's a little bit more complicated. Um, but again, we realized by the time we made the pricing change, we have a complex sale. So if you have complex pricing, like, you know, if you're buying, and I tell people, you know, if you're buying, you know, Oracle or something like that, you know, you're not, you're not looking for like a single line item price. Like every, you know, every quote is going to be highly customized. And so if you're doing a complex sale, you can, you can have, you know, ah, more subtle pricing in there.

Speaker A: And so as you guys were kind of iterating your, uh, as you guys were kind of iterating your, your pricing here, as you saw how it landed in the market, what have you, uh, did you end up iterating your ideal customer profile at all? I mean, obviously you already covered one of those where we started out selling principles. And then we found that we were doing an enterprise sale in order to get $5,000. And that was silly. So started talking directly with the, uh, districts instead. So obviously that was one shift where you realized that the juice wasn't worth the squeeze. So you might as well kind of try to take down the entire orchard to start, if you will. Um, what else did you guys, how else did you guys iterate?

Speaker B: We, Yeah, I mean, I mean, we realized essentially that, you know, every sale, every sale was sort of equally complex, like regardless of customer size. And so it just made sense to target not only districts as opposed to schools, but the largest districts. You know, there's 13,000 districts in the United States. You know, top 500 of them are roughly half the students in the, in the, um, in the country. I'm m getting those numbers right. Um, so, um, you know, and so, and so you start with, you, um, start with, you know, we just realized like, you know, you could spend all this time selling a small district and they've got three elementary schools total. Um, rather spend your time selling the larger school districts. Um, of course, if a smaller one comes inbound. Wonderful.

Speaker A: Yeah. So it's, so it turns out this is this is very much like the workday sales motion where the reality is that, look, it's going to be a slog regardless. So we're going to go ahead and take down, uh, the highest commercial intensity, not because it's low effort, but because everything is high effort, more or less. So we might as well, we might as well go after those folks. Okay, interesting. So maybe you could kind of take folks through, because when I think about edtech go to market, I think about essentially my son's iPad that has all these little tiles of different apps, each of which is not like dramatically costly. And I know the folks at Musela and some of the other, um, and like seesaw, what have you, a lot of these are kind of like lower asps or sometimes more velocity. This is the opposite.

Speaker B: Right.

Speaker A: Intentionally, maybe you can kind of take folks through what the sales motion looks like and like maybe how it started out, maybe not at the principal level, but what it initially looked like at the district level and then how it changed, predicated on this realization that all of these are slogs. So we might as well, we might as well make sure that the pot of gold at the end of the rainbow is, is fairly substantial here.

Speaker B: Uh, yeah, yeah, no, it's a, it's, it's a great question. I mean, I think, I mean, the sales motion is, I mean, yeah, it's a complex sale and there's going to be kind of a complex sales motion, you know, for that, for that type of sale. It was funny. I actually drew on sort of when we got to this point, I drew on some previous experience which we hadn't gone through in my background. But after leaving Clever, um, the VP of engineering and I teamed up on a new startup. We went through yc. It was a nonprofit actually, but we built open source voting machines called Voting Works, which is doing great today. Um, and, and I was, you know, I figured, oh, I, you know, I had done, you know, I'd done education, sales, so I'd be, you know, sort of state, local, you know, sounded, sounded fine to me. Um, in the voting machine market, the voting machine market is the wildest market there is. Um, and it is wild in, in sort of like impossible. It's like, you know, scaling, scaling the hardest cliff. Um, because in the voting machine market, basically no one buys like within a state, no one buys voting machines for a period of, you know, basically between like 10 and 20 years while their current voting machines just kind of are in use and sit. And then at some point, the, um, at some point the state decides, okay, we're going to fund purchase new voting machines and suddenly there's a feeding frenzy in the state and it's like, it's the only time to sell voting machines for like the next 20 years. Now, voting machines, the, the, the kind of local registrars or the, you know, the folks who, who manage voting within, within the county or within the, the kind of voting district, um, they have like fairly close customer relationships with their, um, with their voting machine vendor. Um, because they're like if there's a problem, like some boat flipped or whatever it is, it's like, you know, these are the people who, you know, are going to come to the rescue and okay, let's rerun that ballot to the machine and show that nothing actually flipped. Like the machine just froze, you know, and sort of solve all those problems. Um, and um, and so, and so we um. Anyway, and so those relationships are basically impenetrable. Right? Someone's been working with someone for 20 years. Now there's the feeding frenzy. Am I going to choose the person who I've been, who have a trusting relationship with for 20 years or some new vendor who has some neat feature? No, I'm going to go with my trusted relationship. So I sort of brought that back to education. I said look, you know, people have been selling Reading solutions districts for literally 50 years. Um, um, it's not, it's not a feeding frenzy in the same way. It's you know, district driven decisions, not state kind of funding opportunities, although it is in some cases. Um, but it's the relationships that matter. You know, it's the trust that matters. Because how do you really distinguish one product from another? It's really hard. And so, um, and so what we did, what I did early on is I had a former contact, you know, a friend who um, who was friends with a woman who had started a company, um, which we'd encountered at Clever. And so at Clever, our business model was unusual in that, in that we would sell to the vendors into education and then they would kind of distribute our solution across the school districts they were in. Well, one of the most prolific distributors of Clever in the Southeast was um, an assessment company that none of us had really ever encountered or heard of before, but they had customer relationships across the Southeast. Um, and so they were doing something really well. We didn't know exactly what, but they were doing.

Speaker A: Selling well.

Speaker B: Selling well, absolutely. And they had a great product. And so it just happened when we're starting, once I met the CEO of that company, they'd gotten acquired. And um, and she said that, you know, she was actually a former kindergarten teacher and deeply believed in this and wanted to get involved. And so it was just, you know, happenstance and really good luck and really good timing. Um, but she had this relationship and so I thought back to this voting experience where you know, people buy from the folks they trust. Um, and so that was our initial channel essentially was her relationships.

Speaker A: I think it's funny because we all as entrepreneurs and solve this. Usually it's new which is why you have to consider something a new um. And if that is the case then this person should uh, look at it and say hey, there's an opportunity to do something better here. Um, and all of a sudden like poo good things happen. And so the, and I think that that is the case for the most part with the exception of these high, high, high criticality situations where there's a lot of risk at play, uh, or deep customer relationships. And so usually I guide against the notion of oh, you should hire salespeople for their Rolodexes. No you shouldn't. That's what Zoom info is for. Or that's what LinkedIn Sales Navigator is for. That's what Apollo is for. Except in the scenario where they are the, the thing that is in the Rolodex is not the contact information but, but the trust, the relationship. This person is not going to hose me the multi round gameness associated with

Speaker B: it a hundred percent. And just to kind of put even a finer point on that, you know, one thing, I mean education is hard for many reasons. One thing that makes K12 so hard is that the best way to sell an 8K12 is through customer referrals. Right? Someone's used your product, they love it and they're going to refer to someone else. Well, it takes, you know, normally if you sell into a district, they pilot at the beginning. So it's like a very small sample and then takes a year until you get results. By the time that like that customer might even refer someone else like that year's gone by because I to get results. Which means the next like selling year is already over. So you're already. So it's sort of like two years in like in the best circumstance until you get your first referral. Um, and so if you're in that situation, you either say okay, I'm going to just do this to myself and it is going to be, you know, our exponential curve is going to start really, really, really flat. You know, for many years, for a long time or we're going to speed it up at the beginning because we need, we need to sort of trust

Speaker A: into, into the, some sort of like boots bootstrap mechanism.

Speaker B: Exactly.

Speaker A: So let's, let's actually talk about both of those things because one of the things I, I ask uh, founders to, to think about is compelling, uh, events in, in their go to market. Because everyone always has problems and the question is like, when does the problem that you address become the top, the tippy tippy, tippy top one to be solved by your, by your customer in question and then so one identifying that. But then the other thing is, is that even if you can identify that and you can get in contact with them, and if they don't trust you, then like, what was the purpose of like, okay, cool, we identified this compelling event that some other vendor is going to be able to execute on or what have you. So maybe we can talk a little bit first about compelling events and kind of if there are compelling events that you guys were able to identify, then we can kind of talk about. Okay, cool. Executing against those, using those, those referrals or maybe those. And actually maybe they're parallel paths.

Speaker B: No, no, it's a, it's a, it's a great question. Look, I mean in, in, in education, specifically in tutoring, um, there, there was a compelling event which was the federal government spending hundreds of billions of dollars, um, you know, injecting hundreds of billions of dollars into K12 education. Um, you know, sort of during and immediately after, um, the COVID pandemic. Um, that, that was the compelling event. Um, districts had more money than they had ever had before. Um, and uh, and you know, lots of companies took advantage of that compelling event. Some with good intentions, uh, maybe with slightly less good intentions. Um, um, but it was very hard to stand out in that environment. Right, because, you know, you're brand new. Someone else has been doing this for five or ten years. Um, um. And so the compelling event was actually, it was like harder. If a district was having an RFP because it's compelling event, it was like a worse time to sell to them. Um, because someone bigger was going to sort of make a bigger splash. We basically had to figure out how to create our own compelling event. Um, um, and it was not obvious how to do that. Uh, but I think, you know, we did something that, you know, typically happens in founder of sales, which is that you just go back to like, how did you get your first customer? How'd you get your second customer? Like, what was the compelling event? There and can you replicate that and scale it? Because, you know, it worked once, like maybe it could work again. Well, for our second customer I mentioned, you know, the first was, you know, a school that was referred by, by a friend. Basically our second customer. We were an interesting position where, um, where a, a, uh, large school district was interested like uh, separately from us in working with kind of a premier research institution to study, you know, things within the school district. And we were also connected to, to a premier research institution. And so we said, hey, what if we bring the researchers into the school district to study our program? Like that would be, that would be a neat kind of marriage of like everyone's interests and we kind of bring everyone together. Um, and, and, and, and that really got us, you know, running a randomized control trial with you know, sort of premier researchers in this school district got us into that first school district. We then realized afterwards. Wait a second. Like, um, participating in research is very different from just the ordinary email traffic that school district leaders get, which is, hey, you want to pilot my thing? You want to pilot my thing? You want to do this? Look at the results we had over here? No, no, no. We want to work with top researchers to really kind of prove whether a certain approach works. Um, and so we recreated that compelling event. Um, and we, you know, ran a study, you know, in year one we ran a study, but then in year two we, you know, didn't just invite one district, we invited, you know, um, lots of districts. And um, and we're now about to run our kind of third large research trial and we invited all of the top 500 districts.

Speaker A: Uh, weird.

Speaker B: So, yeah. And, so, and so the compelling event was to participate in this kind of premier research trial, um, which featured us.

Speaker A: I think there's some. That's an amazing hack. I love it. Absolutely fantastic. So I think there's a couple generalizable call outs there. One, yes, your customers should have, uh, a desire to solve the business problem that they're responsible for. In, in you guys case, that would be improving reading scores. Like there is a tactical metrical thing that they like they're supposed to raise reading scores, you know, in these standardized tests. Great. Um, they should want to make their staff better. But humans are humans and if there's always the what's in it for me. And so being able to put a little feather in your cap saying, well actually I spearheaded this approach in my, in my district and we had these outcomes and I'm, you know, and I participated in this research paper obviously is going to be something that is uh, individually compelling to a chief academic officer or what have you. And so um, actually a friend who I do sales coaching for their ah, company has this great turn of phrase where might um, be secondhand in sales and enterprise sales. We're in the business of selling promotions and so in this case the individual is going to get promoted. Maybe not, but like in a metaphorical sense, yes. If they potentially, you know, raise scores, like reading scores or what have you across the board in their org and then the uh, in, in their district. Sure. But also if they can say, and hey look, I'm a co author on this, on this paper. Um, I mean don't underestimate those sort of things. So that's the first thing. And the second thing is, is that you can kind of create these content things that kind of go alongside your, your solution. There's like a variety of ways of kind of figuring out like the bundle along alongside that. Um, I'm not thinking about many others off the top of my head, but if you can kind of think about like the two things and how like the complementarity of it and like maybe this is the easier thing to get in there. Like in this case like the research thing was the easier thing to get in and it was the Trojan horse on which the, the um, you know, reading curriculum, writing, the reading human uh, capital upskilling curriculum was uh, like the actual payload to get in. That can be that, that can be a clever thing that I. You see that, you see that fairly good. There's other ways that organizations sometimes do this, like doing an assessment, like hey, we can, we can do a health check for you. Right? Or we can, or you can lead with a friend of mine, um, this woman, Jen Abel, there's a phenomenal Twitter follow. Um, she talks about how professional services can be and maybe just like a statement of work to do something. Right. In this case you guys were doing research but you could imagine it could have been like an assessment or what have you. That is a one off thing. That is not actually technology. That could be the initial transaction and the technology is like pulled along with it and then maybe sticks around afterwards. Um, what a clever hack. Good job Matt.

Speaker B: Um, I appreciate you saying that. And you know, and I also think obviously at the end of the day like the authenticity of that compelling event to what you're actually selling or what you actually do matters. Right? And so you know, you might come up with a hack where you know, you're able to you know, gather people for free. Food in some venue or something. And it works, you know, and you know, clever. I mean we came up with lots of, you know, lots of really interesting, you know, lots of really interesting approaches. Um, they were often quite successful. But I think, you know, in this case when you really kind of reach out to someone about, you know, you kind of create a compelling event, but this really germane to what you're actually doing, um, it just, it uh, resonates in a way that just kind of like a free offer that's just, you know, sounds like a noise, right?

Speaker A: Like I need another, uh, I need another Starbucks gift card. Like I need another hole in my head. Um, although in the case or maybe you're selling to, to uh, the teachers, it might be, you know, those sort of things that we in the technology industry might take for granted might actually land. Okay, well, so you had mentioned customer referrals and how. I think what we're talking about here is trust. Yeah, right. And, and so one version of trust is, is a uh, seller that you've worked with before, maybe in another capacity that can kind of be like, can inject this, this trust here. Another kind of like transitive property of trusted vendor can come through a, ah, referral or customer referral. I feel that especially in an age where email deliverability is a disaster and even if you're delivering your emails, people's inboxes are overflowing, especially with like AI SDR stuff or what have you. An authentic customer referral can be very compelling. Um, but of course the challenge is, is that they're not super scalable just yet. I haven't seen kind of software or kind of processes by which to scale them up. Um, so one, maybe you can kind of talk about why they were so compelling. I think it's probably pretty obvious in a high trust, kind of high criticality, high average selling price environment why that's the case. But it's kind of two, maybe you can talk about if you've done much around systematizing or kind of like levering that at all and maybe you haven't, but it would be cool if you did.

Speaker B: No, it's, it, it's a great, it's a great question. I mean, look, we would, I mean we would, we would be on fire if we, you know, if, if we had, if we were able to systematize that in the way that we want. Uh, you know, point I made earlier and again this is maybe more specific to education where you know, it's minimum a year to see roi, um, and Potentially years. If you want to study like long term outcomes for kids, there's just not, it's not like oh, I implemented this thing and I saved X dollars in six weeks or whatever. And now I'm just gonna start advertising it to all my friends. Um, for us, you know, it's years. And so if you're in a kind of, you know, if you're in an environment where referrals are, are probably gonna be, you know, your most important channel, um, but referrals are gonna take years. You know, how do you speed that up? You gotta plant lots of Cs, right? And so it's just like gotta start now. Exactly. How can I get as many big districts in as many different states as possible? Um, because you know, folks are going to look to well who's doing what in my own state. So I'm gonna as many districts in these states, um, and just plant that seed and invest everything in that seed. Knowing them successful flowers, it's gonna work kind of in that location. So you're basically like prepping the soil for you know, future referrals. Even if it's going to be years until kind of those first referrals come. Which you know, again this is a challenging sector. And I'm um, and I think there's

Speaker A: another thing there too is when people think about like territory management or prioritization of other, their total addressable market. If what we're saying here is, look, the critical path, the way that you're going to get to these organizations is going to be through a customer referral. It just is what it is, right? Because of the high asp, like uh, or through a trusted seller. Then once if we have somebody uh, who is a raving success story in a region, then once they are a raving success story in that region, guess what we're going to do? We're going to get all the like, forget like oh, let's go prospect into Florida. We are, we are doing all of Ohio. Why are we doing all of Ohio? We're doing all of Ohio because this district right here got to wild success and we are going to ignore everybody else to a certain extent and just focus on getting in front of every single, every single district, uh, in Ohio. Um, I, I, I like that. What? When it came to like a, ah, channel that didn't work at all. Um, what just didn't work? Like what didn't work?

Speaker B: Yeah, no, there were, there were two, uh, yeah, two, two, two. That, that didn't work at all for us. And again, obviously you know, for everyone it's different. You know, one. I mean, so again, initially I mentioned sending, you know, kind of a cold email to every principal in America got you know, very high open rates at first. Um, until, you know, we, I wasn't using any email deliverability tools. Um, and then it, you know, it just like, I mean the emails just stopped getting delivered. Um, and, and that was.

Speaker A: So it sounds like you injured your, your, your domain, your deliverability on your domain. But that's you know, remediatable by doing incremental domains or what have you. Yes, like it sounds like the open rates were good where the reply rates were like.

Speaker B: Yeah, yeah, okay. I mean, I mean again that was a long time ago and that was principal. So I don't have like numbers off top of my head. But the replies. Yeah, no, I mean the, the, the replies felt, the replies felt strong. But, but just you know, subsequent, subsequent attempts at you know, at you know, and then it's like a year goes by, another year by subsequent attempts at cold email. Even with you know, a little bit more focus on deliverability and multiple domains and that type of thing and warming and everything, um, was just really hard. Um, you know, school districts, I mean they're just getting, they're just, you know, they are just getting these emails by the dozens.

Speaker A: And this was targeting the chief academic officer.

Speaker B: Yeah, yeah, yeah, targeting. You know, and these are not like AI written emails and they're not like sent out to you know, 10,000 people at once. You know, it's like personally written emails but cold, but going out to folks. Um, and again they're just getting so many personal emails every day m. That it just, you know, sort of, it just didn't go anywhere.

Speaker A: Uh, so like the, so the chief academic officer at these districts kind of has a similar situation to like a chief, um, chief uh, information security officer. Like a, like the CISO in enterprise sales is the budget holder who is just like completely overrun by, by vendors all, all over them. Right?

Speaker B: 100%.

Speaker A: And uh, I think the funny thing about this little bit of a tautology here insofar as it turns out that the people who have lots of budget, we'll probably have lots of vendors seeking that budget.

Speaker B: Right.

Speaker A: And uh, so it's like a juice worth the squeeze sort of situation yet again. And so it's probably not surprising that what I've heard, one of the things that works really well in at least enterprise CISO go uh, to market is relationships and uh, Rolodexes and what have you, like a person that I worked with at the previous generation of Endpoint Security now is a soft, like, is a sales representative, like a true, a representative of the organization at this new, new category of um, of Endpoint, you know, Endpoint Security or Endpoint. Um, uh, yeah, Endpoint Security. And so I will take his meeting because we worked together previously or what have you. And it sounds like that's kind of a similar situation here where anything that is cold, right, Cold email, cold calling or what have you is in a sea of other things because these folks have large budgets that they're able to disperse like a, like a ciso. And instead the route around that is a very relationship driven go to market or relationship driven sale, um, not dissimilar to the, you know, kind of the enterprise security market.

Speaker B: Interesting. And, and, and I would, you know, I, I, I would even say because, you know, I, I doubt it. I mean I doubted ourself. I said, oh, maybe we're just not doing cold email the right way. Or you know, everyone says, oh, email's impossible. You gotta call these folks. I was like, well, maybe we're not, you know, good enough at calling. So we even, you know, hired a, hired a, like outsourced firm, you know, some, some SDRs basically, you know, fully focused on education, uh, to make these calls and they made no more progress than, than, you know, I did without them. Um, and it was just like these folks are just getting, you know, the exact problem you described. They're just getting mobbed with things all day long. And so what, you know, what we discovered was going back to the compelling, like, so, okay, so cold email, like cold email generally not working. Um, cold calling, not working. Um, you know, you're just fighting against, you know, just like thousands and thousands of other folks doing the same thing. And so we generated the compelling event with the, you know, sort of selective invitation for the research trial. But we still have to get that event out to people. Like, just the fact that we have a compelling event that works, like, how's anyone going to hear about it? We're not going to have a Super bowl commercial. Um, and so I did find an email deliver deliverability service I really liked called, um, Light Meter. I don't know if you've worked with them. I think they're, they're, they're, they're, they're yc. Um, but I'd worked with another one previously where they were kind of putting pixel tracking into emails to check on deliverability. And then I talked to someone else and they were like, well, Pixel tracking itself kills deliverability. I'm like this uh, is just, it's just you know, it is wrong every which way. Um, but light meter I was, I was very pleased with and you know they basically just, they do kind of all the automation around, you know, spinning up all the different email boxes and sending out and monitoring you know, what's happening with the different boxes. And so when we had the right compelling event with you know, right deliverability infrastructure and they did a great job, you know and, and you know, a very, very clean contact list, uh, you know we reached out to the top 500 districts and we got you know, a 10% reply rate, you know, like 10% like positive um, interested reply, you know, sort of like stop emailing me. And so that was like that's huge. You know that is, that is the like that's it. Right? Because that's like basically 10% of our target market responded that they wanted, they, they wanted to learn more. Um,

Speaker A: and I think there's, there's the offer which is what you guys are describing the offer. Like hey, come participate like a highly resonant offer. Come participate in this research. Why yes, I would love to be a co author on this paper that I can put on my resume. I'm so glad you're in my m inbox. Um, and then the second piece of it might be. No, well unfortunately even if you have a coffee being one of 100 emails that day is maybe not great. So that offer delivered by somebody who has a good relationship like the you know, the former enterprise seller who has, who's sold to all those, those districts before, um, or in your case the founder of this other edtech company. Those two things together, right? So like an offer that really hits and then someone who will get the offer read, right or get the offer

Speaker B: someone or just you know, really great deliverability infrastructure that is primed for that compelling event. You uh, know I think those are, those, those are the two that can really work and we've had success with both.

Speaker A: And there's other mechanisms. This is one of the things that I, I would kind of talk with folks about is, is using other reflectors as well. Like in the, this presentation that I give around kind of founder led sales basics, I describe all of the like verbs, right? All the actions that you can take to, to do selling and what we're talking about prospecting. So as an example, if you only have 500 accounts and you know each one is worth a hundred $thousand or $200,000, you can send a FedEx envelope, right? You can send a candy gram.

Speaker B: Yeah, right.

Speaker A: We're not talking about. This is not rippling. This is not Zenefits, right. This is not seesaw, right, where we have like, uh, a, you know, 1k average selling price or what have you in that scenario. If you have an offer, what we're trying to do is we're trying to get someone to read it, right, to consider it, to get the mind virus into their brain. So they go, oh, okay, yeah, actually that is, that is kind of interesting there. So you should consider these, these things that there are other vectors by which you can deliver words and images to a, uh, counterparty for them to kind of consider. Um, let's, let's change gears a little bit here and talk about customer success. So, um, you know, what was particularly important for customer success when you were starting out? I mean, it sounds like in these large organizations there's a lot of change management. Um, so I imagine being very high touch is important. What did you find that was most important there?

Speaker B: Yeah, I mean, what was sort of nice about our model and makes it well aligned with, know, kind of a complex enterprise sale is just that, like our business is very high touch. Um, you know, we are literally providing coaching to, um, to these, you know, frontline, um, frontline employees in schools to help them improve their reading tutoring. Um, but we're also working with the school leadership to schedule, you know, the sessions and the coaching sessions and all the instruction and there's logistics and which space is it happening in and who's doing it and oh, this kid's out for a day and this, you know, this paraprofessional is leaving and who's going to take their place? And so there's so much, there's so much back and forth. And that is really, I mean, that's great in an enterprise sales environment, right? Because it's like once you go deep, if you want to work in a very collaborative way, um, with, with your customers. So that was kind of built into our model from the beginning. Not to try and increase sales, but just simply because that's what we needed to do to deliver the value that we were trying to deliver. And so, yeah, so we were, we were high touch from day one. We needed to do some learning about. Well, if you are, if the district is your buyer and you are high touched with the principals, that might not be good enough. Like, you also need to be high touched with the district because just having principals who love you, right, does not mean that, uh, the district is going to be second year.

Speaker A: So you need to be high touch with the budget holder. Or as I'm going to quote my friend Jenigan, um, success in enterprise sales or at least from a NRR standpoint derives from making the budget holder the user.

Speaker B: Yeah, yeah, yeah, right.

Speaker A: If they're logging, if you're, if your budget holder is logging in every day, it's good.

Speaker B: Totally, totally. And so, you know, so, so, so we had, so we had, you know, so our kind of success arm really focuses much more on the individual school buildings but we needed you know, also really strong relationship management on the account side.

Speaker A: Yeah. And then also I think one of the benefits of it, you might, folks might look at this and say, oh man, that's like you know, laborious and time consuming and costly from a customer success standpoint. But these are also assuming that your product fits the market and people really enjoy it. These are future customers that then maybe teachers probably don't move between districts a lot. But I can imagine in this situation that maybe the paraprofessionals do. And so to the extent that you can then track those folks. Right. So friend of mine runs a company called User Gems that does kind of like tracking probably hard for teachers because they don't imagine, they probably don't have the best LinkedIn profiles in the world. But tracking as your users go to other places and then jumping on them over there can be a very powerful thing if and only if you start

Speaker B: superintendent's tenure in a district might be two or three years. You know, chief academic officer might be a few years. So they're, you know, you have a strong relationship in one district and boom, there's your you know, mini virality into the next district and the next. And so you know, that's interesting also.

Speaker A: So the, the teachers don't move around a lot but the super, the superintendents and the chief academic officers do. Fascinating.

Speaker B: Correct? Yeah, that's going to, that's, that's, that that's who's going to move around and, and that's how these companies grow. But it's all this all measured in years. Right. And so it's just why this is just a, it's a challenging sector but it's a very fulfilling sector, a very mission driven sector and a very sticky sector. Like if you can pull it off, you can build a great business because anyone else is going to start up has to climb the same walls. It's going to take them um, you know, the same years or a decade to do so. You can Build a great business. But it's um, you know, it's a marathon, it's not a strength.

Speaker A: There's usually an inverse relationship between deal cycle and win rate and nrr. So the longer your deal cycle the lower your win rate. Right. So essentially like the harder she is to get in frequently the harder it is for them to, to, for you to get back out again because other people can't get in. And you see this in gov tech as well. Like open uh, gov kind of had this early on. And then this is why oftentimes these businesses over time they have a footprint in a given customer and they start just adding incremental like jobs to be done. So like a great example of this is a, this govtech roll up company called Granicus. I forget if they're owned by Vista or Thoma Bravo or what have you, but you get in, you get super embedded, you get very sticky, you get, you know, into workflow, et cetera. And then you start adding kind of incremental things. And so maybe, who knows, maybe that's the future with uh, ones is we're doing upscaling with respect to Reading. And then of course maybe we do upscaling with respect to XYZ for like a different set of audiences or what have you and thereby you know, add another 30% to our contract value or what have you. Who knows? We're going to solve the problem first of, of knocking down all 500 of these uh, these districts first. What, um, maybe you can tell us, tell everyone here what your early sales stack look like. Obviously you talked about like email deliverability and multi multiple inbox kind of management and warming and that was, what was it? Light what?

Speaker B: Um, for, for a specific, for a specific highly successful campaign we used light meter. It's called uh, light meter.

Speaker A: And so like that's, that's fine but like obviously that's a you know, kind of tangential thing. What else did you use as your early sales stuff?

Speaker B: Yeah, I mean we, yeah, I mean, I mean we have, we have not done a ton of automation. Um, we've used Close, um as our CRM. Um, which you know at our stage has been, has been, has been just uh, you know, just great. Um, and uh, you know that's worked, that's worked well. You know what I'd say the biggest sort of something that um, we were talking about customer success and we talked about sort of being high touch and how that was effective. I think one of the challenging aspects in customer success, especially high touch customer success, is aligning it internally within the company and kind of driving transparency around high touch customer success. Right. Because if you're customer success motion looks like okay, we have a quarterly business review with a customer or we have even a, a monthly meeting with the customer. You know, you can track that and you can say okay, where's the slide deck and where's the, you know, this? And everyone can get it. You can check the box and say okay, I did this thing. Sometimes that can feel like a lot of paperwork but you know, uh, nonetheless it can be tracked. When you, but when you really have like a kind of consultative relationship, not quite forward deployed engineer, but a, you know, a strongly consultation relationship, it's all the interstitial stuff that really drives that interaction, right? It's the text messages back and forth, some of which are, you know, about people's personal lives and some of which are about the product or the customer. It's you know, and, and that stuff is really important. And so um, but, but can be a little bit challenging sometimes to track. And so when you look at it from the outside, a salesperson says well you know, I, I, I, I don't see that many like quarterly business decks. Does that mean we're not helping this customer? It's like no, no, I've like communicates customer 50 times in the last month, you know, and it's like so finding ways to kind of instrument that. Um, and I think we've done an okay job in closed with that. Um, but, but, but we could do um, you know, we could do uh, you know, we could do even better and obviously we could build you know, more sophisticated sales engineering and you know,

Speaker A: really, um, how many customers did you end up closing before your first sales hire? Because I think I was unaware of once's ASP coming into this conversation. For whatever reason I thought it was like your prototypical kind of like low five figure or what have you. And so the problem of course when you're a founder doing founder led sales is when you have these high ASP customers with long deal cycles. You really can't close that many before you have to hire another sales rep or else you're just going to have a company that never grows. And, and so uh, how many, how many did you end up kind of closing yourself before you brought on uh, Cindy? I think it was.

Speaker B: Yeah, yeah, we, we had um, we had six, uh, yeah, we, we had six, uh, uh, uh, customers. Most of them were you know, not, not like, not low asps, but not you know, not enormous. Highlights were not Sort of like big six figure ASTs. So we had, you know, six customers we had sort of acquired through a variety of channels. But it just, it just quickly became clear that um, you know, if we wanted, yeah, if we wanted to scale trust, there was one way to scale trust. Um, and that was to bring on someone who came with trust.

Speaker A: Uh, you know that's really fascinating because in founder led selling, oftentimes the founder is the portable reputation and trust because they have such subject matter expertise in the space. And so the interesting thing here being that even though you do have such a kind of expertise in this, the, because the audience, because the buyer, they're very skeptical of that because they have lots of evil being subject matter expertise, their subject matter experts in their inbox. So you had to prove the high friction, high skeptic, high skepticism sales motion initially and then identified that the, the key constraint here was trust. And so I suppose maybe like one way of solving that was, was Cindy, which is great. And like that was one another way would be. And I, I think actually we were talking about this in the founder led sales community salon uh the other night around um, thought leadership and kind of like content on LinkedIn. Yeah, and by content on LinkedIn I mean there's like kind of like stupid shit posting content on LinkedIn and then there's like actual like hey, like I'm going to write a book on this thing and it's going to be good and, and we're going to distribute it out and lots of people are going to get it. One way you can do this is to ramp your own subject matter. Sorry, the own perception of subject matter expertise. Like ramp your own uh, credibility which kind of hard to do that quickly. Maybe you can, maybe there's mechanisms by which you do that. Like Sam from Mastra has done a very good job of that using through distributing his, his book Principles, um, of AI Agents. But um, but that's interesting. Like essentially you push the rock uphill. Close six customers identified the constraint which was uh, trust.

Speaker B: Right.

Speaker A: And like in this specific market trust was extraordinarily important. Probably like the enterprise security one as well. And so even if you were super expert and you are and you're obviously a very bright guy and can learn things very quickly, the counterparty did not give you credit for that unless it showed up as Cindy.

Speaker B: Right, precisely. And it was interesting. Yeah, no, there was a moment actually that I thought was, was very illustrative of this which is an early call with a very large district know would have been our Biggest district at the time. And you know, one of our first sales calls and um, we were talking about the product and at one point they asked, you know, what, what was our point of view on authentic reading? And normally, you know, when I'm in conversations or sales generally, like I don't like to just say yeah, yeah, yeah, to kind of technical term. You know, if it's like a term of art, I want to be like, you know what, you know, like what do you think of as authentic reading? You know, I kind of, you know, tell me more about this. But. And I'd say 70% of the time, like that builds trust, right? Because you're really learning and like you're really engaged. And maybe we have different understandings of authentic reading. Maybe it's not a technical term. Any case, it is a technical term. And by asking that question they were like, no, we're not even gonna have this conversation. Like this is such an important. Exactly.

Speaker A: Right. Like there was a very critical shibboleth, right. That just went straight over your head.

Speaker B: Totally.

Speaker A: And they were like, get out.

Speaker B: Totally. And, and, and it's like, and the shibboleth was authentic reading. Right. I mean it's like not like, you know, it's not like highly technical. It's like authentic reading. But you know, in the specific reading context like that, that, that does mean something. And so I just, at that moment I just realized like, you know, this is not, this is, you know, I mean, of course I'm, I can talk, you know, about authentic reading, but this is something where like there's going to be a different level of trust. The fact that I've, you know, sold a lot of, you know, school, it is not going to kind of build that level of trust. Um. Ah, but there's people who can do it.

Speaker A: Yeah. I think that I'm part of the, the fact like in founder led sales the whole idea is, is like you're figuring out the path through the, the forest or you're figuring out the recipe. And if it turns out, it turns out that there is a constraint, an insuperable constraint which is this has to the, the words have to come out of the mouth of someone that this person has known for 10 years. And you actually see this in um, in other regions often like this is very common in uh, East Asian sales. So organizations, uh, that then go to market, that go to market in like Japan or China. You, you see this um, also um, kind of like mena, um like um, Middle Eastern, like North Africa.

Speaker B: And to clarify I'm not, I'm not arguing that in education, you know, I, I, I've not sold in, in those specific geographies. In those geographies or in certain geographies potentially you always need like that level of trust. It's like it's an antecedent almost to the, to the price itself. You know, education. It's not that, it's not that you can never have a more junior seller, um, you know, with a little bit less kind of built in trust selling something or talking about a product. But you need those customer proof points first. So it's a chicken egg problem where it's like, how do you get to customer proof points? Will you need trust to get to the proof points, to build the trust? Well then again, how do you bootstrap that trust?

Speaker A: And it's like a scoring algorithm too where it's like um, a whole mix of customer proof points cross with high, like the level of criticality and the size of the transaction. The fact that you guys are addressing these top 500 accounts, maybe if you are addressing the next 500 accounts, the, like the level of, of, you know, of trust might be, might uh, be dialed down or the trust required might be dialed down a little bit, but it still requires all the cat herding and wrangling, what have you. So we might as well go to the top. And so going to the top means that we need to have this like trust importation or what have you. Um, what, um, and kind of like in closing, I think I would love to kind of just close off on some of the sales hire. I know that you've only hired a couple of, a couple of sellers or what have you. And a big component of what's interesting here is, you know, uh, I want to know about hiring and onboarding, hear about hiring and onboarding or what have you. But one of the biggest reasons why you were uh, hiring these people is for their relationships where they can open the door and actually get an audience and what have you. That obviously doesn't take onboarding because like they're showing up with that capacity. What were the other things that were super important for you to, to get right, to make the most out of that, um, kind of imported reputation or imported trust.

Speaker B: Yeah, well, I think, I think one thing that's interesting specifically I think would kind of relate to your world is that, you know, if you bring in, if you bring in folks with more established relationships, they probably have more experience selling on like, more legacy, you know, sort of sales systems and sales software. Um, uh, following more legacy practices. You know, where you know, Atrium. Hm. And kind of you stand out is figuring out, you know, how do you innovate most rapidly and iterate most rapidly, um, on sales practices? Well, you have a catch 22 when you're starting by bringing on more senior folks, which is you don't know your right sales process. Right. Like even if you were a genius at all the different CRMs, like you don't know what fields you actually should track. Like you don't, you don't have a repeatable sales motion yet. And so you're sort of caught between a rock and a hard place, which is, you know, you, huh. You're building a team or initial team of people who have established practices, but they might not be the most modern practices, but those are the practices that worked for them previously. You don't have your own modern practices yet because you don't understand your own sale. And so you uh, end up kind of like adopting legacy practices. And so you have like, you lose control, a little bit of control over your sales motion. And I think that go ahead and

Speaker A: bring in these senior folks that have lots of high trust. They have an expectation that we're going to do outbound via carrier pigeon and we're going to use the stone tablet CRM.

Speaker B: Yeah. I mean, look, I love all the people that we've worked with and you know, I would never want to put anyone down but you know, but I think in a, you know, I think that's totally fair.

Speaker A: And there's a management component to that as well.

Speaker B: Yeah, right.

Speaker A: Where we see this with Atrium's customers all the time. You know, these enterprise sellers who they build their relationship over the time, they're maybe in their late 30s, they're maybe in their 40s or maybe in their 50s.

Speaker B: Right.

Speaker A: And so they have an expectation around how they're going to be managed.

Speaker B: Yeah, exactly.

Speaker A: As well. Like I've been doing this for XYZ number of years. Like I've closed, you know, I've closed more ARR personally than any of your companies have ever earned. So you know, who are you to say X, Y, Z and like you have to, you have to navigate those things. Not only does it show up in systems things and kind of processes like you're talking about, it can show up in kind of managerial things and kind of like coaching and. And you know that you have to kind of like pick your battles there

Speaker B: and even, you know, skepticism of, you know, the lack of marketing of the company. Right. Or sort of the Lack of, you know, like, like all the ways that a startup is not, does not look like, you know, already a large company, um, when it's just at the beginning. So I think there's kind of complexities to navigating that and if you've, you know, been through it and you know, earned some scars, um, then you know, are probably better prepared to do it a second time. But if you're going through it the first time, um, you know, it is, it is hard to kind of, you know, it's hard to iterate and build a modern sales system, um, if, if you can't yourself be the trusted seller from day one. So it's not to say it's an impossible problem. It's just added complexity, you know.

Speaker A: Yeah, I think there's just trade offs here as well. Where, if it is truly the case where you have to import reputation, the shape of your market, the physics of your go to market, make it such that you have to import uh, reputation which is typically encapsulated in these more senior and as a result kind of like more tenured, uh, and more used to legacy systems or legacy processes or what have you, you have a choice. You can either do that or you can figure out some sort of other approach. And that might be like we were saying earlier, somehow spiking your own reputation in some sort of capacity through publication or speaking or, or what have you. Good. Uh, example, this buddy of mine, uh, Edith Harbaugh who is the founder of LaunchDarkly, um, you know, she's super smart and awesome herself but uh, she became the Queen of Feature Flags through starting launchdarkly, not on like just accident, but because she spoke at any conference, everywhere. Like she lived on a plane for two years in order to ramp her reputation as the queen of Feature flags. So that's one way you could do that. Another way is through kind of imported reputation like we were talking about earlier. But each has their own kind of like trade offs associated with it. Um, well, in kind of closing, I mean this is super fantastic high asp. Edtech is something you don't, at least I haven't heard a lot, a lot about. I'm sure it exists. But one of the things that I love to do is I get to learn about these, these different go to market motions and kind of the puzzles, because they're just puzzles, right? They're the way that we make our way through the market in order to, to have supply meet eager uh, demand. And um, if you, if you were to kind of give A takeaway, you know, kind of your, your most important takeaway to folks who are in ed tech, in high aspects or Maybe in high ASP. EdTech. What was kind of your, your parting shot there?

Speaker B: Yeah, it's, you know, it's a good, it's a, a really good question. You know, I think, I mean, I think that um, I mean high sp ed tech or highest high sp, you know, sort of education, sales, um, implies like high value. Right? You are delivering something with a lot of value. It's not just all those little buttons on the screen you talked about before. You know, with each one. I don't know, maybe it's good, maybe it's not. Like it doesn't really matter. Sort of in aggregate, there's a lot of them. Right, right, there's a lot of them. If you're doing the opposite approach, like your stuff better work. Um, and so, you know, we've talked about, we spent a lot, I think, a lot of time without using the word friction, talking about friction and you know, sales complexity and how hard this is and how, you know, it takes two years to get to validation and then another year for someone to refer you. And now you're like years and years in. How do we accelerate and go faster? I think the parting shot is just that, you know, if you're working in a complex space like this, like there is some benefit not to moving slowly in the sense that you're trying to slow things down, but like that slowness allows you to do some more product refinement, um, than would happen earlier, um, in kind of a higher velocity sales motion. Um, and ultimately you need that product refinement to build the thing that's valuable enough that you've got your high ASP sales. Um, um. So, you know, I, I, uh, think that, you know, had we had, we scaled to, you know, hundreds of customers in years, in year one or year two, like we would have broken, like that actually would have broken us. Like what we're doing wouldn't have worked in that, in that scenario. But ideally you learn in the early years and then, you know, AI is changing things, right? And so if you can figure out a complex problem that a customer has and a way to solve it, even if it's low and high touch and importing trust and all these hard things at the beginning, if you can solve it and solve it repeatedly and then begin to layer in some AI, you can build, you know, a scalable product and there's, there's, there's real opportunity there. So it's you know, it takes time, um, but it's, uh, you know, it's an exciting journey. I love it.

Speaker A: Well, Matt, thank you very much for taking the time to hang out with us today. And, um, you know, uh, I'll see you soon.

Speaker B: Sounds good.