Online K-12 Education IPO In The Great Recession: Archipelago Learning Co-founders Cameron Chalmers, Dave Muzzo, And CEO Tim McEwen (Part 3)

SM: Dave and Cam, when you initially started to sell, did you focus on a particular grade level or subject area?

DM: We started with grades 4, 6, 9, and 12. The subjects we focused on were math, reading, science, and social studies. Those grade levels and subject areas were chosen because of Ohio standards testing. We created all of the content for the specific grade levels ourselves and focused only on Ohio.

SM: Just two of you built all of that content?

CC: Yes, we did! It took six months.

SM: Was there a particular school district you were selling to in Ohio?

DM: We sent out direct mail and had a few bites. Our first sale was to College Hill Academy in Cincinnati. They paid $99.

CC: We went with experimental pricing. We offered an introductory special of $99 so that we could get some clients quickly.

SM: All that work and you sold it for just $99! What came next?

CC: We kept expanding. We moved into Illinois, then Texas and Oklahoma. Our model was direct mailings, and we hoped that somebody would call. We started getting a couple hits on Google. We were getting enough traction that we knew we were going to make it, even at that level.

SM: Was it just the two of you working, or had you hired someone by then?

CC: It was just the two of us for a long time. We also had a high school friend who had dropped out of college and was interested in what we were doing. We made a deal with him that if he made a presale of 20 products in Oklahoma, we would make a product for Oklahoma. We gave him a target of $1,500 per elementary school and $2,000 per middle school. That was much higher than we were selling Ohio. He went out and got 30 schools in five months. He’s really good at sales.

SM: I assume that when you had content developed for one state, you could use portions for the other states?

CC: You would think that is the case, but states are so different it’s amazing. Does third-grade mathematics teach carry values to the 10th place or to the 100th place? That answer varies by state.

SM: How much leverage were you able to gain from your previous content?

CC: Now it is at least 50%. Initially it was much less than that, perhaps 30%.

DM: We thought it would be easier as we added our third and fourth states.

TM: That is one area in which Cam and Dave do distinguish themselves. When they say that they have content for a state, they really mean it. It truly is content for that state. They have built each state with a very deep customization, almost from the ground up.

SM: You did almost all 50 states without any external financing?

CC: We did finance organically the whole time, but we did not get all 50 states.

This segment is part 3 in the series : Online K-12 Education IPO In The Great Recession: Archipelago Learning Co-founders Cameron Chalmers, Dave Muzzo, And CEO Tim McEwen
1 2 3 4 5 6 7