Online K-12 Education IPO In The Great Recession: Archipelago Learning Co-founders Cameron Chalmers, Dave Muzzo, And CEO Tim McEwen (Part 4)

SM: Dave and Cam, what was going on in terms of your revenue ramp between 2000 and 2007?

CC: In 2000 we started off with no revenue. In 2001 we made $250,000 in revenue. In 2002 that jumped to $550,000. In 2003 we broke the million-dollar mark with $1.4 million, and that jumped to $4 million in 2004. In 2005 we did $7.3 million. In 2006 we did just over $14.5 million, and we had $23 million in 2007, which is when we sold the company. In 2008 we brought in $36 million in revenue and in 2009 we had $55 million in revenue.

SM: How was your growth in terms of people?

DM: Initially, it was really small. We started hiring people in 2001. Our initial hires were in sales. The first six or seven people we hired were sales. It was not until the winter of 2002 that we hired two people in the office.

CC: It was at the end of 2002. I think we hired them in November.

SM: And all of those employees were funded from your organic growth?

DM: Yes. We were making money from day one because our expenses were so low. We had no rent and no salaried employees. Everything we sold the first year we got back plus 80% the following year. We went really, really lean. We did spend money on direct marketing and commissions. We were profitable from our first year of revenue, and we were able to expand and hire people in 2002 without feeling restricted.

SM: What was the next major milestone?

TM: In 2007, Dave and Cam sold the company to a private equity firm while maintaining an ownership percentage. That is when I joined the company.

SM: What was going on in your lives in 2007 that prompted you to sell a portion of the company?

DM: There were a couple of things going on. First, we were getting a little burnt out. Second, we did not know a lot about selling businesses and private equity. We did know enough to know that our business was very valuable as long as it kept growing. That was our only option, really, to keep growing. It was becoming a daunting task to keep hiring so many people and having to deal with HR issues. It was not necessarily our skill set to do that.

SM: How many people did you have in the company at that point?

CC: When we sold we had 54 people.

SM: How did you go about finding an investment group to buy your company?

DM: We hired an investment bank and went through their auction process. They had a little book, and we sent it out and gave presentations. It was really smooth.

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