Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 2)

Steve Huey: I relocated to Kentucky and started working in small companies again. I was hired by a group of private equity guys to help them turn around and sell a property they had. It was a listing business called Rentalhouses.com for single-unit rental properties. We sold that within about nine months to KKR and their company Prime Media. I was going to stay and help run that but my business founder found another startup in town that had been in business for a little bit and was starting to gain traction. That company was called The Learning House. It helped colleges take their degree programs and offer them online. We bought that company when it was right around the $2.5 million mark. We grew the company and then successfully sold it to a private equity firm. They were also a subsidiary or a derivative of KKR called Weld North. That transaction happened in 2011.

Just as we were in the process of selling The Learning House, we had the idea that we could take what we learned from The Learning House and help market degree programs for online students or non-traditional students. We believed we had a better mousetrap for traditional students. Just before we sold The Learning House, we formed this company that I’m now at called Capture Higher Ed. Capture’s business is helping colleges market their programs and help them find, attract, and ultimately enroll perfect-fit college students. These are primarily high school students. I’ve been the CEO of Capture for three and a half years now. There were about six of us who partnered up to start Capture. We started Capture with one employee and some subcontracting work for a time to help build the company through its first year. We were pretty successful. Our industry contacts and new approach resonated with a few people.

Sramana Mitra: Let’s go back to the beginning of Capture. Specifically, what year did you start Capture?

Steve Huey: In June of 2011.

Sramana Mitra: What did you see around? What was going on in the industry and how did you get the idea for doing what you’re doing in Capture?

Steve Huey: What we saw was increased pressure on small private, not-for-profit colleges. 2008 hit and most of the donations going into small liberal arts colleges had dried up because of the credit crunch and because of what we should label as a recession. There was significant financial pressure on a whole block of colleges in the United States. There’s over 4,000 colleges in the United States. About 3,300 of them are largely tuition-based. Meaning, they don’t have large endowments to weather the storm. They operate their college based on the tuition they collect every year. This pressure was immense. We saw more and more colleges failing or in financial trouble.

At Learning House, one of the things that we had figured out was, Learning House was a great company because we were bringing a new alternative form of revenue for these schools online. Many of our partner schools would have been out of business had they not adopted a diversified teaching model. What we decided was, there was a real opportunity here to help colleges get students because they’re desperate to do that. At that time, many of these schools were very unsophisticated. They would put their college helpers on the road to visit high schools. They would use direct mail. They really were not using the technologies that had been around for 8 to 10 years. They didn’t use email. They weren’t texting their students. They weren’t using the data associated or that you could get. They were very behind.

Up until that time, it was a seller’s market. In the United States, every year there were more and more students graduating from high school. Also socially, there was this belief that if you want to change your life, you’ve got to go to college and get an education. More and more students were seeking to go to a four-year college. That trend reversed starting in 2008. In 2011, the United States had one of its smallest graduating classes for the past 20 years. The combination of market demographics, pressure on these tuition-based schools, and the reduction in donations created a tsunami of demand for companies like ours. Those were the things that we were seeing. Not only was this a nice hot market with a lot of demand, we actually think we can build a better vehicle to help these schools recruit really good fit students.

This segment is part 2 in the series : Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed
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