Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House (Part 3)

Sramana Mitra: Who are the customers? Is this something that you sell as a software solution to other education institutions who are trying to launch or run an online program or are you actually running this as an outsourced service on behalf of these educational institutions who have a brand? What is the business model?

Todd Zipper: The business model is simple. We charge a revenue share. The school charges the student $400 a credit hour, and we charge the school 15% of revenue for basic curriculum services up to 50% for the entire suite of solutions. To answer your second question, they outsource us essentially. It’s our marketing dollars. It’s very much a symbiotic relationship.

Sramana Mitra: Who provides the content and who provides the faculty?

Todd Zipper: They provide the faculty. The content is a collaborative effort. Let’s say we work with a subject matter expert that teaches Introduction to Psychology, they’re working with our course designers to build the best online course they can. They’re obviously bringing their subject matter expertise. We build interactive exercises and bring the content to life. Eventually, the merged content is a collective effort even though the IP is of the school because we’re not looking to take their IP and do anything else with it. To the student, we are invisible.

Sramana Mitra: You’re working under the brand umbrella of different educational institutions who have the accreditation and brand and you’re basically white-labelling the solution on their behalf.

Todd Zipper: Correct. Bringing students is done by enrolment counsellors but to the student, it feels like an employee of the university. They have email addresses and phone numbers of the school. It’s really a white-labeled service.

Sramana Mitra: How many educational institution brands are you doing this for?

Todd Zipper: We have about 70 clients today across the country. It depends. We have some clients where we’re just doing a few basic things for them and others where we’re running fully online programs with 1,600 fully online students that we’re 100% responsible for.

Sramana Mitra: Are there any brands that you would like to call out that are big educational brands?

Todd Zipper: As I mentioned earlier, if you think about post-secondary industry, there’s a few segments. There’s the non-profit sector, which is 85% of the market, which is public and private. The publics are UCLAs of the world. Then there are private non-profit which are everything from the Harvards of the world to smaller regional brands. Are you based in California?

Sramana Mitra: I am.

Todd Zipper:  These are smaller regional schools that are known in their area. We work mostly with those. There are over 800 of these universities. I can give you case studies of schools and what we’ve done there. We also work with a few big brand names. To go on a quick tangent here, about a year ago, we acquired a company out of Carnegie Mellon University that offers a proprietary learning environment. When we saw it, we were very excited about it.

We thought it could be a differentiator for our clients. At some point in the future, we could roll them off of Moodle or Blackboard or Canvas. Those are the three big LMSs. Of our schools, they work with all three of those. We thought that we could roll them off to our own proprietary learning environment. That is still in the works. As part of the acquisition, we’re ow working with three of their existing clients: Carnegie-Mellon and their engineering school, University of Notre Dame, and University of Pittsburgh.

A few years from now, we’re going to have a wide array of clients across all the different segments of post-secondary not-for-profit education. For example, we just saw two weeks ago our first regional state university. If you live in West Virginia, you will have head of the school called West Virginia State Unviersity, and we’re about to sign another school in Alabama that’s a similar type of regional school.

This segment is part 3 in the series : Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House
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