Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House (Part 5)

Sramana Mitra: Going from curriculum to a more broad soup-to-nuts set of services and, accordingly, raising the percentage of the royalties that you get paid is a massive strategic move.

Todd Zipper: It’s risky. I’d like to say we are in the private equity game because I’m going to be a million dollars in before I really know what I got. We like to think that the worst-case scenario is we could do with a million dollars. We haven’t really gotten there yet. Fortunately, knock on wood, all of our deals are working out in some form or fashion. The legacy deals are more deeper service type of deals. Once they start to get going, they pay off. That was the big strategic bet that we made. The second thing is I brought in a whole slew of operators and leaders. I just love my team. It’s a phenomenal group of individuals that can run the business four or five times the size that we are today.

Sramana Mitra: You’re doing this from Kentucky, right?

Todd Zipper: Correct. We have some outposts. We have a small operation in Pennsylvania. We have two other locations in Ohio and in Minneapolis around the school itself. Sramana Mitra: The bulk of your operation and management team is in Kentucky?

Todd Zipper: Correct.

Sramana Mitra: Are these native Kentucky people or are you bringing them in from elsewhere? What does it take to move people to Kentucky?

Todd Zipper: There are pros and cons of being in Kentucky. Let’s say I need to hire a VP of Marketing or a Director of Curriculum and Services. It’s very unlikely that they live in the metro Louisville area. Although it’s got a million people, it’s not a hot bed for ed tech. That has been a challenge for me, but I have my VP who lives in Florida. I had several people move.

When you get people there, they stay. We have good tenure. We have good retention on employees. We’re working extremely hard to train people, build their knowledge up, and promote from within. Our largest division is enrolment. That’s about 135 people. I really know how that works. I was part of the initial Kaplan team that built Kaplan from nothing. I understand the technology and the process. I understand the roles and responsibilities.

Although we’ve morphed it and it’s customized to the non-profit sector, a lot of practices are the same. I just need people with the right type of personality and ambition, and we train them up. We build the enrolment team 100% promoted within, except for my two top people who were hired from outside. One was brought from California who worked. One was brought in from University of Phoenix.

Sramana Mitra: How is the space evolving? Is this becoming a common thing nowadays for educational institutions to start an online brand as an outsourced operation?

Todd Zipper: Great question. To answer that, I take a step back. There was a recent report that came out by Babson that at this point, one of every seven post-secondary student is fully online. At least, one out of four is taking at least one course online. This is no longer a fringe thing. Every single university has to be paying very close attention to how to thread technology and online education into their curriculum.

With the advent of MOOCs over the last years, it’s not only accepted, but almost forced at all levels in different forms and fashion. In many ways, it’s a completely new paradigm for learning. Teaching online is not the same as teaching on-ground. Designing courses online is not the same as on-ground. Marketing and enrolment are different in many ways. There are schools that either don’t have the expertise or don’t have the capital, which by the way are most schools, even big schools. They probably have the capital but don’t have the expertise and are extremely risk-averse. So they want to shift that capital off to a partner.

Eduventures, one of the large research firms in the space, has labeled the space as a $1.1 billion space that will grow at about $2.5 billion over the next four years. It’s in growth mode right now as total post-secondary has actually been in decline for that last four years. Online, on its own, is probably only growing at about 3% according to this latest Babson survey. I believe it is a trend that’s happening. It’s not like it’s on every corner, or there’s a new deal every day. We do five deals a year because we pick and choose. We’re very choosy on the type of partner that we want to go into business with.

This segment is part 5 in the series : Scaling an Educational Services Business to $50 Million: Todd Zipper, CEO of Learning House
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