Building Multiple Bootstrapped Education Software Companies: Lane Rankin, CEO of Illuminate Education (Part 2)

Sramana Mitra: You financed the other company using the resources of the first company?

Lane Rankin: Correct.

Sramana Mitra: If you look at revenues and stuff, how was the first company doing? What was the trajectory of the second company?

Lane Rankin: Our turnover was around $2 million to $3 million in the first company. I sold the second company in 2007. At that point, our revenue was about $7 million.

Sramana Mitra: Let’s talk a little bit about the second company and its business. What were you doing there?

Lane Rankin: Specifically, we were providing data tools to K-12 public school districts to provide teachers and administrators with data at their fingertips to help make decisions about students, classrooms, and school districts.

Sramana Mitra: Were you selling this as a SaaS product?

Lane Rankin: Correct.

Sramana Mitra: What was the average deal size?

Lane Rankin: $30,000.

Sramana Mitra: Per year?

Lane Rankin: Yes, per client.

Sramana Mitra: You built this up to $7 million before you sold it, right?

Lane Rankin: Correct. I sold it to Harcourt. Do you remember Harcourt?

Sramana Mitra: Yes, I do.

Lane Rankin: I sold it to them. I had a two-year contract with them to continue to run the company. Six months into that, Houghton Mifflin bought Harcourt, so I became part of Houghton Mifflin Harcourt. At that point, they actually became the biggest educational publisher in the US. I worked for them for two years, but they incurred $7 billion in debt in putting those two companies together. Then the economy crashed in 2009. I used my resources that I had gotten from the sale to buy some of my software back. I took seven of my folks and started over with Illuminate back in 2009.

Sramana Mitra: Very quickly, with the second company that went up to $7 million in revenue, was there any financing or did you organically build to $7 million?

Lane Rankin: No financing.

Sramana Mitra: So you had full control of the company. That’s great. Would you like to disclose how much you sold it for?

Lane Rankin: No, I don’t want that to go on record anywhere. It was a very good multiple.

Sramana Mitra: You owned the company 100%, so that must have been helpful.

Lane Rankin: WebMedia Solutions owned 50% of Achieve Data Solution. The other 50% was owned by another company. I went in partnerships to form that company. I basically own 50%. When I formed Illuminate, I paid pennies on the dollar of what I sold to them to buy pieces of the company back. I took the seven people. When I formed Illuminate, I owned that 100% and I had the resources to finance Illuminate all on my own.

This segment is part 2 in the series : Building Multiple Bootstrapped Education Software Companies: Lane Rankin, CEO of Illuminate Education
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