Building Multiple Bootstrapped Education Software Companies: Lane Rankin, CEO of Illuminate Education (Part 3)

Sramana Mitra: We are now at the point where you bought some portions of your previous company that you bought to Harcourt. You’re now ready to start off on your own in 2009. What happens next?

Lane Rankin: We started over in 2009 with some pieces of a new platform. We had started a new platform to replace the older platform that we had built in 2002. Houghton Mifflin Harcourt didn’t understand what they had, no matter how many times I explained it to them. Because they were hurting for money, they were happy to sell me back that piece. We started over that year with $150,000 in revenue and grew quickly. Today, we’ll cross $34 million in revenue in 2016 and be pushing $50 million in 2017.

Sramana Mitra: Let’s do this step by step. Where did that $150,000 come from? Did you take some revenue out during the spin off as well?

Lane Rankin: When I purchased the newer software back, I had already sold about $150,000 worth of deals. I was able to take those deals with me along with the software. That was July 2009. In 2010, we did over $1 million in revenue.

Sramana Mitra: What was the premise of the new platform? What was the value proposition?

Lane Rankin: The new platform is very similar to what we had done in the first company. It was still trying to solve the data problem for K-12 school districts, but we had built out a student information system and an end-to-end special education solution. We were in two different spaces. After we bought the company back, we started to get back into the other pieces of the business around data and assessment.

Sramana Mitra: Was the business model similar? Was it SaaS?

Lane Rankin: Our average deal size went up to about $40,000 per year. It was SaaS. The business model was very similar.

Sramana Mitra: Were you selling with a feet-on-the-street workforce or were you able to sell by phone? What was your sales model?

Lane Rankin: My sales model was Lane’s feet on the street. I didn’t have another sales person until 2011. For those first two and a half years, it was just me driving the sales.

Sramana Mitra: Does that mean that all your customers were in California?

Lane Rankin: They were split between California and Michigan.

Sramana Mitra: Why Michigan?

Lane Rankin: They had been great clients from the early days. They had actually paid me to build one of the products that I bought back. The folks at Michigan had actually paid me to build it, but I was able to own it.

Sramana Mitra: For two and a half years, you sold by yourself? You’re talking 2011?

Lane Rankin: Correct. Then I hired a sales person in 2011. We had two people on the street.

Sramana Mitra: What was the revenue in 2011?

Lane Rankin: It was $3.5 million.

Sramana Mitra: You were still self-financed?

Lane Rankin: Correct.

Sramana Mitra: What are the major highlights of 2012?

Lane Rankin: We were just continuing to expand the team and the product to meet the needs of our districts and to expand into more states. We hired more people and got up to $7 million in revenue that year.

Sramana Mitra: With how many sales people?

Lane Rankin: By 2012, I think I had a total of four sales people.

Sramana Mitra: What states were you covering?

Lane Rankin: We were in California, Michigan, Arizona, and Washington.

This segment is part 3 in the series : Building Multiple Bootstrapped Education Software Companies: Lane Rankin, CEO of Illuminate Education
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