Hey everybody. Welcome back to another episode of The Bright Ideas Podcast.
As always,
I am your host Trent Dyrsmid and I'm here to share the stories of today's
leading entrepreneurs with the hopes that we will be able to extract all sorts
of golden nuggets that you will be able to implement in your business today.
Before we get into today's episode, just a couple of very quick announcements.
First off,
I want to thank all of you who have been loyal listeners of this show for years.
All of the wonderful feedback and all the comments on social media that you
leave for the episodes that I do really means a lot to me and it really keeps me
going. So keep them coming and if you have questions or guest recommendations,
I welcome those as well. And second of all,
in case you haven't gone and checked it out yet,
my software companies marketplace, so the company is called Flowster.
It lives at Flowster.app, F L O W S T E R.app.
It is a platform for building,
buying or selling and using standard operating procedures.
And it's really the thing that we built for ourselves that led to my company
ranking number 254 on the inc 5,000 in 2019 and we have a marketplace there that
is stocked full of pre-made SLPs for all sorts of different things and a huge
chunk of them are free.
So I would strongly encourage that you go check it out and see how you can start
implementing SOPs in your business so that you can delegate work to virtual
assistants so much easier or start delegating if you're not doing it now.
So my guest on the show today is a fellow by the name of
Aditya Nagarath and I've probably butchered his name or get them to correct me
if I did.
And he's the founder and CEO of a company called Elephant Learning and he
focused his PhD studies on math and computer science.
And after he graduated,
he worked as a software engineer for the giant education company called Pearson.
Before he struck it out on the zone with elephant learning,
a math learning platform that promises scholars will learn one year of math in
just three months with a time investment of about 30 minutes per week.
So Aditya. Yeah, you've had a lot of success with your software platform.
I want to take thank you very much for making some time to be on the show.
thank you so much for having me.
So let's start off with this
just kinda tell me what is it exactly that the company sells?
It's a tutoring platform, I'm guessing.
So what it is that gamification of a proven curriculum.
So what we've done is we've taken the latest in early education, science
and we've turned it into a game of education, if you will. So the kids,
play the games and
the games are presented as a puzzle as they solve the puzzles.
They are exhibiting math concepts and we're labeling them.
So we teach math conceptually,
which means we're really working on the language of mathematics,
but that's where we find that the students are typically deficient.
Okay. And just so you folks know,
we're not doing an interview about how to get better at math of the reason that
I'm having him on the show is that the company has grown incredibly quickly,
and we're going to dive into all of the things that Aditya has done to make that
happen. So when did you start the company?
Well, we started coding in 2016 and we brought on our first customers in 2017.
And how many customers do you have now?
Qver 10,000.
So 10,000 customers in two, two and a half years, something like that.
About three at this point.
About three. Okay. So that's a pretty significant number of customers.
Let's kind of unpack how all of that happened.
So at the beginning you obviously thought, Hey, I'm going to create a business.
Maybe you already knew you wanted to create a learning platform,
but you had to pick a niche. You had to pick a business model,
what made you pick the niche that you're in and how did you research it so that
you knew that, you know,
you weren't going to put all this time and effort in and then just crash and
burning fail miserably.
Makes sense. Well,
so I was actually in another business, I was in Elephant Head Software,
which was my contract software engineering firm.
And that's the firm that had contracts with Pearson at one point,
amongst other companies. And really,
what elephant learning was an attempt to kind of walk away from a services model
and more into a product model, because, you know, in the services business,
I, I was beginning to realize that really what I had was,
just a job of my choosing, right. And just my company,
but a job. And, we,
I had this ex professor of mine who,
basically approached me with this idea of doing mappings for children.
They had already put out some map games.
And what interested me about it was first that there was this social aspect to
it. So beyond, you know, just wanting to create a business.
I wanted to try to have a social impact or an environmental impact. You know,
[inaudible] triple bottom line companies that are coming out to speak to us
these days. And
basically what he told me was that four to five students start kindergarten
unprepared for the kindergarten curriculum,
meaning that they don't really have a strong understanding of what the numbers
are. They kind of say them out loud. And for a parent that's good enough.
But for the school system they mean can you count to 10?
Can you slide over 10 and stop about 10 without continuing to count,
which if you got a four or five year old, you know,
that's a much more difficult skill than just saying the numbers.
The impact ends up being that preschool math scores predict third grade reading
scores better than preschool reading scores.
Preschool math scores predict fifth grade overall scores,
meaning that wasn't just math effected. All subjects were affected.
Fifth grade math scores predict how you do in middle school.
Eighth grade math scores predict when you drop out of high school. Um,
at the high school level, according to 2019 statistics, 75%
of students are not proficient in high school mathematics.
And that comes from a fundamental misunderstanding originating an Algebra or
earlier. Um, and then when you get to the college level, of course,
all the high paying careers are in STEM. Well,
69% of STEM majors switched to a major with less math.
They used to switch to business.
But now business is so statistically driven with all the computation and
computers and you know,
data that we're collecting on everything that even the business professors are
having a hard time connecting with the students.
So they ended up switching to humanities,
which in itself is not a bad thing except from a salary perspective.
They're capped around 50 K a year, which is below national average. So when
you see things on television like Elizabeth Warren is trying to forgive the
student loans, that's why they have student loans. They can't pay him back.
And they kind of got a bum deal from the beginning. So that give me a lot.
And then the second aspect of it was that we had a system that was already
teaching years of math and just 10 minutes a day and just a couple of months.
So just 10 minutes a day time investment, two or three months.
We made it more effective than what he came to me with. But
that's the reason why I thought this would be a success because they said, well,
if you're showing me statistics,
like 75% of high school students are not proficient high school math,
it means there's not another piece of software out there that is effected.
Otherwise schools would just be using it.
Yeah. Yeah. It makes a lot of sense. Okay.
So once you started,
once you got to the point where you needed to start acquiring customers on a
systematic basis,
I think you told me in the pre-interview that Facebook was the most successful
channel for that. Is that right?
Yeah, we're having a lot of success on Facebook.
Okay. So you got started on Facebook.
What back in 2017 I think you said. Okay.
So let's walk through, we're going to spend some time on this.
Let's walk through your Facebook advertising strategy.
So to do that in the, I guess the simplest way,
let's talk about your most successful campaign. First of all,
you've got to identify an audience. So how did you do that?
So the first audience, um,
that we were able to identify was just a local Denver audience.
So we were just targeting parents,
of children ages two through 10. At that time, we,
I think we only covered through a multiplication division.
And so we
targeted parents and this wasn't, you know,
like cost-effective enough. We weren't getting a lot of traction there.
But then what ended up happening was that we had this nine news interview that
occurred and we were able to re share that post at that time.
And then we were able to then target.
So one of the tips that I had learned was that if you have a kind of a captive
audience and you intersect it with your target audience, then
you have a very strong audience. Right? So in this particular case,
the nine use audience intersected with parents That ages two through 10.
Got has maybe three or 400 converts over the course of a month or two.
And those three or 400 converts got us enough traction for Facebook to get on
the phone with us and teach us how to use a lookalike audience.
So the most successful campaign I would say is that look alike audience because
once we were able to tune the lookalike audience,
we were able to get converts on a very regular basis and we were able to grow
from 300 to a thousand. Very quickly.
So our first customer was in February. We had a thousand customers in February,
2018.
Wow, that's phenomenal.
Now you also told me that once you started to use,
it was a 1% lookalike audience.
And I think initially when you did the when you use the Facebook tool,
it was not even some about 2 million people and you chose to narrow it down
further to around 600,000 people. Why did you do that?
Good question. So, you know, I belong to an organization called EO.
And I went to a chapter event and some of my buddies were there and one of them
says, Hey, you know what? I'm seeing your ads all over Facebook.
You guys must be blowing up and looking at it. And I say, well, you know,
you don't have children that are in the age range that would be using my
product. And he's like, no, not at all. My children are in college.
And I'm like, you shouldn't be seeing my ads.
I don't understand why Facebook is targeting you. So, you know,
that day I went home and I said, you know what, let's just,
let's just narrow down this 1% audience.
Let's take the 1% that Facebook's identified and then cross it against my target
audience at parents two through 10 and see what happens.
And basically immediately we saw the acquisition costs come down to a point
where I could buy my way into getting the 1% audience to work.
Can you walk me through how you did that?
Cause you said you know you crossed it or comparative,
but for the folks listing in case they want to replicate, you did,
let's walk them through it.
Sure. So in Facebook, when you're creating the audience,
you can put the,
the lookalike audience on the top line and then after that we'll say,
like you can exclude or you can continue to filter.
And so once you click on that, continue to filter,
you get back to the demographics that Facebook would show. Yeah.
Okay.
Cause I've never narrowed a look alike audience and I wanted to make sure it
was. So, it's pretty much the same thing as building an audience from scratch.
Only you're starting with a base layer of your 1% audience and then you're just
applying the usual filters for age demographics, interests.
Although the things that Facebook presents you to choose from.
Okay. You got it. Yeah, that's exactly right.
All right, so now you've got an audience. You need to come up with a creative,
how'd you do that?
Well, that's great question. We use promo.com.
So this is a service online that gives you stock, video, stock, audio,
and basically it's three slides so you can put some text on slide one,
you can put some text on slide two. And then the third slide,
typically is your logo and your call to action.
So we made like three or four videos,
just whatever we thought would be cute at the time. And what
we ended up with was like,
I think three or four videos and we were sitting there trying to create the ads.
And there was disagreement on what would work and it was like, well,
let's just create multiple ads, right?
And then my wife walked in while I was doing this,
cause I was working in the basement at a time. And I said, well,
what do you think about any of these ads? Right? She's in the target market.
She's got our child. So she looked at it and she said, no,
I don't like any of those. And that's kind of like, you know what, that's it.
I'm done with this. So what we did was I did a Google,
I found this tool called AdEspresso. And by the way,
like you don't need AdEspresso now because Facebook's got this dynamic content
thing,
but it does basically the same thing but automatically.
So in AdEspresso we were able to drop in all three, four videos.
We were able to drop in five or six headlines.
We were to drop in five or six texts that go above the ad and it went and
mismatched and made something like 50 or 60 ads. And it would tell us, Oh,
you know what?
This one's not performing as well as this other ones that turn it off.
This one's not before somebody just went through and started turning off the
ones that weren't performing and what was left was two or three ads that were
performing and we were able to just run that.
I mean at that time the budget wasn't huge, so we were able to just run that,
I mean basically from November to June without having to re up the content.
Okay. And so from November to June, that's a pretty long period of time.
And you didn't get ad fatigue,
We didn't get ad fatigue.
And this point, sorry to interrupt,
your audience is still only 600,000 people and you didn't get ad fatigue?
Well, I think at some point we took off the cap. So we took off
the intersection. So just we went to the 1% lookalike,
but it was, it's about the training. So like, um,
once we had Facebook trained well enough,
we could actually turn on everybody in the United States and the pixel would
figure out who to convert.
Oh, cool. Okay.
Somewhere in and around here you were contacted by a company called Tap Cast and
they took your 1% audience of 2 million and they wave their magic wand some way
that you're going to explain to me. And suddenly it was 25 million.
Tell me about that.
Sure. So Tap Cast,
came to me in in about June of 18,
and I saw them on an ad on Facebook and they got on the phone with me and they
showed me this map.
So what they're able to do is they're able to take your 1% audience and they're
able to sort of map it to standard marketing demographics. So if you will,
they can decompose it. And they were able to tell me things like, well you're
your 1% audience is really hot against females, 35 to 44.
And then it's like, and then like when you're using this tool,
you can highlight any demographics. So like,
I don't know why this one sticks out,
but like females 35 to 44,
that drink vodka were not in my 1%
only thing that really stood out. So like, but for example,
anything on there like you could, you could highlight it and it would tell you,
well this person is 10 times more likely to be in your audience.
Or like for example, didactic games were on there.
So if you had a female 35 to 44 who likes didactic games,
they were 15 times more likely to be in our audience then
just some random person on Facebook. So using this tool,
they were kind of able to, you know, maybe expand the audience by seeing like,
well, if we target these demographics here,
that's kind of what's in your 1% audience.
And their claim was that the CPM for targeting those people is cheaper than the
1% audience because you're not using Facebook's AI.
So not only will we expand your audience,
but you should theoretically come in a little bit cheaper.
Did that happen?
Well, they were able to take us from,
I think at that time we were around 2 to 3000 customers to 10,000 by
February. Again like for some reason February happens,
it's just the one year mark or the check every February.
So by last year February 2019,
we had something like 9,500 customers.
And do you still use Tap Cast now?
We're still working with them.
So how do they, uh,
without going into like specifics that you don't need to roughly what,
like what does it cost, how do they bill you, what's their, their model,
their engagement model look like? Do they charge you a flat monthly fee?
Is it a percentage of ad spend? Is it a one time fee?
Well,
my understanding of what they charged me is not what they charge everyone else.
I think I had one of my EO guys go in there and they were charging them a
percentage of the ad spend, but they're charging me a flat fee. I dunno,
that's the contract is. So maybe they changed it from when I joined them.
or it's a perk of being in here.
Yeah I think that answers the question.
Yep. Okay. by the way, in case anyone doesn't know what EO is,
it's Entrepreneurs Organization, you can Google it and learn all about it.
We are actually a member ourselves. So
can you speak to how you structured the campaign and the ad sets in Facebook
business manager just to keep things manageable and tidy?
Well, that's,
that's actually then with tap cast who is doing and it doesn't really feel
manageable or tidy. There's a lot of different audiences.
There's a lot of different campaigns that they were running.
So for testing, right as if they could tune it one way or the other.
They were doing it.
Okay. You're doing it all for you. Okay.
All right. So
I think we talked about this already with you doing the dynamic creative or
using AdEspresso, but split testing.
So initially you used AdEspresso to create all these variations and you're
saying now that people can do that using the dynamic ads within Facebook's
business manager. So they don't need to go sign up for AdEspresso
has there been any other split testing experiments that you have done that
yielded results that would be worthy of our talking about or surprising results?
Yeah, the site,
I mean the main one was this everyone in the U S audience because no one thought
it would work.
Yeah. Okay.
So you basically just said when from when it came to once the pixel was trained,
you ran a campaign and for targeting, you said everyone
Let's put it this way.
So what happened was I duplicated one of their campaigns cause I thought, Oh,
let me just try to duplicate their audience and see if I can throw a different
ad at it. But apparently when you duplicate the campaign,
it doesn't take the audience with it, which I don't understand why,
but I just assumed it did. I wasn't paying attention.
I just quickly through the ad in and said, go.
And what happened was a week later,
like these guys got on the phone me and they're like, Hey,
are you aware that there's a campaign targeting everyone in the United States?
And I'm like, no, I didn't know that. They're like, well, we didn't do that.
Did you do that? I'm like, I don't think so, but let me go look.
So I look and I'm like, yeah, that's, that's the thing. I duplicate it.
This other thing that was the audience I meant to put on there and they're like,
well, it's working. So you know, like whatever the pixel got.
And we weren't putting a lot of money.
They said we were just going to keep taking the spend up and see how high we can
take it.
And they just kept taking it up to about what they were spending on the other
campaigns and it was working.
So it wasn't like the strategy per se was kind of an accident,
but like later in December,
the CPMs were so high because everyone's trying to advertise in December and we
weren't getting the economics we wanted. So they said, you know what,
why don't we go try that everyone audience again and see how that works. So we,
that's what we did is we just went and turn it on to everyone in the U S and we
started getting economics again and we were pretty happy.
Wow. That's hilarious. Okay.
Let's talk about scaling campaigns.
I'm no Facebook advertising expert yet though.
It is something I'm starting to dabble in for my own business.
One of the challenges I've heard from many people that I've interviewed on my
show and just in general is when you scale, when you try to increase your spend,
a lot of times your CPM or your CPC or your conversion rate sort of gets
destroyed. Did that happen for you? And if it didn't,
how did you or Tap Cast scale up the spend?
Cause I think you told me you went from 20,000 a month in ad spend to 100,000 a
month in ad spend, which is five X.
How did you manage to do that without destroying the campaign?
Sure. So there's two things that need to happen.
First is if you take up the money too fast,
then the Facebook algorithms will go back into learning.
And if they go back into learning, then
You're sunk.
Then your economics will, yeah, your economics will get destroyed.
and if you're lucky, it'll lead tune, right? It'll take some time,
but your economics will get destroyed. But at least for three or four days.
So you got to take it up by 15 to 20%.
And that's what Facebook tells me is 15 to 20% of the time.
And then from there, I mean,
you're just taking it up until the economics don't work anymore.
And how
often are you making that 15% increase?
Can you do it every day or do you have to like let it run for a week? Like,
how much time between increases?
I think every day. Every day.
Okay. So you can scale it pretty quickly.
You can't just but don't five exit in one day cause then you're screwed. Okay.
Right. So you had told me that your cost of customer acquisition, back
early on was around $35 and now it's up to about $60.
Don't have that right.
It's probably even a little higher than that.
Little higher. Okay. But it's still well below your, your LTV,
so you're still profitably adding customers, which is great. Do you,
were you able to figure out why these, the CAC,
the cost of customer acquisition in case people aren't familiar with that
acronym went up so much?
It's the ad fatigue.
Okay.
And do you try and battle that then by constantly coming up with new creative?
I'm assuming
The way we're approaching it is we've, we've brought in, um,
a consultant, his name is Russel Lundstrom,
he's running a thing called Marketing DNA.
My Marketing DNA I think is what it's called. And so
like the idea that he's got is like, well,
you already got all your customers there.
If you can start to ask them some certain questions,
we can start to figure out a way to give them content that they want to see that
they're interested in without
just throwing things against the wall and seeing what sticks.
So the ad fatigue probably came in maybe two or three, four months ago,
and we've been trying to throw stuff against the wall.
We haven't seen anything stick as yet. So there's that.
But there's also the idea that, you know, at level
of operation that I'm doing now,
it really shouldn't be something that's necessarily on my plate.
So what he's really helping me out with is coming up with a marketing plan
because, you know, literally what I approached him with is I said, look I can't
get other people to do this job because I don't have a process for them because
I don't have a process for myself cause I don't have an overarching plan or
strategy, right? So he's helping us put that together.
And so far I'm pretty impressed by what we've done.
Okay.
And are you yet advertising on other channels like radio or Google search or you
know, there's a whole bunch of places you can be running ads like that.
You can be using Perfect Audience and AdRoll to retarget on basically 95% of the
internet.
Are you doing any of that kind of stuff or is it still pretty much just
Facebook?
So right now we're still focused on Facebook because we found our audience
there. We have tried other platforms like Google search,
we've tried YouTube, we've tried Pinterest, we've
done some stuff on radio.
But really in the end nothing really has even the traction that Facebook has
now. So our
main goal right now is to just focus on Facebook,
get that back to working before we started looking at these other channels
again.
Okay. Let's talk about things like Google search. Oh, go ahead. No, no,
you finish.
Oh, well the thing with Google search ended up being was that the other people
competing for our keywords are tutors and,
and companies like Kumon or where the lifetime value is way higher.
So they're in the thousands for the lifetime value. So
the issue ends up being is that they're willing to pay a lot more for a click.
So while we're able to get some economics at very low dollar value,
we can't compete at a larger dollar value because we're competing against people
who can really take it up.
And there is one of the rules of advertising whoever can afford to pay the most
to acquire a new customer while maintaining profitability ultimately wins.
So with that in mind,
have you thought about ways of driving up your LTV and your AOV?
Yeah, so right now we're working
on figuring out the reasons why people cancel.
Like we have surveys going out and we're reviewing those surveys and we're
looking at how can we make the customer experience just that much better?
Because of course,
if we could get one or two months more out of a customer than our lifetime value
goes up quite a bit.
When someone signs onto your platform,
do you invite them to join a Facebook group as well?
We don't have that as yet.
Okay. All right.
So let's talk about your customer experience.
I think you told me that you started working on this back in March of 2019 and
you worked on creating a new customer onboarding video that has helped you and
apparently, I think you told me it had a positive impact on churn.
Can you expand on all that for me?
Sure. So, I mean, we've been running pretty lean, right? Like we just,
everything was trying to be like, can we put out this software, can we test?
If there's traction, can we test? If it's working,
can we test that more people want to buy it? And so basically
when we looked at churn about a year ago and we looked at the reasons why people
were canceling,
a lot of people didn't understand just what our product was doing. I mean,
and I can understand that, right?
Like you joined this thing we promise that you're going to learn a year of math
in three months and the next thing you look at are these like these games,
right? And they feel a little cookie and there's no instructions.
So like a lot of parents are like, well, I don't even see how learning happens.
Right? And you know, it's a mixture of these games,
but it's also these algorithms that are able to adapt to your student.
So even then,
some of the parents couldn't see the adaption happening because sometimes
it's a little bit difficult to see.
So basically we started working on boarding so that we can explain to them,
you know, what's going to happen, right? Like, how are we going to start out?
We're going to start out in a placement exam so that we can find the initial
level of your students.
So we intend to start behind them so that we're catching up to them.
If we start ahead of them, right, then they have to fail back to their level.
And that's not a great experience, right?
A lot of these students don't have a lot of confidence. So to build confidence,
we start with easy go to hard and so now as they understand what to expect
coming in,
a lot of those issues started to go away and now we're dealing with like what
are the other issues that they may be facing?
Yup. Okay. All right.
It's time for five quick facts.
So I'm going to give you five short questions and I'm just looking for five
really short answers. What is the,
your favorite business book or the one that you are, that you read last?
I, crucial conversations tends to stand out.
But I think my favorite is probably the EOS traction.
I'm living in dying by that book.
EOS. Yeah. We, that's on my wife's desk and that's,
we use the same thing in our own business. So folks,
if you have a team and you want to make sure they're highly engaged,
you might want to check that book out.
A favorite online tool for growing your business?
We're using this thing called mrr.io and it plugs directly into Stripe and it
gives you the dashboard of the key metrics. Like what is your current MRR,
how much was your net collection actually on that MRR,
a lifetime value, customer churn, revenue churn,
it's got, refunds, upgrades. I mean,
just any, any number that, you know,
people typically think is important to their SaaS business. It's on there.
We don't use Stripe,
but going to be checking out mrr.io cause I'm sure it plugs into whatever we are
using in my software company. Hours of work per week?
I have a strict rule that I go home at 5. Sometimes I don't make that,
but when I don't make it,
I'm typically home before six and I tend to walk to and from work.
Okay. So that's good.
And I'm guessing you do that because you have a family, wife, kids,
something like that.
Yeah,
that's the main reason that I'm not in the house anymore is because of that.
We couldn't get respect around work time.
When the baby would go down for a nap, my wife would think,
Oh well it's time for me to leave because my husband's here and I'd be on a call
be waking up. So I got a co-working,
it's about a half mile from here and it's perfect because I walk a half mile to
work. I walk a half mile back, it's a half mile from a park that's further down.
So, and that parks three miles around. So when it's warm, unlike today,
I might walk down to that park and I might take my calls walking around the
park.
Yeah. Nice. Good for you are. And finally,
if you were to give your younger self some advice,
what would it be?
Great question. Um,
I think it would be not to be so afraid to jump into business. I
was always kind of a like entrepreneurial kind of thinking of things.
And maybe doing it on the side while I was working for someone and probably
because of that it never worked.
And then finally I found myself in a place where, you know,
I became an independent contractor and then the sale was so easy to make.
Like I thought it was going to be so challenging. I'm like, Hey,
let me hire someone. Right? I had this whole speech planned out and I like,
I thought about it for weeks before I did it and I said what I had to say,
the guy like, he didn't even think about it. He's like, done,
let's hire the guy. How much do you want for him to,
like the next thing I know is I'm running my own contract software engineering
firm. And I was like, well, that was, that wasn't hard. we have like a,
within six months we had four developers and four or five testers and I mean,
decent revenue to support all of them.
Yeah. Fantastic. Well,
thank you so much for making some time and coming and sharing the ups and downs
and trials and tribulations of your entrepreneurial journey so far in building
your company. And that's been a pleasure to have you on.
Thank you so much.
