Andrew: Hey there freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. And before this, I was a student like many of you, and my favorite part of school, if I had to, a favorite thing that I learned was the standardized test. I thought a lot of my teachers in school, I know we’re supposed to love teachers and really praise them and they should get paid more and all that hara hara hara. I actually believed that a lot of my teachers were bozos. I didn’t enjoy it anyway, and probably because I was a bit of a jerk.
But what I loved was learning, and I loved it with standardized test, they tell you exactly what topic you want to learn, you get to dive in. I would get those books. Usually in school I wouldn’t care, but I would get all those prep books and I would go through the assignments in them and I would study and I would try to raise my grade. And I really loved learning from those tests all the way up to the SATs. I really enjoyed it.
In my car on the way to school, I would listen to SAT word recordings. I loved it. The problem is those books are such a pain in the butt to carry around. And I hate to sound like somebody who’d care about this stuff. But you look a little bit lame carrying a bunch of standardized test prep books because I wanted to keep an image up.
Today’s guest had a similar view of the world. He said, “Why are all these books just . . . Why are we lugging them around? And they’re so antiquated. There’s a better way. There’s technology. It’s been invented. Come on, get with it.” And he created a company.
And I apparently, I’m still a jerk. I first when I heard about this company I said, “Great idea, but not ready for Mixergy interview. I wish I was in school to study it, but it’s not really a successful big enough company for Mixergy interview.” And then I found out how well they’re doing. And it took him . . . I’ll be honest with you guys. It took him a few pivots. It’s not like they just landed on this, but they’re doing phenomenally well. And so I invited the founder on here to talk about how he came up with this idea, how he built it up, how they figured out that the first incarnation of this business was not going to work out and how they figured out what to pivot into, and how they’re getting major, major companies and organizations to work with them.
So that’s what we’ve got here in this interview. His name is Ujjwal Gupta. He is the founder of BenchPrep. They are a comprehensive learner success platform. So a lot of the software that the ACT and organizations like that use, actually, he is the guy responsible for creating it and they’re white labeling it and using it for their students.
All right. Finally, I should say before I give him a chance to talk. This interview is sponsored by two phenomenal companies that I vetted, that I work with, that I’m happy to introduce you guys to. The first will host your website right. It’s called HostGator, and the second will help you hire your next phenomenal developer. It’s called Toptal. Ujjwal, it’s good to have you on here.
Ujjwal: Thank you. Thank you, Andrew. And I’m very surprised that the best part of the learning was standardized test because a lot of people we know are so scared of going through that arduous process of actually preparing and passing those exams. And one of . . .
Andrew: You know what? There was nothing I could lose because I always thought that I was going to be an entrepreneur anyway, so who cares what my grade point average was. I loved learning and I loved points and so this combines two of my passions. Throw french fries in and I’m in heaven.
Ujjwal: Yeah. And what we have done is actually make it less stressful for those users who are not like you who are scared of like sitting for those three hours and actually their professional lives depending upon one exam. So what we have been able to do is actually work with the official bodies, and one of the biggest reasons that they work with us is to reduce the stress level of the candidates preparing for those exams because they are there for a mission. Almost every organization we work with has a mission to help students or learners be ready for either their colleges or careers. And that’s what we enable them to do.
Andrew: Your revenue 2017, what was it?
Ujjwal: We are a private company, but we are cash positive, profitable, growing, doubling in revenue every year.
Andrew: Can you ballpark it for people?
Ujjwal: It’s between $5 million to $10 million. It was.
Andrew: Sorry?
Ujjwal: It was between $5 million to $10 million last year.
Andrew: Last year, 2017, and it’s increased since then.
Ujjwal: It’s going to double, if not more this year.
Andrew: Okay. Before we started, you gave me a clearer understanding of it and I told you in this interview I was going to ask you questions that you didn’t want to answer, like I know you’re not enthused to give out your revenue, but I also told you you could always say no, and I’m glad that we got to a place where you feel comfortable sharing a little bit of it.
All right. The accent. I also told you that I would bring this up, because one of my frustration is that I know that people are going to tune out if they hear an accent that they’re not familiar with, but I also know that because of that, I’m going to be one of the few people championing your story and people are going to love Mixergy because I find guests like you whether you’re not going to be on NPR every other week. Where’s the accent from?
Ujjwal: India. I grew up in India. I did my undergrad from India. I came to U.S. to do a PhD in Chemistry/ nanotechnology. I published 16 plus papers doing my PhD. But yeah, I’m originally from India. I’ve been in U.S for 14 plus years now.
Andrew: You ever have anyone in the U.S. say go back home?
Ujjwal: You know, I would love to say yes to it, but I feel I’m one of the very few lucky ones who hasn’t seen the other side yet.
Andrew: You know what? I wonder also if you guys are in Chicago. I grew up in New York. I remember when we used to go to Long Island, not the Persian part of Long Island, but the other part, people would say to my dad, “Go home,” because he had a bit of an accent. Siri doesn’t understand him. I understand him. Siri doesn’t understand him because of that. Your dad was what? Back in India, what was his work?
Ujjwal: He started out as an engineer. He did civil engineering. After finishing up civil engineering, he tried to do a bunch of things, he didn’t like it. He was feeling constrained, so he got into a law program. He became a lawyer. He did that for a few years. He wanted to continuously learn and the only way to make money in India is to have a job. So he tried to mix jobs with learning. And finally he realized that not any job is not going to make him happy, so he started his own company.
Andrew: And what was this company?
Ujjwal: He became a real estate developer. So he tried manufacturing scissors and clothes, and then he also became a real estate like development company.
Andrew: I’m smiling because his son basically went to a similar path. You love learning, you wanted to get a job, you found that the jobs that you were looking at weren’t going to challenge you and you finally decided, “I got to start my own company.” Am I right?
Ujjwal: Yes, twice.
Andrew: Twice.
Ujjwal: So I did that. Right after my undergrad I started a company because . . . So I went to, if not the number one, the top three engineering institute in India because that’s what you are supposed to do. Like growing up, the only two professions were engineering or being a doctor, so I decided engineering. I went to the number one, IT Bombay in Mumbai, when I undergrad. While finishing up I realized I always wanted to be an entrepreneur seeing by dad’s journey. I started a company with my advisor in nanotechnology. He wanted to keep it extremely small, I wanted to make it big. The plans didn’t match, so I said, “Why not I become an expert and then start my own company.”
So I applied for PhD programs, got into one, did my PhD. I would say one of the best things, or I would . . . Like I did really well in my PhD compared to average PhD by publishing 16 papers, winning out, sending research achievement awards. I even got a few big name job offers. But while I was finishing it, I realized that most of the research that I have done is not commercially viable for the next 20 years. It was sub-nanoparticles that we were creating at the time. So I said, I want to do something which can make an impact right now, and hence BenchPrep.
Andrew: And so the two of you and the guy who became your business partner. What’s his name?
Ujjwal: Ashish Rangnekar.
Andrew: The two of you would get together and say, “Let’s try, just throwing around ideas and see.” And you wanted an argument. You wanted him to be devil’s advocate to your idea and you to his. Was there one idea that you felt strongly about that he shot down that you’re glad that he did?
Ujjwal: Oh, there were tons of them?
Andrew: Is there one that stands out? I want to get a sense of how you were thinking to arrive at this idea.
Ujjwal: So we would do weekly calls. One of us had to come up with an idea and the other had to play devil’s advocate. And this was right around the time that iPhone just came up with AppStore, and everyone was building these like 99 cent applications which you press a button and there will be a new [parts of 00:09:41]. And actually, we wanted to do something similar initially, like let’s just start making these random apps to make money.
Andrew: Is there an example of one of the random ads that you were thinking of?
Ujjwal: Random apps, I think one of the apps that we came up which didn’t makes sense or we said like that’s not a big business, was Top 10. So we said, “Let’s just make these lists of top 10 restaurants, top 10 beers, top 10 universities and have . . . ”
Andrew: So the app would list the top 10 of all those different things.
Ujjwal: Yes. And that was . . . We were also just brainstorming and coming up with things that we would want to use. And both of us agreed that it would be a useful app. And I’m talking about 2008/’09 time frame when iPhone was the only operating system which had an AppStore on your mobile. Like, we both had iPhones from day one and both of us knew that this is going to be big, so we had to do something on the iPhone. That was like a pre-constraint that we had posed so that we’re not just going in extremely random directions.
Andrew: Okay. And it makes sense that whenever there’s a new platform that’s going to be big, there are opportunities that won’t be there later on when it’s stagnant or when it’s mature. And so you guys were just tossing these ideas around. And he at the time from what I understand had a GMAT book. He was prepping for the test or what?
Ujjwal: Yeah. So he actually went to Chicago, University of Chicago business school, both business school, but the idea came before that. So he was in New York, he used to work for Capital One and he used to commute in subway and he used to carry that heavy GMAT prep book everyday which he was studying which would not store any of your data, which would not show you any sense and weaknesses or give you scores or analysis. And . . .
Andrew: It also wasn’t like the size of a paperback. It’s bigger than a paperback book and thick.
Ujjwal: Yes. It was easily, I would say two to three pounds that he had to carry with him all the day. And that is when we realized like just make a GMAT test paper for iPhone. Both of us are educated enough that we can write 200 assessment or questions for the test. I hired a friend, an undergrad from Penn state who worked with me on my PhD to build our first iPhone app. As payment, we bought him a MacBook to learn iOS app development. And that was like our payment to him to build that first app.
Andrew: Who was it who did this for you for just a MacBook?
Ujjwal: An undergrad that I worked with during my PhD.
Andrew: So just a student that you happen to know. And I guess I should say to anyone who doesn’t know. GMAT is the test that you need to go into graduate school. Right? I think I got it. If you want your master’s program.
Ujjwal: Yeah. So if you want to do a business course, an MBA.
Andrew: An MBA.
Ujjwal: Yeah, you have to take GMAT.
Andrew: Okay. So for the price of a MacBook, you got a developer to build the first version of this and you guys sat down and wrote the questions for it.
Ujjwal: Yes.
Andrew: You wrote it scratch? You didn’t take past . . . No, you’re not allowed to take past test questions because it’s copyrighted, right?
Ujjwal: Yeah. So we made sure . . . So I come from a very research oriented background where plagiarism is a big thing. So we knew that we don’t want to do something which is not good, but given that I have taken five standardized test in my life before that and Ashish had prepared for GMAT, we knew what . . . And he actually went to the number . . . He got admitted into the number one business school and his score was among percentile. So both of us are very educated, so writing those 200 units was not a problem, but we also realized that that cannot be something that we can continue doing for the business because we don’t want to reinvent wheel. There are thousands and thousands of instructors, tutors, authors who have written content. So the first app, we wrote the first 200 questions, but after that, we started licensing content from publishers.
Andrew: Okay. And the first version, it let people take the test questions and then it gave them the result. And did it also tell them what their strengths and weaknesses were?
Ujjwal: Yes. So it would give them a score analysis of what different topics you were doing well in and what topics you need to improve upon. But to be very candid, if I look at that app today, I will probably feel extremely embarrassed.
Andrew: Yeah. You know what? My producer wrote a note about that, that you told her that that’s the way you felt. What do you think you’d be embarrassed by?
Ujjwal: No. It’s like if you look at 1990s website, do you want to actually look at them?
Andrew: You know what? Even early 2000s websites, little things drive me crazy. The text is always left justified on the left side of my big MacBook screen. They never say anything about the company. They always act bigger. They never say, “Here’s a photo of the guy who founded. Here’s what we’re about in a very substantive and concrete way.” But I can’t tell more specifically what it is about the first version of your app that you weren’t excited about. I’m looking at early screenshots of it. It’s an iPhone app.
Ujjwal: So it was phenomenal for the time, but if you compare with what has evolved up of BenchPrep, it was extremely bare bones. So I’m . . .
Andrew: Was the company called BenchPrep even from the beginning?
Ujjwal: No. So our legal name is Watermelon Express.
Andrew: And so what was the domain back then?
Ujjwal: Watermelonexpress.com.
Andrew: And people would go to the AppStore and see Watermelon Express? That was . . .
Ujjwal: Yes.
Andrew: Got it.
Ujjwal: So we are still legally Watermelon Express Inc. doing business as BenchPrep.
Andrew: How did you get Watermelon Express?
Ujjwal: So we decided that we want to be in iPhone app business. And when we decided that, we were drinking watermelon.
Andrew: I’ve never heard that. Okay. And so, got it. Watermelon Express, that became the company. And now I understand also why when I look back at older versions of the software, it actually looks really good, it’s because I haven’t been looking at Watermelon Express and now I’m kind of going back in time and hunting down what that looked like. All right. So two of you have this idea for a first version. You decide you’re not going to sell it for this 99 cent price point which is what you initially were thinking. You finally found something that was substantive, right? And so you said, “I’m going to charge more.” How much?
Ujjwal: $9.99.
Andrew: How’d you come up with that? That’s pretty gutsy back then.
Ujjwal: It was back in the day and even now, it was very easy to change prices. So we just had the price, uploaded the app, and we never even checked or we did not even check the AppStore for a week or two. And we decided let’s go and check what has happened and we had already made more than $2,000 in less than seven days.
Andrew: Why didn’t you check for so long?
Ujjwal: Because at that time, we were of the opinion that Apple takes usually a week or more to review and approve aps. So remember, this is extremely like almost 10 years ago, extremely early days of AppStore where Apple would have . . . Apple was spending exorbitant amount of time in review . . .
Andrew: Before they have it right. And so you’re saying, you didn’t know that it was live. It wasn’t that you were on to other projects. You just had no idea it was live, and when you did, it was up already for a few days, and so boom, it was hit. How did you celebrate that first win?
Ujjwal: That’s a good question. I think I called my parents and I call Ashish and we like both of us . . . That was our first aha moment. We realize like, “Oh my God. This is something which is noticed, like Ashish or I thinking that it’s useful, but this is something that is useful for more people than us.”
Andrew: And this was just you and Ashish at the time?
Ujjwal: Yeah.
Andrew: So two men operation and a guy with a laptop who learned how to code it up one product. It seems like you quickly, if I’m going back through internet archive, I can see you fairly quickly moved into GRE, SAT and LSAT.
Ujjwal: Yeah. So, in the next two years we create more than 80 apps.
Andrew: Eighty?
Ujjwal: Yes.
Andrew: Wait. How many tests are there? There’s the SAT. I feel like the four that I just read right there are the list of them. What else . . . Sorry?
Ujjwal: There are thousands and thousands of exams.
Andrew: My favorite was the Regents in New York. That’s not a nationwide thing.
Ujjwal: Yeah. But that’s high school level. But exams, and it’s not just the college admissions or graduate admission exams, you need a certification for almost everything you do in U.S. So if you are a real estate agent, you need to have a license. If you’re a nurse, you need to have a license. You need to have those continuing education credits. If you are in finance, you need to have a FINRA series 6, series 7 license. So we were creating apps for each one of those exams.
Andrew: I’m imagining what you did was you went to the bookstore or the virtual bookstore, you looked for what books were there, you probably listed them in order of sales, and that’s what you decide to get into. And then you license the questions from them.
Ujjwal: From the publishers, yes.
Andrew: From the publishers.
Ujjwal: Yes. So we were . . .
Andrew: On a per sale basis?
Ujjwal: Yes. So we were paying them royalty based on the revenue we earn. But there’s a funny story. So GMAT is taken by about 100,000 users every year, and we were making about $200 to $300 a day. When we said, “Let’s make another app for SAT or ACT,” that is taken by two million plus students every year. We thought if we are making $200 to $300 a day for 100,000 people exam, we should be making easily $2,000, $3,000 or maybe even $5,000 a day for those exams. And so the day we launched it, we waited for a week, then we waited for a month, and then we waited for three months, and that never happened.
Andrew: And so we feel like we’ve got now our product that works not to the level that you imagine, but one that works, the people are buying, the sales are good, and still there was an issue, an issue that forced you guys to change. And I want to know how you changed. Let me take a moment first to talk about my sponsor, and then I’m going to come back in and we’ll get into this.
My sponsor is a company called HostGator, if you guys are out there. Let me see. There it is. Apparently WordPress now is being used by 30% of all websites, WordPress, including Mixergy. So if you have an idea for a website, now it’s super easy to get it up and running. The question then is, all right, WordPress is free, you can get it downloaded anywhere. You can install it and have it managed by anyone. Where do you go to have it hosted? Well, there are tons of options for hosting your website. So why would you go to my sponsor which is HostGator? And I’m going to tell you guys why. It’s inexpensive, they’ve been around forever and it just works. So, I noticed you guys, I shouldn’t be talking about a competitor in this ad. You guys use Wix to run your first website, right?
Ujjwal: Yes.
Andrew: Hey, you don’t need brilliant website development anymore. You used Wix. I’m suggesting WordPress. That’s what make Mixergy is built on. And I’m saying, “Look, go get a hosted by a company that’s been around that they’re not going to be a fly by night operation where they suddenly shut down and your whole website is gone. I’ve interviewed people like that. Don’t pay exceptional exorbitant amounts of money to have your website hosted because your money should be spent on your product and your sales and not on the website hosting. Just get it, good enough to work.
So if you’re out there and you want it, an idea, whether you have something new or something that you’ve already launched and you want it hosted right, go to hostgator.com/mixergy. When you go there, I’ll be honest with you guys, they’re giving you a discount, but they give discounts everywhere. It might be a bigger discount than you’re going to get anywhere, I think it is. But still price is so small as it is that if I give you a big discount in something small, it’s still small. So what you’re going to be doing by going to that URL is doing me a solid and letting them know that you came from Mixergy which means that you’re going to be helping to support Mixergy. But you’re also going to mean that you’re going to be tagged in their system as a Mixergy listener, and you know I’ve got a big mouth. So if anyone for some reason needs help with one of my sponsors, I jump in there and I help out. So if you’re a customer that came through me, I want to make sure that you have a great positive experience. And every day I get emails from people about their positive experiences and some about their negatives and I get riled up about both.
So here’s the URL where you’re going to get up to 60% off. They are very low prices. You’re going to get unmetered disk space, unmetered bandwidth, unlimited email address. This is just table stakes at this point. It’s good hosting that works. And 45 day money back guarantee in case you don’t love it. Here’s the URL. Go to hostgator.com/mixergy, hostgator.com/mixergy. If you have any doubt about it, go back and see how many of my past guests ran hosting companies that then were crushed by HostGator as these guys just kept getting bigger and bigger. A great company, hostgator.com/mixergy.
All right. Where were we? We were talking about . . . So you had all this software, why didn’t you say, “You know what?” Actually, what did you say next? If I’m sitting in your shoes, I have all these other ideas for what to do. You found the right one. I’m curious about how you found that. Was this a crisis for you when you said we did all these courses and it’s not working out?
Ujjwal: So we knew . . . So we would get emails and phone calls from students every day saying that they improved their scores or they pass their exams because of BenchPrep. So we knew that the product was extremely useful for the learners, but the lifetime value for the customers or the end users was less than $100 and there’s not a lot of cross-sell, upsell opportunities in test prep, certification prep, licensing prep market. So because of the lower LTV, having to go out and look for new revenue every month, there was just not the right product market fit. The product was extremely, extremely solid.
Andrew: How do you know the product was solid? I mean, everyone thinks that what they do is solid. I think I did a great interview today, but someone else’s going to tell me, “You talk too much.” How did you know for sure that this was good?
Ujjwal: I think data speaks for itself in our case. We have thousands and thousands of testimonials from students from our old days who used to email us and saying that they passed their exams or they improve their scores because of BenchPrep. They don’t know what they would do without BenchPrep.
Andrew: Okay. So you’re seeing it and you’re starting to feel proud of the results. I saw you guys got some press write ups at the time. All right. And so you said, “It’s not us, we just hit a capacity with this. We can’t get somebody who’s signing up for an SAT course to also sign up for an LSAT just so we can double our sales. It’s just not possible. They’re not going to college and then law school right away.” All right. So then, what are some of the ideas you kicked around before you found the right one?
Ujjwal: So from the vetting site, there was only one that we could try, which we did and we have been very successful with that too, which was to use the same product because we knew the product was working, and to work with official testing and certification bodies who owned that exam to help them to reach their candidates and donors and help them improve their scores. And yes, so that’s what we did.
Andrew: It was just that. You said, “Look, we are . . . ” And you already had partnerships with them for content, you were licensing their content. So you said, “Why don’t we just create the app for them and they’re going to have bigger reach than us and they’re going to have an ongoing need to buy from us?”
Ujjwal: Exactly. So if you look at the professional of these college admissions, graduate admissions market, all these organizations have 100% market share. So if you want to go to a business school or . . . they are kind of monopolies or duopolies. So if you want to be a nurse, you have to have a license. If you want to be a financial advisor, you need to have a license. So most of these organizations had captive audience, had brand exposure and explored content. We had the best technology platform.
Andrew: Weren’t you thinking, “Yeah, but you know what? They could go and hire developers and recreate our software, and they don’t need us?”
Ujjwal: So it’s funny you called this out because a lot of companies think like that. What they don’t realize is building software is not trivial. It’s not easy, it takes time, it takes money. We have spent more than $15 million in the last eight years to build what we have. If an organization wants to spend that much money over six years to build something like what we have, sure. But by the time they build it, we will be six years ahead.
Andrew: Okay. And I’m looking actually and see who publishes their books. I don’t know who publishes their books. I’m still doing research in real time. But my sense is that it’s not them publishing their own books, they go to publishing companies, and even though publishing a book is easy, they work with someone who does that professionally. All right. Did you have any fear of that? Were you afraid that they were . . . Oh, there it is. GMAT official guidebook is actually published by Wiley which is their publishing company. But did you have at the time any fear, “Hey, you know, we’re about to give them this big idea. They’re going to take it away?”
Ujjwal: No.
Andrew: No.
Ujjwal: I am a firm believer that ideas is not what makes you both differentiates you, it’s the execution.
Andrew: Okay. And so you said, “Look, I know we’re going to be able to create it, but what about this?” This is where . . . You know what? This is the kind of devil’s advocate stuff that was useful before. Obviously, we know you’re right, but good enough would work in that space. If it’s good enough because they have access to the customers, that’s fine. They’re just competing with the book. They’re not necessarily competing with you. They have access to all the people anyway, but that’s not the way it turned out.
Ujjwal: Yes. And one of the biggest reasons was, or two of the biggest reasons was omni channel. We were mobile first from day one. Most of the organizations which they were trying to build those solutions were learning management systems. And as I was calling out, learning management systems are not built for delivery of learning. They are built for file sharing, and grade books, and student management, and communication between instructors.
Andrew: Yeah. You and I talked about this before we started. Those learning management systems were assuming that there was a human being teaching and that the software was backing up the human being, they weren’t there to replace the human being with an app or replace the book with an app, and that was your revelation. And so you said, “I’m going to put this out there, I’m going to bring it out to them and take the risk that they’re going to partner up with us.” And what kind of . . . How did know how to price it for them?
Ujjwal: It was for the first few clients, we said, “Let’s do revenue share so that he incentives are alike. If you make money, we make money.” And that worked phenomenally well for us.
Andrew: Okay. Anyways, so you build it, you customize it, you create it for them, they promoted it to their people, and then you guys do revenue share on the whole thing.
Ujjwal: So very similar to how publishers work. Publishers charge a print fee and then they share revenue on per sell book, and that’s how we did it.
Andrew: Okay. Or they offer an upfront advance based on upcoming revenue. You guys did it the other way. You asked them for an upfront cash and then use that to build your software?
Ujjwal: So we already had the software in place because of a previous incarnation of the computer site.
Andrew: Yes, I see.
Ujjwal: So we just modified that software to be able to have their branding on top of it.
Andrew: But they didn’t have to pay upfront, did they?
Ujjwal: In some cases, no, but in some cases, yes. But upfront is a very small portion of our revenue. We actually have three to five to seven year contracts, and it’s the ongoing subscription that [inaudible 00:31:28]
Andrew: And that solves the problem. Now you’re selling on an ongoing basis, you’ve broaden out your audience to now include a much bigger share of the overall test taker market, you’ve added to your credibility, and you don’t have to worry about marketing, which I’ve looked in the past. You guys were good at getting . . . Who was it on your team who got press? Was that you?
Ujjwal: So both Ashish and I are very . . . We have very solid educational background, and our product has always spoken a lot on our behalf. So . . .
Andrew: But you got pressed. I think you guys were in the Wall Street Journal at one point, you got some tech press, like VentureBeat I think.
Ujjwal: Yeah. So we have been in New York Times, we have been in Washington Post, we have been in TechCrunch, like all of those back in the day.
Andrew: And that was you doing it.
Ujjwal: Me and Ashish. Ashish is the CEO. Yes.
Andrew: Yeah. You and Ashish contacting people, getting in. I’ve even seen small blogs. I don’t know what JYOTHI is, but that’s a blog, I guess. And I saw that they did write about you guys. It’s you guys who are doing it. And the posts here that I’m seeing in an old blogpost post is about how BenchPress is for students and if I want, I can go and get my own app directly from you guys and for publishers. It seems like at one point you guys had your foot in in each camp, right?
Ujjwal: So we transition . . . It took us a couple of years to transition from our consumer side business to purely B2B. We are purely B2B today, but back in the day we were also . . . So, because we were ahead of the curve and we were the first one to a lot of things, publishers used to love us and we were actually making them money. And they really wanted to use our platform as well, so we tried a bunch of things with them as well.
Andrew: How much did you make in revenue before you made the shift?
Ujjwal: So I would tell you that we are easily going to make four times than our peak revenue back in our previous incarnation.
Andrew: Four times now.
Ujjwal: Yes. Four times this year. There are peak revenue in a consumer side business.
Andrew: Okay. So this was clearly a good move. What I’m curious is, I think a lot of people would have just said, “This is going well. Let’s just look for other businesses to get into on top of this or let’s just milk this.” Why were you guys not at that place where you thought this was fine?
Ujjwal: So what you’re saying, we could have converted this into a lifestyle slow growth business, but that’s not what Ashish and I signed up. We want it to be reaching to millions and millions of learners. I personally believe that education can solve world problems. I think terrorism comes from poverty, poverty comes from not being educated or make a living. Education can solve all of that. And technology is the best enabler to solve those problems. So money has always been part of the equation for us, but accessibility and providing capabilities to other companies at this point or as many users across the globe is a huge part of our mission.
Andrew: All right. And you guys did some paid ads? How did that work out for you? You know, I don’t want to just quickly transition to that without underlining your point. I’ve noticed that the bigger mission seems to win. The person who has the bigger vision and not just, “I want to make money with an idea that works,” they tend to win. You had on your website this chat app that some people you to have back then. It was called SnapEngage. I really like SnapEngage. I had it on my side too. It shows you guys wanted real feedback from people who are on your website so you can respond to them.
I love SnapEngage but they were beaten by Intercom because Intercom had a bigger mission. Now you see them on everyone’s website, those little bubbles that let you chat with the owners and their support team. Their vision is, “Why is it that all websites are . . . ” I don’t know that I could express someone’s idea better than he could. But it’s like you walk in to a coffee shop, you get to talk to the owner. If you have a problem, you’re just there. Imagine if you walk into a coffee shop and you’re just trying to figure out things by yourself, it’s confusing, and we’ve been to coffee shops for thousands or hundreds of years. Why shouldn’t the web be like that? And he has this vision that I think sets them apart. And I could see that your vision about learning is important. I don’t want to just bridge past it like it doesn’t matter. But I do want to talk about the ads spend. Tell me about that a little bit.
Ujjwal: So, it was a huge learning lesson for us. We were spending . . . We started with $1,000 a month, then we went to $10,000 a month, and we were very profitable when we were working within those budgets. So for every $10,000, we would make, let’s say $40,000 with $30,000 in profit. As we wanted . . . So we started saying, “If we spend $100,000, economy of those scale should work, and we should actually be making $400,000.” That’s not how paid advertising works.
When you have small budget, you can focus on extremely, extremely specific in relevant keywords. And because those are extremely specific and relevant, they are profitable. But as you are increasing your budget, you have to start bidding for keywords which are more broad. And as you are increasing the scope of those keywords, the ROI is going to reduce. And that is what we started seeing. So, a lot of times, and we are also seeing that in so many different areas, when you are five people, big company and 50 people big company, like, the problems that you are solving are very different. Same with the revenue, same with paid advertising. And $10,000 making $40,000 does not mean that you can use the same tactics, spend $100,000 and make $400,000.
Andrew: And also is hard to track in your space, in the app space. Right?
Ujjwal: In the consumer side business or today’s business?
Andrew: Oh, I see. In the consumer side business, you weren’t doing that. I thought this was for the consumer side of the business.
Ujjwal: Yeah. We were doing ads in the consumer side business. We don’t do ads in . . .
Andrew: And so how did you know that it was working? How could you even tie it back in to be able to analyze it that way?
Ujjwal: In the consumer side business?
Andrew: Yeah.
Ujjwal: Because we were selling apps. So paid advertising was like you show . . .
Andrew: But you couldn’t tie it back into a specific keyword, could you? You couldn’t tie it back to a specific . . . You can’t connect in the AppStore unless I’m wrong. You can’t connect a source back to an order.
Ujjwal: Yeah. So by 2012, when we started doing paid advertising, we also had a web application.
Andrew: Okay.
Ujjwal: So think of it [like items 00:38:36]. We had a course library on web, iPhone, Android, and you can buy it from any device and you have access to it on every device and it will sync across devices.
Andrew: Okay. I see. And then, though, if you’re talking about web-based, you were competing against people who had been around for a long time, who dialed in their online marketing for a long time. You might have had advantage in the app space, but when it comes to the web, those people are sharks.
Ujjwal: Yes. And huge marketing budget. And so that goes . . . Another reason that our ROI as we were increasing, the marketing budget was reducing.
Andrew: Was going down. Okay. Do you guys ever raise any money?
Ujjwal: Yes. We raised seed round and series A round. We raised $2.2 million in our seed round from a fund called Lightbank. It is a Chicago base fund started by Eric Lefkofsky and Brad Keywell, founders of Uptake, Tempus, Groupon and they’re working a lot of big name companies.
Andrew: NEA.
Ujjwal: And we raised another round in 2012, $5 million from NEA and Revolution Ventures. But we have . . .
Andrew: Revolution is Steve Case’s?
Ujjwal: Yeah, Steve Case, Ted Leonsis.
Andrew: Yeah. And NEA is huge with the bigger companies. They’re not there to play small ball. They’re just . . . Right?
Ujjwal: I think they are on their 11th one. They just raised $3 billion of their 11 funders of 40 or something like that. They are one of the biggest VC funds in U.S.
Andrew: With biggest in terms of dollars, but not in terms of attention. They’re not big bloggers, they’re not big content creators, they’re not big talkers. So I didn’t know like what they were all involved with until I moved here to San Francisco and got to know some of the people who are in and then I realized, “Oh, this is huge.” How did you get connected with them?
Ujjwal: So NEA is a fund which works very closely with Lightbank. They have invested in a lot of companies started by Eric and Brad. So they made the introduction and then they loved what we were doing and they invested.
Andrew: How long did it take you to get Lightbank on as investor?
Ujjwal: Lightbank, actually, from the day we got the first call to the money in the bank a week.
Andrew: Because? Why was it so easy for you?
Ujjwal: So we were not even looking for funding at that point. We were running it from . . . We were just running it based on the money we were generating. And we won the business fund competition at Chicago Business School both where Ashish was a student at that time. And Eric heard about us. He gave us a call. He invited us to come present the next day. We came and then we negotiated for a couple of days and then the money was in our bank account.
Andrew: I see.
Ujjwal: But the next round was easily six months.
Andrew: Why?
Ujjwal: I think when . . . It’s like what we have realized, it’s like the same that companies are bought, they are not sold. It’s the same with investment. If you’re doing well, investors will knock on your door, and they will want to invest. If you actually go out and try to raise, you put yourself in not a very [leveraged 00:42:10] situation.
Andrew: And that’s where you were. You were at a place where you needed the money.
Ujjwal: Yes.
Andrew: Because . . . At what stage of your story were you?
Ujjwal: So we were early on, we had raised $2.2 million but we spent a lot of that money in building the next version of the product, including the web app, including the syncing, including these omni channel deliveries across different platforms. And we did not spend a lot of time in keeping it profitable. So we reached a point that we are growing but we needed more money to continue growing.
Andrew: And in the six months . . . So you needed it at that point. In the six months while you were having this conversation, how did your bank account do?
Ujjwal: I think we had to take a loan for one payroll.
Andrew: Wow. Wow. Was that scary?
Ujjwal: Very scary.
Andrew: When you . . . You know what? Let me come back and ask you about this scary story. First, I’ll do a quick spot here for Toptal. Anyone out there who is looking to hire a developer . . . I’m actually going to experiment with short ads at times. Anyone out was looking for a developer, I want you to go check out toptal.com/mixergy. They’ve got the world’s best developers in their network and their URL is super simple. By the way, if you want to hire from them, you could do one person, multiple people, project basis, part time, full time, whatever you need. You can often get started within days. Here’s with the developer that you hire.
All you have to do is go to toptal.com/mixergy, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no risk trial period of up to two weeks. That’s top as in top of your head, tal as in talent, toptal.com/mixergy.
When you get scared, what is that like for you? Are you up in the middle of the night? Are you worried that your friends are going to think you failed? Are you worried about your dad, your family? What are you thinking?
Ujjwal: I think people that I’m responsible to, so employees. I think . . .
Andrew: “I will let this person down. I will let all of them down.”
Ujjwal: Yeah. And people, like, a lot of times, you don’t realize the responsibility that comes with having people work for you.
Andrew: Because they have families, they have kids.
Ujjwal: They have insurance, they have all dependent upon the payroll, and if you can’t submit that payroll, how are they going to make mortgage or how are going to be pay for insurance or school, or they got rent? All of those. That’s the scariest part of running a business to me.
Andrew: Right. And you know what? What I don’t think about is, if a client doesn’t pay me for an extra month, it’s a problem. But if someone’s problem it’s going to get handled, it’s not an issue. If I don’t pay someone who works for me for a week longer than I should because we just didn’t hit the button on it, that’s a huge problem. Right? It’s not . . . They’ll work it out. I see. So were you up in the middle of the night? Did you need to have a drink or something to calm yourself down, multiple drinks, weed? No.
Ujjwal: Definitely drinks. I . . .
Andrew: One of them vodka.
Ujjwal: I still love that. Yeah. But it was a stressful time, but the good thing is that our investors like Lightbank who was our first investor believed in us and they send that loan like within a day.
Andrew: Oh, I see. They saw this is going to work out, we’ll lend you the money, and let’s make it work. You didn’t have to go figure out lending in the process.
Ujjwal: No, no, no. Thankfully not.
Andrew: Hey, how come you guys are so successful? And I’m looking over your shoulder, there’s nothing there. It’s an empty book case. I’m trying to get a sense of you. The white board. You wiped the white board down before you got a conversation with me?
Ujjwal: Yes, because it had a lot of propriety information.
Andrew: I figured. What’s going on here?
Ujjwal: So we just moved into this new office. It’s 15,000 square foot space on the 57th floor of Willis Tower. A lot of people know of it as Sears Tower. It’s the tallest, the number one iconic building in Chicago. We are facing east, west, north. Phenomenal office.
Andrew: So if you were to turn your screen around, we’d be looking at a view of all of Chicago, although you’re doing it right now. Oh yeah, I see. It’s getting cloudy there.
Ujjwal: Yeah, it’s getting cloudy, but you can see the lake.
Andrew: Yeah dude. Wow. So you just moved into this space.
Ujjwal: So we moved in a few months ago and we have book shelves in all offices, but all of them are empty because that’s what we are doing. We are replacing those books with the online learning platform. So no paper waste, be environmental friendly, and actually be useful for the end users.
Andrew: Do you read your books usually on a Kindle now or do still read paper books?
Ujjwal: Kindle, iPad, phone. I was never really a book-book person.
Andrew: What do you read?
Ujjwal: Mostly business books, autobiographies.
Andrew: Oh, so you’re saying you were never a paper book person.
Ujjwal: Yeah. Even back in the day, I would . . . I used to make notes on notebook, but I preferred in-person training or self-study than studying from a book.
Andrew: Yeah. I’m with you. I had this weird experience recently, though. One of my guest send me an actual paper book. I’ve been against paper books forever. I’ll read on my phone. Specifically I tell guests, if you want to send me a book, send it to me via digital. I took out this old pencil that I hadn’t used for anything in a long time just started marking it up. It was a lot of fun, like to say, arrow, and then here’s a message. It’s very tactical and I could see why people would be drawn to it. It’s just not me.
I think what you’re doing is especially interesting because the more we move, I think the more we could absorb. We’re not meant to just sit and have stuff come at us. We need to do something with it. If I were going to teach you to drive, I wouldn’t give you a book on how to drive. I would give you a book on how to drive that was small and I’ll put you in a car a lot. And I think you’re doing this for test prep, but I wonder where else you could do this. The only place where I see this done really super well is in coding. If you want to learn how to code, they’re going to get you into a coding screen fast and have you do and teach along the way the rest of the world. I don’t know how to do that. Do you have any ideas? How would you do that?
Ujjwal: So I think we are not just into test prep. So are building a lot of continuing education programs for our clients. We believe that learning is going to become extremely, extremely important in everyone’s professional lives. This entire concept of lifelong learning where you might have Google Analytics Certification three years ago, but if you don’t continuously follow Google Analytics changes, updates. The certification does not matter anymore.
Andrew: So how you . . . Do you guys do any Google Analytics training software?
Ujjwal: So we are trying to work with Google.
Andrew: How would you envision it? Because it couldn’t just be, “Here’s a question, give me the answer, and I’ll tell you what your progress is.” Wouldn’t you want someone to actually do something in a demo version of Google Analytics?
Ujjwal: Yeah. So, the way we have built our platform is that you can embed anything within our platform. So you can have a simulated environment within our platform and say, do this, do that.
Andrew: Really? I could basically duplicate the Google Analytics screen where I type in a keyword into a search?
Ujjwal: Not without Google. So if we are working with Google, we will integrate with them and can do all of it. So we use our own platform to deliver our own product training for our own products. So when someone is going to our training, they actually end up creating a course on our platform to deliver that training. So, we are big believers that are training in general is going to move online. There are going to be a lot of experts who are going to be there for solving the problems that you are having or answering any questions you have, but learning and practice, and this entire concept of retention has to move online and mobile. And that’s what we are focusing on.
Andrew: I worked with Dale Carnegie & Associates for a long time. I love that company. I volunteered. One of the trainers started a company that did training for businesses. And I had no idea this was a thing, but businesses need to train their people in their ways. And then of course, they also have things like sexual harassment, training and so on. I had no idea of how big that business is. So you’re saying beyond test prep, we’re thinking about that. How do we bring that into the modern age? You’re thinking about those types of learning applications that businesses would want to teach their people to everything, not just test prep?
Ujjwal: Yeah. So think about all these sales training that goes into a company to teach sales people to do the right thing for the customer, or even internally like now, almost every employee in any company ends up using 15 different software. So they use a project management tool, then they use Slack, and then they use an email tool, a CRM and ERP and accounting system and expense system. How do you bring all of that into like in one place where someone is not spending two weeks to four weeks in just training?
Andrew: Right. So you would . . . But everyone uses Slack differently. You would allow the company to create their own Slack training?
Ujjwal: So maybe, but what we are doing is we are enabling at least the onboarding on Slack, and then the policies of using Slack. If they have very specific things that the company needs, they can of course customize the learning program based on those.
Andrew: Wait. So if I have Slack in my team and I want to onboard people, what I do now is I have a checklist for them to go through. You’re saying the checklist is not nearly as helpful as this software where I can go to BenchPrep and I could create our onboarding and then give it to each new hire.
Ujjwal: Yes. And if it’s a three list item checklist, we are not probably going to be the best solution. Whenever you have a complicated training program, which would need Slack training, whatever project management training, maybe of video training, video coaching, like all of that. If you want to combine that into a training program, then apply [inaudible 00:53:15]
Andrew: What’s your pricing on this?
Ujjwal: We have a minimum per year of $200,000 a year and three contracts.
Andrew: I’m looking at . . . I did a search for pricing and it didn’t come up. It wasn’t on your site. Instead it brought me to an article from 2012. I just did “Pricing benchprep.com”. 2012, TechCrunch article, “BenchPrep switches to subscription model as it moves forward.” It was you guys trying to figure out your model.
Ujjwal: Yes.
Andrew: This was difficult. I’d been brushing over the difficulty of it, but I actually happen to look at my notes here and see that my producer said that at one point, you guys had to lay off 80% of your staff just to make the switch. Why?
Ujjwal: So, in our consumer side business, we had a big marketing team. We had a big content creation or basically instruction design team, support team, data team. When search models, we don’t do support, we don’t do marketing, we don’t create content at all. So a lot of that overhead went away and also we were running out of money.
Andrew: Wow. That must have been really tough. Did you need somebody like one of your investors sit you down and say, “You’ve got to move faster,” or were you quick with that?
Ujjwal: So, I would say the day we had to lay off a big portion of our company back in the day was the darkest day of our entire life, of my life. But it was one of those things where both Ashish and I blogged for a month full time. We are very well connected in this Chicago tech scene. So, we made it a point to connect with all the other founders, all the other head of HRs. And I would say almost 100% we found everyone a new home.
Andrew: Wow. So even while you guys were going through this difficulty, you still said, “We need to find these people a new job. It’s our responsibility.” That’s a lot, man. Do you get to take any time off now?
Ujjwal: Not in the last six months. And my wife has been complaining about that a lot.
Andrew: I bet.
Ujjwal: But I love traveling. I’m hoping to get a vacation sometimes soon.
Andrew: When you travel, what kind of traveling do you do?
Ujjwal: I am a big snow boarder, so I love going on the mountain snowboarding, but I love going on beach vacations. So we were in Jamaica last year. We were in Japan a couple of years ago.
Andrew: I have never been there.
Ujjwal: Yeah. Dublin, Spain, I love Spain. Italy.
Andrew: Me too. I’d like to live in Spain for a year and do Mixergy from there. It’s just the kind of place where I feel comfortable. That’s the kind of travelling I like to do. I like to live in the country for a little bit to experience what getting breakfast is like and when they eat dinner. When you go to a country and they dinner at 10 o’clock, it changes your world for a little bit.
Ujjwal: Absolutely. I’ve been to Spain, I think four times. I love Barcelona. That’s like my favorite city in the world outside of Chicago.
Andrew: The only problem I have with Barcelona is they’re going to take my iPhone X. My iPhone 10, excuse me. It’s a pretty dangerous country. All right. Congratulations on doing this. Look, I’m very proud to have you on here. I’m really glad that you’re here. I’m wondering what’s in it for you? Why are you doing this interview? Why are you out there? To be honest, we got you through your PR company. Why do you have a PR company to help you get the word out to companies like mine and sites like mine?
Ujjwal: I think our biggest problem that we are trying to solve from PR marketing side is a lot of prospective clients might have heard of BenchPrep, but they still think that we are a consumer sector. Like, even you or we talk to a lot of people, they still think that we are a consumer site company when we are not at this point. So that makes it on us to continuously repeat that message that we are enterprise/learner success platform. And second, we believe in the mission [V 00:57:22]. And I’ve been a big follower of Mixergy for seven years now. Like, since you started, I used to remember that you used to post it on Hacker News.
Andrew: Yeah, yeah.
Ujjwal: And I would watch like all those videos. So being on Mixergy is like phenomenal.
Andrew: Well, thank you. Thanks.
Ujjwal: And part of me of being able to talk to you.
Andrew: Thanks a lot, and I hope I’ll get to talk to you in person. I’m amazed and excited about your story. I’m also shocked as I did some research that there weren’t that many articles about you. Hopefully, this will start off a series of more. I mean, about the company there were about you I like. I like your story, your message. I know that you do some of this stuff on Techstars. Techstars. I kind of had the sense maybe you guys raise money from them and that’s why you’re . . . No, you’re just mentoring the Techstars. I feel like this is a story that needs to be told. I’m glad that you’re on here telling it, and I’m also frankly and selfishly, I’m glad that you’re not. You didn’t tell it in all these other places first.
All right. For anyone who wants to connect with you, I think the best way to do it is to just go check out your site, benchprep.com. And my two sponsors, the company that’s going to help anyone host their website, it’s called hostgator.com/mixergy. And the company that will help you hire your next great developer, it’s called toptal.com/mixergy. All right. Thanks so much and congratulations.
Ujjwal: Thank you. Thank you, Andrew.
Andrew: Cool. Thanks. Bye everyone.
