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Here is the program. Hey there freedom fighters, my name is Andrew Warner I am the founder of Mixergy, home of the ambitious upstart. How does a guy who couldn’t learn how to program end up bootstrapping a programming school that generated over a million dollars in sales within its first year? Neal Sales-Griffin is the co-founder of the Starter League, a school in Chicago that teaches people from all over the world how to code, design, and ship web apps. When he wanted to learn how to program and discovered that all the options available to him were inadequate, Neal decided to build his own school. I invited him here to talk about how he did it. Neal, welcome.
Neal: Thanks for having me.
Andrew: I fact checked before the interview started. In fact, I checked with you and said, “Do I have this number right or am I exaggerating?” Did you generate a million in sales and you said: “Andrew that’s an understatement.” First year in sales, what were they then?
Neal: In terms of the specific number we do not have it. What we said was the bottom line was a million but, really, the way that we represent that value is thinking about the number of people we impacted in our first year. We taught over 300 people how to code, design, and ship web apps. That is with classes with a price range of $2,000 to $8,000 depending on what class it was.
So, just doing the rough back of the napkin numbers it sort of shows that a lot of people believe in investing in themselves and in fact, investing in us to make sure that they can change their lives for the better. We are really proud to have hit that milestone. I think Jason and the team at 37 Signals, they really value a company that was able to bootstrap itself to profitability from day one.
Andrew: OK. I don’t want to spend too much time on the numbers because we are here for the story not the numbers. You did tell April, our producer who pre-interviewed you, that it was closer to $2 million in sales, right?
Neal: Yes, that is where we are at now. That is a little past a year. But, yes, things are going really well. We are definitely putting all the profit and resources that we are making right back to the program to make the (?) experience better.
Andrew: The life changing event that happened to you that sent you on this path was you wanted to learn how to program. Why did you want to learn how to code?
Neal: Over the past seven years, in Chicago, I have been very much engaged and involved in the sort of startup community. When I was in college, I was involved in a couple of startups. Then, I had the fortune to work for a couple of venture capital firms. I was this business guy, I am working on these financial modeling, I am looking at deals and due diligence and talking to entrepreneurs and companies.
Then, what happened was it got to a point where I really did not understand the technology that all these . . .
Andrew: We lost the connection and in fact, we kept losing the connection today. What we are going to do instead is just go straight to Neal’s iPhone and we will continue the interview from there.
What you were saying is that you got frustrated that you could not understand the technology that you were looking at investing in or helping the venture firm that you were working for investing.
Neal: Exactly, right. Then, basically, what happened was, I was pouring a bunch of money into working with developers and designers to create these ideas and these products. I realized that I wanted to learn more about what they were doing.
I started to crack open some programming books by night. I started to study to figure out what is this coding stuff and how did it work. Because, I had no background whatsoever, through college or anything with computer science or math or anything like that. I realized that I needed to put in a lot more time in order to pick up these skills.
I quit my job, just sort of cold, working at this VC. I decided, I was going to do nothing for the next year but, teach myself how to code. I did everything under the sun, I looked at video tutorials, online courses, programs, eBooks, everything you can imagine. What came of that is I got a fundamental or rudimentary understanding of how programming works. I could build or prototype a basic web app with rails, but I didn’t really understand what was going on, and I knew that I needed more support, education, resources and people around me learning in order to effectively learn how to code.
Andrew: Let me ask you this, Neal, because that feels like a really good set-up for why you launched a company, and it’s a good way of just putting down every competitor in the industry, and explaining why this is the only way to learn, but millions of people have learned how to code from books, have learned how to code from various websites that are out there to teach it, from just doing it themselves. Why didn’t it work for you. Why didn’t all those options that work for everyone else work for you?
Neal: That’s a great question, and honestly, I was baffled by it because I saw examples of other people learning how to code and doing it themselves and all that kind of stuff. What I learned was that, at least for me, there wasn’t enough. All those examples of the people. They either had someone there to help them or they had somebody there in their corner to support them, or to advise them or to mentor them.
Andrew: But didn’t you have that as a guy who was working for a venture firm?
Neal: No. Honestly, I didn’t. When I was trying to learn how to code, a lot of people would just throw these resources at you. Oh, go Hackity Hack, or oh, go read “Learn Python the Hard Way” or go do this online course. They’ll point you to it, but these developers, they can’t really justify the time to mentor you, tutor you, so you get stuck along the way. While I think there’s a few outliers in terms of success stories of people who have learned on their own, there are far more people out there that get discouraged because they try to go through those resources. They fall short or they fall flat because they don’t have the proper guidance or resources to push them through. Honestly, I love and respect the fact that so many people have been able to bootstrap their own learning, but it got to a point where we realized we needed something far more engaged and immersive than that.
Andrew: I see. When you say we, do you mean you and your co-founder?
Neal: Yeah, yeah.
Andrew: You both were trying to teach each other. Teach yourselves.
Neal: Yeah, when I quit my job I called him up and said “Hey, let’s learn how to code. I will focus on the back end, you focus on front end.” And he learned HTML, CSS, and a little bit of Java Script. I learned Ruby and Rails, and I started off with Python, actually, and switched over to Ruby.
Andrew: And this is Mike McGhee.
Neal: Mike McGhee, yes.
Andrew: With the idea that at the end of this focused year, you guys would both rock programming and be able to start a startup of your own, right?
Neal: Yeah, that was the idea. Not necessarily rock programming, but just get to a point where we could actually build prototype of an idea. Start an app, get the basic functionality and the features in, do some front end design, do some testing, and really see if it’s something that will work with other people, and something that they want and something that we wanted to build. And in doing that, that’s really all we wanted in the beginning, and then to build up from there.
Andrew: OK. And as you were looking around… well, let me ask you this, actually. One of the things that I notice about you is there is a sense of confidence to you, even on camera here, even in a situation where the computer kept crapping out on us and we had all these issues, you have a sense of confidence on camera. Why not say to yourself, I clearly am the business guy? I can communicate confidence and vision and lead people in a way that just comes naturally to me. I’ll hire programmers. I’ll figure out what my customers want. The programmers, I’ll motivate to do it for them, and I’ll be the business guy.
Neal: I can’t tell you how many people advised me to do that. And that’s basically want got me as far as I did, working in those VC’s and those startup. But it wasn’t about what other people thought I should be doing. It was about what I wanted to do. What I realized is that, I did that. I hired developers. I hired designers to work on my ideas with me and for me, but I realized that in hiring those people, they didn’t care about my ideas as much as I did.
Andrew: Give me an example. What did you hire them to do and what did they do?
Neal: Basically, Harper Reed is a good friend of mine. He is currently the CTO of Barack Obama’s re-election campaign. We’ll come to see the fruits of his labors in the next week I’m sure, but Harper was basically the main guy that I relied on to connect with developers and work on projects. I had a mobile app that I was trying to build as an entrepreneur in residence at the VC I was working at called Sand Box Industries in Chicago. And working with these people, they were talking about the different API’s that I needed to use and how long it was going to take to get this stuff done and they had a lot of work on their plate. It really just did not feel like they cared half as much about the meaning and purpose behind my idea, and what I wanted to do with it. And I met with lots of people to find co founders and technical co-founders and support and design and it just got to a point where I got so frustrated that I was like “I’m just going to do this myself,” so I decided to do this myself because I ultimately enjoy the process of creating far more than just managing and facilitating the process of something being created. I’ve found a lot of joy and empowerment from learning the skills necessary to go from having an idea and taking the course of a weekend to put the product together. It’s something truly empowering and I think anybody can do it. I also think one of the mistakes in our culture right now is that there are certain people for certain roles and that each person has a natural talent in a certain area, and based on our upbringing or resources are what will dictate what we are able to do with our lives. I wanted to reject that notion and start and org that empowered people to do what they wanted to do with their own minds.
Andrew: As you realize that you dislike programming and reject the whole experience feeling unpowered, how do you go from there to deciding to start your own school?
Neal: Almost a year into studying, I realized it was going to take a long time to develop the skills needed, so I gathered my self-confidence and began searching for an accelerator school for founders or cofounder, but there wasn’t one. We then decided to search for others with my same needs and experienced an overwhelming amount of demand upon pursuing that.
Andrew: Tell how you did that. How did you know? One of the problems with building a business it solves your own problems and your own needs. You could have a unique pain that no one else has How did you make sure that this was not so unique to you and your learning style that there were other people out there that both had this problem and were willing to pay for a solution for it?
Neal: We honestly had no idea. I kid you not. And we tried customer development and we tried to imply strategies to figure out if it was people needed and we got positive feedback but no one said they would sign up. When we put up the website, we did so blindly. We felt that if we could just reach 10 people and have them sign up we would be happy.
Andrew: In a minute well get to how you got those people, how many showed up and how you got the guts to charge as much as you did. But let me continue here with the narrative, you now said its time for me to go build the school people are telling me they’re interested. The next thing you did was you got a white bard, what did you do with it?
Neal: There are a few things we did; one of the things we did was list of about 25 people that we wanted to contact to ask them if this was something that they wanted. And we also created the narrative, out story and our backgrounds in order to create the content for our website and to promote the idea in the Chicago community of software developers, entrepreneurs and other people to support us.
Andrew: And these people that you contacted were they to be mentors and people e that would help you build this business?
Neal: Yes, mentors, advisors, and honestly we were looking for an instructor, because we didn’t have any of these things. We were going to start a school and we did not know anything about doing that at all. So we made this list of priorities in order to get a school done. Like, okay I guess we need an instructor, we need a space, we need computers, we need a curriculum. And we just made that list and then we just decided what was the most important thing, put that at the top, did that and then went onto the next thing.
Andrew: What was the most important thing?
Neal: So the first most important thing to us was an instructor. We weren’t going to have a school unless we had somebody that could teach.
Neal: So and we found that serendipitously through Twitter. We (?) a page for the site and a few people re-tweeted us and this guy named Jeff Cohen who is now our chief instructor and probably one of the best real teachers on the planet happens to live just outside of Chicago and he heard about what we did after a couple coffees we had convinced him to leave his senior software development job to join us full time to build this.
Andrew: By the way, why did you decide to do this in person? Everything on the internet is done on the internet. Why did you decide to do it via webinars and forum, etcetera?
Neal: I had done all that. I had done all those things over the past year. I was on Mozillas peer to peer university website class. I was on Ruby Mindicint University. I was on codeschool.com. I completed Michael Hardo’s (?) tutorial like five times by that point. I had gone through every single online resource that I could and at least for me I realized that I needed something much more hands on and immersive in order to get to where I needed to go.
Andrew: And you said that Jeff Cohen saw the landing page that you put up, that people tweeted around.
Andrew: So before you even had a curriculum, before you even had an instructor, you put up a landing page saying, this is coming sign up if you’re interested.
Andrew: Ahh, okay. And when you put that up did you ask people for their e- mail address or their billing information.
Neal: No, no. We didn’t ask for anything. We just said, hey this is, all we gave, we gave the email address. We didn’t even have a sign up form, like they couldn’t even put their email in. People could contact us but that was it.
Andrew: So what was the point of having it then if not for collection of either data or payment?
Neal: Well, it was just to almost see whether this was something people were interested in and just to let the world know that we were coming.
Andrew: I see. And it becomes more real when there’s a webpage then if there’s just an idea?
Neal: Oh yeah, oh yeah, it definitely becomes real because we put that up there so when we were talking to people about it they said where do I go? I mean we kind of pointed them there but really there was nothing, it was more of a placeholder then anything.
Andrew: Yeah what about this. Now that you’re touting this new program that’s coming up and people are talking about it isn’t there fear that you still don’t have an instructor but 37 signal guy’s down the road from you could teach this. They have a history of teaching, or some guy in Silicon Valley who’s fighting for an idea because he just got funded by an investor and you know he’s feeling the pressure, he creates a school in Silicon Valley. Isn’t there this pressure basically what I’m asking is, that someone’s going to steal your idea? Why weren’t you afraid of that?
Neal: No, no, we weren’t afraid of all. Because I mean, look at us. Here we are these people with less than a year’s experience in software development and just education and all of that. And we’re going around talking to people far more qualified than us that could in effect build a school like this, right? And we’re talking to these people because honestly they’ve got jobs, they’ve got other priorities and they didn’t have the problem themselves. They already knew how to code. They knew they had the skills so really we just wanted it to happen. So our take on competition isn’t really, oh there are competitors, it’s more just like, we have this problem that we want to solve in the world. And I guess a lot of people have tried to solve this problem, not a lot of people have solved it in the way that we would like or that we buy into. So we’re going to solve it ourselves and if other people want to learn from us and do it, that’s more than fine. Because that almost forces us to get better at what we do. And that in effect what has happened over the past year because lots of schools have popped up since we’ve started.
Andrew: What about the curriculum? How do you know what the curriculum should be if you hadn’t gone through the proper curriculum yourself?
Neal: Right. So, not the proper curriculum but I had definitely, probably more than most people I knew, I put myself through the fire and flames of having learned the fundamentals and foundations of how to prototype a web application with Ruby (?). So because of that it was very intuitive to me to structure a system or a sequence of tutorials and exercises that made sense for a beginner. And not only that our instructor was brilliant. Like he was used to teaching current developers how to pick up rails that knew other technologies or languages. But between he and I we were able to collaborate, to structure a sequence, a curriculum, that would work well for beginners. And now we’ve gotten very close to perfecting that process.
Andrew: Okay. So he said, put the students in front of me. I will teach them and here’s the curriculum that you and I are both going to create.
Neal: Well, honestly, we only have a curriculum for like a week. Maybe a week, week and a half. This was for a 12 week, at the time, class. We decided to just adapt as we moved along. So the first week we taught basic concepts of (?) and fundamentals, then over the weekend we would sit down and go, OK, what are we going to teach next week? All right, let’s dip in the rails, let’s give them a taste, let’s do this. We just really adapted and evolved as we went to see the pace of the learning of the students that we had in the class.
Andrew: The math behind a business like this is fairly straight forward. What do I have to pay in rent, what do I have to pay my instructor, what are some other costs that go into it? All right, great. How many people do I think I can get in there? Let’s divide my expenses by the number of people who I can get in there, put a little bit of padding for profit, and unexpected expenses, and we’re good. Did it work out that way?
Neal: That is exactly how it worked. All I did was I had a one sheet on an Excel document, and I listed out my expenses and what I thought revenue could be. So, all of our expenses, this is what we’re going to have to pay the instructor, this is what we need to pay ourselves, this is what the computer’s going to cost, this is what rent’s going to cost, and all the miscellaneous things. Then I looked on the right and said, OK, these are how many students we think we can get, we thought 10 to 12, we said how much do we need, how many students would we need in order to meet that on a quarterly basis. That number was six grand at the time.
Andrew: Six grand a quarter is all you needed in order to run this business?
Neal: Six grand from each student.
Andrew: From each student? All right, that’s a pretty high amount of money for someone who doesn’t know how to program, who doesn’t have a business, to shell out six thousand dollars for a company that never even existed before. Where do you get the guts to charge that?
Neal: Yeah. Really we just looked within ourselves and what it would be worth. We didn’t know that it was going to be a number that people could meet. Both my co-founder and I don’t come from wealthy backgrounds, we didn’t have a lot of money at the time. Mike, our co-founder, literally went broke. His bank account went to zero, a month before the class started. For me, I was running on just a couple thousand dollars. We had literally run out of money to make this happen. But, we knew that this was important enough for us, if there was a program like this, we would have saved up to go through it, and we would have made it happen. Because of our faith in ourselves that we would have done that, we asked the same of the people that would sign up for the program. It ended up having a very, very unique affect, because not only was it something people sacrificed a lot to go through, but that signified commitment. So those people that went through the program, they’re like, I paid a lot of money to go through this, I’m going to make sure I get the most out of this program.
Andrew: I see.
Neal: So that was the really special part that was a pleasant surprise, on top of the fact that we had the resources we needed to continue building the program.
Andrew: By the way, did you just put your hand on the mic? Because now you’re sounding a little muffled.
Neal: All right. Here we go.
Andrew: [laughter] We’re making this work, one way or the other. Did you have issues like this in the first class? Where technology just didn’t cooperate? Tell me about that.
Neal: Oh my goodness, yes. That’s probably why, like you said, I’m confident about these issues. We had so many. We actually started off, we didn’t have an office space, until three days before class started. I signed a sub-lease with Groupon and we had 12 cubicles that we used, no, it was 10 cubicles, to hold two people at each desk. We stuffed people at each of 10 desks, 20 people in 10 desks, and… the projector went out, didn’t have a wall with an actual projector screen, we got white poster board paper and taped that on the wall so that was the screen. Everything that could go wrong, went wrong, from time to time, but we adapted and adjusted and now, we’re in a place and in a position where we have a really nice facility, a really nice place. It’s been a long road, but we’ve learned a lot about how to actually adapt and modify a classroom environment to optimize it for the student experience.
Andrew: Don’t you feel terrible when people are paying you six thousand dollars, often that they… it was six thousand, right?
Andrew: Six thousand dollars, often when they have to save up to do it, and they’re looking to do this so they can get a job, and then, the equipment doesn’t work. I’m not saying this is criticism, I’m saying it because I feel that way. We all feel that way when we’re creating something in the beginning, and it doesn’t work out.
Neal: Oh yeah. Let me tell you, it was the most painful thing to me, to make sure, we wanted to optimize the student experience, we wanted the best for our students, and the thing that happened was, they were more forgiving and understanding than I was, about the things that we had to deal with.
Andrew: Why do you think?
Neal: Because they knew why they were there. They trusted us. They believed in us. They wanted us to succeed in what we were doing for their own sake and for the movement that we had started with education. Really, these are some of the best people you can imagine and we didn’t just accept everyone that went in. We interviewed. There was an application process. So, the people that we accepted sort of bought into our mission and bought into our values and our culture. So, the people that were part of the program weren’t really that critical of things like that. They were more understanding and constructive about helping us make the best experience for them.
Andrew: All right. Let me break down how you got customers. I’ll get to the application process in a moment. But first, you’ll have to get people to first want to participate in this. Now, you’re a new business. Hard to get traffic to your site. Hard to get people to trust you with their money. You don’t have any social proof or experience. You know, you can’t put pictures of past satisfied customers on the site. You’re nobody in this space. How do you get customers?
Neal: Yeah. So, what happened was, is once we put up a basic site explaining what the program was, we had no money. [laughs]
Neal: All we had was a couple social media accounts. We had twitter. We had Facebook. And we had list of one hundred people on an email list that we knew that we wanted to contact to tell them about the program. And with that, we put the idea out there and a lot of people heard about it. Because we hussled. We went to every single Meetup or Hackathon or event in the city of Chicago to let people know what we were trying to do. And i think a lot of what got us off the ground was the novelty of the idea at the time. Not a lot of people heard of a three month program, where you could learn something like Ruby on Rails, as a beginner, at that price point. So, at one of the Rails workshops I attended before this program existed, you could go to a software development shop and they’d have a four day workshop for $2,000, for you to learn the fundamentals of one of these technologies, and those are for existing developers. So, to hear of a three month program that’s at six grand is actually more valuable than what most people see these days.
Andrew: So, you’re going to one of the local events, and I’ve gone to tech events a lot. Sometimes someone stands up and says, “I’m about to do this. I want you guys to… Let’s talk if you’re interested.” But it takes some guts to do that. Were you the person who stood up and did that? If I asked people from Chicago, will they say, “I remember Neal standing up at my event?” Yes? Is that how it went down?
Neal: That’s how it went down on every single one. We hustled. We really, really hustled. We talked to everybody. We reached out and told people what we wanted to do. That was something that both Mike and I did heavily at Northwestern. That was the one thing that we knew how to do. So, the reason how I got to know Mike was because we both served as student body president at Northwestern. So, we had to campaign in order to…
Andrew: [laugh] There’s where some of that confidence seems to have come from.
Neal: Yeah, I mean, we knew, because the reason why he and I got to know each other was because we cared about helping people. We wanted the student experience at the school to be better. Now, ironically enough, we’re building a school to build the ultimate student experience. So, yeah, we had a lot of confidence about what we wanted to do. We didn’t have a lot of confidence about whether we would do it well yet, because we hadn’t done it. But then we figured it out.
Andrew: [??] start up events you went to, design Meet-ups you posted on Facebook, of course. You tweeted, of course. Word of mouth. You also got some traffic from Built In Chicago dot org [builtinchicago.org] Is that right? That’s where some of your people came in. So, you had an application process. When you’re new in business you want as many customers as possible. Why did you decide to put an application process, instead of saying, “We’ll take as many people as we can get. We’ll bring in some money. Then later on we’ll create an application process that only brings us the best. But now we don’t even know who the best is. Let’s take as much money and as many people as we can and figure shit out.” I just cursed.
Neal: Yeah. I mean, that’s what a lot of people advised us to do, to be honest, but we’re very opinionated. We knew that the kind of person that would actually be able to get through a program like this, and learn these skills, that took me over a year to learn, in three months. For them, we knew it took a special kind of person and we weren’t just going to take anyone. It wasn’t about aptitude or prior experience. It was more about passion and persistence. So, that’s our interview selection criteria, to this day. We look for people that are not going to quit and for people that have a problem that they want to solve with technology.
Andrew: What do you mean by that? That’s an interesting criteria.
Neal: By the former or latter or both?
Andrew: You know what? I said ‘criteria’, but I mean ‘criterion.’ The second one. What do you mean by the criterion of, “We need someone who has a problem that they’re looking to solve with coding.” I think that’s what you said, right?
Neal: Yeah. With technology. So basically, the ultimate motivation, I learned this from David Heinemeier Hansson, before I knew who he was, or even much about 37signals. He had some advice for people looking to learn how to code, which was code angry [??]. So, when you’re trying to learn something that is really hard you’re not going to learn it unless you actually care about what you’re going to do with it upon picking it up. So that’s what I was doing and that’s what I looked for in people to make sure that they were motivated to learn this really, really hard stuff because when you get stuck, when you’re stuck with a bug or you’re trying to pick up a concept and it’s not sticking, it’s not jelling, it’s going to take weeks or months or even years to make sure that you have those concepts down in order to solve those problems. So unless you’re properly motivated by something you care about, something much bigger than a paycheck or a cool job or something like that. Like a bigger more higher purpose about a life change or something important that you want to create to help people or help yourself, that’s really what’s going to get people over the humps of the learning challenges that they’re going to have to face in our program.
Andrew: Ahhh, I see. Unless they absolutely have to do it, they probably won’t end up doing it.
Neal: Yeah, yeah, so I mean it’s so easy to half-ass this stuff. Like thing about how many people sign up for all these online tutorials. Codecademy, treehouse, all this, it’s great. But what they don’t say is the drop off. How many people sign up but don’t end up actually persisting and going through all the classes and learning? There’s a huge drop off. And that’s because they’re lacking either the support, resources or push in order to get through it.
Andrew: Let me go off on a quick tangent here and then quickly come back to the story because I want to hear how many people applied after all the work that you put in. But Codecademy came out. You guys used to be called Codeacademy.
Neal: That was our original….
Andrew: And Codecademy comes out and people start confusing the two of you, right?
Andrew: So you were first, they were second. How did you feel when you heard them come out with a similar product that was online with a name that was very strangely similar?
Neal: Yeah, so we came up with the idea for Codeacademy, the name, at least, exactly when we came up with the idea. And what happened was is over the period of four to five months we built up the brand, we built up the idea of this program in Chicago and when we launched our site we got a lot of excitement, a lot of people applied. And then after about two or three weeks of the site being up YCombinator announces its summer batch. And in the summer batch is a company called Codecademy, with the A dropped in academy. And not only was the name confusing but they were like, hey, we’re the easiest place to learn how to code. And we’re free and we’re online. And not only that they bought Codeacademy.com. So they had the dot com and we were dot org and it was just a shit show. And a lot of the minds of the people looking to find either us or them. And they blew up, they were really, it’s a great product. And we were excited when they came out about what it was doing because we felt like some of those resources could augment what we’re doing in the classroom. But the confusion was insane. So I feel like I became a trademark lawyer in the period of six months because I learned so much about rights and processes with themes and descriptiveness. But really at the end of the day what we learned was, when you have something like that, and I don’t know whether they knew about us or not. There’s no way to figure that out at this point. But we did come to an amicable resolution with those guys because we like what they’re doing, they like what we’re doing.
Andrew: They paid for the name from, they paid you for the name.
Neal: Well, we haven’t like really disclosed the details of how we concluded that, but basically we had a series of meetings. Zack and I met multiple times. And we ultimately decided that we wanted to support each other rather than conflict with each other so we ultimately decided to rebrand ourselves to better represent what we were trying to do and then also they’re in support of our efforts as well in different ways.
Andrew: Did they pay you in money, or did they pay you by giving you potential customers in the future?
Neal: So that all still remains to be seen. So we, like when I met with Zack we talked about a lot of options for how to do that, and we’re still in the process of finalizing how that’s going to look. But it was definitely something that was beneficial to both parties.
Andrew: Okay. Zack, of course, the co-founder of Codecademy which is now I think called Codeacademy, right?
Neal: Probably, I don’t even know.
Andrew: All right. So then how any people applied after all that effort in getting new customers?
Neal: Yeah, so our first class we had about, I think, yeah we had exactly 88 applications.
Andrew: Eighty-eight. And you guys were aiming for 12 people so 88 must have put you over the moon.
Neal: Oh my gosh. We couldn’t believe it, we were shocked. So what happened was is we, so we wanted to get 12, we ended up taking 35 out of the 88. So we did take more people because we, at first our instructor was going to be part time, he was just going to teach one class. Once we realized we had enough for two classes we decided to bring him on full time and really invest in making sure the program was going to be great.
Andrew: So over $200,000 coming in for this new business that didn’t yet have an office, didn’t yet have, definitely no office space. Didn’t have classroom space. Just had a teacher who was committed. Didn’t have any experience, didn’t have any equipment. That was phenomenal. And just at that point as you said earlier Mike ran out of money.
Andrew: Tell me about that. What do you do? Was this before or after you got all the customers coming in?
Neal: This is before. So it was the end of July so it was right around my birthday and you know, like Mike had a meeting with me we lived together. And he was like, hey, you know I’m about to hit zero man, like I don’t know what to do. I know we got to get to October, that’s our launch date but, I’m stuck. And I said, you know what? I’ve got a few thousand dollars, I’ll cover you and me. So I ended up, my burn rate like doubled in terms of rent and food and other expenses. And basically we were down to the wire with our resources to make sure we got this program off the ground.
Andrew: And there was really at this point as far as I could tell no indication that this thing was really going to be a success. You didn’t get your orders in, I mean you didn’t get your applications in. It wasn’t until September, a few months later, that you were actually interviewing people and the following month, October, that you accepting people and finally starting to see cash in. Why did you believe in it at that point?
Neal: Yeah, I mean we’re crazy. Both Mike and, no, we’re crazy because we spent years at Northwestern together working on projects and working for a cause for no money and no real like foreseeable value in the sense of our own personal gall or benefit. So both Mike and I knew, we know how to live off of very little and that’s something that we were willing to do for something that we cared about. And we knew all the people that we could help. We had other opportunities. I don’t know if I mentioned this before, but basically Mike and I had to turn down an opportunity to work under Harper for the Barack Obama campaign as product managers on that team. I turned down an opportunity to help run and lead a rail shop in Uruguay with a great developer, and learn how to code for him. I turned both of those opportunities down because we wanted to build this school, the highest risk option we had but the one that we thought would be the most valuable for the world.
Andrew: What’s your motivation here? I’ve said in the past that my motivation for building something great is that, building a great business is that I felt a sense of inferiority walking around the streets of New York with everyone else doing incredible, fantastic things and I couldn’t even start a conversation with someone. I couldn’t even understand chit chat let alone do it. And so that big disparity between the people surrounding me and the buildings that they were autographing and me where I was feeling pushed me to really excel. What’s yours?
Neal: Yeah, so I mean for both Mike and I which is amazing that we have this kind of value alignment, we wanted to sell meaningful problems for people. We had a lot of reflections throughout college about what’s the meaning of life, why are we here, what’s our purpose, what do we want it to be, what do we choose for it to be? And basically what we realized is that what we enjoyed most about life in anything was making other people happy, and through that making ourselves happy. So we wanted to just continue to do that post college, and that’s why I got into entrepreneurship. I felt like when you start a company you’re in affect solving a problem for people. You’re doing something for people that’s worth something, that’s valuable. So we wanted to continue to do that with the problems that we saw in the world. So over the course of that year when we were teaching ourselves how to cope, we were brainstorming all these ideas for all the problems we wanted to solve in the world. With politics, with productivity, with health. With getting to know people, making friends. It’s so many really cool app ideas and we’re just getting to the point where we can even facilitate the creation of some of those either through our own students or through our own team now. And it’s, I mean I couldn’t be happier based on the fact that we’ve realized that the best way to solve problems and the most efficient way to solve problems, or at least the ones that we thought of, is through technology.
Andrew: We here at Mixergy before the interview asked you what your biggest challenge was, what your biggest challenges is were. And one of them was analysis paralysis. I’m watching, that’s what you said. I’m watching in this interview, I don’t see analysis paralysis at all. How did it manifest itself? Do you have an example of a situation where that expressed itself?
Andrew: You know, for other entrepreneurs who I’ve interviewed the answer for how do you figure out which of many different options is best the answer is, let’s just try something, look at the data and then adjust. You can’t really do that. You can’t say let’s try five different options and kind of do an A, B style test on them and see which one. Because you’re doing a course that takes three months. So how do you decide when you have all these different options?
Neal: We decide what, I mean it’s just what feels right. It’s what feels right and what we think, what we believe we can teach and be the best at teaching. That’s really it. And the same goes on the product side and we’re definitely heating up on that end of things as well.
Andrew: What do you mean?
Neal: Well, we boot strapped our organization through teaching and now we’re in the process of also building up a team to augment what we teach and how we teach with software. So we’re really excited about that side of things.
Andrew: Software for teaching.
Neal: So basically we have software that we’re building and currently using that’s enhancing the learning experience for our students in a way that I wish I had when I was in grade school, I wish I had when I was in high school.
Andrew: Give me a sense of what you mean. I know you’re not going to go into details of it which is fine. But I don’t understand how software fits in with the starter league.
Neal: Yeah, so I mean think about it. We teach web development and web design. So who would we be if we weren’t designers and developers ourselves and continuously building things? Because the whole value of what we’re doing is the fact that you’re not learning from people that are career professors. You’re learning from people that have been doing this, that are doing this. So with those people and with us we’re building software that’s basically going to support the learning environment here but also for our alumni and the community around us as well. And we’re sharing the effectiveness of what we’ve been able to teach with others through an online platform.
Andrew: You and I were introduced through Jason Fried, the co-founder of 37 signals just a few days before you officially announced that he invested in the business. I’m looking at the progress of your company. It was profitable from the beginning, right? From as soon as you got, from the first class. It was growing from the beginning. Why take Jason Fried’s money, especially. Why take Jason Fried’s money, I shouldn’t even say especially (?)
Neal. We don’t need his money. We didn’t need 37 Signals money at all and I think that’s why they invested in us ironically enough. So it was more of a symbolic gesture because we’ve decided to partner. They believe in education, it’s a very important thing to their business. And what they do, they also created the technology that we pioneered teaching and really they just wanted to make sure that they had a formal stake in our success in order to justify the time that they’re spending to support us, to refine what we teach, how we teach, and our strategic direction as well.
Andrew: Were they supporting you and giving you advice before they invested?
Neal: Oh yeah. So I’d known Jason for, I mean I guess over a year’s time at that point. We had interacted through e-mail and I’d met him a couple of times and we, basically I would check in with him and let him know how things were going. And you know just share with him our journey and the different challenges that we had along the way.
Andrew: Why? I understand what’s in it for you. What’s in it for Jason? You’re an entrepreneur who is starting something new. Why does Jason spend time helping you with this thing?
Neal: Yeah, so I mean he actually wrote about this. Inc. magazine, he has this monthly sort of in Inc Magazine, the November issue is a page dedicated to explaining like his story from his perspective in terms of investing in us. That’s on page 37 believe it or not. But the short of it is Jason just sort of said it felt right. He believed in our story and our values and a lot of it was inspired by rework and their thought leadership with 37 signals. It’s one of my favorite companies in the world. And really we modeled our approach and our organization off a lot of those values and principles and ideas. So we have an organization that was bootstrapped from the beginning, did not raise any funding, and really prioritized a culture of consistent behavior. And because of that I think he really felt like we were the people that he wanted to see solve this problem in the best way.
Andrew: That’s what it was you’re saying? I didn’t read the article but you’re saying that it’s because he believed in your mission essentially.
Neal: Yeah, he believed in our mission. 37 signals is very like, I mean, I think everybody knows this, they care about education. They have their own classroom in their space. They do lots of workshops and things like that. But they can’t justify a full time commitment towards educating while still building their company. So, rather than doing that, I think that they felt like we were the worthy company to partner with, in order to support us, to solve those educational problems on top of that.
Andrew: They put in how much into the business?
Neal: We haven’t really disclose it. But it’s a small stake, non- controlling. And in all likelihood, not very significant in the sense of our profitability or resources.
Andrew: They own less than 25% of the business.
Neal: Yes, it’s definitely a minority stake. So it’s not like a big amount. And I wouldn’t say that it’s a small amount in that they definitely care about our success going forward. But they’re definitely not investing to get anything out of it. In effect, Jason sort of says that they’re investing to stay in.
Andrew: Just to stay interested, essentially?
Neal: To stay in. We’re not looking to sell our company. We’re not looking for some big exit, and neither are they. So when they invested in us, it was more to signify the fact that they cared about us becoming a company that continued to be the best in the world to solve this problem.
Andrew: Okay. You know, I’m acting like the kind of reporter that I don’t want to be. I don’t really care about the percentage or the numbers. I only care about that part because I think it might make some news and I’d like to get some attention to this interview. But what I really care about here is what my audience and I have been talking about, which is, how does someone with no background get a mentor that’s like Jason Freed. So talk to me a little bit about that process. You mentioned it earlier, and I didn’t dig into it. The idea that one of the first things you did was reach out to dozens of people who you thought would be helpful. How did you pick them and what was the approach to getting them on board. Getting them to care enough to help you?
Neal: Yes. So really I just told them my story. That’s what people care about.
Andrew: I think you’re also hiding the mic again.
Neal: Oh sorry about that. It was about the story. Can you hear me now?
Andrew: Yes I think so, yes.
Neal: So it was ultimately just articulating to people why I was doing this.
Andrew: So it was just constantly emailing people who you thought could be helpful, and saying “I am doing this because it’s necessary. Because I couldn’t learn how to do it. Just constantly talking about your mission.”
Neal: Yes. It was. And honestly I actually commandeered an iPad.
Andrew: A what?
Neal: An iPad. And I basically made a ten slide deck. And I would flip through it when I met with people. It was the ultimate presentation tool for a dinner or a meet-up or a lunch or something. And I would just sit down with them, and I would go “Look, let me just show you. Let me tell you my story and let me tell you why I want to make this happen.” And after doing that, so many people would buy in and were impressed and wanted to help us.
Andrew: Interesting. I saw Sean, the founder of Spree Commerce do that. He would walk around when he was raising money and trying to build excitement for his shopping platform. And he would show people PowerPoint slides on the iPad. And what he said was interesting. Was watching where they stopped. Because if he gave them control of the iPad and they stopped on a slide, he understood that’s a point they care about and he could talk about that. Did anyone turn you down? Were there a lot of people who turned you down? What were the percentages?
Neal: I would say 95% of the people were like “Hell yeah, please make this happen. Oh my God, why hasn’t anybody done this?” They were super impressed. They wanted to know how they could help. But I will say there was about 5%. There were a few people, mostly the old guard of the software development community, the people that said “You’re not going to be able to do this. You’re not going to succeed. I don’t think this is going to work. I don’t think there’s enough people out there like you that are willing to learn how to do this. It’s too hard. The concepts that you’re going to teach are too rudimentary, or they’re not addressing the right things that real software engineers need to learn.” And there was a lot of push back in that respect.
So we did have a lot of fear and insecurity because we really respected those people and their advice. And I wasn’t anyone to tell them whether they would be right or wrong. All I knew was that I didn’t really care because I wanted to learn. And I wanted to do this. And with that confidence that I had, I just had the weird belief that there were other people in the world that probably shared that same sentiment.
Andrew: You told April the three big lessons that you learned from building the Starter League were don’t quit, decide quickly, we talked about deciding quickly, and trust yourself.
Andrew: I’m wondering how you can trust yourself when you have no evidence to show that you’re on the right path. When you couldn’t learn programming in a way that you would think everyone else was learning perfectly. When people who you admire were saying this wasn’t going to work. Under less daunting circumstances, most people would have given up. What tactic do you use to trust yourself and keep yourself going when all of that is working against you.
Neal: I don’t really reference a lot of, you know, books or anything like that , but the Art of War by Sun Tzu, there was a really interesting concept in there that really . . . I thought about a lot when I had to face those moments, which is the idea of death ground. I don’t know if you are familiar with that, but basically there’s a story in there talking about how Sun Tzu realized that if you pit, you know, an army of people, let’s say 1,000 soldiers against another 1,000 soldiers, the outcome is relatively predictable and, you know, average. But you take like 200 soldiers and you put them in a valley, like a place that’s sort of closed off with their backs, there’s no way out but for them to fight their way out, they’re more productive than those 500 or 1,000 soldiers, because they know that there’s absolutely no other alternative than to fight their way to freedom. So, basically I just mentally put myself in death ground, when it comes to entrepreneurship and my ideas, and we basically said, we either try . . .we either succeed or we die. Like, if this doesn’t work, there’s no alternative, there’s no backup plan, there’s no Plan B, like we have to make this happen and with that kind of mindset, it’s really what drove us to get to the point where we were about to be dead broke, have no resources and utterly just fail and fall on our faces because nobody would want to do this program and we wouldn’t find an instructor, and we wouldn’t find a space and we wouldn’t get the money to do it. But we did all those things because we weren’t sitting on some backup plan.
Andrew: That’s a good point. That’s a very powerful point. But, one other thing before I move on to my last section of the interview. That’s . . . in some cases, that’s really helpful; you have no other option, so you have to fight through it. Sometimes though, it becomes so overwhelming that you’re immobilized by it, that it’s just destructive to have that kind of pressure and to be under that kind of . . . to be in that kind of ground. Did you ever get to that point or is that you . . .did you never get to that point, and that’s why you were able to keep fighting or did you have a way of getting your mind out of it? That’s the worst phrased question I’ve had this whole interview. But, you get what I’m saying.
Neal: I totally get what you’re saying. So basically what you’re saying is, you know, when is that effective and when is that possibly even destructive.
Neal: Inhibitive to your organization and really, you’re right. You’re right. It has a time and place, and I think at the earliest stages of building a company, that’s when it’s more important and valuable. Over time, it gets to the point where you have to think a little more strategically and a little more cautiously about what you’re doing. Because now we’re in a position where we’ve taught over 400 people, and we’ve got real lives and real people on our hands that we have to make sure that we’re providing the best experience for. So, we can’t just sort of, you know, shoot from the hip all of the time and just hope that the, you know, the throw it against the wall and see what sticks strategy works, we actually are very careful and very thoughtful about what we teach, how we teach and the student experience that we take now. But before when we knew nothing, we didn’t have anything to go off of, so because of that, we just decided to make it happen because no one had really done this before, we didn’t have an example or a person we could talk to to tell us how to do it. But, what we’ve been able to do is help a lot of other people.
Andrew: What were you able to do that you couldn’t have done if the situation were easier for you, if you did have a way out, if you didn’t lock yourself into this . . . into this position, where there was no option but to succeed?
Neal: In what . . .
Andrew: What were you able to do because of the situation you were in, because you were in such a dangerous situation?
Neal: Yeah, we were able to move fast.
Andrew: Ah, I see. Right, if you had more money, if you had a job, if you had a cushion, you’d say, let’s spend a little more time, people are telling us that maybe this should be six months, not three months, I see, okay. Alright, final question, 37signals famously says that teaching is marketing.
Andrew: Other entrepreneurs have said, and I think 37signals and you would agree that teaching is management too. So we’re all doing more and more teaching as a way of growing our businesses, but none of us, few of us have done it as much as you. What have you learned about teaching well, about getting people excited about that, that the rest of us can employ in our businesses and lives?
Neal: Absolutely. So I think the future of a lot of these organizations and a lot of companies is going to be investing in their own people, in their own teams. And a lot of companies do it, but I think it’s really going to become a fundamental aspect of developing and growing an organization that’s successful, to make sure that we are empowering . . . either growing people into the roles that we need them to have or investing in new people to bring in, to make sure they’re fitting those roles. For instance, there’s a huge demand for technical talent and design talent at different, you know, companies. All over the place you can throw a rock and find, like an open rails job or programmer. And really what’s going on there is the fact that, you know, there aren’t enough people, there’s negative unemployment in tech. And what companies are going to have to do in order to meet that, like that need and that demand, is invest in themselves, and invest in their, you know, in growing those people themselves.
Andrew: Instead of fighting for a small pool of people who are available for these jobs, train your own people to take those jobs yourself. Send them to school. But what about this, forgive me, what I meant to ask was, how do you teach well?
Andrew: Most of us didn’t learn how to teach. Are there a few tactics that you’ve learned, like give people a quick win [SP], or what else have you learned?
Neal: Yes. So we actually, yeah, I have a few tips for that for sure, because we tried some things that weren’t really, you know, that were very much untested in the learning environment. So we employed a lot of unique strategies, in the sense that we do pair programming. So when you come into the class, you’re not just an individual with a laptop that comes and sit down. There’s one computer, one keyboard, one mouse, two people. And what happens when you’re learning with someone else, and you’re collaborating, one’s a driver, and one’s a navigator, is you’re asking questions, you’re thinking through problems differently, and you’re getting a lot more feedback in a short turnaround time, than you would if you were on your own, distracted, doing your own work, reading e-mail, checking other things, not being focused. So that’s one thing we’ve employed. We’ve also done a lot of agile methodology. So think about when you were in college or in high school, what if, at the end of each week when you have class, you got to have a meeting with your teacher with the rest of your students, and give them feedback on their performance, and how well they did, and what you actually learned that week. What if that was an iterative feedback mechanism throughout the school systems? We do that here, and I think that’s something a lot of learning environments can learn from.
Andrew: So, Jeff Cohen, at the end of a week we’ll get feedback from all of his students who say, ‘Hey, you know what, the way you explained that, way too fast.’
Andrew: “The way you explain that, just too slow. I got it, move on already.”
Andrew: That’s the kind of thing that we’re talking about.
Neal: And in addition to that, they also say, “This is something that really stood out to me that was really effective.” And basically, we log those things so that in the future courses and the future classes, we make sure to highlight those things and improve them each time.
Andrew: All right. It’s an exceptional program, I’ve heard a lot about it, and I’m really grateful to Jason from 37signals for introducing us. If people want to go check out the program, it’s thestarterleague.com, right?
Andrew: Excuse me, starterleague.com. You have a really simple domain name. And if they want to thank you directly for doing this interview, and being so helpful, what’s a good way for them to contact you?
Neal: Find me through twitter, nealsolace, spelled nealsales, is really easy to contact me. Also email@example.com.
Andrew: All right. Neal, congratulation on the success, and I’m looking forward to more and more interviews, as you build this thing up bigger and bigger and bigger.
Neal: Andrew, thank you so much.
Andrew: You bet. Thank you all for being a part of it. Bye guys, bye guys.