He generated $180M for Oura after losing an exit to Covid

Welcome to another Founder Wisdom podcast. We have Anthony DiValerio with us. He's the founder at Open Admission. It's human capital development. He's advancing Gen Z to higher ed in Philadelphia, in Philly. And Anthony has an interesting background. So friends for good. I hope we can talk about this one today. You've been at Antler, you've been at Aura. Been at Arch, I think that one rings a bell to some degree. And it's not your first company, you've founded a couple of ones, including ViewTag before that. So Ant or Tony, welcome to Pod. Glad to have you on. Tell us a bit more about yourself.

Yeah, thanks for having me. I appreciate it. Yeah, not my first tech company. I guess technically I've done, what, 3 ventures, including Friends for Good, which is a 501 nonprofit, That operates here in Philadelphia. I have been operating that for the past 7 years, and Open Admissions is the newest venture for me. ViewTag was an accidental first that scaled pretty well, and yeah, collected up a couple of different experiences along the way.

Tell us about, I guess, your first company, right? Heard you negotiated terms and then it fell off. To some degree, what happened there?

Yes, so the, uh, the company ViewTag was, um, it was an incubation of a product inside of a 30-year-old existing company, and I joined that company to, uh, to lead product development and kind of work with inside of their innovation lab. And the product itself was a digital luggage tag that could fully integrate into airlines' mobile apps. So this allowed passengers to fly any airline that they'd like, and having this device on their suitcase allowed them to check their bag in at home. The device itself had an e-ink display. It was bistable. You could transmit checked bag information that would normally be printed on the tags at the airport. You could transmit that information ahead of time at home, arrive at the airport, And drop your bag off without having to go to the check-in counter, interact with an agent, and essentially complete the entire check-in process all from home. And yeah, scaled that from early days back in Napkin to working within the industry itself. And we saw a lot of competitors try to get into the space, all of which tried to circumvent the airlines themselves. They all quickly learned that airlines have the final say as to what is allowed to go on the plane. And I think since we were the only ones working within the industry and with airline partners, we were one of the two that actually survived many, many years of development, technology ratifications, trying to get hundreds of airlines to agree on technology, processes, communication standards. And yeah, eventually we partnered with half a dozen or more airlines. The airlines we worked with covered 80 countries. So we were shipping products all over the place for those airlines. And yeah, at the beginning of COVID we were approached by a Fortune 500 to be acquired. that worked directly within the aviation space. They saw our product as a complementary solution to what they were already offering airlines and the industry at large. And we negotiated terms. It was gonna be an acquihire, so it was gonna be nice for me, nice exit, plus a secure job running a division at the company. And by June of 2020, COVID had reached a peak and the deal got canceled, unfortunately.

What was your psychology back then?

Uh, it was interesting. Um, I think that my psychology— it took me a minute to wrestle with the idea that not only was I kind of—

Your dreams were gonna be broken.

Uh, yeah, I think I allowed myself like maybe 1 to 2 weeks to like Yeah, yeah, it's like 1 to 2 weeks because— Yeah, I think I gave myself like 1 to 2 weeks to lick my wounds, and then it was kind of back into operation mode. Um, at that point in time, 2019 and 2020, the aviation industry was really, really focused on innovation. Um, there were big plans for the airport of 2025. and it to be a completely connected experience, totally seamless, frictionless. So there were a lot of partners, a lot of buy-in from the industry at large to improve the passenger experience. Our product just happened to be the very first bottleneck of a very large process, and that was seamlessly checking in your bags, baggage tracking, baggage reconciliation, baggage operations. So we were you know, at the very tip of the spear for what this connected experience might look like by 2025. Of course, in 2020, the industry radically shifted from innovation to salvation, like, oh my gosh, no dollars can go into innovation, we need to save the ship, we conserve capital, we don't know when people are gonna be flying again. So because of that, when the deal fell through, We just got right back into business and trying to figure out like, okay, how do we position this as a touchless experience? No human interaction. People are still flying, you know, albeit a little bit cautiously, but the market, the industry, everyone still has to operate, still has to function. We can position this as a zero-touch solution for COVID safety. We tried very, very hard, but I don't think the, the industry was really looking at new solutions. They were really looking for things that probably plugged the holes. And yeah, needless to say, by December we had closed the business. We did scale it when we generated almost $2 million in revenue in our first year. But by the end of 2020, you know, all momentum was lost and revenue went right to zero. So at that point in time, my business partner decided like, let's just close it.

Is that how it ended? Because I see like a European branch. And also what happened after that? Like Aura saw some talent in you and decided to go after you. How did you land that?

Yeah, I mean, we— because we were, we were a startup, you know, there was me, my business partner, and one other person, and a ton of like solution providers for us. So we were a very small team, and the business did not survive. I mean, our patent portfolio is huge, so the patents are probably pretty valuable still today. And then about December, when we made the decision to close the business, I had to actually try to find a job. So I was like, oh my gosh, I've been working ostensibly for myself for the past 7 years. It's going to be interesting to go back into the job market, hunt for jobs, search, figure out what, what it is that I can market about myself. So I had to learn about like, hey, what skills have I developed over the past 7 years, you know, running a company? How do I position those things as valuable assets to a hiring company that may or may not be interested in someone who was a founder or had run multiple parts of a business? You know, I looked at, you know, several industries And I started off like just applying to jobs, shooting from the hip, and had some interviews. I got several other jobs, job offers. But before the offers came in, I had to take a step back and think about what industries do I think are ripe for disruption over the next like 10 years. And I landed on 3 that were particularly interesting to me, which was health tech, fintech, and edtech. So I just applied to roles that were available in companies operating in those verticals. Aura was one of them. I think my skill set was attractive to them because they hired me as the generalist. So I got to float between many different departments as the business operational specialist and the strategist for a couple different departments. So I guess with the hardware software background, it kind of fit well with, uh, Aura's growing needs. And yeah, that's kind of how I, I landed at Aura.

And you generated a small $180 million to their top revenue line?

Something like that. Uh, yeah, I spearheaded, uh, the HSA/FSA, um, stream there. I think the mandate had— it was always like, find new ways or opportunities to grow customer value or company valuation. So within the business operations department, I straddled 2 sub-teams. One was corporate strategy, which defined Aura's long-term strategy.

Many—

everything you kind of see today, Aura was a result of that that work. And then HSA and FSA, there's a lot of money sitting in those accounts and people don't use it every year. So we saw that as a huge opportunity and my responsibility was to identify, de-risk, operationalize, and stand up the HSA initiative.

I love it. Okay, you identified edtech, right? So you went through Founder to to Antler, I guess, and Open Admission got out of that? Like, what was the thesis behind that one? Edtech is incredibly hard, by the way. So, I mean, as a GTM guy, it's like, good luck. It's like trying to—

Yeah, you're 100% right. I feel like anyone who has worked in education or edtech or tries to sell within education, everybody has a horror story or some scar tissue. And between Aura and Open Admissions, I also joined a blockchain software development company that was also focused in crypto. So I figure if I can handle some of the most heavily regulated and difficult industries, edtech shouldn't be terribly different, especially if I can make it through health and travel, so, or transportation. So I figured, hey, I've kind of done this before in other industries. How much more difficult could this be? And, uh, given my background working in nonprofits, I'd like to make an impact in, uh, in areas I think are important.

I love that. Um, and what is Open Admission about? Like, why, why are you bullish on that one? You're You're like helping folks choose the right college confidently. Others have tried to tackle that before. The education system has huge systematic problems, in my opinion. Why start with that one as a guy that solved the first step of the last bottleneck?

That's a, it's a big question to unpack. So let me try to do it as eloquently as I can. When I, when I was thinking about education, you mentioned it very well. There are like systematic archaic issues at the foundational level. What I have discovered and quickly realized that if you try to like pull or untangle a knot in this ball of yarn that is education, When you undo a knot, you inevitably encounter 17 more, and each of those 17 knots is connected to 70 other knots. So it's, it's very easy to become distracted around how much every other piece influences the thing you want to focus on. And it can be very easy to get distracted on, well, what's going on over here and getting discouraged. We focused predominantly on how do we help more students understand and realize the volume of opportunity that's available to them from schools that are looking for them, that the system has otherwise not created the connections in order to facilitate that line of sight, right? So universities collect information on students, All year they build up a pipeline, they market to students. It's all very impersonal, right? Students will receive hundreds of emails during application season. That same email goes out to 200,000 other kids, so it just, it feels like spam. And students typically rely on either a parent, their counselor, or maybe a mentor. to kind of guide them through the application process, trying to determine which school is right for them, why those schools are right, why schools are not correct for them. And what we saw with our nonprofit work was that there were a lot of like really good kids who were talented that didn't have a parent that went to college or received very, very little counseling throughout the year that were kind of overlooked during the entire recruitment process and really wanted to go to college. And knowing that there's over 6,000 2-year, 4-year institutions in the United States, all kind of hurting for enrolled students, that disconnect seemed obvious. Like, there are students who want to go to college who are looking for those opportunities, and there are universities and colleges that are looking for students to fill seats that will have success on campus. And the premise, which has eventually grown since we started, the initial thesis was to own the entire journey and own it further upstream, meaning if students were leveraging our product and using it with all of the functional materials that would need to be reviewed during the admissions decision process, And if we were able to make that information available earlier, so that way it completely negated the need for a student to fill out an application and submit it, then we could allow more universities to identify students earlier with the critical information that's needed to make an admissions decision without the student actually having to submit an application. Not dissimilar too much from how LinkedIn operates when you're looking for a job or recruiters are looking for people to apply to roles. Leveraging the content that's available on your LinkedIn profile, not very similar to what Open was proposing and building, and allowing university admissions officers to make admissions decisions at the time of search, which a lot of people have tried and very difficult to do because it's a marketplace environment. We've since shifted that focus to be more direct As opposed to being so far upstream, we've moved all the way down to the bottom of the 9th inning where a university has maybe 3,000 seats they need to fill. Inevitably, they will admit 15,000 students because they don't know who's actually going to enroll. And as opposed to missing enrollment, what we have created and now offer is something that we call i9 Intelligence. And this was developed by my Chief Human Intelligence Officer that reads and uncovers 9 different dimensions of human discernment at the student level. And what that enables us to do is understand that student so deeply after a very, very short, kind of a weird survey. But what that uncovers for us is is exactly how that student operates, how they think, the types of cultures that they would do really well in, the types of environments that might not be suitable to their success. And what we do now is we offer this engine that we've created to universities. So at the time of acceptance, the student is not just getting an acceptance offer. What they also get is an entirely personalized, bespoke rationale and reason and resources for why this school makes a lot of sense for them. It's not 100% pretty picture. We also include kind of like, hey, this is something to be cautious about. Like, no place is perfect, and I think it's important to kind of call out those things for a student who's making a decision. And if I'm a student and I've been accepted to 5 schools and one school sends me this highly personalized, almost playbook of like how you're gonna have success here. Here are the resources you need. Here's an entirely cultivated course catalog that fits your major, your other interests. Here are groups, communities, clubs, extracurriculars. Based on what we know about you, this is how you find your tribe, your people. Here are the other opportunities for you. If you're looking for resources, right here, meet your advisor. It takes all the questions out of a student's mind when trying to figure out like which school is right for me. Because what hasn't been done before is delivering this highly personal, almost like welcome package for a student. So if you and I were applying to the same school, what you would see would be very different from what I would see. And it's all fundamentally rooted in what the university offers.

And how do you make money from this?

We charge the universities. The engine's not free. The engine is a small monthly retainer, and we do charge a success fee on the back end because if we admit one student, the product is paid for, and we charge a piece of revenue captured. So we're fully aligned with the, the goals of the university.

And I went through most of the process. It's a very high-quality lead answer, a whole bunch of Question, right? So how much do you sell these leads at? Anywhere from $200, $500?

We don't sell leads. Um, like I said, we come in at the bottom of the 9th inning when a university is trying to convert students. Like, they've already been accepted, um, they don't know who's gonna show up. And what we do and what we come in is actually we position the university in such a powerful light for the student That it becomes a no-brainer for the student receiving kind of like this i9 report on A, themself, and then B, how that school is positioned to actually help them succeed.

Okay, but you said universities buy these from you, right? So isn't that—

The engine, not the student themselves.

The engine, okay, I got it. So do they pay monthly for that or?

Yeah, it would be a monthly fee, could also be discounted for annual, you know, whatever the school's budget is. We priced it so competitively that we do know that we operate well within a university's discretionary budget, which saves us from having to go through an RFP process.

Mm-hmm.

In edtech and education sales, you probably are familiar, like it's a super long sales cycle. You know, you need to get like 3 levels of authority buy-in, 3 people to sign off on it. But we know that the departments that we sell into, we know what their threshold is for individual to sign off in a meeting. And we did several tests and we know that we can get to a contract signed in under 90 minutes.

Wow. A contract signed in 90— that's crazy. I've never heard that, especially in edtech. How do you get in touch with these guys? Is it cold outreach? Is it ads? How do they get into your funnel?

Mostly cold outreach. Um, I think I have every single email of every university professional that works in the admissions, enrollment, and student success department across the United States. So I, I have everyone's emails, and, uh, we do have great advisors that also make One-to-one connections for us. So, you know, warm introductions or just an email from me basically being like, I see all your data, I've seen all the public record, you need help, we have a solution that's A, not gonna kill your budget, and B, actually convert your admitted students into enrolled students.

And how do they get these students to apply? Is it like their own ads? You own that part or only the landing page and the AI that qualifies them?

We only own the AI and the landing page.

Interesting. And how do they get the students normally? Is it just like Facebook ads and where students hang out, Insta ads?

I think there's probably a million places where universities advertise or promote themselves. Historically, what universities used to do is they would name buy. So if you were a sophomore in high school or a junior in high school and you took the PSAT or the SAT, College Board, the company that administered those tests, probably the ACT too, would make your name, email address, GPA available to buy to universities. Um, that has gone away. And in 2024, the PSAT and the SAT went digital. And because it's a digital format, that means that the data that a student provides falls under digital privacy regulations, which does not permit those names to be sold. So universities saw almost an 80% drop in available names to buy, and that was a huge interruption to their normal operating procedure.

Interesting. Fascinating, actually. Your priorities this year, you're raising capital, $1.2 million, I believe it Was, uh, what's the valuation on that pre-seed? That's pretty aggressive for an edtech. I'm guessing you have revenue and clients though.

We have revenue lines. We have a strategic partnership we're finalizing with a, uh, a government organization, uh, mostly not for education per se, but the engine that we built is so sophisticated that it not only identifies like people who are potentially interested in certain roles, but then also uncovering and identifying what roles they would do really well in and which groups of people that they would actually find success in. Turnover's high, retraining is more expensive. It's kind of the same issue that universities are going through, just at a much more expensive scale. And That's one thing we're working on. We're working on a partnership right now with one of the largest school districts in the United States, and we've got a— I would say a pipeline of like 30 universities that are interested in using this solution. We're not going after the, the Ivies. We're not going after the, the big brand name schools, mostly because they don't necessarily need admissions help. The schools that really need the help are the Tier 3 and Tier 4 schools, and that makes up around 55% of the market. Those are the ones that are at financial insolvency risk over the next 5 years, and they need a solution yesterday to basically save them from bankruptcy. Those are our targets.

Really? So I didn't know that a lot of them were struggling. Why is that? Because of the problem you mentioned that they couldn't buy off the—

It's just about business. Here's some, here's some hard statistics that I didn't create. This is from Gallup. This is from basically all of the polling houses that, that do this type of research. Damning statistic number 1. 64% of college graduates regret a decision about their college experience, and that's either the college that they chose to go to or the major that they chose to study. The other damning statistic is 1 in 3 kids don't return after their freshman year. So statistically, schools can expect to lose 30%. of every class that they bring in every year. So if you lose 30% of your tuition revenue pool, you have to now try to recruit transfers, which is another, uh, another initiative line. You're trying to recruit first-time, first-gen students, and now you also need to recruit transfer students. Um, so the way students find schools and actually apply is through a myriad of channels. Social media is one, TV ads, print, radio, nothing is off limits for universities. And one of the core theses for us is that every company that's in this space that's trying to at least solve or alleviate that challenge for universities is really only treating a symptom of the root cause. And what we see is that there's a fundamental challenge between The student who is going to enroll and what the university has to offer. So we focus really on the root cause, which is at the bottom line, it's a mismatch issue. And if you're able to provide that information earlier to a student so that way they can make a better decision, you've improved enrollment, you've improved persistence, on-time graduation rates, and those 3 things make for happy alumni. who become success stories for the university, who go on to have very successful careers and potentially even donate back to their alma mater. So it's, it's trying to solve one piece of a very large challenge that actually has ripple effects across many different areas of a university's operations.

Interesting. Thank you for being on the show, Anthony. Where can people find out more about you?

Uh, you find me on LinkedIn. My, uh, my LinkedIn— I guess my LinkedIn ad is AJ DiValerio. Um, you find us on Instagram, Open Admissions, uh, under— I think it's openadmissions.io is our Instagram handle. And you can find us on LinkedIn as well. And my nonprofit is also on those places. It's, uh, FFG Philly on LinkedIn