How Outschool Has Scaled As One Of The Fastest Growing Marketplaces

So you've also been mentioned on A16z's Marketplace 100 as one of the fastest growing marketplaces in the past few years. So I wanted to talk about growth. And so how have you approached growth at Outschool?

So I think of growth as at the highest level, I think there are 2 techniques to grow. One is you, and I think of it like a boat. I don't sail, but this is just my analogy. So bear with me. It's like a boat. You have a sail. And you try and position your sail and you design your sail and kind of weigh your broads, kind of affects the shape of the sail. And you sit there in the market and you try and build a sail that's gonna be positioned to receive wind, like trends in the market. That's one way to grow. The more common thing that's talked about when you listen to like Reforge or growth is building a growth engine. So that's like repeatable motions, like SEO growth loops or viral growth loops or paid growth loops, that kind of thing, or sales growth loops. And that's building a growth engine. And you've got to kind of have, or you'll benefit the most if you have both. And to make this real, for example, in 2018, after we'd found initial product-market fit with Sector of Homeschoolers, we found our first growth engine, which was actually a paid growth loop. Back in those days, paid was actually much more attractive. Because you could, once you get to a certain scale, like 1,000 customers, you could upload your customer list to Facebook and do a lookalike audience, say, find me more people like these first 1,000. You need a minimum of 1,000 before it became effective. And it'd be really effective. And then on the supply side, we had all these interesting classes, which turned out made great Facebook ads. We didn't need to design ads, we just uploaded a feed. And we discovered that we were able to buy customers with like a 3 to 6 month payback period. So we're able to scale our revenue pretty rapidly and then put the revenue back into scaling this paid growth loop. And that allowed us to grow our business like 4 or 5x in 2018, which is by far our fastest growth rate at that point. So that's an example of discovering a growth loop and then putting your foot to the gas to really kind of make that scale. Another example of growth was obviously COVID. Now COVID was the most enormous gust of wind in the market towards online learning. But we grew 15x in 2020. Most edtech startups grew about 3x. So why was this gust of wind so effective for us? Part of it was just structural positioning, like we were live online learning, which everyone wanted versus other types of online learning. But other key attributes of Marketplace that enabled us to scale very rapidly within the gust of wind was the fact that we were so broad with the age ranges and the subject areas. And so every part of our market, you know, we had built this big sail that, and every part of it was capturing wind. And then we positioned it right. So in the, even before COVID shut schools down, we started to realize that this might be really big for our business. We did 2 things completely separate to building our products. We started doing webinars for teachers and administrators because we started realizing that probably of any organization in the world, we were the most experienced at running these live online classes. And suddenly all these schools were gonna try and do the same. So we didn't try and make money out of it. We just, like I said, shit, well, we better, we don't really know what to do. So what we're gonna do is just we're gonna try and help. And we have this expertise. We just start running these webinars. They became hugely popular. Thousands and thousands of teachers and administrators joined. And then through that, we realized this is a drop in the ocean. This is gonna be an absolute shit show in the school system in general. And no matter how much we quickly, we try and transmit this knowledge, like, you can't just take a system and put it online overnight. It's gonna be an absolute shit show. And then we started to think, well, what's gonna happen? Well, families with means are going to come to Outschool and other sites to try and fill in the gaps and supplement education while the school system attempted to adapt. And secondly, families without means were gonna be left out hanging. And so we span up a nonprofit arm and we said, well, what we're gonna do is we're gonna offer free classes for parents in need because that's gonna be a critical need during this pandemic. And we funded it initially from the company. We did a partnership with Zoom. We funded to like $50K. We're gonna offer $50K pre-class. And we launched this program on Friday the 13th, 2020, which happened to be the day that mass school shutdowns happened. And at that point, like, growth didn't look like exponential. It looked like going up a cliff. And we ran out of that initial $50K at 2 AM on the Saturday morning. We funded it more. We raised external funding. But then The for-profit elements of the business just started rocket shipping. So we realized we could fund this free class program for an extended period and we ended up putting like $3 million into the free class program and raising $3 million externally just to provide these free classes for kids. So that was an example of the wind and positioning. It's an extreme example. You can't usually— we didn't build this company expecting there to be a global pandemic, right? So you can't rely on it to the extreme degree that we did. But that's an example of how, you know, building a sail, experiencing a massive upshot of wind and correct positioning can also be a driver. And so those 2 tactics, find growth loops and position your company for market tailwinds.