Ankur Nagpal built Teachable from $10K to millions using a disciplined "EveryDollar" model: set a monthly growth target, calculate the revenue gap, then assign specific tactics to close it. He walks through an August 2015 example where a 30% growth goal meant finding $10,843 in new revenue, and explains how the framework forced the team to discover new channels instead of chasing random ideas.
Chapters
What's up, y'all? Personally, I don't know about you guys, I heard there's a lot of Brooklyn people here, right? That makes me very excited. I live 5 blocks away from here and I feel like there's not enough tech happening in Brooklyn, so it's awesome to have you guys all here. Cool. So who here has heard of Teachable? Show of hands. Not bad. Who here is a paying customer of Teachable? There we go. All right. So pretty good. Pretty good. So today I want to talk about the business behind Teachable, specifically how we learned to not entirely suck at growth. Let's get started. So at the risk of sounding a little bit douchey, we had an amazing November. Our creators, some of whom are here, earned over $20 million on our platform. We as a company made $1.5 million in revenue last month, of which about 80% of it came through monthly recurring revenue, which is our creators paying us an average of $70 a creator a month, or our MRR, which was $1.1 million. So that looks pretty good, right? Like, look at that graph. Look at how beautiful, look at how beautiful up into the right it is. It's very easy to look at this graph and think everything was perfect. It was always rainbows and butterflies and other Maroon 5 things. But no, that's not how it was. Like, it wasn't always that good. 12 months in, 12 months after raising $1 billion in venture funding, having a team of 10 people, we were at only $10,000 in monthly recurring revenue. Like, things were not working as well as they did after that, and we were pretty concerned. We were pretty concerned at the time. It's not that we were completely flat, like we were growing, it was just very, very, very slow. Like when you zoom in on the first year, like it, again, it looks up and to the right. But the fact is at the end of the day, we were at only $10,000 in monthly recurring revenue after a year. And we were, we didn't know what to do. We didn't know what we were not doing right. We read all the blog posts, did all the startup bullshit. We were doing everything. It was just not working. At the scale we wanted it to. We could basically afford one engineer, kind of. That's our CTO, Noah, who probably doesn't approve of me using his picture here. We could afford one person, kind of, one year in. We had 10 people. Like, the math was not adding up. We didn't know what to do. We were working really hard. We were working far harder then than we frankly work now. We were hustling. But it wasn't working. We were trying to grow as fast as possible, do everything we could. We were trying to follow the startup thing. Have you guys heard it? Do things that don't scale. We did all of that stuff. I was personally uploading content for people. We reached out to Y Combinator and hosted their startup class on our website. I was manually— I went to Ryan Holiday, took his book. We ourselves converted it to a course. To try and make the business work. We were doing all these things that weren't scaling. We even started growth hacking, which is a really stupid thing. Don't growth hack. I'm really happy that word died. And small side note on growth hacking. Growth hacking, we were basically just trying to be smartasses about it, and it never worked. One of the things we tried is, I thought it was really cool at the time, but I built this bot that scraped all of Udemy, which was one of our competitors, was a marketplace, had other people selling courses. So I built this bot, it scraped Udemy, it found social media profiles for everyone who had a course on Udemy, right? So now I have all these creators. Then I took another database, cross-referenced it to get an email address for every single Udemy creator, which plugged into my Gmail, and it automatically started emailing people to check out Teachable. Sounds cool, right? You know what the stupid bot did? It emailed the founder of Udemy. That's the first person it found. It emailed the founder of Udemy. That's an actual email. It's like, "Hey, Gagan, I found you teaching online. Awesome. Check out Fedora," which is what we were called. Did not work. None of this stuff was working. One year in, we were still at $10,000 in monthly recurring revenue. But then we 16x'd the next year from $10,000 to $160,000. And that's what this talk is about. It's really the framework we applied. That's what I'm gonna go over. And the framework we applied to 16x and the same framework that we still use today. That's what this is about. So here's what changed. So we added a growth model, what we call the every dollar model. That has a picture of our team member Andy, who actually built this model. Because I think a lot of founders come up here and talk about all the things the team members do as something they did. Like, this was not my creation. This is something a team member did. And this entire story, by the way, this entire narrative is not my doing. It's really the team of people we have working there. I'm just here for my sense of humor, my good looks, my tight t-shirts. That's, that's the only reason I'm here. So we added an EveryDollar model with the idea of being In the past, actually, I'll tell you what we did in the past. In the past, we had this epic Google spreadsheet that was our growth idea backlog. Don't take a photo of this. This is the bad stuff. Don't take a picture of this. The next thing is what you take a photo of. We just had this epic list of all the ideas we had that we wanted to work on. We prioritized them, had owners. We worked really hard to execute as many of them as possible. Our biggest metric then was how many of these ideas could we complete in a single month. What we moved to, the Every Dollar model, which I will explain, is we tried to account for every single dollar. Well, actually no, we started by setting a growth target, worked backwards, and tried to account for every single dollar. So the easiest way to demonstrate this would be to walk through a real example that that we used in August 2015. Okay, so the first big change we made is we stopped trying to grow as fast as possible. This sounds counterintuitive, but what we decided is we would pick a specific number, and at the time it was about 30% was our desired growth rate month over month. We were highly intentional about how fast we wanted to grow, and then we worked backwards to figure out what that looks like. So in August 2015, We wanted to grow 30%. We were starting at about $25,000 in MRR. Our churn was sadly 12% then, which is really bad. It's much, much better now. But then we plugged this into some pretty basic math and figured out what amount of revenue we needed to add. Again, this sounds obvious. We went a year and a half not doing this, and I guarantee there's a lot of people here that don't go through this kind of discipline. So now our entire job becomes really easy. Now instead of trying to grow as fast as possible, we have one simple goal, $10,843 in new monthly recurring revenue. Our marketing team, our growth team had one goal now, one goal, like the whole thing became so much simpler. And then we would take this number and try and build a bottom-up model and figure out where it would come from. So at the time, we had 3 things that were happening in August. We would get about $100 of organic upgrades per day, which should be $3,100, but $3,000 in organic upgrades. We had weekly webinars to our free customers that we gave an offer to upgrade to a paid plan, and that brought in about $1,000 per Thursday. And then we were banking on an enterprise sale closing, right? Right. So With this, we had $8,000 accounted for, but obviously there's a problem. Like, we still have to find $2,800 in revenue. And this happened every single month. This number, we used to call it the RTBF, revenue to be found. This number is where we— this number and the necessity of hitting this number is the single biggest reason we have grown. Every single marketing strategy and innovation that we have found has been us trying to work backwards to hit this RTBF number. So I will, I'll give you a few examples of how this applied at different stages, but it was really applying this model, figuring out how fast we wanted to grow, working backwards to figure out what we already had accounted for, looking at the difference, and then focusing on how we make up the difference. Sounds really simple. but that's been the single biggest reason, and the single biggest reason we continue to grow. August, for instance, we realized we could add in a few partner promotions, bring in affiliates, and do a promotion to them. For instance, we'll work with someone like, theoretically, a Tim Ferriss, or obviously of a lower scale, where they will promote Teachable to their audience, and that, we can do 3 of those a month and make up the $3,000. So now we're going into August 2015 with some semblance of an idea as to how we're going to actually hit these targets. So the same way necessity is the mother of all invention, hitting this RTBF number was where all of our marketing strategy innovation came about. Like in the past, we were flying blind trying to like work off this big list of growth ideas, but it wasn't as disciplined as like, okay, I need to find $2,843 and I will do whatever possible to find that amount. And at different stages, we've made this up in different ways, right? If you have revenue to be found of less than $1,000— and by the way, none of these strategies are what I want you to take away. Like, you will have different channels that work for you, but just the discipline of going through this exercise. But for us, this is what worked. At under $1,000 direct sales, I could literally find enough people, email them, and sell them myself. Under $3,000, we could do a big monthly webinar to all of our free users, make them an offer to join a paid plan. We could make up an RTBF of $3,000 pretty easily then. $5,000, we had to systematize it a little bit. We had to like add a weekly webinar. We added a weekly webinar on Thursdays, then we added one on Tuesdays, and that reliably could kind of add $5K in RTBF. $10K, again, partner promotions layered up on top of this helped us hit the bigger RTBF number. But at every single stage, as the numbers grew bigger, we had to keep innovating and find strategies to actually hit this goal. So we went inside into every month having some idea of how we were gonna hit our goals. Don't get me wrong, we'd miss our goals 70 to 80% of the time, but this exercise of preparing ourselves and coming up with a hypothesis for how we're gonna hit our goals ultimately fueled our entire growth engine. So as our TBF increased, so did our marketing innovation. Here's a couple of specific instances of things we found only because of our TBF. So a couple of years ago, we raised the price of our lowest tier, which was our basic plan. It used to be $29 a month. We moved it to $39 a month and felt pretty good about it because we added a lot of new features. The plan was better. And we felt good that that was going to raise our average revenue per user. So in all the future months, our organic upgrades would be a higher amount. The problem with this is that wasn't going to help us hit goals this month. We still had a difference of about $10,000 or $15,000 to make up this month. And the necessity of hitting that led to us running a campaign where we offered the old price to all of our existing users. For a 1-week period just because we needed to generate this like revenue bump that specific month. So we ran this campaign. It worked really, really well. We added about $20,000 in MRR for this campaign. And this is a strategy we've reused about 3 to 4 times since. But the only reason we even found this strategy was the necessity of hitting this goal. Like the math wasn't adding up, so we had to try something. That had a chance in hell of hitting a 5-figure RTBF number. Another example is what we call the summit, but back in 2015, we had to make up a lot of revenue one November, but we didn't, we just didn't have time to schedule enough partner promotions or anything to make the whole thing work. So what we did, and it was experimental at the time, now it's become a pretty standard thing a lot of companies do, is we got about 15 to 20 partners, and instead of doing one-off promotions, we created this massive event where all 15 to 20 people are promoting this one big event. We're promoting it. We're trying to drive thousands of people to this event, and at the end of the event, we made a one-time offer to buy a Teachable plan. Again, this whole thing, when we tried it 4 years ago, was a massive experiment. We're just like, "We need to do something big. The math is not adding up. There's no other way of hitting these numbers." So we did this summit back in 2015, and it worked really well. We added $25,000 in monthly recurring revenue from this 2015 event. But what's cool about the summit is this is scaled. We did one, um, 2 months ago, and again, our numbers are higher now, and we added $130,000 in brand new monthly recurring revenue from this event. Like, the scale is fully different now. We had 60,000 people sign up. We converted 2,000 paying customers. But the only reason we even found these strategies was the necessity of hitting a very, very, very specific RTBF goal. So necessity of hitting this is what led to our very, very best growth strategies. And the best part of this whole thing is the accountability you get. Because as I mentioned, right, like 70% of the times, We missed our goals. But what was cool is this quantitative model, like this, like now we knew exactly why we missed it. Like, oh, the enterprise sale never closed and the partner promotions didn't work that well. So now when we revise our model, we're going into this with a lot more data. And I know this sounds, some of this sounds kind of obvious, especially for people that have never run a software company. We didn't do this for a very long time. There's companies I advise and talk to that don't do this. It sounds really simple, but I've seen far too many companies die despite having arguably a more beautiful product than us when we first started out, like better usability, everything was better, but they succumbed to the fallacy of if you build it, they will come. We were very, very, very, very intentional about all our growth Ever since, in the first year we weren't, but ever since then we've applied this consistently. It also, the corollary to this is it helped us avoid what we call the great idea trap. An example is we've wanted to have a conference, call all our creators, call it Teach-a-Con, kind of make it like this, won't be as cool, but definitely will also be in Brooklyn. But every time we try to like spreadsheet this out and be like, What do we need to invest in terms of like marketing team energy to pull it off and what is our expected ROI? We could never prioritize it. And there were a lot of projects like this that when we applied the rigor and discipline of a spreadsheet that again, we're getting to a point where we don't have to have every project have a positive ROI. Back in the early days, it was existential. We wouldn't be here if we weren't growing. So this discipline, again, it helped us avoid so many ideas that we otherwise would have pursued. So this worked really, really well till about $10 million in annual recurring revenue, or about $800,000 in monthly recurring revenue, which was, let's call it, 7 or 8 months ago. It starts breaking down at that scale a little bit just because planning 1 or 2 months in advance isn't good enough. So we still use a version of this right now. It just has to be a full year in advance where, as you can see, these are real numbers. We can't do events all the time, so we figure out when we're gonna do 4 or 5 events a year, load more growth into those months, kind of adjust for seasonality. We've gotten a little bit more sophisticated about it, like model our churn rate going down. And the goal of this is now we have a target we need to hit every single month. We're doing a full year in advance because we can accordingly— like now we have a finance team, we have like budgeting processes, there's all this other bullshit that you have to deal with. So now we have to plan this a year in advance, but it's still a version of the exact same thing. We just try and figure out when we're going to push well in time so we can hire for it, prepare for it, and so forth. And then again, we have to work backwards, right? It's the same exact thing. There's just more columns now. There's just more channels. The other thing that changes is organic becomes much more important because when you have to add $200,000 and $180,000 and so forth, unless you're getting a good organic lift from your existing customers, the math doesn't work out. The other thing unique to where we are now is, as you can see there, our math is still not working out. So sadly, even though the whole premise of this talk is how we grew without paid, Next year is when we have to learn how to spend money if we want to still double year over year, which is our goal. But this stuff works and has worked for years, and I strongly encourage everyone here, especially those running a software company, but if you're running an agency, it can be applied. If you're running most kinds of businesses, working backwards from revenue and applying the Everygrowth model can absolutely work. So in conclusion, right, while we were doing this, A lot of people, both internally and externally, thought this was kind of dumb. They thought that we kept doing unsustainable things to hit a local target. But guess what? If you do something unsustainable repeatedly, and if you sustainably can do something unsustainable for years at a time, there is no difference between that and like, like that is a sustainable growth engine. Our sustainable growth engine was optimizing locally for months at a time, for years at a time, until we built what Teachable is today. So, and this growth again, just, I don't think it needs too much repeating, but this growth is what built momentum. It got people excited about the company. It built morale, frankly, like operationally we were a disaster for years. When you're growing 30 to 40% month on month, That's fine. People overlook a lot of stuff. It helped grow our brand. It's the only reason we were able to raise money. My self-worth still hinges on how fast we grow, and that definitely helped with that. This is the singular reason we are where we are today. My parting words are, don't leave growth to chance, guys. Don't leave growth to chance. Reverse engineer this. This worked for us and it will work for you. Thank you. Cool. The first question is from Carrie who says, talk description said you did it all without Facebook ads. Is that true? No paid ads at all? How did people find out about you? It's not true that we've used no paid ads at all, but all the paid ads we've used have sucked. Like, we've still not figured out how to spend money successfully and profitably. Like, Even the second question is, what's our CAC? Whenever we try and spend money, it costs us like $5,000 to acquire a customer. We've not figured out paid acquisition at all. How did people find out about us? I mean, as we brought up, like we did a lot of these events, we did a lot of partner promotions, we did a lot of intentional marketing to get people to find our product. So we had a free plan. We had a free plan that got a lot of people to sign up. And every single year we kept getting better and better at converting our free users to paying users. Like right now we're at about a little over 5% conversion from free to paid. And we've kept growing that number every single time. So converting free users is a big strategy. Affiliates and partners are a big strategy. Also when you use Teachable, you end up creating a website that you in turn have other students coming to. That says powered by Teachable, and that builds a kind of nice organic loop. So yeah, most of this happened without paid ads. The paid ads we did end up spending money on have not been super successful. Strategically, we still have to learn how to spend money to grow. Yeah, and again, the fact that we can't spend money to grow in my mind is not a sign of strength, it's a sign of weakness. We should learn how to do that. We've not been able to thus far. Cool. The question is, what's your CAC and LTV? I can talk more knowledgeably about LTV. Our CAC is still, as I said, we don't rely on paid a lot. Every time we run paid acquisition, our CAC comes super high, but our LTV right now is about $900, and it's kind of trending to the $1,000 mark. So our LTV is looking good, and it's continuing to kind of ride. Up there. And how much you rely on paid acquisition? Not at all, but we do want to one, learn how to get good at it, and when we do, it will likely be pretty social heavy because there's not a lot of search intent behind what we're trying to find. Can you share the Everyday model online somewhere? It's awesome. Yeah, I'll probably, I'll like tweet it out later or something. That might be helpful. I'm happy to do that. How do you stress test your model to figure out what's working and what's not working, and at what stage do you bite the bullet and ditch a particular strategy? So the model I showed you right there, at the end of every month we would basically look at what our assumptions were and we'd look at what the reality is and then accordingly decide what needs to change. So for instance, partner promotions are great. Example because they worked really well for a while and then they stopped working at a certain point. When we consistently missed our partner promo line item for months on an end, we're like, okay, this entire line item needs to go. So the best way of doing this was just, again, applying this model, looking at exactly which part of it— like, which parts are consistently missing. A second example is at some point next week we're going to kill our enterprise 'Cause our enterprise plan still, after all these years, has no product-market fit. It's a distraction for the business. We're gonna kill our enterprise plan. And again, it's the rigor of looking at this model and realizing that we've missed our enterprise targets for pretty much every quarter, that this whole thing is not working. How has having a tweet go viral impacted your life? Uh, I don't know who asked that, but, uh, so I had some tweet about hipster Brooklyn shit, uh, reach 17,000, 18,000 people liking it on Twitter. It's actually impacted my life quite considerably. There have been a bunch of like random press outlets reaching out. Um, we've found 3 people to apply for jobs at Teachable because of some random Brooklyn tweet going viral. So it has impacted my life a little, but mostly it's just been funny to look at. Also, does anyone want to ask any questions just in person? It feels weird to read this stuff off a screen, right? Anyone want to just raise your hand as well and ask questions off screen? "Is Andy still at the company?" Yes, Andy is still at the company. He's now working on all our affiliate and partner promotions. Yeah, he is not impressed with the specific picture I chose of him though. Anyone want to ask questions? Like, yeah. So his question is, you talked about self-worth. Has having a successful company changed your self-worth? Okay, wow. Honestly, no. Like, I think, like, you're— I forget where I read this, but you're always— you're realistically always going to be about as happy as you are now. Like, I don't think external outcomes really truly change it. As much as I like to joke about my self-worth being tied to how fast we're growing, I don't think so at all. If anything, the biggest thing having the business has added is it's— is really the team I work with has made my life more valuable. It doesn't change my self-worth, but my life feels more valuable for the team I get to work with every single day. Any questions in person? Yep. Kind of. His question is, can you explain the unique metric you had? I didn't quite understand it. Is that the RTBF? OK, so one more time, the RTBF was At the start of every month, we would figure out how fast we want to grow, and then we try and reverse engineer what are the growth channels we already know are happening, because chances are you'll have organic upgrades. You'll have some level of growth built in. RTBF is the difference between the two. So in the example for August 2015, we needed to add $10,843, but we only had about— we didn't have $2,800 accounted for? Stand up. This is a purely— this is a very— this is only a revenue model. We do expenses separately. Like our finance team does expenses, our growth/marketing team does revenue. So organizationally, expenses are done by a different department, and personally I was never involved with that because I I'm not very good at that spending money side of things. So— oh. All right, we'll take one last question here. How do you ensure that the short-term RTBF doesn't consume the overall long-term innovation? So you're not just chasing a short-term goal to create another webinar app that doesn't actually involve any of the product development? So very good question. The question is, how do you ensure that short-term RTBF does not come at the expense of long-term innovation. You don't always try and do short-term one-off webinars to make the difference. Two-part answer. One is at a certain point it did, and that's when we realized we had to kind of zoom out and start planning things more in advance. The second thing is we've always kept product strategy out of this. So product strategy kind of applies at a different level. Where we try and think of strategy over a period of years, but revenue in a period of months. So the short answer is it definitely has, and that's when we realized we had to zoom out. But we also tried the opposite where we tried like kind of ditching this entirely, and then we went back to not growing. So we still found applying this was more good than bad. We just have to get to a point of doing it further out in advance and forecasting a year out as well. But that's a very good question because that is definitely a risk you can fall into, but at that point, chances are your company's already worth something. You've already passed the, like, minimum viable, like, this is going to be a business level. All right, cool guys, this has been awesome. Thank you for having me.
