Scaling Teachable: Our Journey to $500k+ in MRR

We share revenue, sales, student numbers and more.

Transparency is one of the four core internal values at Teachable. Outside of compensation information, we believe in making every single aspect of our business transparent internally.

What does that mean?

Everyone internally has access to our financials. Investor updates. Revenue dashboards. Board meeting agendas. Meeting notes from other teams. My personal Snapchat. Ok, maybe not the last one.

But today, we’re extending our internal transparency to apply externally. And in this post, I’m going to share with you some of our most sensitive metrics: our monthly recurring revenue, the dollar value of course sales on our platform and more.


This is terrifying.

For a multitude of reasons, publishing this post is scary af. Every single one of our competitors will read this (oh hai Jeff!). Every company considering entering this space will read this.

But at the end of the day, we believe the benefits far outweigh the downsides.

The benefit that reading this post will inspire more people that value transparency to join our team at Teachable.

The benefit that an inner look inside our business will build more trust and empathy with our customers that we aspire to treat like family.

The benefit that transparency dramatically reduces the cost of communication.

Finally, we believe transparency builds a better business. Transparency attracts and retains better team members and ultimately, the company with the strongest team wins.

Now, let’s dive into the good stuff.


Our Journey to $500k+ in Monthly Recurring Revenue (MRR)

Teachable as a business has three primary revenue channels — one of which far outweighs the other two.

Our primary revenue channel is our Monthly Recurring Revenue (MRR) — this is the fee that most of our teachers pay us monthly for access to the Teachable service and comprises almost 80% of our total revenue.

Our monthly recurring revenue right now is $555,500:

While that graph looks like a relatively smooth stairway to heaven, it masks some of the biggest challenges we have faced and will continue to face as look to grow this number almost 20x in the coming years to $10 million a month:

  1. We need a different growth ‘playbook’ at every stage.
If we wanted to grow 10% monthly two years ago, I could single handedly do that by cold emailing a few potential customers and selling to them one at a time. If we wanted to grow 10% monthly a year ago, we could host a weekly webinar to a hundred people and get 25 to buy Teachable every week. Now if we need to grow 10% monthly, we need all of the above, along with paid acquisition to deliver results, our content program to bring in more leads than before and affiliates to drive meaningful traffic. A year from now? Let’s find out ;)

2. Growth is linear, churn is a percentage.

Churn a.k.a. the percentage of customers that cancel their subscription in any given month is measured as a percentage of the total. So if we are churning 5% a month at $100,000 in MRR, that’s $5,000 a month. At $500,000 in MRR that is $25,000 a month. On the other hand, added revenue grows linearly since it’s really, really hard to exponentially add new monthly recurring revenue for an extended period of time. As you can visualize by playing around with a MRR Forecast tool that unless we continue to decrease churn with time, we’ll run into flattening growth.

3. We are only as successful as our teachers.

Whenever we measure our customers by a specific “cohort” based on when they signed up for Teachable and track them over a period of time, we find that the revenue they contribute decreases with time due to churn. For example, the March 2016 cohort that was worth $10,000 in the first month might only be worth $5,000 a year later. To offset this loss, we need to generate expansion revenue from the customers that do stick around — and ideally enough expansion revenue to cancel out churn entirely. Interestingly, our biggest source of expansion revenue is transaction and credit card fees from our customers selling courses, which further reiterates that our future success as a business is dependent on our teacher’s success.

The single biggest inflection point for our growth trajectory was the decision to switch focus from transaction fees to recurring revenue. When we slashed transaction fees on our Pro plan to 0% (see if you can find out when by looking at the graph!), we overcame one of the biggest objections people had about joining Teachable while also increasing our average revenue per customer.

And while churn is something we continue to fight on a monthly basis, it sure is nice to start every month at ~95% of last month instead of $0 :)


Can Our Customers Sell a Billion Dollars of Courses?

Our mission is to build the single best payment and e-commerce system for information. The easiest way to measure that impact is the amount of money our customers are making on the platform.

In some regards, this number is more important than our MRR because it speaks to the impact our platform has on our customers’ lives.

In 2014, our customers made under $1 million. In 2015, it jumped to $6 million and in 2016, it grew 5x to almost $30 million generated on our platform:

In 2017, we are hoping to do over $120 million through the platform — with a bold target of over $1 billion in sales on Teachable in 2019.

Where is this growth coming from?

1) A massive increase in volume. We now have 80,000 published courses on Teachable (top) and over 7,000,000 students that have signed up to take a course (bottom).

2) An increase in every single instructor’s success rate. Growing volume isn’t enough, we need to continue increasing the average amount of sales for every single instructor — and in this regard, we’re still only scratching the surface of what is possible.

Our goal has always been that by using Teachable to sell information — you will end up making *more* money than any other solution — and enough more to offset the cost of a monthly plan.

So far, we have been doing that by:

a. Building features that directly increase monetization like 1-click upsells, bundled courses, monthly and annual memberships, an advanced couponing system, different pricing tiers for a specific product, an inbuilt affiliate program, the ability to charge in 100+ currencies and so forth.
b. Constantly testing and iterating on our checkout flow based on all the data we are collecting — for instance, we recently made the decision to move to a single-page checkout flow that has students enter their payment information first and only create an account after their purchase.
c. Harnessing the power of our network. By intelligently remembering payment and authentication information, we can make future purchases on the network much, much faster. In an ideal world, if someone has bought a course before on Teachable, they should be able to buy your course with a single click.

But as education and technology continue to evolve at such a rapid pace, we are only scratching the surface of what is eventually possible. And we still have not solved the biggest problem in our space: what can we do to help someone with amazing expertise without any marketing experience launch a successful business?

New technological advancements — whether it’s the known (virtual reality, cryptocurrency, artificial intelligence, machine learning) or the unknown — will have a dramatic effect on how information is bought and consumed and Teachable will be at the forefront.


Mo’ People, Mo’ Problems (not really though)

If you had told me three years ago, we would have over 60 people working at Teachable, I would have likely asked you for some of what you’d been smoking.

But as the years have progressed, our headcount has continued to approximately double every year. The business has grown at a faster rate — approximately 5x in 2015, 4x in 2016 and we are on track for between 2.5 and 3x in 2017:

At different times, different departments have led the charge on hiring. We started out as a group of engineers and product people. Our second big phase of growth was building out a growth and marketing team to sell the product we had been building. Lately, a lot of our growth has been operational to support our business both internally — and especially externally in providing the best Customer Care humanly possible.

Somewhat related, the number of grey hairs on my head has also grown linearly with headcount and is currently also on track to 3x in 2017.

The best part about this sustained growth is the novelty of experience — like a video game, every few months our jobs “level up” because of how much the company has evolved in that time period.

Consequently, the rate of learning in this environment is completely unparalleled which leads to an interesting phenomenon where a year working at Teachable is approximately the same as ~3–4 years of experience working in another environment.

We strive to have that reflect in the career trajectory of anyone that joins our team where a year of time working at Teachable can accelerate your professional career by 3–4 years.

And to be able to do all of that working on a product that makes a positive difference in the world?

That’s pretty special.


These graphs sure are sexy….

But this is just the first chapter of the Teachable story. And we want you to help us write the rest of the book.

Historically, if you wanted to be an entrepreneur, you sold stuff. Physical goods that you grew or manufactured or imported or bought or built.

But today, we live in a brand new world.

The easiest way to now start a business is by selling your expertise. By selling a product of your mind — by selling information, knowledge, services.

And this information revolution will create more businesses and entrepreneurs than ever before.

Teachable will be the platform to enable them. Will you join our journey?