Scaling Teachable: Part 2 — Our Journey to a $15M Run Rate
A year ago, I published Scaling Teachable — Our Journey to $500K in MRR.
A lot has evolved since then, so one year later I figured it’s time to update our narrative and chronicle where we are as a business today.
While it may be unusual for a private company to share such a close look at the important metrics behind the business, transparency is one of our core values at Teachable — and by doing this annually, we’re putting our money (our venture capital?) where our mouth is.
Business Metrics
In August 2018, Teachable earned over $1.2M+ in revenue.
Our revenue is primarily composed of two categories:
- Subscription Revenue — i.e. what our creators pay us every single month to be subscribed to the Teachable platform. Our Monthly Recurring Revenue (MRR) is the leading indicator behind this number.
- Payments Revenue — i.e. transaction and credit card fees from processing course sales on behalf of our creators.
We ended August 2018 at an MRR of $920,500 and our Payments Revenue came in at $300,000+ on $15,000,000+ in monthly sales.
While this indicates a 75–25 split between the two revenue sources, we expect Payments Revenue to increasingly contribute a greater percentage as we look to double-down our focus on providing new and better payment services — similarly, we are debuting a new Payment Gateway shortly.
Monthly Recurring Revenue (MRR)
Our subscription revenue is derived from our MRR earned from creators via a relatively standard SaaS fee. A few hiccups notwithstanding, our MRR continued its steady upward ascent at a relatively reliable clip. Our number of paying customers has grown steadily, while we’ve made nominal — but steady — gains in average monthly customer value ($57 in Aug 16, $66 in Aug 17, $71 in Aug 18).
Our MRR is up 1.7x from last year — which honestly isn’t as fast as we’d like it to be but with rapid payments growth, we still clock in at approximately 2x annually in overall revenue growth.
Payments Revenue
In August 2018, Teachable creators earned over $15 million in online course sales. That’s right! On an average day, Teachable creators sold approximately half a million dollars worth of courses on Teachable!!
On the $15 million, we earned roughly $300,000 in revenue across a combination of mechanisms, including: transaction fees from our free and lower tiers, credit card fees on our higher tier on our payment gateway, and our soon to be launched brand new payment gateway Teachable Payments (shhhh).
We’re investing a lot in streamlining payments for our course creators in the coming year — including filing and paying a myriad of taxes on their behalf, offering to pay out their authors, affiliates, and other stakeholders while issuing tax forms on their behalf along, [better tools for fighting chargebacks] — and with this, we hope our increased focus on payments will lead to Payments revenue growth outpacing Subscription growth in the coming year.
Other Business Metrics
Total Sales
With a large percentage of the year still left to go, we expect to come in between $160m and $190m in 2018.
If you look at the last 12 months (ending August 2018), we have helped course creators sell ~$138 million in course sales.
That an increase of more than 3x (!!) the 12 months preceding that where we helped course creators sell ~$44 million in total sales.
Number of “Successful” Creators
Arguably one of the most important metrics we look at on the platform is the unique number of creators making a sale every single month.
This graph has been incredibly predictable since Day 1 — during great months of growth, it was frustrating to see this graph grow at (almost) the same rate as always, while during months of stagnation, it was promising to see this graph continue to grow.
At the end of the day, this is the graph that truly indicates that even in the absence of hype, marketing, promotions and PR, we are onto something truly valuable helping more creators transform their knowledge into income every single month.
Students
This is worthy of only a quick mention, but there are now over 14,000,000 students using the Teachable platform with 20,000+ signing up every single day.
Breaking that down, in the last 12 months ending August 2018, there were 7.25 million students who’ve signed up to take a course, as compared with 4.6 million in the 12 months preceding.
Why is this only a quick mention?
Ultimately, Teachable is a platform that empowers creators to transform their knowledge into income. These are not students that belong to Teachable — rather they belong to our creator community.
So while it’s exciting to see these numbers rise rapidly (and it makes working on the product so much more fun!), it is ultimately a function of our creator’s success.
Five Questions We Want to Answer in the Next Year
I believe our answers to these five questions will determine how successful the next 12 months will be for us.
If we answer three or more of these successfully in the next year, it’s going to be a pretty, pretty good one (in Larry David voice).
Can we spend money to grow faster?
Lately, Teachable has been unintentionally skirting the line towards profitability. As a venture backed business with a relatively large amount of cash in the bank, this has not particularly been by design — but being responsible with money has always been an implicit part of our culture.
However, a less glamorous, large reason for that is we’re not particularly effective at deploying capital to grow faster. Our paid acquisition campaigns and programs thus far haven’t shown a ton of promise, which means if things are running slow on a particular month, we can’t use the money in the bank to go out and acquire more customers. We have plans to fix this but if we cannot, it will slow down new subscriber growth at a certain point.
How fast can we ramp up the Payments side of our business?
Strategically, we’ve identified Payments as a core focus for our business moving forward. We’ll process close to $200M in Payments this year — while dealing with a host of complexities so that our creators don’t have to including fraud, chargebacks, taxes, international currencies, affiliate and author payouts and so forth. Next year, we hope to more than double that number while taking on even more painful payments challenges ourselves.
Consequently, we also expect revenue growth from Payments to be faster than revenue growth from subscribers — particularly if we can enable each subscriber to sell more every single year.
Can we help people sell more than online courses?
Every time we chat with our creators, we find that most of them have businesses that span beyond online courses. They sell live training and coaching, conduct in-person events and workshops, have clients to whom they sell services directly, write books and own other downloadable assets and more.
Our long-term vision to empower creators to transform their expertise into income — no matter if their expertise looks like an “online course” — and in the coming 12 months, we want to be better at allowing our creators to monetize these other forms of expertise on our platform. By doing that, we not only increase the amount a creator can earn through our platform, but also make our platform more welcoming for creators just getting started out who may not have developed a full-fledged course yet.
Can we effectively train smart, motivated people to become successful content creators?
At Teachable, we believe everyone can teach and everything is Teachable. Sounds great as a corporate slogan, but a large determining factor in how big this business can be is how effectively we can train an enthusiastic, wannabe creator into someone consistently earning an income online. There is no shortage of smart, motivated people out there who want to be successful online creators, but haven’t gotten there yet.Training them effectively is one of our largest opportunities.
We are taking this challenge seriously in the coming year — starting by investing in our own online training program, TeachableU, and making it a core part of our paid offering. Previously, Teachable was simply software. Today, and in the future, Teachable is both training and software. We hope that creators that are earlier in the journey will see the value in maintaining a paid Teachable plan even if only just for the training.
Can we build, retain and scale an effective team?
This may be the most important question of all to answer — it’s the equivalent of asking a genie for unlimited wishes. If we succeed at this, we will eventually surmount all the other challenges.
Completely unrelated sidenote: Teachable is hiring. A lot. And we’d love for you to be a part of our journey.
The Next Journey of our Growth
While Teachable is hiring for many, many roles at the moment — with the ambitious goals of having approximately one new person start every week between now and the end of the year — I believe two roles have outsized importance in determining the success of our next year.
If you believe you may be a fit for either of these roles, or know someone that could be, do email me directly at firstname at teachable dot com:
VP Marketing
In addition to finding product-market fit early, one of the most significant reasons we have reached where we are today is by being incredibly growth-minded, especially relative to other product-first companies. With that said, at the moment we are at a crossroads and are looking for a Marketing leader to join our Leadership team and take us to the next level.
Some of the biggest challenges they will be responsible for solving:
1 — We’re pretty good at converting leads to paying customers and have gotten increasingly efficient at doing so with time. However, we need to work on growing the number of leads in our funnel much faster including running a successful paid acquisition program.
2 — For the first four years of our business, we ignored “brand”, “PR”, and other not directly measurable activities as a waste of time. We are no longer at this point and need to actively working on evangelizing this entire space of online creators, and need to work on better top-funnel visibility.
3 — Building, retaining and progressing an incredible marketing team under them. This role will ultimately largely come down to team-building so exceptional skills here are mandatory.
Chief Operating Officer (COO)
I am looking to hire a Chief Operating Officer (COO) to partner with and help me execute the broader vision for Teachable. This person will complement and operationalize the vision, while allowing me to retain focus on the product and market strategy.
While we have an amazing team and culture presently, we are lacking in the experience side — particularly someone that has been a part of a company scaling from $10M in revenue to $100M+ in revenue and beyond.
Here’s some of the responsibilities of the role:
1 — Running existing operational business areas (e.g. Customer Operations, People, Finance) and potentially building out new areas (e.g. Customer Success, Account Management, Sales).
2 — Organizational design, building and running the executive team, implementing leadership and company-wide processes for scale.
3 — Own goal-setting, compensation and performance-management frameworks across the organization.
4 — Other Sheryl Sandberg-ey type stuff (I kid, but only slightly)
Again, if you or someone you know would make a great fit, slide into the inbox.
Any thoughts, comments or questions about this post? Holla at your boi.
