This weekend I was lucky enough to have the opportunity to have one-on-one time with Rayfe Gaspar-Asaoka, an analyst for a Silicon Valley venture capital firm called Canaan Partners. We only met for a half hour, but the amount of information I learned in this short time was invaluable.
After giving Rayfe some background on Jetset ESL, he quickly identified us as an online marketplace. We are connecting students to native-English speakers, aka serving as a middle-man between students and teachers.
We are planning on going after our first round of funding soon, so this was an excellent opportunity to get advice from someone who does this every day.
What metrics will we need to know?
First, Rayfe gave me a few resources:
- Canaan has a pitch book for help with creating a pitch deck: http://www.slideshare.net/canaanpartners/canaan-pitch-workbook/1
- For specific background and metrics for online marketplaces, there is a handbook created by a VC firm called Version One: http://versionone.vc/marketplace-handbook/
Some questions we should expect to be asked:
- How we think about scaling the business. Need to have an opinion on this
- How to scale teachers and students the right way
- Our customer acquisition strategy
- From a CTO/developer perspective:
- Integrating with ed tech platforms
- What we have done to make sure it's a good product
- Engagement metrics. Repeat users, daily active users, etc.
Scaling our teacher/student marketplace
One of our biggest question marks is how we are going to scale our teachers with the number of students we acquire. If we sign a contract with a school that has 300 students, how do we make sure we have enough teachers to supply the demand?
We have done a lot to address that issue in the past few months, but Rayfe gave me some general advice on scaling our marketplace:
- We need to have a good handle on CAC for each side of the equation and how to scale them properly
- It's better to have more teachers than we need than not enough, so the scale should be heavier on that side
- There's a metric called "lifetime value" (LTV) that we need to calculate for teachers. Once we hire a teacher, how many classes do they teach on average? Once we know that metric, we can then calculate the average revenue a teacher will bring in, and compare that to the CAC of the teacher.
- This ratio should be at least 3:1, but in early stages it should be much higher. 3:1 is the goal once we reach "steady-state"
- Calculate LTV on the school/student side as well
General advice and takeaways
He noted that for marketplaces, it's important for us to always have a backstop of teachers available, especially at an early stage. In the early stages, if a new user comes to the site and there are no classes available then it's really easy to lose that customer forever.
He pointed out how we should strive to focus on one market early on. The biggest bottleneck for us at this point is manpower, and if we spread ourselves out over multiple markets it could be death for the company. It also has the added benefit of figuring out a playbook for one market and being able to take that to slightly different or new markets.
Going back to engagement metrics, Rayfe recommended we build the website as a resource that students use consistently. Right now, they only go to the website during their scheduled class times. If we build out some social features and original content, the website will become a resource for users that they come back to frequently. This idea is already in Bianca's master plan, so it's nice to get some confirmation!