Podcast
July 20, 2024

How Lena made a U-turn from Art-Director to Edtech Founder

Yash Shah
Co-founder, Momentum91
Lena Dorogenskaya
Founder, Unschooler
10m read
10m read
10m read

Introduction

In this episode, Yash interviews Lena from Unschooler.me, a platform that helps people create their own digital schools using AI. Lena shares her background and the journey of starting Unschooler. They discuss the importance of understanding the 'why' behind your business, the concept of product-market fit, and the decision to pivot. Lena emphasizes the significance of retention as a metric for determining product-market fit. They also touch on the topic of fundraising and the impact it has on the focus of the company. Lena shares insights on building a team and the importance of hiring for specific solutions. The conversation concludes with a question for the next guest about finding the right use case in the search for product-market fit.

"Pivoting is necessary when the retention is not healthy."
- Lena Dorogenskaya

Key Takeaways

  • Understanding the 'why' behind your business is crucial for success.
  • Retention is a key metric for determining product-market fit.
  • Pivoting is necessary when the current use case is not generating revenue.
  • Fundraising should be done when there are proven hypotheses and a need for scaling.
  • Hiring should only be done when there is a clear solution to a problem.
  • Finding the right use case in the search for product-market fit requires focus and experimentation.

Transcript

Yash from Momentum (00:00)

Hello and welcome back to Building Momentum, the show where we peel back the curtain on the exciting and often chaotic world of building a successful SaaS business. I'm Yash, your host for the show where every episode we bring you the stories and strategies of founders who've been in the trenches, conquering churns, scaling their teams, and building products that people and businesses love. In this episode, we'll be chatting with Lena from Unschooler .me. UnSchooler is a powerful platform that can help you create courses using AI.

See?

And we're excited to hear their story and the lessons they've learned along the way. We'll be dissecting the wins, the losses, and everything in between. So buckle up, grab your headphones, and get ready to dive into the world of SaaS founders. Thank you. Thank you, Lena, for joining us today. How are you doing?

Lena (00:33)

you

Thank you so much. Thank you for having me. I'm great. Thank you for your question.

Yash from Momentum (00:46)

Awesome. Awesome, man. And so if we can start with a little bit of your introduction, a little bit of your background, tell us a little more about what UnSchooler does, I think that's a great way to start.

Lena (00:56)

Okay, so I'm the co -founder of UnSchooler. We have a small team for people who built the platform where people can launch their own digital schools with help of AI. They can utilize own materials, maybe some chaotic video recordings or PDFs or documentations, upload to our platform and get educational programs for different audience.

Moreover, people can launch several schools simultaneously on our platform, not only one school, but several schools, and manage these schools with help of AI as well.

Yash from Momentum (01:33)

Nice, that's awesome. And it's just lovely the amount of new use cases that AI has opened up. And the quality of content that goes out there, the quality of almost everything that goes out there is significantly improved. And one of the things that I noticed on your LinkedIn was that you started off as an art director and then moved to working as a marketing director and then founded

a company that uses AI so heavily, right? So it's not a side gig, like something on the side, like a small module or a small feature that AI is. AI is sort of central to UnSchooler. And how do you make that transition going from art to marketing and then to technology? Can you tell us a little bit about that?

Lena (02:20)

Yeah, so I landed to the tech job from the designer position. Then I started switching to the art director and marketing director. And because I'm really interested in strategy, always, even when I...

work as a junior designer position, I always try to understand why we need to do this design, why we need to launch this marketing company. So it was really interesting for me. So that is why it's like that was a pretty logically directed path from a junior position to marketing director at Fibery Startup.

Because I really want to influence the strategy, want to influence the business solutions, I really fond of the business and other things related to the meaning of the launching startups, meaning of the launching companies. So that is why I, at the final of my path, I decided to switch to the founder because I...

had this idea of own company, of own educational platform. And we launched several experiments while I was working as a art director and marketing director as an employee in different companies. I launched small experiments in my free time. So it was like...

pretty logically it was not like out of the blue. It was a distant path from one. Yes, I'm just trying to build business strategy, business with companies or on my own right now in Unschooler

Yash from Momentum (04:02)

You're building up to, yeah, got it.

Very, very interesting, right? And so one of the business leaders that we have over here in India is Ratan Tata, who's a founder, who's one of the leaders at Tata Group. And one of the things that he says is that if you want to generate disproportionate impact on an organization, always ask the why question and try and figure out an answer to that. And if you...

Lena (04:35)

Yeah.

Yash from Momentum (04:36)

try and solve for the why, you will end up generating disproportionate amount of impact. And so that's interesting. So give us some stock of where UnSchooler is today. So who are your typical customers? What is the size and scale of operations in terms of the number of users that you have, the number of people who are getting impacted by courses created on UnSchooler? Tell us a little bit.

Lena (04:39)

Mm -hmm.

Yeah, great idea.

Yash from Momentum (05:04)

about Unschooler help us put that in context in terms of numbers.

Lena (05:04)

Mm -hmm.

Okay, so regarding to the numbers, right now we have more than 60 ,000 users. It's not only the course creators, but also students. And paid customers, we have more than 1, 1 ,500 of paid customers and more than 500 schools.

So it's pretty good numbers for start because we're pivoting several times and this right now, our current is not, I would say it's a pre -product market fit. I'm not sure that we found the product market fit. We are still in search of PMF and this is our main focus right now and main goal. However, we had several...

Yash from Momentum (05:30)

Wow.

Lena (05:56)

proved experiments, proved hypothesis that we are developing in our tool. So this is our current state.

Yash from Momentum (06:05)

These are great numbers, by the way. And so here's an interesting question, which is, and I'll come to understanding your thought process behind Pivots in a little bit, but talk to us about PMF, right? Because how do you know that, okay, now I've hit, like, what's the metric? Is it a revenue number? Is it a user number? Is it daily active users or weekly active users or number of customers or average revenue per user?

Like what metric do you look at or what even needs to happen at Unschooler for you to say, hey, you know, we finally we have a product market fit now.

Lena (06:40)

Mm -hmm.

Well, the main metric always for product market fit is retention. So we track the retention for paid customers. This is the main audience that is important for the understand if we have this product market fit or not, because only people who pay for something and then proceed paying this continuous of this section

is meaningful for product market fit Because previously, for instance, for B2C startups, our startup is B2B. However, for B2C startups, they track retention for not paying customers. For instance, for free users who are just using freemium version of the product. So it's also applicable for B2C. However, for our startup, as soon as we

have B2B model. The only one metric is meaningful for us is retention of paid customers. And this is actually main thing why we pivoting one year ago when we launched AI courses, we had a freemium model for this courses. We had a lot of like 1 million visitors in several months after launching these courses because people like it.

Yash from Momentum (08:04)

Okay.

Lena (08:06)

However, we understood that with AI costs, you need to charge and you need to get some money from customers. And as soon as our premium users, despite the fact that they retain them, they come back to our tool again and again. However, some of them not willing to pay. So that is why we're pivoting in the niche. And actually, this is the important thing.

Yash from Momentum (08:26)

Mm -hmm.

Lena (08:33)

when companies need to niche and find the focus and focusing on some small group of customers. And this is the main metric. When you get pretty good numbers in visitors and usage, however, you still have bad revenue. You need to somehow to live to pay salary and pay the cost. And this is good.

Yash from Momentum (08:51)

Yeah.

Lena (08:57)

time to pivoting and pivoting and focusing on some small group of people who willing to pay and willing to pay again and again. So this is why we're pivoting in the B2B for, and our main group right now is coaches or mentors who create educational programs for different audience. It can be own audience like some influencers create courses based on their

audience interests. And also it can be the coaches who sell the educational programs for companies, organizations, for instance, leadership program or program of AI in the enterprise. So they create a lot of courses, they have a lot of materials that can they utilize. That is why we bring them the most value. Comparing with other groups, they got a lot of value because they already have materials.

Yash from Momentum (09:33)

Yeah. Yeah.

Lena (09:53)

and they can utilize it in several minutes. So our main audience are coaches, mentors who create courses for organizations.

Yash from Momentum (10:02)

Correct, and I think this is so important, right? Where a lot of times in early stages in having run a SaaS company, ourselves used to run a platform called Clientjoy, which is a CRM for freelancers and agencies. And as a SaaS founder, I would, in its early days, I would often make the mistake of thinking that when one metric spikes up,

I'd say, hey, this seems like we're getting close to PMF. And that metric has nothing to do with retention or anything like that. That metric could have been the number of customers added or the amount of leads imported or the amount of payments that our users have collected or whatever. And I just have this shine in my eyes and sleep like a baby that evening, thinking that we're getting close to PMF.

And this is so relevant because a large number of the audience that we have are either very early stage SaaS founders or agency owners who are thinking about starting or productizing or creating a SaaS company. And so it's so important for them to understand that PMF is only when your retention is healthy. 100 % is ideal, but no one has 100%. But a healthy revenue retention is what means that you have PMF.

You also very lightly touched upon pivots a little bit. So, while I understand that pivot would have happened because what you might have noticed is that the retention is not heavy enough and you might have reached down or you might have exploded the use cases. Tell us how do you think about what, so like one you identify that you need to pivot, which is which your metrics can tell you that you need to pivot. How do you identify what you need to pivot to?

So what's the next pivot? Can you talk a little about that? What's been your thought process?

Lena (11:45)

Mm -hmm. Yeah, so I guess for small startups, it's also always some gut feeling and some knowledge based on the talking with customers. For huge companies or bigger companies, and bigger companies, maybe metrics also applicable because they have a lot of...

data because they have a lot of data about user experience and usage. However, when startup is small, you do not have actually a lot of data. And actually, even if you have this data, it's so small that it's statistically wrong to rely on this data. You need to rely on conversational life communication with customers. So first, when you're pivoting, you firstly need to talk with

people who pay you and pay you not only once. So when this customer pay you several times, you need to talk to him why they pay for this tool, what problems they try to solve, and then think if this problem is scalable. Because your end goal, building something global company,

billion evaluation, so you want to build unicorn. So you need to understand if this use case is scalable. And then you understand how this customer find you too. With which channel or something, how they explore you too. You go there.

maybe it was like influencer posts, you go to bloggers, you go to the Facebook groups and try to reach the same customers and talk again, talk to them. You do not build anything, you just talk, talk with different people, with some pretty close in the use case and understand if your tool is better than the other competitors. And this is really important because you can...

Yash from Momentum (13:55)

Hmm.

Lena (13:56)

build something that's not better and it was failed not because you do not find the good use case but for this use case your tool is not the best. So you need to find something where you will be the best and this niche will be scalable. And then you start building some experiments. This is how we launched courses.

We found out from the customer, like I had the meeting with the customer, the customer mentioned that, OK, the great idea to have AI mentor, but I would dive deeper in some program, but I could not understand where I can find this program. I need to like one button in the interface where I can click and dive to the several months program.

That is why we add this button and the next day, like literally, static button, we're just starting count clicks without building at all. We're just starting clicks and found out that people proceed clicking. We launch this course and then talk to these customers again and again, to the customers who start using this. We launch these courses, start using these courses, how they feel about these courses.

why they decided to pay for this, what they building with these courses later. So this is how it works for us when we pivoting.

Yash from Momentum (15:31)

Yeah, in early stages, I think, so like quantitative data is, the subset is so small, the sample size is so small. I heard this is really famous scientist, educationist in the US named Neil DeGrasse Tyson. It's really cool videos on YouTube. And he was on stage talking about

Lena (15:50)

Mm -hmm, yeah.

Yash from Momentum (15:56)

talking about something, he was talking in the context of finding alien life and stuff like that. And he touched upon this subject where he said, the amount of space, the amount of universe that we've explored is so small that it is like going to the beach, filling up a glass of water, and then saying, okay, there are no waves in the ocean. So the sample size in the, and that's really similar to the amount of data that you have at the absolutely early stages of.

Lena (16:14)

You

Yash from Momentum (16:22)

of the startup that it's not meaningful. And talking to customers is, I think, it also, for me, it gave me some amount of satisfaction also just trying to get insights out of the problems that they were describing and the journeys that they were doing. But here's another piece that I want to explore with you, which is, what are the, so especially for the agency founders who are looking to start a SaaS business.

Lena (16:23)

Yeah.

Yash from Momentum (16:49)

they have some amount of capital. It's something that they can deploy and build an MVP to test it out in the market and stuff like that. And the question that they have, we're just trying to sort of understand is fundraising versus bootstrapping. And you raised seed capital for yourself as well, for Unschooler. And so if you can talk to us a little bit around what happens post -fundraising, as soon as you close the round.

Lena (17:05)

Mm -hmm.

Mm -hmm.

Yash from Momentum (17:17)

After that, what's the relationship that you have with the investor? How does that work? Can you talk a little bit about that?

Lena (17:22)

Yeah, maybe I need to talk a bit about the situation and when you need fundraising and when you do not need to do this. So in my opinion, we raise the pre-seed maybe a bit early. I would prefer to raise a bit later.

Yash from Momentum (17:35)

Yeah, yeah, yeah.

Lena (17:47)

Because we didn't find at this point, at this time, we didn't find the proper positioning and proper audience and didn't prove some important things. And when we got the fundraising, we start doing this, but this is not the good time when you raise any round. When you raise money, you start thinking about scaling.

And you need to, to this point of time, you need to have several proofed hypothesis, proved by retention and revenue, not like interest, not like likes shares. And this is what we rely on, on like shares on interest, but this is not important metrics. The most important metrics is revenue. And when you have several proofed hypothesis, you need to growing, you need to hire people who will.

grow your ideas, they will acquire new customers, they also talk to customers, they also will pivoting but not like in crucial way. You need to at this point understand absolutely 100 % what you are going to build in the future. I know a lot of cases where people

people just raising fund and trying to figure out after the raising. I'm not sure that this is a good approach. Some people can do this. It's not for us. So when you fund raise, you start hiring people. This means that you...

Yash from Momentum (19:19)

Got it.

Lena (19:27)

lost focus on product and customers. You start talking with your employees. And if you didn't figure out about your target audience, it was a problem because you can stick with wrong audience, with wrong customers while you're talking and hiring employees. And also, you engage in different management issues, problems, discussions, and all

all of the things takes your time. That is why teams with two, three people moving much faster than companies in 20. So you need to understand that you will slow down immediately when you fundraise and start hiring. So if you want to move quickly, you...

Yash from Momentum (20:05)

Yeah.

Yeah.

Lena (20:18)

do not hire. And even if you raise funds but not sure about the audience, again, stop hiring quickly. Like quickly hiring different employees is the most frequent problem in the reason of death of startup. When you start hiring a lot and all of these people sometimes really

Yash from Momentum (20:41)

Yeah.

Lena (20:45)

good people not applicable for new business model. That is how we launched in market dedicated to the education in Russian language segment. It was Belarus, Ukraine, Russia, Kazakhstan and other countries. And then we pivoting to the platform for the native speakers, English speakers. And we do not have much

people in our team who can talk in English. So it was like, well, we need to change the whole team right now. So this was interesting. It's a possibility, but also can be really painful thing, fundraising. So now we are bootstrapping right now. I think we are ready for fundraising. We have pitch deck, we pitch for some investors.

Yash from Momentum (21:22)

Yeah.

Lena (21:41)

However, we have some money in our bank because we are profitable right now and we do not spend all of this profit to salary because we are not growing, not hiring. That is why we have some money to make some decisions to pay salary for themselves. So we think maybe we will proceed with bootstrapping for the time being if we do not find the good investor with good valuation.

we can do this decision freely without any pressure. So I guess this is a really good situation when you don't have to rise right now because your company was dead. Yes, so that is why, this is how it works for our company.

Yash from Momentum (22:28)

Yeah, when you don't have to do it.

It is funny how your conversation around fundraising was also a lot more around recruiting and team building. Because one of the things that I have also noticed is that you should hire only if you know the solution to the problem and you want it to be applied multiple times.

Lena (22:58)

Mm -hmm.

Yash from Momentum (22:59)

So, hiring will not solve your problems, you will need to know the solution and then hiring will just solve it over and over and over multiple times. So, that is something that I have that we have been through as well and so, this brings me to identifying and getting the early team together. So, how did you put together, I think you mentioned that you have a team of four.

Lena (23:02)

Yep.

Yeah.

This is absolutely true, yes.

Yash from Momentum (23:26)

How did you find those people? Were they a part of your network or some event? How did you get together?

Lena (23:32)

So my first co -founder is my husband, so it was really easy to find him. Literally in the same room. So the second co -founder, we found him on the hackathon, where we figured out what the problem we want to solve and what solutions it should be.

Yash from Momentum (23:38)

Okay. Sure. Sure. Yeah. Yeah.

Okay.

Lena (23:58)

And also we have some teammates from our network. Yes, when we need people to help with this or that with some tasks, some specific tasks, for instance, make some back -end projects and tasks. We've hired a back -end developer and found him from network. And also other people.

related to the marketing as well. So it was mostly it was networking, it was like word of mouth, some network, social network posting. So it was pretty, actually easy to find first people.

Yash from Momentum (24:41)

Got it. Understood. And so the other thing that I... So now we're moving to the end of the conversation. So at the end of the conversation, we ask you the question that was asked by someone else, by the last episode's guest. And so as a founder of Makersuite who asked this, and then that he wanted to primarily understand...

How as a SaaS founder do you decide at what point is it the right time to niche down versus at what point it is a good time to explore adjacent use cases or adjacent markets and sort of try and solve for those as well. So how, what metric, what event needs to happen when you say, hey, now I want to focus and I want to niche versus I want to spread and I want to acquire adjacent markets.

Lena (25:10)

Mm -hmm. Mm -hmm.

So I already mentioned about the niche, about the focusing. Yes. When you see that your target metric is not really good, like bad, you have revenue, but they stop paying at some point. So this is a good point of time when you need to focus on someone who proceeds paying.

Yash from Momentum (25:35)

Yeah, about the niche. Yeah. Yeah.

Lena (25:57)

So this is when you niche, you have bad metrics of in your mostly it's a revenue or retention. And when you need to expand, when you have repeatable use case for some people who already paying and this is how, this is our main right now focusing. We are looking for the repeatable use case of some people who, because we have

a lot of people who repeat paying, but all of them paying because of different use cases. So we want to scale the main use case, found this main use case and scale for a lot of people. So this is how expanding works. When you like have good metrics, you need to improve them and you have some

Yash from Momentum (26:28)

Yeah, yeah.

Lena (26:54)

like the repeatable thing in different groups. So for now, actually, this is also the next question for your next speaker is that how to found out the right use case in your PMF search. Because for now we have several repeatable things. For instance, let's say 10 people pay for this tool because of this.

Yash from Momentum (27:06)

Yeah. Yeah.

Lena (27:23)

another 10 pay because of that and the third group paying because of that thing. So how to found out that this is the second group we need to focus and need to scale this group, we need to launch maybe some direct advertisement, different sales.

Yash from Momentum (27:26)

something else. Yeah.

Lena (27:45)

One, two, three. Different sales efforts we need to put into this second group, not to the first and not to the third. This is most painful for us. It's actually focusing at the same time and simultaneously it's growing because you need to focus and then put a lot of money to the advertisement, to the different landing pages for this group. So it's also about scale.

Yash from Momentum (27:49)

Shit. Shit.

Yeah. How to do that? So that's an amazing question. And I love it. So I've been doing this for a few months now. And before this, I used to run a SaaS company and an agency as well. And sort of decent scale. I had my fair share of interactions with other SaaS founders. And I love it.

Lena (28:12)

So how to find the right group?

Yash from Momentum (28:34)

Because the questions that they are battling with are the questions that don't have answers that is information, but they typically have answers. Those are approaches or those are sort of first principles. And I love it when a guest makes it extremely difficult for the next guest to answer questions. So thank you for that brilliant question, Lena. And I would love to see my next guest suffer.

trying to answer this question. It's really good. With that, Lena, we come to the end of this conversation. Thank you, everyone, for joining in. Wherever you are listening to this or watching this, you'll be able to find the link to Unschooler .me in the description. Go ahead, check out the product, check out the platform. And if you are into creating courses, this will be extremely meaningful and helpful.

for you as well. Thank you, Lena, again for joining in and doing

Lena (29:32)

Thank you, yes, thank you.

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