Sarah Chou on Finding Product-Market Fit in the Education Industry - at YC Edtech Night

Hi everyone! Really, really nice to meet you. It's so exciting to see—I mean, yeah, this is a lot of companies. This is really exciting. So, I am the CEO and co-founder of Informed K12. We did recently go through a name change, so we were formerly Chalk Schools. I still catch myself saying both, so if I do that today, you know me too.

Generally, what we're doing is we help any school systems we work with, district offices primarily, and we help them bring any paperwork process online. So, what that looks like in practice is we started out with things that go home in backpacks, that you know about probably—permission slips, back-to-school things. As we got further and further into it, we do everything now that is internal to the district offices as well. Everything from mileage reimbursements, conference and travel forms, to chair requests, stoplight violation forms. I've seen everything, I think, but there's always new stuff that comes up with the districts.

Those we've been working with for the longest have hundreds of forms on our platform. I think the record right now is over 600, and that is just how the back office works. So that is rad!

What were you doing just in your career before you started this company?

Before I started the company, I actually came from the nonprofit world. I don't know if anyone else here has that particular background. I was always really interested in doing things that I felt had impact, but my challenge there was trying to find things that could scale with that impact. What I ended up doing is I started a couple of nonprofits sort of early in my career. I ended up deciding to work for the school system, and I worked for the Providence Public Schools out in Rhode Island.

I don't know why I talk about that, so I worked for the Providence Public Schools and managed PD Senate there. Any PD people here? Managed PD for all staff—so all the teachers, the principals, the speech therapists, everyone. I was pretty firmly in the world of like Florida ceilings and cabinets, lots of sign-in sheets that we collected on paper. Funny enough, which I think we might talk about, the first company idea that my co-founder and I worked on was not this.

This was not that, even though I did actually deal with a lot of paperwork. I struggled a lot in my district just trying to track what was going on with teachers. Are we delivering services? Are we actually—are trainings effective? Lots of questions like that. It made me decide to go back into technology to seek ways just to scale more impact and to solve those things that I was seeing.

It led me to Stanford, where I was in the learning design technology program, and that is where I met my co-founder, Chen. She escaped the world of finance because she wanted to do more impactful work. And when we met, both—this is the same year I was in the same cohort as Preston, so MOOCs were a really big deal that year. We were like, "We're doing something for districts, period!" We were probably the only two—I know we were actually the only two in our entire class that cared really specifically about school systems, and that set us on the path.

We created an internship together. We were working at an elementary school, highly recommend getting on the ground, really really immersed if that's what you're looking to do, if it's to solve problems for schools or school systems. There's nothing quite like doing that. So we ended up working closely with teachers on a program where they were launching iPads, and along the way, we looked at a lot of different apps and a lot of different things, and that's when we came up with Chalk.

Yeah, we met in 2012 when you were leaving the LDC program and starting Imagine K12, and yeah, you applied with a very different idea. So, yeah, tell us what the idea was and why you decided to pivot away from it to something else, and then we can talk about how you came up with...

So, when Chen and I were working at the school sites, one of the things that came up pretty quickly while we were trying to help teachers launch iPads was just this feeling that people weren't sharing their best practices or they didn't know what other teachers next door were doing. Schools are very siloed, classrooms are often siloed. So we were like, "Okay, we're gonna build this Q&A system, basically." I know Jeff calls it a Quora for schools.

We spent the entire year doing that. I mean, we built—that, Chen is CTO—she builds multiple versions of it, and we talked to teachers. We were working on it for the entire year, and we went into Imagine K12 thinking, "Oh, this is gonna be a great way to continue working on this idea because we care about this so much."

We really, really, really believed in it. I remember—I don't remember how many users we had, but we did have prototypes. We were in probably three or four weeks—I think that is what it was—yeah, in Imagine K12, when we ended up doing a user study where we had a group of teachers in a room.

I remember this really clearly. We recorded them and we stepped out. So, this whole thing about teachers being too nice to say things to your face around whether or not it actually works well or whether it's something they want is so true for us. Unfortunately, we ended up putting a group of teachers in a room—teachers who we had been talking to for a good portion of that year.

We turned the recorder on, walked out, and then recorded them while they were trying to use one of our prototypes. We have on tape—the exact words were, "I would never use this; my teachers would never use this." We were both like, "Oh boy!" So, the thing with teachers, at least with this particular idea for us, was that we had sort of forgotten the context of the school, which is that teachers are often in their classrooms on their feet most of the day.

So, who is going to really have time to sit down, submit the questions, and have the answers? And how is that going to really work? And so, that's what it came down to for us—the moment was when we saw that on tape, and we were like, "Okay, I don't know—how are we gonna actually do this in practice?"

Yeah, that's kind of a gift of theirs that you were able to get this honest feedback like, "I would never use this." You're like, "Alright, that's pretty clear." Not, I'm not just trying to deduce, the rule number one: you should hope to have users, and you should hope that there is good to it.

So, you guys decided to pivot. What process did you go through then? Like, how once you decided, "Alright, they aren't using this," how did you convince yourselves to let go and then how did you come up with a very different idea that's now used in many, many schools and districts?

Letting go was hard; it was sort of the first step, but I think it took us less than a day to just be like, "Alright, off we go! We're back off to the races." I remember, right—this was probably two weeks before we were graduating and we needed to present what we had worked on all year. That was one, and the other one was, I think we were one week away from Teacher Day, or I forget the name now—Educator Day! I was close!

But the day where we were going to have people hopefully come and see what we had built and created, which we had nothing anymore at that point. So, we just stepped into high gear. I think we spent one to two weeks doing everything we could and talking to everyone—so long, like all day as many people as we could.

I remember we did things like—we offered to help a couple of teachers. We were like, "Anything! Talk to me about any pain you have." We had interview after interview. We offered to help a couple of teachers set up their classrooms, so we could get more of their time.

We spent a couple of days putting up a bulletin board—yes, we did that—and then we would go late into the night just coming up with as many ideas as we could. And I think it was about two weeks of that, and it was a really intense two weeks. We ended up narrowing it down to two ideas—one was for paperwork, and the other one was called Lightning Ideas, which I don't know if Tim or Jeff remember at all.

But Lightning Ideas, surprisingly, came from trying to come up and brainstorm with a lot of ideas. It was an app—let's do that better. So, we were really the two. With the help of our advisers, it was sort of one had potential to be a business probably with the market, and the other one may be an app—not sure where that could go.

So, we doubled down on paperwork, and that's pretty much where we've been since. Awesome! Thanks!

So, from that decision, how did you get to having some customers—your first like ten users? How did you go about that?

So, we had users after some time. It took us a long time, honestly. I think it took us—we certainly had users! The thing for us that was difficult is we tried to get teachers to sign on to the app for free to do permission slips—that was sort of our first piece of it.

We did end up, along the course of that, finding a couple of things just for us that it was hard to get teachers to pay for it, so we sort of muddled around for a period of time trying to find our user. The challenge for us with paperwork is it's a very dispersed problem, and with school systems I think one of the challenges, depending on what you're building, is just that you have a lot of potential users, and each of them see different parts of the picture.

So it’s challenging to know who you're necessarily going to sell to or solve the problem for—if you're like us and you're doing something that is sort of systemic. So, it took us some time to find it. I'd say we were also simultaneously building the app from the ground without a team, so it was just Chen.

It really did take us a good amount of time—I’d say probably a year before we had the first couple pilot districts on. I sold our first couple pilots with a PowerPoint prototype; we had nothing built, and that's how I got our first people to sign on to use it. Even then, it took a while to find out who was going to purchase our particular product.

So, there were the permission slip product people were using for free, but then you used your PowerPoint presentation of something else to get districts to buy it, correct? Okay!

Yeah, and so, it was challenging even from there to find out who was actually going to be the ultimate person to buy it. There was a period of time where I demoed and either cold called or emailed pretty much almost any level of staff you can think of—lots of people.

I demoed a lot of athletic directors, for instance, and they were wonderful, but it was also hard for them to purchase. So, it took some time to figure that part out. Again, I think part of that is due to the specific problem that we're solving and how we're doing that—so the market half of product-market fit—you were searching for for a while!

So, when you did find out, I guess I'm interested in kind of the systems you found to learn from these users when you found the person who was your market. Because it may— I imagine for not Chalk, for Informed K12, the person who's purchasing isn't always a person who's using the product. So, how do you learn from these different parties that are involved with your market?

So, we did actually find out that—so right now, for the most part, we work with different departments in the school systems, but we sell primarily to like the chief business officials or assistant superintendents. It took us some time to figure out how to even get in front of those particular people, and it turns out that they actually do sign a lot of forms.

So, for us, it wasn't quite—we did find that they were sort of people able to buy, but also, I mean, a lot of the assistants—oops! That I work with personally sign and even superintendents personally sign a lot of documents.

Oh, so they were using it to sign off on things? That's okay! Got it, got it!

So, you were telling us about finding that product-market fit, so when did you know? Was it like the first real sale, and you thought, "These are the people we're after"?

Yeah, it was—that's 25 sales in! I would agree with, at least for me, what Preston was saying—there wasn't a moment. We actually sold a couple, and sometimes you get false positives—be like, "Oh, I did it! Like, I sold an outdoor education school!"

For a while, I thought we'd sell to a bunch of those and that did—quiet! It wasn't like the big enough worst in the market, either. How did I know? I think it must have been 2000—towards Anna in 2014 or early into 2015. We started doing—we started getting consistently with a process knowing that if we called this person this way with this message, etc., that we would be able to actually start landing those contracts consistently because even our first ten didn't necessarily tell us that much.

But is that repeatable sales process? Yeah, for me, it was more that when I was like, "Okay, we're actually—this is the one; this feels like..." Was that the point where you raised money, or had you raised money before that?

Or we had raised money before that. We raised money on pilots before that.

So, one thing we talked about a lot at Y Combinator—and Paul Graham writes about this a lot—is doing things that don’t scale as a startup. So, you already told us that you sold PowerPoint versions of your product, which definitely is like a limited-time thing to do.

What are some other things you guys did in the early days that didn't scale to get you to product-market fit, and/or what are things that your company does today, like in terms of things that don’t scale, to keep you moving forward?

I don't—I think there are so many things we probably did that we couldn't scale. It's hard for me to remember exactly what set of things I will say now, and the things I don't like regret spending on—I would spend a ton of time on and continue to is spending a lot of time with basically building the relationships.

I think schools, at the end of the day, and districts—there is a really strong relationship aspect of it. I think as customers, they can be pretty unique in that, like, lifetime value can definitely be longer, and you want a product that's pretty sticky. So, what I—and what we continue to do is, we will spend—like, I can give you an example.

There have been a couple of times where either things have broken or we—like, if the site went down somehow, at times, we personally called every single customer that you know—it’s one of those things. There are times where if I really want to make sure that something is going to go well and that I think it's really important for us to keep our promises that we make to the school system.

So, if that's in my mind, a lot of times, it's whatever it takes. Of course, as we do that, we want to find the right way to implement that will scale. But at the same time, there's a lot that you learn on the ground through multiple visits, and what it might be that you just kind of need to do, and you do get a lot more information on those on-site visits than you do over webinars or phone.

I just continually see that. So, things that we do that don’t scale now is just focusing on the customers. I personally spend a lot of time on our support and we'll check our Net Promoter scores and call people—school office managers if it’s something that looks like it's not working well for them.

I'd like to keep continuing to do that, but that probably falls into the bucket of "Do I know if that will continue to scale? I'm not sure about that." But those are things—the customer piece and the building that relationship and the commitment to them—those are things that we just try not to compromise.

Just for context, how many people are in your company now?

22.

Okay, okay! So you probably have some focused support people, but your time support as you know as well. Can you tell us a little about building trust? You gave us, I think, some good examples, but building trust with school leaders—and are there other parties? Are you dealing with parents or students in building trust there as well?

Yeah, given the nature of what we do, we end up working with kind of everybody across the school systems—parents all the way. So to build trust, sort of depending on the set of people, there's gonna be different things. But the one thing I see consistently across schools and school systems is that everyone thinks they're pretty unique, and I think it's true—there are a lot of things that are contextual.

Like every district I go to, they'll be like, "Oh, this is the way we do things here," or "We have typewriters." We do! And I'll be like, "I definitely just talked to a district that also has them!" But it's sort of—it’s that local context piece.

So, district to district, county to county, state to state, things will be different. Of course, there are things that are sort of across the board in common, but that feeling of really needing to understand their context—that's really important. You know, it's really important that when you're partnering with someone and taking on a risk of a big contract or a big implementation, a big public thing like that, it's really important that you feel who you're working with understands what that is.

I don't think that's the best way, but it's also just really important—that’s on pretty much like teachers and up, school system people. For parents, I think it continues to keeping a big thing, but privacy, security—whatever to start early and keep working on it and expect that parents in certain areas—they might pull up your privacy policy and really read it in great detail and maybe understand it correctly or not, but all those things on the parent end are really important.

Let's talk a little bit more about fundraising. Can you tell us about when—like when you first raised money and how you got your first investor? And maybe about relationships with investors and how you find investors that will add value for your company?

So, raising money took a long time for us. We were really—we had to restart from scratch all over again when we were in Imagine K12. So, demo day definitely came and went, and I think even at that point we still had no users, we still had a bare prototype. I don't think we'd even had necessarily an active launch at that time yet, so we had a lot of work to do.

We did, though—right after it—we got a bunch of people that we met. We did all those meetings, and we were up and down Sand Hill just pitching and doing it. It takes a lot of time and effort to work on that.

For us, like we sort of came after a couple of months to the realization that it was time and effort away from building the product and building our go-to-market strategy, which is what we really needed. So, we did, after, I'm gonna say like three or four months, just—we were like we're not ready, so we started focusing again back more entirely just on product and getting pilots in.

A couple of things there, I think. So, in the time we were pitching, we focused a lot at the time on creating our deck, and I think our deck probably went from like ten slides to over 40 at some point. You go to these meetings, and it's like, "Oh, we need to adjust this," or "We need to tell it this way," and "Do this."

Truthfully, I think our story got really watered down; it just got really hard to know what we were even talking about at some point. Then we sort of hit pause on it, and then it must have been over a year later—and this is one of those things that you kind of just have to be prepared to pitch really at any time.

Eventually, we had sort of gotten to the point where Jen and I had like a—probably like a ten-bullet-point list of just what our story was. Like, whether we were talking to people—we're pitching to hire or potential investors—these are the things that we need to listen to.

How we want to tell our story about our company? We did have that, and we were actually pretty well-rehearsed on that, and we were on the same page and constantly updating it. But I'd say over a year later, out of the blue, we got an email from an investor who we had originally sought advice from, like, over a year and a half ago.

So, it was very much out of the blue. He was just like, "Do you want to have lunch?" I remember, at the time, Chen and I were like, "Sure! Like, of course!" But we didn't really know what was going to happen there.

But it was a good thing because, of course, we were prepared, and we went to have lunch. I remember, at the end of lunch—if I remember exactly—we were eating all those things. He just sort of looked up and goes, "Okay, I'm in."

And I’m one of those people where like everything is on my face. So, Jen says afterward that I looked like someone had kicked my dog. I was shocked, or just really, like, a combination of shock and like, "I really hope you're not kidding!" Like, one of those—but that's actually what happened.

Actually from there, it was much faster. At that point, we had focused on product and on having a good set of pilot districts, so it was just really good timing. But there's sort of an element of luck and networking consistently and being prepared.

Yeah, yeah! That's great! Just in our last minute or two, from your position in the industry—working with districts, having worked inside districts and now working in the EdTech industry—what changes have you seen over the past five years? What are you excited about? What opportunities do you see?

So, I'm probably always going to—I’m like full-on on the efficiency back-office side of things. I think there's a whole world there. So I'm just gonna sort of probably keep talking about that.

It is interesting. I think I came at a time where again, MOOCs were a really big deal. The thing about back office or district administration stuff is that it's kind of hard to know. It's even me personally having worked in a school system—I had my own set of things that I did in PD. But the whole scale of what happens in that whole piece of it—there's a lot.

So what I hear a lot of now is definitely almost every district I’m talking to now is preparing in some way or other for budget cuts or at least thinking about it. If you are at all interested in HR things, I hear a lot about the challenges of trying to hire and attract Millennials.

There's also—depending on the—I mean, there are usually some really, really just things that people have been doing for a really long time that they're really eager to do better and do differently. And there's a whole world of that.

I think with sort of what's coming next and the need to do things more efficiently and better, I think that is an area that we'll be seeing more things in. So, cool!

Anybody building those things? Hopefully, we'll hear about that! Wonderful! Thanks so much, Sarah, for coming in and sharing your story!

[Applause]