This is copied from an email sent to team August 12, 2020. My notes as of January 26 2021 are in blue throughout.
Well, hello team!
We were the two cofounders, my brother as part-time lead engineer, and my best friend as part-time COO. All of us had other full-time jobs at the time.
I thought now that we actually have the beginnings of a team, maybe it's wise to share a little planning every so often.
The following is all up for debate. In fact, everything about Synthesis School is and will be up for debate, except our core principle: we will always act in accordance with the LONG TERM best interest of our students.
- The future will be better than the present to the extent that we have many humans who can solve complex problems cooperatively
- So our goal is to develop a generation of super thinker / super cooperator kids.
- To do that, kids need engaging problems that get them to actually think and cooperate
- The key concept is complexity. Synthesis should be the most complex and demanding learning experience kids can get.
- Long term success metric is (probably) startup founders and inventors who credit Synthesis with giving them the head start and confidence to do something good for humanity.
- As more education moves online, there will be an unbundling of daycare and education.
- The shift online will favor specialists , not generalists.
- Therefore, the core strategy of Synthesis School is FOCUS. We must focus on what we do uniquely well.
- What we do uniquely well is the combination of several skills:
- Unique and novel games
- Live, social online classes with video/audio
- The best teachers and peers
- Soon, we'll add a demanding curriculum with connections to mental models (i.e. "game theory") and history.
- We'll start by doing one Game extremely well.
- Initially, we offer a high touch, high price, exclusive experience.
- We'll use the revenue from this phase to create new Games, and build software tools to augment and replace some teacher functions.
- Over time, we'll move toward lower price and more democratic student admissions.
- After we prove out the efficacy and engagement with a consumer product, we'll contract directly with national governments which are increasingly concerned with giving children a 21st century education.
Financial milestones are a means to an end. We're all here to make amazing learning experiences that improve kids' ability to succeed in anything. Financial success enables that, which is why I spend a lot of time thinking about it. ARR = Annual revenue run rate.
- First Ad Astra online cohort
- First non-Ad Astra cohort [DONE — July 6]
- First paying customer [DONE — August 9 10pm]
- First full paid cohort — 15+ students [DONE - Aug 10 4pm]
- First profitable month — 75 students [Do by September 1]
- $1M ARR [DONE January 19, 2021]
- $10M ARR [Target August 1 2021]
- $100M ARR
- $1B revenue (1M students per year @ $1,000) [Can we do it by end of year 3?]
- $10B revenue per year (contract with state and national governments)
It's funny to see this now, and try to remember what it was like when Josh and I were still teaching all the classes, and no one was paying us. At the time, it seemed like a huge milestone to get even one customer to pay. I remember when it happened — I sent out an email to potential customers at 10pm August 9. Several orders came in immediately. The phone rang. It was our COO: "What the hell are you doing? Our payment processor is still in test mode!" This was 1am for him, but he rolled out of bed and switched our Stripe account to 'live'.
Notably, I think September could be our first profitable month. It will actually take only 5 cohorts of 15 kids each. We already have 2 full cohorts for August. I believe we can get to 5 for September just by asking for referrals from existing students, and possibly a forum post in one of the FB groups Kat (my wife) is in.
Theory of Constraints
The idea from supply chain management that you should focus on your biggest bottleneck is a good one. I believe scaling teacher hiring is likely to be the bottleneck. I don't imagine demand will be the problem.
Here's my math on what each teacher can do…
- Assume we can only fill cohorts in the hours 3pm - 6pm for our students.
- And assume most students will be U.S.
- That means teachers will be busiest only 12pm - 6pm PST.
- An extremely busy teacher could do 6 cohorts per day in that time.
- And they could teach both M/W and T/R
- Since a cohort lasts about a month, if a teacher taught all 4 days, they could do 12 cohorts in a month
- But they may need a break between classes, classes may run over, it may be hard to do 6 in a row, let's just cut in half and assume a teacher can do 6 cohorts per month
- Assume we'll pay teachers $80 - $100 per hour, which is $640 to $800 per cohort
- At 6 cohorts per month, that's $3,800 to $4,800 per month, which is great for a stay at home mom who needs extra income but doesn't want to return to work force full time
Ok, so let's take the 6 cohorts per month number, and see how many teachers we'll need to hit our $10M ARR goal by end of year:
- September — Astra Nova teachers → 5 cohorts → 75 students → $20k gross profit (breakeven)
- October → 5 teachers → 30 cohorts → 450 students
- November → 20 teachers → 120 cohorts → 1,800 students
- December → 40 teachers → 240 cohorts → 3,600 students → ~$1M revenue
Note: I was wildly optimistic in how quickly we could scale. I was right demand wouldn't be the bottleneck, but underestimated how long it would take to solve basic product and operational challenges. We may have been able to hit these targets, but would certainly have sacrificed the long-term. We slowed down in October to really get the product right.
I don't know if 40 teachers sounds like a lot. On the one hand, we have a few months and it's a great job, so recruiting should be easy. On the other hand, we have a brand to protect, so we need to keep a close eye on training and quality control.
Synthesis is currently the absolute best learning experience I've ever seen. We need to maintain that level. The student experience always comes first, even if it means we miss our financial goals. That said, I think if we keep this plan in mind, we can figure out the systems that enable us to scale gracefully and hit our goals.
Have some more detailed operational plans and milestones in mind, but this seems like enough for now!
I'm extremely grateful to be working on this with this group of people. This is going to be the most difficult and exciting year of our lives. Buckle up and enjoy the ride :)
I was right it would be difficult and exciting. We're all doing what we love, with the people we want to work with. Still seems surreal, though maybe that's because I haven't had a good night's sleep since the night of that first sale.