Trevor Schmidt Hello, and welcome to the very first episode of the Founder Shares Podcast. We’re so happy that you’ve chosen to spend some time with us. I’m your host, Trevor Schmidt. I’m an attorney at Hutchison, a law firm in Raleigh, North Carolina. Every day, we work with founders and entrepreneurs as they fight and grind and stress and push to bring their visions to reality. We are inspired by their incredible stories of success, of failure, of reworking and trying again.

We at Hutchison get to see this every day through our work, helping technology and life science companies start up, operate, get funded, and exit, but we want a chance to share some of these stories with you, our listener. So whether you already are an entrepreneur, have an idea that someday you want to start a business or are just fascinated by the stories of how a business goes from idea to success… or not such a success, this podcast is for you.

On the Founder Shares Podcast, we hear from founders and occasionally their investors about the journeys, the keys to their success, the lessons they learned from failure and their advice to others.

Our first guest is Karl Rectanus, co-founder and CEO of LearnPlatform, an education technology corporation committed to expanding equitable access for all students to the learning tools that work for them.

There are fifty-six million K through twelve students in the United States, about four million teachers, and over one hundred thousand public schools across thirteen thousand school districts. So, theoretically, there are millions of strategies for teaching and just as many educational tools being used. Sometimes the districts make the decisions as to what edtech tools are used, sometimes the schools make the decisions, and sometimes even the teachers make the decisions.  With these different levels of decision making, it can be hard to know what tools are really effective.  Even within a single school, it can be hard to know what tools are improving student outcomes, and which just aren’t worth the investment.

Karl saw this problem in 2014 and started the LearnPlatform, which now works with two hundred thousand teachers among six thousand schools to rapidly analyze and improve how they use edtech.

Karl got to Learn by first being an educator, then an administrator, and finally an entrepreneur.

Karl Rectanus: When I was a teacher, I loved it. I also had what my grandmother calls itchy feet. Uh, we traveled a lot, and so I wanted to get overseas, ended up teaching in Japan for a couple of years,  was lucky enough to meet somebody, a Canadian, another teacher. She finished her contract before I did. I moved to Australia to get her masters. And, I, chased her.  I went down there, I thought, I’ll go see about a girl.

Trevor Schmidt: Now, that girl is his wife and they have three daughters together. In Karl’s career, he was employee number three at eCivis, which provided a SaaS solution to finding government and school grants. He was the founding leader of the NC STEM Community Collaborative. He’s been an advisor on the NC Chamber, and a board member of Innovate Raleigh, among other civic and entrepreneurial endeavors.

There are two things that I feel attention, that every entrepreneur always does, right? One perfect can be the enemy of the good, right? Doing a little bit better is enough to go do it and you will have confidence that you keep doing it at the same time. pick a challenge that matters. A tough, tough nut to crack.

Ends up being job security. A lot of other people aren’t going to try to go after the hard thing. And so as we do our work and our mission driven to expand equitable access for all students, that’s a really tough nut to crack in the, the way we go about that is by getting better and better each day and bringing sort of disruptive opportunities and technologies and approaches.

To go on after a challenge. That’s really hard. and so that, that, that’s what gets me excited.

Trevor Schmidt: Yeah. So that kinda brings us to what you’re doing now is Learn Platform. So just tell us a little bit about what the company is and what it is that you’re doing.

Karl Rectanus: Yeah. We’re platform is, we are as a company.

We are a research based, mission-driven, for benefit corporation. we are, our mission is to expand equitable access for all students to the teaching and technology that works best for them. And we do that by, through a learn platform, our software as a service offering that equips educators and their organizations and partners to organize all the different education technology being used to streamline the business processes. Those that I worked on as a CFO, like procurement, request workflows and compliance. And then we built some very unique and groundbreaking technology to help those districts analyze in which situations are those technologies helping students learn the most.

That’s been reallyfullfilling

Trevor Schmidt: What was the germination for this idea? Or, or what was the Genesis for this idea?

Karl Rectanus: Yeah, so between, A six are successful completion of the NC STEM work and starting Learn Platform. I built a consultancy and we consulted with States and foundations and school districts.

We even did some due diligence for venture capital in education, education policy and other things, and we would get asked these significant questions, difficult questions and there was no data. There was really no data. Basically the way a lot of these consultants, you would try to find out answers, but really it was phone a friend.

Okay. And one of the primary questions that I was asking, this was in 2012, one of the primary questions that we get asked by States and districts was, what is blended learning? Which of these tools should we be working with, and what’s a good price, and how do we implement that?

And really there was no data. The best option you had was to call the guy down the street and the superintendent. You’d ask the superintendent, what do you think of that math intervention you started? Say, well, my teachers aren’t revolting, so I guess it’s working. Right? and let’s, no, it’s not an issue with a product or, or, you know, lack of capacity.

These are very smart people, but there was just no systemic way to. There’s no information. It was just anecdotal. And as we dug into this, and some of our previous work, came to bear, we got this idea. What if you could, we looked at the pharmaceuticals, area pharmaceutical trials  you know, is basically build, measure, iterate. Well, it’s hard to measure if you’ve got no data. Right? But it was really build it, you’ll fix it later. If you take medicine and throw it into a bunch of sick people and just say, we’ll fix it next quarter.

That’s not how pharmaceuticals work.

Trevor Schmidt: Work for the individual patient.

Karl Rectanus: So we looked at the pharmaceuticals trials model where you’ve got this staged phased approach, uh, you get, you know, consistently a little more rigorous with each of these and realize it’s very similar. Teachers are always piloting things.

They’re always trying new things, and they’re figuring it out with that. That information sort of goes off into the ether. But if you, if you take that data and you start to, that looks like a phase one trial is pretty similar to what happens in pharmaceutical. If you could add a little more rigor around that process, if you could add a slightly larger sample size, if you could look at, you know, demographics and others, you start to look like a phase two or phase three trial in pharmaceuticals, and then phase four, which is end market studies, you’d start to get achievement and other data in there. We took that, spent about it 12-13 months, doing due diligence around what this would look like with school districts, what investors thought, what was in the market. And, after a while it became clear that this idea of a phase stage approach to rapid cycle evaluation could be pretty valuable for the market.

Trevor Schmidt: So what were some of the early challenges then that you faced once you had this idea? Now you’ve got to start this company to start to meet some of those challenges. What were some of the early hurdles you had to cross.

Karl Rectanus: Well, first off, I would say, I didn’t want to start a company. That 13 months of due diligence was trying to find somewhere else to do that intrepreneurship or to have somebody else do this. As an entrepreneur, I would never want to create an also ran if somebody else is already doing this. secondly, like. at the time we had three. we had a third daughter. a young family, entrepreneurship is not the most stable, secure approach. but after that 13 months, we realized like, people aren’t going to be able to do this the right way.

It’s not going to exist. And we built such a strong passion for the work that we were doing in our approach. that as we talk to investors and customers, we got a lot of kicks in the backside, like, you guys have to do this. Um, so first challenge was even deciding if we wanted to. To create another company cause it’s hard work.

Sure.  you know, then obviously every entrepreneur, the number one reason companies go out of business is they run out of money. it’s easier when you don’t have any money. So, you got to go get some, we were honored to receive an NC Idea grant here in North Carolina, and, uh, shortly after, were accepted to the Kaplan tech stars, accelerator in New York City.

Uh, they were some of the folks who had, who had given us sort of thumbs up early. And so we pulled together some funding, to be able to pull together a team. small team, three or four folks. We moved up to New York, and that was not the easiest thing to do, but we got a ton of things working.

And I can’t tell you how valuable the tech stars accelerator was for us in that alumni network and tech stars is.

Trevor Schmidt: So they were providing mentorship, kind of ideation and capital and all of that, or was it more kind of just

Karl Rectanus: Little bit of capital a 90 days accelerator. And a lot of mentorship.

We probably did nine months worth of work in three. Okay. We launched our alpha and, to one of your, your question about challenges and opportunities, shortly after, we had set out to help people figure out what they were using. That worked. Well as we talk to school districts, they told us, well, we don’t even know what we’re using.

We said, no, no, it does that. But it also tells you if those things work. And they said, great, but we don’t even know what we’re using. And we said, well, if we told you what you’re using, would you pay us for that? So yeah, we definitely pay for that. So we realized we had a much bigger opportunity than we initially thought.

We were originally called Learn Trials, like pharmaceutical trials, and we expanded to Learn Platform where we are now. And which was on path, but, we realized we had a big opportunity and we’ve continued to expanding from that. We’ve been lucky, I would say, in our work. That was the closest thing to a pivot that we had.

But in terms of a sort of an expansion of the brand and how we position, but we never had a challenge where it’s like, okay, let’s just quit this and go sell toasters.

Trevor Schmidt: As you were rolling this out, do you try to focus on specific school districts or like a state or is it something that you just can approach across the country?

Karl Rectanus: First off, I think one thing I like to, I believe business model is a huge determinant of success, of mission, of core values. All of those things get impacted by your business model. So we thought really rigorously about how we would approach the market and as a sort of category-creating software as a service.

We  weren’t building a bigger or better learning management system that already existed. This is a new category for the market. And so we thought long and hard about that and we focused on selling directly to districts. They’re the demand side, right, as if you want to move a market, a macro economics would tell you that the demand side is what moves the market.

Supply side reacts. So we did not want to sell to product providers, the supply side, which was an option. We decided to move and focus on the demand side, and where we see the best fulcrum to move the market were in school districts. They have a huge impact on procurement and on purchasing of education, technology and managing that stuff.

So that’s where we were focused. But they also have direct lines to States and directly down to schools. So by focusing there, we can impact a broader set of the market. And the supply side has reacted well too.

Trevor Schmidt: So what have been some of the challenges that you’ve faced from the districts themselves? I mean, what are some of the issues or I guess the resistance that they might have to having you come in?

Karl Rectanus: You know, selling into the public sector, most investors and others will tell you that they don’t like doing it, that it takes too long. Sales cycles are hard and, you know, selling to school districts. I had multiple lot of North Carolina based investors and we were blessed to have investors from all over the country, but a lot of them would say, Oh, we don’t do public sector.

The irony is,  that’s an enterprise sale that takes a little bit longer, there’s a lot of good things about it. They pay up front. They renew consistently once you’re in, and they don’t default. It’s fantastic.

But you know, with selling the school districts, it’s a different way. You know, it’s a different approach. Now. I was a CFO for school, so I’ve purchased millions of dollars. I’ve been on the other side of the table. We understand how to sell to school districts. But when you think about the business processes and the challenges that we help them solve, they boil down to something very similar to almost everything that you see in public sector, which is inertia, right, is what they’ve been doing before. We replace shareable spreadsheets and homemade wikis, and you know, we’ll just throw some people at this, right? Right. There is a default setting that if we do it ourselves, it’s free, but if we pay you, it costs money when the reality is doing it ourselves within the school districts, those are salaries. That’s expensive. But because it’s public sector doesn’t have a profit motive designed into it, there’s a little less value put on those salaries, so that’s one of the challenges when you’re selling into districts is making sure that’s the case.

Now we’ve overcome that in spades. The return on investment for our product is between nine and 12 X, per year for school districts, that’s, that’s exorbitant.

Trevor Schmidt: How is that measured? I mean, when you say that you have 9-12X?

Karl Rectanus: So school districts use our system to organize, streamline, and analyze all their products, and that gives a ton of benefits, right?

From a financial standpoint. One is that time and staff savings, the efficiencies, saving each teacher 10 minutes a week is massive. Helping their procurement work more efficiently is hugely beneficial, but the second way, we help them save money as they use our system to identify product licenses and tech licenses that they’re paying for and never using.

So the average school district is paying for and not using 30 to 60% of their edtech licenses. It’s over $1 billion a year in the U S and because they’re more educated as the demand side, our customers also get better deals. Their purchasing power increases by 10 to 20% using our system. So it’s a no brainer from the financial side if you understand that.

But there is work to implement and kick things off.

Trevor Schmidt: You had mentioned early on that, you know, one of the goals of this is related to improve student outcomes or to improve access for the students. Was there a moment that you were just like, yes, this, this is, this is achieving what we set out to do.

Karl Rectanus: There are so many moments, as an entrepreneur, as a high growth company, there are so many pain points and there are so many things that you’re challenged by, but almost every day, I get to hear about from a customer or a C on our system where data or analysis or tools that we’re providing are helping change decisions that are being made on behalf of kids. Our education system is set up for adults. It should be delivering for students. And the last thing we want to have happen is those results don’t matter. When results matter, everything changes. Purchasing changes, policies change, procurement changes.

But if when I was a CFO, I didn’t have the data. I didn’t have the information quickly enough to actually inform decisions. I was using last year’s data for next year’s budget. And those are different kids. But there are so many examples of where school districts and States are making decisions that are helping kids this month using our system.

Trevor Schmidt: It’s gonna be so exciting just to, just to see it pan out like what you hoped it would, but also just to know that your company is making a difference. You’re making a difference.

Karl Rectanus: It is our number one recruiting tool as well, because everybody within these walls and across our distributed team will talk to you about our core values and their mission.

We’ve got a lot of great talents. They have opportunities at a bunch of different organizations, but at the end of the day, you want to sleep well. You want to be able to tell people about the mark you made on the world. And just a couple months ago, Granite County schools in Utah, 40,000 students, used our system to analyze their math interventions.

And it was actually an educator between Christmas and new years decided to run these analyses. He was, he was on Christmas vacation. But at first semester was over, he wanted to take a look at the data. He ran it on his own. He did the functional equivalent of what a third party evaluator would take, would take six months to do.

He did a couple of hours. He used our system and what he found was that their math intervention was having an outsize positive effect for English language learners in their district. They were doing better than they expected for non English speakers. But it wasn’t serving their highest achieving students as well.

That particular intervention. So when they came back to school, we talked to other curriculum instruction leaders. They started providing professional development for teachers who had higher populations of English language learners. And they were going into budget season, they realized they didn’t need to purchase as many, as many licenses as they had been because they were going to use different interventions.

They asked us to be a part of the call was the product provider because they didn’t want to get, they said, this is good news, but we think the product provider is going to be upset that we’re not purchasing. We’re not going to be paying them as much as we have in the past. So we got to sit in on that call, share information.

The product provider was ecstatic. And because the product providers have never had this data either, they wanted to write case studies about it. They’re sharing it with others because they’re helping English language learners in a better way in math. And they realize, and they were able to do that. They would’ve never figured it out without our unique technology.

So I love that instance because you got educators doing what’s best for students. You got students, not that look like those kids, but those kids having a better educational experience and getting better outcomes. And you’re moving the market to start to make decisions like those product providers to say, actually, this is the pathway to our success. I love it.

Trevor Schmidt: Do you find that’s a consistent response from product providers that they like your platform or do you get some pushback from some folks saying, I’d rather not have this data out there?

Karl Rectanus: It’s a great question. When we started, we talked to publishers. We talked to providers, was part of the mentorship through tech stars and to a person.

I talked to the big five publishers in education. At the time, there were really five major publishers. Senior leadership. Each one of them told me, I don’t want you to exist, but can I buy the data?

It made it clear that A publishing, which, you know, obviously I think everybody knows that the business model is changing, but that there was not enough data in the market to understand. And so while every market’s going to have bad actors and good actors, mission-driven organizations, and good or bad execution, the reality is people often expect the providers wouldn’t like us. But providers are desperate to make good products that work well, especially in education. And so we have providers sort of beating down our door now to get access and to help them understand how they can improve their products. And frankly, right now, we don’t offer a service for product providers, but we will. And so that’s a growth opportunity for us.

Trevor Schmidt: Are there any mistakes that you made at some point in time that you’ve learned from or something that you can point to kind of along this way?

Karl Rectanus: Every day. It’s funny, my wife, she does it last now, but early on, she would say, how was your day?

You come home, often my answer is ask me in six months. This is the problem with public sector sales. Every day is, you know, the Razor’s edge between global domination and bankruptcy as an entrepreneur. You walk that and you feel it every day. The goal is to get more pats on the backs than punches in the gut on a daily basis, and usually you’re like 49 51 like one way or the other in this work, if you’re doing well, right?

If you’re not, you’re more like 99 punches to the gut to one pat on the back that keeps you going. If I think about the mistakes, this is my fourth successful education innovation organization. That first one, we learned so much. Not the best exit and return financially, but really learned almost everything I feel like you need to know at a basic foundational level, then it’s about execution team work. But the hardest mistake is counterintuitive, is realizing that relationships and personnel is about 80% timing.

As a high growth organization, your roles change very drastically and dramatically. And so the needs of the organization continue to expand or change and twist and turn. And it’s not always the fact that your teammates want to make those twists and turns or have the capacity or ability or willingness or interest to do that, to grow in the direction that that particular role is thinking of.

And so our commitment here is to help people be successful in their goals whether that’s here or somewhere else. Early on, I would say some of the mistakes and the hardest mistakes are around trying to force individual people into roles or keeping them in roles that aren’t best for them and aren’t best for the company because there’s a stigma around changing jobs or moving on or turnover. We talk about churn and employee churn, and they’re almost all negative connotations. But the reality is, if you think about the fact that, and keep at the heart of your work, you know, how do we be successful as a team and a company and ensure that our team members, our teammates are growing in the direction that they want to?

If they want to grow in a different direction than where the company goes, or what the market’s telling you or, or just change their mind, that’s okay. And so by being invested in individuals and helping them, you know, that’s how we try to solve that problem. The mistake is keeping folks in roles or trying to force folks, when really the writing’s on the wall and people just want to avoid tough conversations.

I would say those are, those are the, like there’s mistakes every day, but the hard, the ones that seem the hardest are those that have impact on your teammates.

Trevor Schmidt: Right. Now Learn Platform’s been around for how long?

Karl Rectanus: We are five and a half years old.

Trevor Schmidt: So as you look to the next five years, what gets you most excited?

Karl Rectanus: Man, we’re still having a lot of fun. We’ve doubled every year, and our path is to continue to do that. I suspect, and our team thinks about it is, you know, where every overnight success is at least 10 years old. Right. so, you know, part of me gets excited about the fact that one day we’ll be one of those overnight successes, but that’s not what gets me most excited. We are fundamentally having an impact on education only in U S K-12 right now. And we’re only touching a small percentage of the market. What gets me most excited is moving a whole market, is getting a market and moving it in a way that makes decisions and execution effort better for students.

Like that is huge. So over the next five years, our team’s going to grow the data flow. We see more data than any organization in the world on which education technologies are used and accessed already. That data’s going to exponentially, continue to expand our  revenues will continue to push forward.

But it’s that market impact that helps more and more students. We right now are helping organizations directly that serve 4 million students. Pretty good. That’s a good impact. That’s more than I taught in high school. Right. Yeah, we’ve got a lot more, and there’s 50 million students in the U S and there’s a lot more internationally, and there’s a lot of decisions being made by adults that impact those 50 million kids. And I’m most excited about the impact we’re going to have, especially for those who have been traditionally left behind by the system, for us to help the system work on their behalf, not to feel like headwinds for those kids.

Trevor Schmidt: And what do you think will be the biggest roadblock in that goal of moving the market or, or getting to that point where you’re having that impact on those broad population of students?

Karl Rectanus: There’s plenty of headwinds. You ask what the biggest challenges, as an entrepreneur, you think about, you name it, market dynamics, competition, growth, execution. I have a ton of confidence in our team and our ability and capacity to execute, which is the differentiator for every successful startup is the ability to execute.

But I think the biggest barrier to reaching this goal ends up being effective use of resources and trying to time the market.  We will continue to execute. We’ve been very cost efficient, very cost effective. We’re educators, right? So we’ve raised funds from, we did a series A two years ago. We’ve only put $5 million into the company, from some very smart investors. But we’re getting to a scale that, we’re smart enough now that I think we could invest more and have a much larger impact. I’m excited about what that looks like, but being smart about the systemic dynamics of both the education market and the venture capital market are probably the biggest, the biggest barriers, to reach in our mission.

Trevor Schmidt: Step back a little bit, which would you say is the bigger challenge, being a classroom teacher or being a CEO?

Karl Rectanus: Oh, being a classroom teacher. So if you think about it,  a classroom teacher  serves usually about 30 to 150 customers who all have individualized needs with very limited resources and has to solve a problem for each of them in terms of learning and assessment and achievement.

That’s what an entrepreneur is, right? They take limited resources and they try to solve problems every day, but the teachers have to do that every single day for like kids who are like. 40% of our kids just in the state don’t have enough food. And they’re not the same customer. If I was an entrepreneur, I’d decide which of those market segments I want to serve.

So as a CEO, I’m lucky enough to, you know, we deal with growing pains, self-reflection, figuring out how to lead and follow and get out of the way and help your team grow and do all those things. But I’ve never had a harder job than being a teacher. So have deep, deep respect for the work that they do every day.

My mother just retired, almost 50 years in the classroom. A middle school teacher never left the class, wasn’t an administrator. She is fantastic. And I can tell you that, three weeks ago, I was at a meeting and had a chance to meet with the Secretary of Commerce and his assistant.

I have a noticeable last name. His assistant came over to me and said, are you Karen’s boy? She taught her 20 years ago. You know, that’s the type of impact that you just can’t beat. So there’s, there’s rewards, for educators, but they’ve got the toughest, toughest job for sure.

Trevor Schmidt: I agree with you completely. So my mother was very, so much fourth grade teacher, and retired two years ago, after, I think 40 plus years as a teacher.

And, you know, the impact that she’s had on people, just not something I can replicate ever.

And it’s just, you know, God bless all the teachers out there.

I do want to ask the question, so we are the Founder Shares Podcast. So I want to ask you as a founder, if there’s one piece of advice that you would share with somebody who’s like, I want to start a business, a business that’s going to have a social impact, what’s that advice that you can provide to them?

Karl Rectanus: As a founder, you will lose money and you will make money, but real success is getting to work with people you actually want to work with. There’s not a lot of people who get to choose who they work with. If you talk to other folks who have other jobs. they, often don’t get that choice of who their customers are, who their colleagues are, things like that.

When you’re a founder, the best advice I can give you. I mean, stay focused. So all the things, it’s all about execution, you know, don’t run out of money. I mean, there’s all those things, but in my experience, choose to work with people you actually want to work with. And it will serve dividends beyond any sort of investment.

And take that all the way to investor, right? Don’t take dumb money or investment from people you don’t like, just cause it’s there. Don’t do the deal with the devil for a customer if it doesn’t feel right. But real success is if you, if you really feel it. That real success is getting to work with people you actually want to work with.

It can really tense your decisions and it can buoy you through those days that you get more punches in the gut than pats on the back.

Trevor Schmidt: That’s great advice and I really appreciate it and I appreciate you coming on and

Karl Rectanus: This is awesome. Thank you.

Thanks for what you’re doing with your company.

Thanks, Trevor.

Keep up the good work.

Trevor Schmidt: That was Karl Rectanus, co-founder and CEO of LearnPlatform. You can find more about Learn by visiting LearnPlatform.com.

We hope you enjoyed our first episode, and we can’t wait to share more stories with you. Be sure to subscribe to this show so you don’t miss our monthly episodes. But, in celebration of our first episode, you can listen to the second episode of the show right now, with founder and CEO of SimpleAuctionSite.com, Bob Freedman.

And if you’re a founder or business owner in need of legal advice, we’d love to hear from you. You can start by visiting HutchLaw.com. We have the capacity to help you out with just about any legal need your company may be facing.  We are passionate about the innovation economy and are ready to support you on your entrepreneurial journey.

This show was edited and produced by Earfluence.

I’m Trevor Schmidt, and we’ll talk to you next time on the Founder Shares Podcast!