“It was probably a foolish thing to do, but in hindsight I guess it worked out alright,” quipped Ben O’Connor to the amusement of his audience. O’Connor is CFO of Higher Learning Technologies (HLT), a Coralville based mobile learning app that in three years has gone from idea to more than a million users worldwide, navigating multiple funding rounds and growing from its three founders to a company of 45 employees.
O’Connor was the April guest of Mike Colwell, Executive Director of Square One DSM, at the organization’s monthly Startup Stories luncheon. The foolish thing O’Connor eluded to, an episode of youthful naiveté that he would reference multiple times, was leaving school to launch a business without even the barest element of a product. O’Connor and his longtime friends Alec Whitters and Adam Keune were all graduate students at the University of Iowa, when Whitters, seeking his license in Dentistry, was confronted with a cumbersome armload of flash cards that were the traditional method for exam preparation. Thinking there had to be an app for that sort of thing, the trio searched and found none. “So we thought, let’s try it ourselves,” remembers O’Connor. Realizing they were on to something, but still without so much as a prototype they abandoned their formal matriculation for the entrepreneurial siren call.
By the fall of 2012, just months later, they had a successful product which served the painfully small initial market they had identified, dentistry students studying for their licensing exam. Fast forward less than four years and the HLT format has spawned 22 products and has been extended into multiple additional vertical markets, most notably, and much more populous, nursing and physicians, as well as business and finance. Likewise, they have penetrated beyond the exam prep intro into those markets to provide a means to the continuous education that such fields require. Along the way, a seed round in 2013 delivered $1 million in funding while a Series A round in 2014 brought another $5.5 million to continue their growth. All of which conspired to bring O’Connor, a youthful 29, before an audience of entrepreneurs and investors at the Partnership building on a rainy April afternoon.
Among the insights and anecdotes, he shared:
Scaling at light speed. “After our Series B funding it was definitely chaotic. We went from 20 to 40 people in three or four months. I can’t say I would recommend that to anyone,” he confessed. Critical to managing that chaos was bringing in a few key and experienced people. While admittedly the first few hires of the fledgling company required only a warm body as credentials, when growth became serious, O’Connor and his partners knew they had to bring in credentialed leaders for the COO and CMO roles. “I look at them and it makes me feel like I need to step up my game,” he says of the hires that drive the company forward.
Stock options. “We were a small startup. In the beginning we couldn’t offer a big salary or a lot of benefits, but we could offer stock options,” he explained suggesting that ownership, at any level is apparent in the way staff apply themselves and respond to the challenges. “I’m a big believer in stock options,” he concluded.
A competitive marketplace. Asked about patents as a means of securing intellectual property rights in a market that is not without competition, O’Connor explained that while they do copyright the educational content, pursuing patents to protect the features of their application seems a less than efficient expenditure of effort and of questionable likelihood of success. “Patents and intellectual property aren’t a big part of our business model. We have a lot of competitors out there but for us it is about working faster, working harder and executing better,” he explained.
Being a CFO without a finance degree. A grad student in nursing when he made the leap to business, O’Connor seems singularly unprepared to find himself the CFO of a multimillion dollar startup. A religious devotee of continuing education and constant learning, he confesses to reading incessantly and even taking the 4-hour roundtrip drive to the luncheon as an opportunity to listen to a book on tape. “We were all grad students in health science and all we did was learn and read. We really learned how to learn, so over the last few years we have shifted that to learning everything we can learn about business.” And he admits with a smile that he is the only male in his family without a degree in accounting, reasoning that it might be in his DNA.
The value of naiveté. “I’m still young, but back then we were very naïve and I think that was actually beneficial because I don’t think we would have dropped out of school and gone all in on this if we weren’t terribly naïve about where it might go,” he recalled. This makes a point that Colwell reiterated as one he has often heard from successful startups shared in hindsight, that a more risk averse mature personality may well not have taken the first step.
The biggest challenge for HLT. Time was the young man’s immediate answer to the question of the biggest challenge in front of his young and growing company. He expanded, “Not enough time in the day, not enough time in the week. And from a financial perspective, we are a startup with investors that is working its way towards being capital positive, but time is always against us because time is money. Our team can do anything. It’s just a matter of time, so, as far as I’m concerned, time is our biggest battle.”
And with that the time allotted for questions had run out.