How Can AI Break Down the Barriers in E-Learning?

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 this 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 Ethan from

Mindsmith is a next -gen e -learning authoring tool that uses generative AI to make it easy and extremely fast to create and share learning content. We're excited to hear this 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 in the world of SaaS. Hey, Ethan, thank you for joining us today. How are you doing?

Ethan Webb (00:45)

I'm pretty good, Yash. Yeah, I was telling you earlier, this is my starting out strong in the morning at 7 am So we're good. We're starting strong.

Yash From Momentum (00:52)

-huh.

That's awesome. have you at your peak energy for this episode and I'm glad we have you at that. So let's start with what's the big problem that MindSmith is solving for today and who is it solving for?

Ethan Webb (01:09)

Yeah, great question. I'll start. I'll answer the second question first. Who is it solving for? So, Mindsmith is primarily used by people with a role called instructional design. So this is people whose full -time job is to design custom e -learning content. I would say right now we have a particular focus for the corporate world. So imagine like when you join a company, you're doing like an onboarding training or a compliance training or upskilling.

So the people that design that type of content, that's who Mindsmith been built for. And the problem we're solving is that the creation of this content is insanely time intensive. So not only for the individual creating the content, but you have to bring in lots of different people from the organization to create custom e -learning content, like bringing in subject matter experts, bringing in designers, bringing in all these groups of people.

And what we found is that, well, first of all, on average, like when you're doing this process manually, it takes like 200 man hours to create one hour of e -learning content. So it's like $10 ,000 for an organization just for an hour of custom e -learning content. And so that's really the big spend. That's the big rub that a lot of organizations are facing is that they have a lot of custom content they want to build.

but it doesn't make sense to build it just because of the economics of how expensive it is. And so MindSmith, we found that generative AI does a lot, does really well at a lot of the steps of building e -learning, a lot of that process. So from the synthesis of subject matter expert material to the structuring of content to actually writing the content.

MindSmith kind of adds AI into every step of that lesson development process following the workflow of the instructional designer.

Yash From Momentum (02:57)

So I had this question. It was going to come up after a couple of minutes. But I'll bring this up front. So Mindsmith as a platform can target a couple of different client personas. So it can go after organizations, which is what you're doing. But it can also be used by coaches and consultants and agencies and schools and universities. So how did you make?

make the choice, what was the process of figuring out. And this is a challenge that most SaaS founders face, that they're building something that is useful for 5 different personas. And the go -to market is very different for each one of those. So if I'm going after coaches, I want to do some amount of inbound, probably some amount of social media. If I'm going after corporates, then larger enterprises or mid -market, want to do cold outbound. My positioning also has to be very different.

because in one place I am talking about ROI, in the other place I am about a learning experience and so on and so forth. So, how did you make that choice that I want to go after this, like what are the factors that you evaluated?

Ethan Webb (03:58)

Yeah, so we actually started in higher ed. So MindSmith, we were building and we are finding that the creation process for teachers, if they wanted to create any e -learning content, was super, super clunky. So we were pitching to instructional design departments at universities. We also did some experimentation for K -12, you know, meeting with their instructional designers and their teachers.

And we just hated it. The sales cycles, anyone in ed tech will tell you that selling into higher ed is just the worst. And we didn't have like the network to make it work. We didn't have the time to make it work. And so we said, okay, MindSmith is a very,

robust and very versatile platform. What if we try pitching into corporate? And it was just, we found so much more success. was sales cycles were shorter. People were more receptive. They tended to like care about new technologies way more. Like you mentioned, ROI was much more important and kind of like on the front of their brain. So yeah, we just kind of pitched to a few. did some cold outbound to some corporates. We pitched to a few of them.

And we just found that the messaging worked a lot better. We also found that it's actually quite a bit larger of a market for corporate learning than it is for higher ed. There's just way more companies out there that are willing to spend a lot more on educating their people.

Yeah, it was definitely a trial and error thing. So we we errored out of the other one and then found that corporate was the way to go for

Yash From Momentum (05:27)

And

I saw that meme once, which is where, you know, and that just was explaining how does it feel like selling to a university, right? Selling anything to a university. And so was basically there's a house on fire and there was a professor who was standing outside the house and there's a fire brigade, like a fire truck. And the fire truck is like.

shall I just get this fire away? And the guy is like, but I don't care. And then there's another line, which is where they say, but all of your valuables are in there and whatever, but I don't care. And so it's extremely difficult to, I've done that only for 4 months. And I know that as a salesperson, you're trained to share value.

Are you trained to talk about the benefits and you expect them to sort of reciprocate that hey, know, okay, yeah, this is great but But when that doesn't happen, you just don't know what to do. So So make sense there and then this positioning is great, right? We're going to help you It costs you 200 man hours per hour of content creation. We're going to see if we're going to significantly save that that's that's interesting. Let's

Ethan Webb (06:38)

Yeah, I will say as well. Yeah, just while we're still on the subject, we do still play in the K -12 and higher ed space. So we have quite a few customers that are teachers and school districts and universities. It's just not like when we're doing marketing, positioning, thinking about strategy, it isn't the those aren't the number one people on our the flow from the program.

Yash From Momentum (06:39)

Let us talk a little bit about, now please go

And so for people who may not know Mindsmith yet, could you share with us a little bit around the size and scope of Mindsmith, like where you are today, any metric about Mindsmith that will help us and the listeners sort of understand the scope of the operations that we have.

Ethan Webb (07:18)

Sure. Yeah, yeah, we're a pretty early stage startup. So it's myself, my co -founder and two devs. And we're just right at 12 K MRR, but we're growing, you know, 20 to 30 % month over month, just like, join the ride. We're looking to hire our first sales hire, which is just insane to me that we're in a place where we, need to, you know, bring on another salesperson. So yeah, pretty early stage.

We came out of, we've been building for about a year and a half. We came out of a university startup accelerator program where myself and my co -founder essentially got just a bunch of school credit for starting a company. So yeah, we did two semesters of that. It's called Sandbox at BYU. then after just kind of during that experience, we're growing, we're building, we're pitching, we're doing student pitch competitions. Got some money that way, brought on some

really early capital as like uncapped, undiscounted safe notes, then went full time in the summer and then raised a venture capital around the winter of 23. And then we've just like, just been growing ever since.

Yash From Momentum (08:25)

Nice, so great to know that you're looking to hire your first salesperson. And so this would be a great time for me to understand a little bit from you is that from like, could be a difference. So from a leadership standpoint, if you're building a leadership team or people who are going to work on strategy at Mindsmith, they tend to have, of course, disproportionate amount of impact on the company.

And in those cases, what are some of the key qualities that you look for? So when you hire for someone who's going to contribute to strategy, not just execute on a predefined strategy, what are some of the key qualities that you look for, like in the first few team members?

Ethan Webb (09:05)

good question. So this sales hire that's actually, so you mentioned questions about, that I should pose to the next, interview we, and that's actually my question is, is kind of around that. So we have been hiring for an SDR role, which is much more just on like, we just need to source deals. Your job is to source deals, like find us a bunch of deals and maybe, it's like kind of ill -defined and they have to like do a lot of experimentation.

Yash From Momentum (09:12)

Yeah. Yeah. Yeah.

Ethan Webb (09:32)

but it's like, they're just an SDR, they're going to source deals for their whole time at Mindsmith versus a strategic hire where it's like this person I can see like leading the sales organization of Mindsmith as we grow. does it, how do you figure out which one to do? Because I've interviewed a lot of SDRs and I've interviewed some like really top -notch like AEs that would just like, you know, kill it at like scaling the organization.

but it's like, we at a place where it makes sense to like bring on that person that, you know, I mean, we're starting to see product market fit. We're starting to see some traction, but it's still like, I don't know, should our first sales hire be the strategic person that's going to like, like contribute to the vision and the strategy, or should it just be like, we need to grow, grow, grow. And then after we get like a few SDRs, maybe an AE, then it's like, we spend a lot of money on a good like, you know,

COO or head of sales or whatever.

Yash From Momentum (10:32)

That's a great question. And I'll tell you why it's a great question. It's because there's no right answer to this. I know this for a fact, because I've done it both ways. And it could have failed. It could have worked. In our case, it just ended up working. So just to give you context, before this, I used to run a SaaS company. And we saw a complete journey of founding, building, growing, raising funds, exiting in the last 4, 4 and a half years.

And it sort of turned out that we changed strategies a couple of times with you. The reason why it's a great question is that there's no right answer. And I love to see my guests suffer trying to answer questions that other guests have given. So it's interesting. And thank you for sharing that. So coming to this, let's assume that you're looking for a person who's going to set the strategy.

Let

Ethan Webb (11:20)

so definitely like being comfortable with out, like a defined role, like, and without like, like very clear direction. So, yeah, like that's probably the number one thing is someone who like takes initiative and can experiment on their own and build on their own and someone I can just put a lot of trust into. so that's a big

I would say another one is someone who's excited to join a startup in general. They are excited about getting equity in a startup and the potential to build something amazing and to be the catalyst to build this company. And I think that when you organize your structure in a very meritocratic way, that you tend to draw those people.

that it's like you can have outsized impact and like you tend to get amazing people who'd like trust in themselves because they want to help build the company. So someone that's excited to join a startup and to contribute to a startup. And then I would say maybe this goes without saying, but someone that's excited about SaaS in general, there are a lot of salespeople in the world that sell a lot of different things and they have to be just excited to sell like software into, you

B2B So I would say like for us, a big thing is just like wanting to be here excited to be here, like bringing that energy and excitement.

Yash From Momentum (12:41)

Great to know and so on a day to day basis I am sure you are measuring growth in MRR,

account expansions, churn, retention. But on a day -to -day basis, like if you were to track, or a week -on -week basis, if you were to track progress of, apart from MRR, like the revenue numbers, if you were to track progress of MindSmith, what are a couple of other numbers that you sort of look at which give you an understanding that, hey, you we think we're going in the right direction, right? So I'm sure that when you were...

pitching to universities and when you made a decision of positioning towards corporates, there must be something that you must have been tracking. So, what are those things today that help you sort of say every day or every week that, okay, we are better off than what we were doing in the US.

Ethan Webb (13:27)

Yeah, yeah, for sure. So in our early, early days, the biggest thing that we were worried about was like, MRR, can we close deals? Like that was our only North Star that we cared about in like the first, you know, 4 to 6 months. And even still, like that's our number one metric. And I think like, like that should be the number one metric, in my opinion. I think there's a lot of other things that you can use as your North Star. But I know you said outside of that, some of the things we're tracking and thinking about.

Yash From Momentum (13:47)

Yeah, for sure. For sure.

Ethan Webb (13:52)

the best lagging indicator for us would be lesson completions. So, like, that means that not only is the organization creating content and putting it onto their learning management system, but that it's then getting completed. And so that's how we know that our customers are getting value, is that their learners, their employees, whoever is our starting lessons,

and then finishing the lessons and like, and maybe there's like an even further lagging indicator of like how they're performing on the lessons, you know, or how much time they're spending on average on a lesson or whatever. But right now it's lesson completions is the best lagging indicator of success for us. Some of the leading indicators that we're caring about are like daily actives. So just number of people who are active logged into the software using

We track API calls, which is not super amazing, but it is a helpful proxy for usage. So instead of just time in the platform, it's like, how much are they doing? How much are they creating? And then there are some other ones like lessons generated. Are they using the AI generator? Are they creating lessons?

Yeah, just a bunch of extra stuff. We're also like tracking, not, not just the free users, but the, like, we have a separate thing just for paid users to see how much like value they're getting out of it. Of course.

Yash From Momentum (15:14)

So the reason why I said like apart from MRR is because the thought process is that if you have MRR then MRR is the thing is your not star.

But then there might be a lot of people who are watching this who are yet to reach that stage. So they don't have MRR. so in those cases, but they have a product. They have some users, maybe free. And so in those cases, what should they look at? And so broadly, I think what you're saying, and please correct me if wrong, is product usage and so one product usage, but more importantly, one of the lagging indicators is value creation through product usage and whether that is

or not as well. I'd like to next sort of like understand a little more around how does a person who's been a writer and then a teacher get into building a Gen AI tech company? Like how does that happen? Like what happened there? So I want to explore that a little

Ethan Webb (16:08)

Good question. So yeah, I've done some writing. I was like, I was a TA, so not really a teacher, but you know, I was helping out in my economics classes. I was also so, so the, the, my career path before getting into MindSmith was actually more in the finance route. So I had been interning for a hedge fund for quite a while. I was super into like ESG, like impact investing. How like, do we create shareholder value while still like creating impactful and good companies?

companies that do good. So that was kind of my focus before I was going to like get my CFA, you know, I was going to, you know, do the whole finance thing. And I had a friend who did the same program that I'm in the sandbox program as part of their first cohort. And he just like, he went all in and just fell in love. So he built a company, he had an offer from BSG or BCG, he had an offer from McKinsey.

And then like they got into YC and they were doing the whole like startup thing and he reneged on his like top, you know, top consulting offers. And I was like, dang, that's actually exciting. You know, like he's doing some cool stuff. So I saw there was a deadline to apply and it was like the last day. And I was like, you know what? I have some credits to burn. May as well like see where this takes me. So I did it. There was a hackathon.

My partner in my hackathon was a really talented engineer that I became really close with and I'm still close with today. And then, and we just like, we had so much fun. Like we were ideating, we were talking to customers, we were building an MVP, we had this really cool thing. And so we did, we pitched at the end of the hackathon, you we got first place, we were super excited. And then we were also accepted myself and this kid I was with and some of my other friends were accepted into

Well, first of all, the sandbox program. then secondly, a sort of fellowship within the sandbox program that was sponsored by a big VC here in Utah Valley. And so we got to have a class just with him, just like the 20 of us, ask questions, talk about building companies. And then we had a study abroad where it was some of the biggest entrepreneur mentors at BYU that came with us.

And so really kind of, went head first into startups and suddenly I'm like, wow, this is actually a fun and exciting like place to be and one that you can like make a lot of money and do good and all this stuff. So, a kid that I knew on this fellowship knew my now co -founder and knew that he was building in the education impact learning space. And he knew that I was really interested in like creating an impactful company. So he connected us.

we met up and we just like went to town building. We're just like, let's just go hand this summer. So we did a bunch of building in the summer and then the fall started, we did the program. It was amazing. We did the two semesters. We're slowly like starting to get more traction and you know, we're pivoting, we're building. And yeah, we did a few student startup competitions, got some money there. I think I already mentioned this. We got some money from like very early angels and

you know, company just kept growing and flourishing from there. So yeah, just mine all

Yash From Momentum (19:11)

Yeah. So this is cool, right? And so one of the things that I've had opportunities to work with people who've done some amount of writing and then in some capacity teaching. And one of the things that I've noticed is that people who've been writers for a while, they achieve some amount of clarity of thought or cohesiveness in terms of

So they think, they sort of think and then they have to think a little more and a couple more times before they put something that can be read by other people. And the people who teach, they are great at communication. So those two skills are things that as early as possible if you learn them, then they sort of are also some amount of, like not completely, but they're also success indicators in the sense that

you're able to think in a comprehensive fashion. And then you also have the ability to communicate complicated thoughts in a fairly simple way, which I can see on display while we're having this conversation as well. So this is great. So that's a great journey. You make it sound like everything was happening by chance. But I think it took a couple of things.

from your side in the sense that you were looking for opportunities, were looking for chances, not just looking in one direction, accepting that this is what I'm going to do, deciding too early on that here's my next logical step for my career and just staying open to all the opportunities that come along your way, networking, meeting with people and exploring. think that's extremely helpful as well. The other piece that I, yeah, please go ahead.

Ethan Webb (20:45)

Yeah, I've always, sorry, I was just gonna build on that a little bit. I always like have kind of had the mantra of just like, do what sounds fun. You know, like if it sounds cool and fun, like try it out. And maybe it'll, you know, happen for you. So like, I just always that was like I did debate in high school because it sounded cool and fun. I started writing in college because it sounded cool and fun. I love, you know, game theory. So I became a game theory TA, you know, it's just

I don't know. Yeah, take opportunities as they're presented and do what's fun.

Yash From Momentum (21:15)

Interesting. So this brings us to the last part of our conversation, which is where I ask you the question that my previous guest had asked me. So my last guest was the founder at OneTab .ai. OneTab .ai is a developer productivity platform which brings together chat, CI, CD, documentation, and a whole bunch of other things in one single place. So engineers are building softwares. They are able

work in focus and be significantly more productive. One of the things as a challenge that they face at one tab is that more often than not, their customers are using a couple of different apps. So they're either using GitLab or Slack and a combination of 5 or 6 different products and platforms. And people have just accepted that as a way of life. And so when he is doing a sales pitch, one of the challenges that he has

He has to first try and change people's way of thinking to get them out of thinking that this is the whole truth and this is how the life is going to be. So in your experience, if you ever had to do that, how have you tried to change a prospect's view of life or way of thinking? How do you influence someone who's stuck in their way? How do you go about

Ethan Webb (22:30)

Yeah, yeah, I have a lot of thoughts on this. So the first is that, well, Clayton Christensen writes about this. So he's like a famous person in kind of disruption theory. And he was did a lot of research and basically found that that same problem, like people just, especially companies struggle with novelty, like they don't like the novel solution.

which is kind of counterintuitive. Like in our brain, we really want people to just like accept the new and the better because it's new and better, right? Like if that just makes intuitive sense, but like there's something in our like monkey lizard brain that does not want to do that. And so yeah, you're right. It's something that startups fight all the time. I would say, and this is something we kind of struggled with as well. Like there was a point in MindSmith where we wanted to bring

learning and e -learning more to the manager instead of like the learning department, which is a much bigger like paradigm shift for the organization. And we actually pivoted away from that because of that problem. So I think there's a point where like, like it's just not worth it. Like you're not going to change people's minds and you're going to be fighting that all the time. And like, you have to make that decision of like,

Is it worth trying to change the entire paradigm of an organization to like get in and do it? But I will say usually if you can change the paradigm of the organization, your product is very sticky. Like if you sell someone on something that's like a totally new process that they haven't done before, then like you've gotten really deep into the sales cycles and you kind of force them to buy into your ideology that you created.

So it's like being a cult leader where it's like, if you can get them, you really get them. And so there is a lot of value there in like building a startup that does like change people's paradigm. As far as like how to do it, I don't know. My guess, and I've talked to some other founders who are much more on the end of what you're describing, it's just really intense onboarding and a very hands -on sales cycle. Like you have to

Yash From Momentum (24:13)

Get

Ethan Webb (24:32)

like talking to your customers all the time and reminding them of why they're using your tool and like, you know, like talking to them about their workflow and how like your use case can help their workflow. Like there's just a lot of onboarding. You basically have to be like a D2C brand where it's like you are constantly emailing them and, you know, checking in and all this stuff.

My guess is just a really hands -on sales cycle would be the best option for overcoming something like that. But it's hard. mean, like we've really leaned into, I wouldn't say really, we've thought about, and we've kind of built around the assumption that we should follow people's existing workflows. And then if we want to change their workflow, so what we're doing is like tools within their workflow to help them go faster. And

We're trying not to be the like, we're going to change everything within your organization. And we're going to like, this is a totally new thing and forget everything you ever knew about instructional design. And I think adoption has been easier and faster that way, but I don't know. It's just like, there are pros and cons of both. Like it's easier to turn because it's just like their existing workflow. It's not something new. So I don't know.

Yash From Momentum (25:49)

Yeah, so this reminds me of one of the other founders that we had on the show. He runs a webinar platform for organizations and helps small and medium businesses run webinars as a revenue generating channel. And so more often than not, he would come across a small business where they'd say, we never thought of webinars as a revenue generating channel.

And so he would go in and make sure that from the day that they are, if they are open to the idea, he would essentially become the show runner for their first webinar. He will set up the ads, the registration form, the landing page, know, set up the platform and then the email campaigns and all of that. And then sort of showcase them that, hey, this is the value that can be generated. And so you continue

do it, right? And so, which is extremely hands -on because if a mid -market company has never done a webinar, there's just a lot of friction in getting them to do it for the first time. But if you get them to do it for the first time and if they start to see results, then it's what you said, right? So then they are with you for a long, time. So with that, I think that brings us to the end of the conversation because we already have your question.

Would you like to add some more qualifiers to that question that you have?

Ethan Webb (27:03)

I don't think so. No, I'm just, that's where we're at right now is we're trying to hire a salesperson and I don't know how to do it. And it'll be trial and error and like, we're going to have to make a decision and it'll be a fun ride. But yeah, do you, is your first hire a strategic expensive hire or are they a cheap scaling like sales hire?

Yash From Momentum (27:09)

Yeah.

sort of patchwork, who's going to try to make things work. So less predictable, but costs significantly less as well. Interesting. So that's the question that I will ask. And so thank you, Ethan, for joining us today. And thank you, everyone who's been watching or listening to this episode on Spotify or YouTube or Amazon Music. You will be able to find the link to MindSmith in the description. If you are an organization who's looking to build

learning content for your team or a school or a university or a coach or a consultant as well. I'd strongly encourage you to check out Mindsplit. They've built great gen AI tools to help you create those pieces of learning content within your organization or the setup that you have. Thank you everyone for joining in. Until next time.