Jay Tokosch spends $1.6M of his own money to build an EdTech MVP that streamlines digital education materials to students’ smartphones and monitors engagement
12 early adopter schools have enrolled NoteAffect across 32 classes with 10-60 students as of May 2020
Due to narrow education sales window, Tokosch is focusing on non-educational analogs for governments and large enterprises
NoteAffect is Jay Tokosch’s seventh company. His previous exit with CoreApps, an ecosystem of event apps for trade shows and conferences generating $6.8 million in annual recurring revenue, allowed Tokosch to “sit down at the beach and play golf” for a while.
But the retreat didn’t last long, and Tokosch is once again making a comeback into the startup scene. This time, while still a sound business model, his venture is also motivated by a sense of purpose. Our host Nathan Latka sat down with the philanthropic serial-entrepreneur to figure out just how rigid the business side of his personal quest is.
Tokosch’s 7th Infancy Stage Startup to Transform Education
The way NoteAffect is trying to make a difference is by increasing student retention and student engagement in educational institutions. “Most students learn by being engaged in the classroom,” Tokosch says, and NoteAffect entices students to learn by broadcasting digital learning materials to the most engaging item students have: their smartphones.
PowerPoint, web presentations, smartboard materials and all other digitalizable content is broadcasted to the student’s smartphone or laptop real-time, where they can take notes—directly in their local copy of the material. In addition to that, NoteAffect equips teachers with live polling and live Q&A functionality to foster interaction.
Another curious feature is lecture recording. NoteAffect records digital learning materials (the presentations, the smartboards) and the lecture audio separately, and then connects them into a harmonious lecture experience. After the lecture, the teachers can see robust analytics of their students’ engagement levels—they can clearly see which parts of the lectures “snooze” their students and which parts are the most engaging.
12 Schools Pay NoteAffect $5 Per Student, About 960 Students Total
NoteAffect’s sales teams are targeting directly the highest-level decision makers within educational institutions. The price, Tokosch says, is extremely friendly: whether it’s an Ivy League university or your local high school, they’ll pay $5 to $10 per student per semester. The annual contract values will depend on the school’s organizational model, but he does confirm that $6,000 per semester is a good estimate of what the startup can expect in revenue.
To grow his company, Tokosch is “definitely” looking at higher education institutions. In particular, he is looking at universities with Open Education Resources (OERs.)
Rice University, for example, has a vast library of free educational resources. NoteAffect can help Rice measure the participation, absorption and engagement of their students when interacting with those digital resources. This allows the University to realize where exactly do they lose their students, which enables them to go back to the problematic material and make it more “readable.” Via NoteAffect, the University can later repurpose that content.
Tokosch Spends $1.6M of His Own Money to Build MVP, Spends $1.55M Yearly Budget By May
NoteAffect was launched in the end of 2018, and stayed completely bootstrapped up to May 2020. Tokosch used $1.6 million of his CoreApps sale cash to fund the NoteAffect MVP alone, but he doesn’t take pride in the fact—instead, he is actively looking for an investment partner.
He’s doing this mainly for the PR stamp: “it’s one thing to say ‘hey, I put my own money into it,’ it’s another thing when somebody says ‘I believe enough in the product that I put money into it,’” the CEO ponders. For that reason, the initial amount he’s looking to raise is about $1 million in Q1 of 2021.
As of May 2020, 12 schools are using NoteAffect for their 32 classes. The software concept is still new, and even the early adopters tend to enroll their students on NoteAffect gradually—one class at a time. The classes themselves range from 10 to 60 students.
NoteAffect is still in its infancy stages, doing about $30,000 of revenue annually. The biggest expansion challenge—besides the fact that it’s a blue ocean product—is matching the short sales window of educational institutions, which is usually in July.
NoteAffect CEO Expects Salesmen to Close Half as Many Sales as He Can, Builds MVP Based on Trade Show Feedback
10 team members are currently working on making NoteAffect the next big EdTech. Of those, 7 are developing the actual product and 2 are making the sales. At this stage of the startup, it’s difficult to give your salespeople a quota, Tokosch says, so instead he just measures them by monitoring how many calls they make and how many product demos they perform.
To benchmark his salespeople, the CEO ran a few sales cycles himself first. “If I’m able to do, say, 10 demos a month, I’m not always gonna expect the salesperson to [match that,]” Tokosch explains his rationale. “You know, I live and breathe this stuff, the salesperson may not necessarily be able to do 10 demos a month. So I’m gonna cut that back by 50% and say ‘listen, I need you to be doing 5 demos a month.’”
Back in 2018, you could find lots of sponsored articles and ads in the leading education trade journals—Tokosch spent $60,000 to test whether those placements would generate tangible returns.
NoteAffect’s futuristic vision of one of the oldest industries didn’t catch on in trade journals, but the CEO did find tangible success in trade shows. From the end of 2018 on, if you’re an educator, chances are you’d meet Tokosch and the team at one of the educational trade shows with a pilot demo in hand, ready for you to play with. The feedback received during these conferences, Tokosch says, was instrumental in sharpening up the product and building a sell-able MVP.
NoteAffect Burning Around $75,000 Per Month With Less Than $5,000 Monthly Revenue
While their feedback was invaluable, teachers and mid-level educators turned out to be less-than-great “recommenders,” or people who would convince the actual decision makers to consider NoteAffect. So what Tokosch did was switch his focus to a more of a “matchmaking role,” connecting with university buyers and school superintendents directly.
With less than $5,000 in monthly revenue, Tokosch is currently burning between $50,000 and $100,000 of his own money per month to foster growth. “I hit my budget for this year just last week,” Tokosch laughs. “The budget was $1.55 million, but I’m gonna be good.”
Nathan Latka’s 5 Questions With NoteAffect Founder and CEO Jay Tokosch
- Favorite business book? “Rework by David Heinemeier Hansson.”
- Is there a CEO Jay is following or studying? “The CEO of Docusign.”
- Favorite online tool to build NoteAffect? “Hubspot.”
- How many hours of sleep does Jay get? Married, single, kids? Age? “I try to get 8. Married, 3 kids. I’m 58.”
- What does Jay wish his 20 year old self knew? “I wish I knew to be more confident and drive with what I think I can do.”
2020: 0 (bootstrapped, interview)
2021: $1M (looking to raise for VC stamp in Q1, interview)
2018: 0 (first demos in late 2018 trade shows, interview)
2019: $30,000 (interview)
2018: 0 (first demos in late 2018 trade shows, interview)