Teachable Employee to Circle CEO/Co-Founder— Sid Yadav's remarkable story

I was actually on the founding team of teachable to do what I want to do having to leave the company for about 3 months I did nothing you guys decide you want to start this other company and your biggest investor at that time are the people from teachable at this point he had basically invested 90% of his liquid uh Networth so that's kind of how much he believed in me uh it's always a delight and pleasure for me to speak to CEOs because they get to see things from a very different level and it's even better when they start out at the very early stages of a company so they can see all the different growth stages and so that's why I'm super excited to be speaking to Sid he's the co-founder and CEO of circle something that we use full disclosure big fan of you know we use both teachable and there's some history there and circle and we've seen it go through some growing pains and it's starting to get into a rhythm where I think it's it's it's actually very usable now uh so I said for people who don't know who you are can you please introduce yourself give us a little background of your story and then we can go from there yeah first off thank you so much Chris for for having me on the show I mean uh my co-founder and I talk about you guys using Circle when I always like Chris is the dream customer so if we can make Chris happy um I know we're building a great product so um love how everything kind of come is coming back full circle uh so yeah my name is sidya I'm the co-founder and CE of circle we're an all-in-one Community platform for creators and Brands um started in 2019 now a team of think this month we're going to be 140 wow um yeah yeah it's been a it's been a crazy few years uh but it it it really feels like we're we're just getting started yeah and so here's the interesting thing so we can rewind the tape before I get into like what you're doing now what you're seeing is we're we're both have connection to teachable like teachable is the the platform we use to host our courses and we love it we just did an event with uh some of the team from teachable and you you know the funny thing is it never occurred to me this is how smart I am I was taping a TV show and they're like this is a teachable moment I'm like wait a minute is that a plug and I never realized teachable is used in that way I'm like what a dummy and I I mentioned it to Olivia and she goes yeah duh where have you been but it was just kind of neat for me to see like when a name can be used like that and so integrated into the conversation is super cool so the question I have for you is this is if I got my story right you guys decide you want to start this other company and your biggest investor at that time is are the people from teachable right is did I get that part right yeah not only that so I was actually on the founding team of teachable um so I was a second engineer uh and first designer at teachable yes um as was my uh uh one of my co-founders was uh uh teachables who actually went on to be uh teachables VP of growth and marketing so you know we saw that Journey actually fairly up close and it your story just made made me think of uh the the moment where actually so when I joined teachable we're not called teachable we're we're called Fedora back then okay terrible name we all hated the name including enor the founder and CEO and my boss and we were like hey this name needs a name change and we went through you know these exercises we would do to come up with the name teachable was always my favorite name and then people point out that a teachable moment is actually kind of negative like you know that's like a you know you you're you're being pointed out something that um that you didn't know before and it it has a somewhat negative connotation and I always looked at was like well that's exactly the point because post the teachable moment you're now enlightened you now have a new insight and um yeah so we had big debates about that actually and uh uh in hindsight just very glad we um we came up with that name yeah well I've you know this is kind of interesting about perspective and lenses because I'm an instructor a teacher I've been doing this professionally for 15 plus years I'm also I run my company I I believe the position of a CEO is one of a teacher and we can get into the debate of that if you wish but when we look at a bad situation happening we lost a client our servers crashed there was a security patch that we didn't figure out and so we're just really in a negative State then we ask ourselves what is the teachable moment how do we turn This Disaster into a powerful lesson and one of the things I I love to share with people is failure is the tuition you pay for Success like a lot of us have success and we're never quite sure what we did to reach this moment sometimes we think it's our talent luck timing all these kinds of things but when we fail and we learn from that it's pretty clear we know at least one way it doesn't work and that way doesn't work so I always looked at a teachable moment as how you pull Victory from the jaws of defeat so I'm glad the world is glad that you change it from an A awful name Fedora to teachable yeah yeah I actually do not know if I'd be talking to you right now if we'd uh stuck with the name Fedora but uh no that is so true by the way and that's kind of how I look look back at my journey at teachable so I was at the company for five years I was the VP of product um you know first designer first engineer um and and basically everything that I feel like we're getting right at Circle today is likely as a result of something we failed at um and had to learn from the the teachable journey so my co-founder and I joked that we made pretty much mistake that there is to be made um you know as Founders as product people as designers Engineers Etc and so a lot of our life today you know where we celebrate our victories or when we appreciate certain things that we got right it's as a result of having done it wrong and had and having had maybe thousands of those those teachable moments while at teachable so there you go you see like how many times we're using teachable right now this is awesome okay yeah starting sound like a teachable podcast yeah no that's wonderful and there's a lot of synergy between the two um okay everybody has a moment like this I think you're working at a company things are going well you're playing a significant role you're you're making a lot of progress you're learning you're growing at some point it comes an opportunity or a frustration or something that you're like you know this is your company you get to do it your way but we have other ideas what was that point for you guys to say like you know what we think there's this community driven thing that we can do tell take me to that point in which it's like it's become clear to you you must leave and tell me why and then tell me how you leave such that you can not create bad feelings yeah um yeah this was a big turning point in my life actually so just taking everyone back to early 2019 so I'm at teachable I'm five years in uh VP product business is amazing um you know we had uh and table I think continues to have incredible product Market fit um and what I realize is uh you know I'm actually a two-time immigrant I actually immigrated to the US uh from New Zealand with the whole intention of starting my own company and uh becoming an entrepreneur um is back when I was 21 uh and I just realized that you know if I was to look at my work at teachable very proud of it um you know having become an executive having grown the company but um just personally speaking I felt like starting a company was in my DNA and I hadn't done that yet I hadn't done that to the scale of um kind of what my intentions were of course I had many different like projects and apps and I even had a Blog at one point um so that was kind of one driver the other driver was um I was actually in love with uh the the customers that we had a teachable kind of customers that are very much like you um and what I found was you know they're not the typical sort of it's not a consumer startup so you're not trying to like you know limic hijack millions of people to uh uh to make a bunch of money it's not a Enterprise startup so you're not in these like boring you know sales demos and um super long sales Cycles um you're actually helping people build their own business that's ultimately what it comes down to and the frame that we had at teachable was very much around the education frame right hey let's help people build courses build their own course business about five years in my co- I realize that there's actually another frame which is education a course is actually a subset of a much bigger thing which is really about community and engagement right and so if you if you change the the lens a little bit what you realize is uh as a Creator you really go through kind of four phases phase one you're starting to build your audience that's when you're building your email list your newsletter um you know maybe you're getting big on Tik Tok Instagram YouTube uh Facebook two is you're starting to engage that audience so that's when you may start a community or build a course um or even write a book or start a newsletter that you do you know twice a week and your audience really gets to know know you and know a lot about you through that phase three is your monetizing so you're turning aspects of what you've gotone right so far and by the way at this point you may be doing coaching Consulting Etc turning that into business and then phase four scale so you're you're kind of picking the the very ious product lines the various initiatives that you want to um scale up and maybe you've tried a whole bunch of things and some of those haven't worked and you're kind of letting go so when I thought about that Journey at teachable I realized that courses always felt to me like there were one key aspect of what engagement could look like um and still is that way but there's a larger opportunity around what is possible with communities with memberships uh with coaching with Consulting Etc okay so it's driven by a couple different things number one your dream to start and found your own company I get that part and you're seeing that courses are cool but maybe that's a smaller part to a bigger piece of the puzzle and so you guys are thinking you know what community engagement memberships we we think we can develop a better mouse trap for the education Market the Creator economy right so you guys have to desire so tell me how you guys get into this okay we're going to do this we're leaving the company job security everything's great and how do you do that in a way that gets your previous employer founder teachable to say you know what we want we believe in your vision too so we want to invest in your company tell me how that went down yeah um this was a nerve-wracking conversation I bet right because um you know my my boss founder of teachable on core he's the one who actually set me up for the career path I was just some designer engineer uh this little kid from uh New Zealand um who he kind of made a bet on promoted me to uh VP product kind of three years in um and I went on to kind of build out the product team High PMs and um go through that motion and so this is a person who's actually trusted me to uh be on that like on that Journey on that mission um and hopefully not just for five years but but for a longer period of time so um I think the thing the thought process that I went through was you know what would Encore do so Encore himself as a uh entrepreneur a founder and I find that Founders typically have a bit of a I don't I don't know if you'd call it like a rebellious streak or something that makes them go independent right and I always felt like I had that um but at teachable I was you know you're an employee right I mean no matter how early you are to the game and I was pretty early at teachable you're still looked at and and will feel like you're an employee um and more importantly like you're not owning um uh a meaningful stake in the business such that you shouldn't be an employee so you know you're not you're not being rewarded um as a Founder would so um the thought I had was I should just have a direct conversation with him without telling him I'm leaving the company without you know trying to scare him and say hey here's where I am in my stage of life which is I moved to the US from New Zealand to become an entrepreneur I you've enabled so much of that um through the Journey I've had there's so much that I've learned from you and from The Experience Etc I feel like I'm now at the next leg of that Journey um and really to to do what I want to do the next step involves unfortunately having to leave leave the company with that said what I would love to do is keep you as a mentor friend coach adviser for life um because you know whenever we interact whenever I get to learn from you there's just so much that I think is kind of mutually beneficial um and hey maybe someday and by the way this is not a time when I had the idea for Circle so that came much later but maybe someday you may go on to invest in the company that I start and there's nothing I would love more than to to have your uh kind of Buy in and belief and you know skin in the game Etc and uh to my kind of surprise because I kind of expected that perhaps not to go so well uh because you're ultimately telling someone um in a very uh and you're in a leadership role and you're telling your boss who's the CEO of the company that you're not going to be here um in the next let's say three to six months um but to his credit um I think he took it as well as anyone in his uh situation could have and we we started to chart out the the exit path and I was also one other aspect of this is I offered to stay for as long as he needed me uh to help for a smooth transition so you know that that made sure that his life wasn't going to get um harder as a result of me wanting to to take the step and before I do my follow-up question and summarize is it public knowledge I think you've disclosed how much they invest and what can you share that so that people understand what's going on here yeah so uh you know circles raised uh over 30 million dollar to date uh our first preed round um so the first ever round we raised was early 2020 that was a $1.7 million preed round Encore uh invested about uh one5 of that from his personal bank account before teachable was sold uh to company called hotmart for about quarter of a billion dollars and later I learned that um at this point he had basically invested 90% of his liquid uh net worth into Circle um and so that's kind of how much he believed in he didn't tell me that and I probably would have tried to uh talk him out of that um at the time but yeah it it it all kind of it'll work out for us yes I'm trying to do the math it's not quite $400,000 it's probably 350k that he's invested in your company basically draining his liquid assets so that he can invest in this and I want to point out to our our our community here a couple different things that you've done so well first of all beautiful conversation between the two of you and the way that you handled it and the way that he responded to it is how we think this should ideally go for every company and is a great sign of leadership in friendship in that he goes on to say yes I will be your mentor and your friend and I will make a sizable investment in your Venture and I believe in you so much and the way that you handled this is this because there's a lot of uh people regardless of your age kind of immaturity that comes into this thing where we feel like we've put in our time they owe us something we're going to go away and we're like screw you I'm doing my thing but the way you ended it and the way that you said it's like I'm thinking about this you've actually groomed me this entire time I was kind of like CEO in training because second engineer and and you're hiring and managing people he's allowing you to go through all the process of leadership building and then you can inherit those skills like hey I came here as an engineer and designer but actually I have the chops to be a CEO because this is essentially what I'm doing maybe not by title but this is kind of what I'm doing and you're getting your reps in so he's very generous in seeing talent in you and assigning responsibilities and you in return say hey I'm thinking about this I don't have an exact timeline I want to let you know well in advance because I'm sure when I leave you'll have to replace me with somebody but I'm willing to stay here as long as I need to so that this doesn't become a burden to you and in in gratitude I would love to continue this relationship it's not the end of one it's the beginning of a new one and you did it in such an open way I don't know the exact dialogue but but the way you described it sounded beautiful you nailed it and actually um to to tell you some some of the postcript of that specific day obviously enor is not very happy after that conversation and not happy in the sense that you know he thinks I'm betraying him but sad in the sense that hey I'm not going to we're not going to get to work together um as closely as we did and that evening he says let's grab a drink uh and and there he's able to process uh a lot of the emotions actually with me and I think some of the worst things you could do in in these situations is one you don't want to burn any Bridges right so you don't want to be like hey um you know I put in my five years and I'm done and I'm G to build something much bigger and cooler than teachable you don't want to do that the absolutely worst thing and you don't want also want to over formalize it right so one approach I could have had was to come in and say Here's my uh uh 3-week notice four- we notice uh you know and all all of a sudden the dynamic we had of like Mentor mentee uh friend Etc is is gone and now we're just we speaking to each other as an employer employee kind of dynamic uh because quite honestly Circle would not have started without my experiences at teachable and without Encore backing us and a postcript to this conversation is um you know encor invested at a say six to7 million valuation circle's last valuation as of three months ago uh was a $250 million valuation so it's also been one of if not the best investment that he's made uh today it's beautiful I love it this is one of those like Hollywood fairy tale scripted stories that work out we we usually see the Facebook version It's just lie cheating and pushing people out of companies uh because somebody made it perceive transgression okay now we start the company you're in it you're starting you're running it it's it's it's not not quite bootstrap but you're kind of beginning again you have a million and a half in in in preed Venture Capital you're building your company take me through those early stages because I have my experience on the consumer end and then there's of course the the real story what's happening on the back end now you get to call all the shots which means all the responsibil is on you every decision is between you and your your co-founder and you can make a lot of wrong decisions take me through some of the struggles and and tell me the thinking process and how you work through it yeah um so first it was important for me to take some time off after teachable for for about three months I did nothing uh but sort of just you know actually live life with my wife with my daughter we traveled a bunch um I reconnected with you know long lost friends and so on um and that put me in a mindset where I was open to the next big thing and I didn't know what it was going to be but I was kind of in that mindset of you know true openness true true creativity I could do anything from this point onwards um and it's on me to figure out that path forward now at the same time you know I gave myself three months it wasn't like um you know Sid goes on a holiday forever it was like I have three months to kind of reenergize a bit and then I'm going to get working on my on my next thing so a couple things happened one after those three months I started uh Consulting uh about three days a week uh with one of my uh kind of old friends uh uh his name is sahil linga uh he's a CE of gumroad and cool thing about gumroad is you know he hires people who could do two days a week three days a week as a designer engineer you get to build stuff um and pays you pretty well so I was doing that that made sure that there were there was cash flow in my bank account you know teachable hand exited I have a wife I have a daughter we're living in Brooklyn um so this is important to me so that bought sort of personal Runway to work on my own idea two days a week second thing I did did was to um kind of establish the founding team which I kind of had an inkling um while I was at teachable but was then formalized so you know I have two co-founders one of them is uh his name is andrewson he also started at teachable about when I did he was teachable VP of growth and marketing we were kind of best friends at teachable um he is sort of if if I'm the technical founder he's a non-technical Founder but you know Marketing sales customer success those are his um skills and he's exceptional at it um and we always joked that we'd try and recruit each other um after we we we'd leave uh teachable so kind of reestablished my connection with him um and got him to at least informally agree to work on ideas with me uh and the other dude um his name is Rudy Santino I think he knows uh Ben burns from uh from your team pretty well um Rudy and I have known each other for for now maybe over 10 years um and I look at him as my product design soulmate so Rudy's a designer Rudy's an engineer so am I um we are able to deconstruct uh products deconstruct businesses uh rebuild we built many many apps together um separately Etc uh and then what's cool about Rudy is he also worked at teachable for a little while he then left teachable and became a sort of contract CTO uh consultant about 30 course creators so while I was at teachable I had the product perspective um as an executive he had The Outsiders executive um in that he actually worked very closely with our customers to help them build their course business and community so three of us had different things to bring to the table for me it was sort of being a designer engineer but also having the kind of business product uh uh backing and uh sort of being that you know that sort of synthesizer of the the creative side of um building a company as well as the the revenue the money side of the company as well as the culture side of the company Rudy with his design product background uh and a very direct C uh connection to a potential customer Andy with his Marketing sales uh uh background and the ability to grow a product uh that had product Market fit so we kind of established a group together now we still didn't have the the the precise idea of for Circle but uh we essentially spent about six months talking through maybe over 10 different ideas that we could be working on um and so what we would do is we'd hop on you every Thursday every Friday and we'd have like a 12-hour Zoom call um and we would just talk about ideas you know fire up figma actually back then there sketch was right before fig uh figma um we would start mocking things up we would hop on with potential customers um so Thiago Forte was one of my friends uh uh from back in the teachable days he would hop on he would help me deconstruct what his day look like looks like what his business looks like and we were just looking for inspiration and a new mission to uh to put ourselves in service too was really the goal um and then what happens over time is certain parameters start getting formed so we realize okay we want to continue to work in the Creator space um you know this is inherently fulfilling to us to build products for uh uh for creators as opposed to your typical consumer or your typical Enterprise B2B company so we want to do that and we want to build a SAS business so it's got to have recurring Revenue so we can make money from day one um because eventually we want to be profitable we want to own our own destiny so these types of constraints start forming um and we talk about Community a lot again thinking about the thing that threads not just courses uh but other as aspects of uh engagement right which is you know as a Creator you're bringing people together um you're enabling them to connect with each other they're kind of connecting with you um and one realization for us is there's all sorts of stuff you can do with that even if you're not trying to directly monetize it so for example if you're figma or if you're web flow if you're Circle you have your own Community as a startup and community in that context is also as important as the context of uh you know Creator building community so Community kind of keeps coming back up over and over again uh eventually we actually get into designing a prototype that's when we you know booked out this bbnb in uh Santa Monica for a week um you know I have a family Rudy has a family so realized we just needed to be in a space together for at least a week where we could just have those 16 to 18 hour days um building uh and that's when we came up with the first prototype for for Circle why did you choose to do this in Santa Monica why not do it somewhere else why Santa Monica of all places honestly it was just very random I think Rudy had spent a few months living in uh LA and Santa Monica in that area um I live in New York I live in uh uh today I live in grap Neck Long Island but back then I live in Brooklyn so we just needed to be like close to a beach somewhere where we can walk for hours and hours um and just have an Airbnb which completely kind of I don't know isolates us from the rest of the world so we can just focus and build together and it was one of those places that came to mind I'm imagining like a scene from Silicon Valley the TV show on HBO where you guys are laptops maybe energy drinks and just slaming like yeah posted notes let's go is that key detail yes the first thing we did was we went to I think B and we bought ourselves monitors for just that week that we then returned at the end of the week so we we very much wanted that like early startup Vibe of like you got monitors we bought ourselves a whiteboard we wanted that at least for a week uh you know because we actually we collaborated remotely otherwise Rudy Liv lives in Portugal um but it was important for us to have that like founding moment together in in one spot so describe to people why it's important for that moment where you're actually sharing physical space as much as we're all doing remote work in different time zones beauty of being a digital Nomad or something you could live wherever you want what what do you think is so special about people coming together for for a brief but intense period of time what kind of magic can happen only in in person that just seems to be lost when we're doing Zoom calls yeah and just for context um you know circle is a remote International Company um so we have 140 people spread across uh 30 different countries today so we're like the epitome of like a remote um startup but we still do two to three offsites a year where we bring the whole company together in one place you know we just did one in Italy Thailand Mexico we're about to do one in Turkey um and just going back to now the the initial days of circle uh there's just no way in the world I see us having started Circle if we hadn't had that that weeklong uh founding moment because I think remote to me is amazing for for execution right the ideas have been established the team is there you need to be heads down and you need to build um or support customers or um you know close sales calls Etc so once the team knows what everyone is doing once you've established um you know the org chart and relations Etc um I think remote is an amazing way to scale a business scale a company right um one advantage of remote is that you know it forces you to be async so literally half the company um is in a time zone that's not shared with the other half because we're both um you know people in Asia and in um Europe and in North America so we need to communicate with each other um through channels that are not like hopping on a zoom call so it's great for that what remote is not great for um is ideating uh is brainstorming is you know you have a completely blank slate you want to be in a room together you want to talk about every potential idea possible you don't want a end to the meeting right then that that meeting could go on forever maybe you you take a nice walk just take a little break maybe you come back you know you start screen sharing and looking through competitors you want that chaos that almost sort of organized intentional chaos to seed different paths forward and then to have the ability to say okay out of every everything we've looked at and talked about today what are like the next three steps what are the things that we do from here um and I think we did a lot of that and at least that that first week together I'm I'm there with you I think there is something um magical that technology hasn't been able to replace yet when you're in the same room you can see people you can see how they react so if they get excited about an idea those little micro expressions or body language tells you a lot so that you're not dealing with with the like posted stamp size feedback like what are they even is the video static are they even still here and you just get the energy right so like when we're in the same room we feel it and I just finished doing a a two-day uh onsite here where where my managers came in we had to like power through some tough things and I think we also get a better sense of who we are as people versus just we're here for a zoom call we're going to be gone in a second so there's something magical there and I love that okay you guys are doing Circle and I remember in the early days it must be Rudy who's talking to Ben he's like hey there's this new company they want to they think of us as their ideal customer they're willing to do whatever we can to to help build the right platform in that moment in time I think we're still on Facebook and Facebook is great for lots of things it's horrible for other things one it's you bous everybody knows how to use it it's super fast it understands algorithms so the things that are most engaged pop up at the top so very easy to kind of keep in touch what's horrible is it's a distraction Factory because you get on it and your intention is to read the thread or whatever but then you're pulled like somebody's cat video or somebody's mom had a birthday and you're like what no no Stay Focus stay focused then there's ads and then there's no way to organize topics and threads and so you guys came along just the right time we're like this is painful we're kind of cluing Parts together to make this work oh my gosh this is super difficult and then to in full transparency I love The Arc in which you've been on which was initially jumping on made a lot of sense we we overdid it we created too many threads and people like where do I start it's overwhelming the Simplicity of Facebook you give us the tools and we go crazy but one of the the challenges was speed it made me appreciate the massive amount of engineering brain power that goes into creating a Facebook with the servers that you know that that infinite scroll you could literally scroll forever and it never gets stuck and I don't know what kind of caching and Technologies are be used here but you can scroll forever and here we are in circle like uhuh wait Circle and it was tough and checking messages like one 1,000 too but now it's speedy and I was telling Ben if they don't fix this we have to leave because I can't even respond to messages talk to me a little bit about how you guys overcame those things and how you were able to prioritize the things that mattered that the have to have and the nice to have and where you drew that line yeah I mean all I can say is like I think we had some incredibly patient customers in more than ways than one in in that first year like customers like yourself and um Thiago and others who gave us a chance right so yeah we know it's slow but hopefully they'll work on it hopefully they'll get better right so first off that trust was key but also for us um you know you kind of have to um balance two things right so one is you're you're you're expanding the Paradigm of Facebook so Facebook is one thing but to your to your point what it's lacking is it's lacking context right right um so when you want to establish a direct connection with your audience with your customer with your member as a business what's cool about circle is you get that you get that mind share so when they're on the future membership area they're not thinking about all the other things they could be doing with their time they're thinking about you know how do I get the most out of my membership um here right and what Facebook has and going against it is the distractions right just One Click Change Tab and and all of a sudden they're watching cat videos so you know on the one hand we were kind of expanding and extending the Paradigm which involves experimentation you know trying out different things maybe then backtracking un certain ideas that you had um and then on the other hand customers still expect and should very rightly so the Polish the speed the reliability um and when you're in year one of building a startup you're learning the hard way so what you're talking about with the infinite scroll with the load times with cashing all of that stuff we had to learn and get better at the hard way because the reality was you know a Chris may give us a chance for a week a couple weeks but if we just if we stayed that way and you weren't looking at or observing the the progress that the product was making you would have at some point given up or asked Ben to move platforms and um I think a lot of that honestly just involved building out a real team and going from generalists like Rudy and me building the product writing the code doing the mockups to specialists in every area so today we have um I think 45 or so Engineers Rudy has a design team of about 10 folks and the best thing possible for a Founder CEO is that they're better than you in so many ways um so like if you're still the one responsible for like I don't know challenges like cashing or reliability in like year four year five you built it the wrong way you want people who are like 10x better than you in fact you want teams of people who are like that and you want to break up the problem so that you know you have groups of people groups of teams kind of obsessed about certain key problem areas all working together now you're still guiding them and you're still you know I still give them feedback about all of the various things that I that I don't like about Circle that I think we could be better at but thankfully we have people who are sort of specialists in Industry obsessing about and owning these problems and then it's on me to kind of trust that they deliver and you know trust but but monitor but really it's about kind of giving away a lot of the responsibilities to to folks who are better than you uh for for people who don't quite fully understand this myself included there's this there's this talk about Venture Capital seed fund and and then pre what there's so many different terms that you guys will use and you're you're you need this money because you have to build out the engineering team the design team and and onboarding clients while you're building the product so there's not a ton of Revenue coming in initially but the heavy investment at some point you reach a a point of stasis where you don't need to burn Venture Capital where it's self sustaining and then it gets into a realm of profitability where you're generating orders of magnitude more than you're burning where you are at in that and where do you plan to be yeah um so I I'll give you our numbers actually you know I like to be public with with numbers so for year one we launched um so we built the product in a private beta throughout 2020 we launched in September uh we had about I think say $500,000 a year in Revenue in September of 2020 having by the way given you know over a thousand demos each as Founders to the initial cohort of uh customer the private beta and having individually made those sales so you couldn't sign up to Circle and start a community you had to be guided first so we went from uh about half a million dollars in ARR to a million uh uh within three months 2020 so we end 2020 we're at a million in AR um is also when we close our first or actually our second funding round uh which is seed round so that was a $4 million round at a $40 million valuation that's 2020 and ending at million AR uh 2021 we grow from1 million to $4 million in AR um it's a 4X year um by the way 2021 obviously not great for the world in terms of covid and other things uh but it turned out people are spending a lot of time online um especially that year you know starting virtual communities and taking courses it was a great year for for actually for the business that we're in uh so that's 2021 22 we go from 4 to8 uh and then 23 last year we went from $8 to $16 million in AR um and this year you know we want to double again so roughly that sort of 2x year-over-year trajectory at this point onwards now from a funding standpoint we raised as I mentioned over $30 million um and the last big funding round was in 2021 was back in the good good old uh zero interest rate so I'd say we got very fortunate with some some very very generous valuations uh but thankfully we've been able to use that to get to what I think should be the ultimate goal for any entrepreneur which is really to be profitable to be cash flow positive uh to own your own destiny and at this point it looks like we're about roughly 12 to 14 months away from it um so you know I've set up this one big goal for the company which is we want to be profitable by mid 2025 that's the one goal which doesn't change there's a lot of other moving goal post but that one goal doesn't change right now we're tracking to be profitable by by March of next year some people are going to have a hard time fathoming that you're going to do $32 million just a few years out but more remarkable than that is not yet fully uh profitable or cash flow positive where's all the money going help us understand that yeah um so honestly most most of what we spend on I think it's that way for for most companies startups that are scaling like us are the people right and so you have I look at it so there's two types of cost there's one type of cost which is a pure investment like you don't have to invest in those people you choose to and for me R&D is largely that right so if Circle wants to expand into a new business line if you want to build live streaming or events or payments or courses um well that's going to require more Engineers because we don't want to get the the people building your feed and scaling that and say hey you're now building courses you're now building YZ um and so you know we're spinning up new teams of people um as a product line expands and that's pure R&D um and then the other aspect of the business is um your sort of non-technical orgs right so customer support sales customer success and a lot of that is really a function of other numbers that are not entirely in your control so for example you know the amount of leads that we get on the marketing side every day yes that number is something we can influence over large course of time but we don't you know we don't plan for those leads to show up they show up and now a certain percent of them need a sales call need a demo call and we know that we can convert some of those folks into customers if we have a uh a sales rep and so you know we have models all sorts of models actually um that try to predict that inbound that that try to predict the close rates capacity Etc um as it is with customer support that that's more a function of number of support tickets and how that Maps your customer growth and with customer success which is really you know how many of these customers or rather what percent of your customers do do you want to give like the best white glove experience to um where it's not just about helping them with their pain points like support tickets but actually it's about helping their businesses grow and so we have team of folks doing that and so um for for me as a Founder CEO it's about deciding which areas of the business to invest in to grow which areas to pause and one key Tool uh one key uh uh thing that I've discovered in the last six months of aiming to be profitable is is kind of the power of pausing certain initiatives right because there's all this momentum people want to work on everything um and you don't always get to be in these conversations where stuff gets worked on but you do get to say at times hey you know what we've done enough in this one area um we're going to pause for a little bit so that team can maybe refocus on certain certain other things um because if we just kept building we'd have like four or five people just doing that and then we would new need new people for other things so it's almost this like this art around investing in certain aspects of the product investing in growth uh and you know what is that ideal composition that values both the customer so the product improves experience improves and the business which is you're you're you're getting to grow and make money uh from all of those investments in terms of like the the servers uh that you have to use how much of that percentage wise in terms of your operating Capital so I heard staff that are on the product team then there's a sales and marketing team and there's customer success which includes service so it's heavy people it's labor intensive uh but what about just the technical stuff like servers that you have to purchase or rent or lease what percentage does that make up yeah so that's about 10% of our Revenue so if you were to look at our cogs as a composition of servers infrastructure and customer support um you know we're I think our gross profit margin right now is about 80% uh and so the the 20% that does get spent you know it's kind of split across servers infrastructure it's like non-optional like you need to keep the site up and super reliable at all times uh and you need to support the the customers um who do have issues or who who do need that help um and that's almost unavoidable now the great thing about a software business and actually great thing about the internet is that a 80% grow gross margin is like amazing because if you look at most other Industries you know you'd be lucky to have like a 50 to 60% gross margin and that allows us to scale um you know profitably over time uh because we're not we're not losing most of the dollar that we that we earn yeah what else is contributing to the cost of goods sold uh besides the service so people understand cost of goods sold is it scales with the number of customers that you have overhead doesn't necessarily but cost of good Souls like what does it cost you to service one new customer and so you're saying for every new customer we spend 10% just on the servers alone because it's not negotiable you need the server space needs to be fast it needs to be reliable redundant what other things contribute to cost of good sold um you know for for us it's really just those two it's the infrastructure and it's the support but I'll say that infrastructure you know we can simplify it and say it's about the servers but when when you look at the infrastructure bill there's like you know 20 different costs associated with that right so Circle sends over 100 million emails uh a month um for just transactional notifications so now there's an email service you know we have a live streams feature where people can go live on Circle and that has its cost so you break that down into just various components um of you know quote unquote keeping the site up and of course when you're a customer of circle you know you don't look at that and say oh it's really this one service that went down for you it's about everything being reliable or not and and for us it's a matter of these things being kind of table Stakes yeah this is fantastic okay um I mean it's it is the dream of most corporations to spend 10% as a cost of goods sold kind of all in this is fantastic there was a couple other things that you mentioned I want to be sensitive to people who aren't entrepreneurs who aren't CEOs you said ARR that stands for annual recurring revenue and you're just looking at that number like what are you going to be able to do reliably predict that you'll do next year the idea is to continue to grow you're talking about 2x you mentioned R&D I think everybody knows what that is but just in case there science for research and development so there's the product itself and there's a things that you need to do to continue to serve the unarticulated needs of your customers so that requires you to pay pay attention to what's going on look at Trends and that leads me to the next question which is who do you see as potential or existing competitors to what you do because there's a lot of platforms that service content creators and Educators yeah where do I where do I start with this question yeah we we have a lot of U I'd say potential competitors or somewhat competitors we have very few direct ones actually so you know I would say actually our two biggest competitors from the perspective of we either lose people to them or people may not use Circle because they're quotequote pleased enough with them or actually just Facebook group and slack right because many people are like you which is you know hey I've got a Facebook group why do I need to move them off somewhere else everyone in the world uses Facebook I'd say actually vast majority of creators are in that head space until they start to scale up a community experience within Facebook and you know run into all the various points and some may even struggle with engagement because yeah you are in Facebook which has over a billion daus but you're also competing with the rest of the world um and so for us we actually spent a lot of time just thinking about that which is you know at the top level you have people who are maybe happy enough or pleased enough with slack and Facebook groups and for that reason they may not be giving circle circle a shot or maybe they give Circle a shot and then say you know what I'm just going to go back to Facebook groups it's free um so for us it's really those are the tier one competitors um and then tier two you know we have um other products in the space uh that go kind of more head-to-head you know there's obviously Discord um there's uh mighty networks um there's actually a whole pleather these types of competitors and where we try to differentiate is to say you know we want to be the all-in-one right so um eventually we want the future or the next future to run most of their business not just community on top of circles so that includes courses Events maybe in the future newsletters Consulting and that's our point of differentiation which is yes you're not on Facebook which over a million people use but your entire business is on Circle and that's a different kind of value prop now which is you know you've built this ultimate member experience um that you're um either selling to or offering your your members um and because everything's in one place it's it's easy for your members to engage with various parts of your business for you to upsell them into multiple different types of experiences so may maybe you're logged into community and then you see that you know Chris is running an event hey I'm going to RSVP into that or you know you check the newsletter Tab and you start reading post so it's it's about kind of unifying that experience um and that to me is our ultimate future value prop um you know we're working our way through that and that's also the ultimate Challenge right which is circle of eventually ends up being not just one product but like you know five to six different products that we have to get right I I guess I want you to look into your crystal ball can you share with us whatever you're able to disclose some things that you're very excited about in terms of features you're working on that will be relas sometime in the near future or at least give us a clue tease us a little bit will you yeah um so just going back to what what I just said you know when I look at the all-in-one pie of a Creator business uh like yours um you know I just feel like we're we're maybe like at the halfway mark but there's a lot of stuff that we don't do yet um that I hope we can get into as well as with the stuff that we do you know the other half we want to get right and we want to be the best versions of so um in terms of I think what would make for an exciting teacher actually there's a lot that I could talk about but I don't want to make our Engineers um freak out over this podcast they happen to be listening um what what I will say is the following so I think at the start of the the show I spoke about you know start engage monetize in scale so those are the four steps to the journey of a of a Creator um I really feel like over the last four years we've been very obsessed with the the engage part of that Journey right we assume that people already have an audience before they start Circle um and then we launched uh you know payments a year and a half ago to help them monetize we haven't been as focused on the start and scale aspects of the business so start aspect would be you know are we helping people even build an audience you know why is it that you need to build an audience maybe um in an email list product or newsletter or Tik Tok before starting Circle so can we expand the pie of customers at the the top of the funnel and I I'll just kind of leave it at that and on the scale aspect it's really about you know helping the future futures um stay on Circle right which is we don't want you to have to outgrow us um we want to support you as you guys become you know10 million do business hundred million doll business I I imagine eventually there'll be a billion dollar business um hopefully uh if not on Circle but in the wider world uh a billion dollar Creator business to me seems inevitable and we want to build that ultimate product which people can start with and then scale too uh and yeah there's a lot going on there um which are both sort of weaknesses of circle today a lot of pain points that we want to solve for as well as opportunities because we know that if we stall for them um we're going to be helping a lot more customers start engage monetizing skill okay couple of questions I have for you and feel free to plead the fifth or or be evasive if you wish we're in the political season anyway so nothing would surprise me right I noticed something that Facebook and many of the social platforms do which is they don't give you a chronological feed it's built on engagement and understanding how people react and respond to things is there any desire to do that because there are threads that are created and it's like I got to scroll down to find them and just because it's newer it sits on top doesn't mean it's the best thing to be seen uh so are is that something that you're looking into what can we expect there oh yeah 100% so I think um there are two types of problems people struggle with with circle right so one is a problem of Engagement which is literally the opposite of that which is you know there's crickets in my community yeah um and then for the folks who nail engagement to some extent where there's a lot of activity there's you know posts and comments and threads and there's stuff happening all over the place it's like oh my God this is too much like what should I even be looking at or uh responding to and you know again over the last four years we've really been focused on that the problem of the Crickets and the avoiding that that kind of Silo um you know the the feeling of sort of non vibrancy sort of static feeling experience and to the extent that we've done that for customers like yourself um we are only starting to scratch the surface on solving for basically a smart feed uh which would be kind of version of what you're talking about um showing the best of um and by the way there's also other ways to do that so you know we have a weekly digest that goes out that could be a lot smarter let's say um and one really cool part about working on these challenges right now as opposed to let's say three to four years ago is that AI just keeps getting better and better so when we're now approaching these challenges with the the tech the AI Tech that's enabled to us especially in the last like six months um you know there's a whole new sort of tool belt that we have um to to undertake these challenges so I'll kind of leave it at that but very much kind of hear you on the core core problem and I think there's a lot that we need to be doing here over the next next year okay oh you you kind of already opened the next can of warm for me which is is AI to be able to use a enhance everything uh feed uh summaries uh for calls or uh or or thumbnails one of the features that I really like is when I make a post we know that visuals help to create excitement I don't always have time to figure out what's going on so that your early integration and play to include unsplashed as an ability to just create so here's a quick thing I think that's good I think the next level that is let me just type a few keywords or it intelligently already knows what I've written about here maybe we suggest a few AI generated images click a button boom get it in there and it to to do that so that it's not stock right I I think something like that would be beautiful some other things I think about are I I just curious to to to get your take on this I think we're a fairly unique and demanding um client we have so many weird uh ways that we monetize either through courses uh through just downloadable like PDFs that we can sell but we have coaching communities and we have different payment plans and ways to structure it so one Community it's just pay as you go open enrollment the other one is open specifically during certain windows and you must commit to three months of billing uh because we we know that 90 days is what it takes for you to form a habit we don't want you to dip in be a looky L and then jump out there's not enough time for us to show you that you your life can be transformed that's one of the challenges is that something that you would be that you would consider working on or prioritize so that we can then make this a more seamless thing so it's like different ways of onboarding people different payment plans and so that it's we're removing all the friction for people to sign up yeah absolutely I'll take the the second one first actually so my co-founder rudby calls this connective tissue and a problem we've struggled with from day one is like we don't want to create silos of experiences right but at the same time we want everything to feel connective and cohesive and by the way like the whole reason you would want your entire business on circle is really that right it's to offer both your members an experience that feels cohesive and connected and also for you as a business to have these opportunities to upsell cross promote um have sort of seamless uh transitions from one aspect to your uh business than to the other um and I think that again the last four years have been about having those building blocks in the first place right so was about like building events building payments building courses live streams Etc um now when we do these design sessions you know Rudy and I like to spend at least three to four hours every week just kind of just thinking about the future ideating you know I'm I mean you're Your Design sort of um connoisseur Guru so you know this but you know we like to go pretty far out right so what is circle look like in 2025 26 27 um and what's cool about being a design Le company really feel like you know it's two designers running circle we get to do these thought experiments and and start to see some of the the mockups and the prototypes uh taking shape um I think the more we we do those exercises we discover almost an N squared number of um these types of opportunities around the connective tissue actually Rudy shared me shared with me something uh just just today is that I think he's he did a three-hour session with Ben from your team about this very topic so I'm sure they've gone pretty pretty deep on this but it's definitely kind of the next sort of Frontier of the product which is hey now that we have all of the building blocks how do we both build a cohesive experience ourselves and help our communities provide that to their members yeah I it's something that we talk about a lot in our internal meetings where it's like we want an experience as one username one password yeah okay there's a zoom thing and then there's a slack thing and there's a lot of other things we've got to there's a teachable account versus this and it's just we we we we want to make it Like An Elegant experience you s you call it the connective tissue where somebody can log in with one username and find all the things they've purchased they can chat with their friends they can see what's going on in events and it's all brought together in an elegant way it's the best way I know how to describe it and without getting into like a case of futis where you're just putting the kitchen sink and everything else in to build on the core foundational components and then to integrate parts that make a lot of sense to kind of remove that friction now I want to say this on behalf of everybody who's listening what is what the heck are we even talking about right so I'm going to describe it from the users's perspective because I think that's going to give you the most honest portrayal and then feel free to correct me where I may have misspoke said because I I'm not just having any random CEOs on the channel I if I don't believe in what you're doing if I can't talk about it an honest and effusive way then and I'm not sure it's a good use of either of our time so let me just tell you something okay so everybody who's paying attention here I'm just going to go on a little monologue here okay our mission is to teach and to Leverage The Power of the internet social media to teach as many people in as as low money commitment from our students as possible because we believe in the power of education being transformative to get people out of poverty and the people we want to serve the most are the least likely to afford what we do so we create lots of content for free behind no pay walls then we would go broke and the way that we make a living here at the future is that some people say you know we love you so much we feel so grateful for you that we would love to either give you money just to participate in your communities to go deeper to have greater access or to have more organized materials in courses and that's how the future continues to run then that's a business model we're on so as an educator Creator myself I have to look for technological platforms that allow me to do this in the most elegant way many of you are familiar with the teachables of the world which is course creation they're they're very good at doing that especially if if you have one or two courses but when you have a variety of Educators lots of different curriculum that starts to even break and strain the system and we know this it's like if you enroll in a course and students have work that they'd like to have feedback on or to be able to reach out to you in an office hour or just to get some critique that platform doesn't seem ideally suited for it and this is the beauty of a community-led platform like Circle so you can have courses that you can open and unlock as you wish there is a live chat function which shows you a thread that's chronological it's pretty cool that's a new feature there's obviously messaging you can go go back and forth uh and there's lots of different ways to organize events and posts so that they feel and look like the way that you want versus you must you must uh use the templates in which Facebook or one of these big companies have created for you so there's that sensitivity to the needs of a designer a creative person sometimes you want list view sometimes you want thumbnail view sometimes you want big bold images and sometimes you want and it depends and we love that there is for the most part one one tool one platform that allows to do this it's getting better every day used to be that sending messages was like a pain because it take forever for it's a cycle now it's quick at least it's quick enough for me to use so I'm excited about it again and we see all the smart decisions that you're making so for for the for the this broadcast in this point in time I'm a big fan and I'm saying that I'm not getting paid there's no money being exchanged here if you're an educator and you're trying to figure out how do you make a living doing what you love and you love to teach and help people to create the kind of transformation we're talking about I highly recommend you guys check out Circle wow that was beautiful you've pit Circle I think better than I ever could thank you so much that means a lot well as a used and as a Believer as the song goes I'm a Believer you know uh I I can talk about it and and not feel like I'm I'm I'm being some kind of slick car salesperson I'd love to end our podcast today with a question that allows people who are interested curious from a CEO point of view something that they can do some actions they can take maybe they're inspired maybe there's some lessons here but the way I'd like to frame this is this because you have a unique perspective is if you look back on your life and you could tell your younger self something some key insights and and I want you to literally think about you 10 15 years younger what would what are the two or three things you would say to your younger self to accelerate this process or to make some of the hard decisions much easier yeah wow what a great question I think key thing that that comes to my mind is I I feel like I wasted so much time you know like I think I did a lot of the right things but it really feels like you know the things that ended up mattering the most in my life were the smartest friends that I had the ones that I got along with you know my co-founders Rudy and Andy you know on core my boss C at teachable and when I look back at it there's so much that I was doing that didn't involve either working with them learning from them you know so for example right I would attend a lot of these meetups um when I first moved to New York City and for a while they were fun I was just getting to know the city but eventually I was kind of like hey am I really learning something here when I could be at home kind of building an app or talking to talking to Rudy about building apps and so on I think so one thing that comes to mind is like you know you want to be you want to maximize the amount of time you're spending actually building stuff or talking to your smartest friends about building stuff um as opposed to for example uh like thinking about building while not doing it um and of course there's a balance of that and there's everyone needs inspiration everyone wants to learn right but it has to be applied and it has to be sort of in action uh and without that I think what a lot of Founders face what I faced honestly before circle is that you know I'd get started with something and then I'd get into kind of either learning mode or procrastinating mode and then I'd give up on that thing and then I'd move on to the next thing and I've probably done that countless times before Circle whereas if I look at what really what really made Circle or what really kind of went behind it it was the fact that you know Rudy and I were spent that week in Santa Monica enor was a big believer when I you know slacked him a prototype of the product and offered to wire us that check Andy agreeing to hop on as a co-founder and all of us just really being in sort of build mode as opposed to uh think SL procrastination mode of talking about the ideas without actually doing the so you know if I sum it up I'd say kind of just do the work and maximize the amount of time with your smartest closest friends especially if you see them as close collaborators um because every moment that you're not doing that and that you're spending you know watching cat videos or um trying not to think about work etc um those are just wasted wasted moments you know I'm 31 right now maybe I could have started Circle you know four or five years uh before when I actually did and so I think about all that time that was that was kind of lost not not being in this mode because what I find right now is I am the most fulfilled um so of course running a company with over 100 people is like super challenging of course my days are filled with sort of problems and crises and whatnot but I know for a fact that I'm utilized uh my my brain is itiz to the extent that it can with the hardest most rewarding problems and I haven't had that for for a lot of my life dare I say before I um before I joined teachable so yeah I I just kind of encourage folks to to do the work okay that was excellent well said so there's this thing that all creatives get into whether you're an engineer designer or classically trained artists which is you do a lot of thinking and one of the things that gets in the way if you publishing work and putting your ideas out into the world is this perfectionism that we all kind of fall under or we get into deep research mode we'll call it that and so you're looking for all the ways it can fail versus just finding out if it could succeed and I love the way that you said that you have to make this choice either to take action to build what you want or at least Express the intention of taking that action so that someone else can hear and that way you You're vulnerable enough to put the idea out there for to be tested within the realm of thoughts and communication versus just keeping it locked into yourself so for a lot of you who may not have founder friends like the ones that you were able to to meet even just journaling and Publishing your thoughts is good enough because you're going to get feedback from the world they're going to surprise you they'll get really excited about something you're like that just a little thing or the thing that you think is going to be the winner no one cares about everybody's like yawning so the best way to do that is to share to express and to publish and let the chips fall where they may so that you don't wind up looking back five 10 15 20 years and saying my God I wasted the best years of my life your most productive energized moments physically that you're so capable and now you're coming to that realization fairly late let this be a kind of a wakeup call for some people look at this young man he's 30 years 30 a little bit over 30 years old and he's running a company that's projected to do $32 million with the $250 million valuation his former boss invested 90% of his liquid assets and it seems like they're on a very high trajectory they're going places and he's he's just a baby he's barely 30 years old come on this is fantastic so I don't think you wasted any time at all you're doing great things and I just think it's like the Asian immigrant in you it's just like you can do more why aren't you a billionaire billionaire already actually sure just one thing as you're talking at thought of this so when we when we first built the Prototype of circle um and we raised that precede um I had this inclination to think okay maybe we're going to spend the next two years building Circle and then we'll announce it and then we'll launch it I think you know a lot of entrepreneurs when they're given that kind of Runway because we're looking at the 1.7 mil we're barely paying ourselves anything we're thinking hey we don't have to actually launch this thing until um you know someone like Chris thinks it's like super fast and reliable and all that maybe we shouldn't even talk about it um and then there's a key moment where I just kind of tweeted that you know moving on from teachable um starting a company I didn't even mention Circle uh and it was just a very off-handed tweet this was not an announcement it was just kind of updating mostly kind of friends and uh people I'd known on the internet and that tweet um got way more attention that I ever thought it would uh with people asking me what that what that next big thing was a couple days later we just we put together this very Bare Bones marketing site uh for Circle um to start a weit list um off the back of that tweet and I just tweeted that again not with the intention of announcing my next big thing but just kind of putting it out there that you know I rais this preed and now and now I'm committed to building this that's one of the best decisions I've ever made because that tweet got us I think the first 5,000 uh leads on that weight list who we then spent you know the months of January to October selling and onboarding into the platform now obviously a lot of those customers didn't convert or uh may have just expressed interest in my company but we're not really potential customers but just to share one example of what kind of putting yourself out there can enable um as opposed to kind of bottling up the the creativity bottling you know just making your convincing yourself that you need to have the best version of XYZ to put yourself out there um because really that feedback loop that this creates uh which then honestly energizes you to deliver on the promises that you've shared with the world uh and so I just wanted to share that you know what when you're were saying all this stuff you reminded me of something that guy Kawasaki says there's a famous Bobby mcfarren song don't worry be happy and so don't worry be crappy it's okay to ship a product that has elements of crappiness in it but just don't let it be the forever Perpetual State you have to work the crappiness out and let's just say it did ship with a little bit of crappiness in it but you work through it you can that process yeah it was a little slow was difficult to use but you know eventually you guys you you'll figure it out and for everyone out there who's afraid to put their ideas or the artwork out there you're sitting there trying to eliminate all the parts of crap and you never ship and it's better to ship something with elements of crappiness in it than it is to never ship at all okay I enjoyed our conversation you were super generous and transparent I hope and I'm pretty sure I'm speaking on behalf of our audience thank you very much thank you very much for doing this it's it's always awesome to talk to CEOs who are as forthcoming and transparent as you thank you very much Sid hi my name is Sid yav you are listening to the Future [Music]