John Baker, founder of the on-line learning business Desire2Learn, is seen inside his Kitchener office on May 12, 2010. JENNIFER ROBERTS FOR THE GLOBE AND MAILJENNIFER ROBERTS/The Globe and Mail
THE CHALLENGE
John Baker, CEO of Kitchener-based eLearning company Desire2Learn, started the company while he was student. Although his company grew quickly, Mr. Baker was soon faced with the challenge of building a sales force that would allow him to catch up to larger, more established competitors.
THE BACKGROUND
In 1999, Mr. Baker was in his third year of systems design engineering at the University of Waterloo. One of his course assignments required him to come up with a problem to solve and to create an economically viable solution, not simply to solve an specific problem. The open-ended assignment brought out his entrepreneurial side, and he began searching for problems he could solve.
At the time, Mr. Baker's brother was taking a distance education course that required him to listen to cassette tapes and submit his assignments via fax. Mr. Baker's newfound entrepreneurial inspiration, combined with his brother's distance education experience, got him thinking about ways he could apply web-based technologies to transform education.
That summer, Mr. Baker knocked on the doors of Waterloo professors, asking if they would like to put their course materials online. Five professors agreed and Desire2Learn – whose name came from comments by educators who said that sparking a desire to learn was their number one priority – was born.
At the time, most of the competition was open source (free) and the largest competitor in the space, WebCT, was moving from a free to a paid model.
As he returned to his fourth year of university, Mr. Baker started taking courses such as database programming, law, epistemology of systems thinking, and technical entrepreneurship to round out his education and better prepare him to become an entrepreneur.
In August of 1999, Mr. Baker raised $30,000 from his parents, his friend Bill Trick and cashed in his life savings. After graduating from university, he hired engineers and co-op students to expand product development.
Desire2Learn's first big win came in 2002, when Mr. Baker presented his ideas for combining the best of online and in-class education at an educational conference in Vancouver. At the time, the Vancouver School Board was unhappy with their current provider (WebCT) and had just received a grant to explore alternative Learning Management Solutions. A meeting that afternoon eventually led to winning the sale.
The company's next significant milestone came in 2003, when they caught the attention of the University of Wisconsin-Superior, who was looking for a single solution that could run an entire education system while providing autonomy and control for each individual university or program.
"The challenge was that winning a large customer like the University of Wisconsin, who had a team of 35 people evaluating the solution, forced us to focus on research and development and support, which left us no resources to develop a sales team" says Mr. Baker.
But in spite of doubling it revenue each year between 2003 and 2006, Desire2Learn could not catch up to industry leader Blackboard, who was landing larger, more complex deals.
In 2006, just when Mr. Baker began to build a strong sales team that could compete and win against Blackboard, Blackboard filed a patent lawsuit that could have effectively shut down Desire2Learn.
During this time, most education budgets were being slashed and Mr. Baker knew there was an opportunity to sell his flagship product to a market that was looking to help educators and administrators do more with less. But he also knew he couldn't win the court case and build a sales team simultaneously, so he decided to focus the company's resources on fighting the lawsuit and keeping existing clients happy.
After three years and multiple court decisions, Desire2Learn ultimately won the decision, but it came at the expense of the funds Mr. Baker had set aside to build a sales force.
"After 3.5 years of expensive litigation and multiple court decisions we ultimately won. Now we wanted to return to doing what we do best: build and deliver software and services that helped students improve their grades and helped education institutions increase their graduation rates" says Mr. Baker.
Now the challenge became building a sales force that could win more deals and catch up to the industry market share leader Blackboard.
THE SOLUTION
"People underestimate how hard being a salesperson really is and I needed to spend time on things other than the lawsuit and sales to grow an organization that could help more of the schools that were struggling with limited budgets," says Mr. Baker.
In 2010, Desire2Learn started looking for the best salespeople they could find but finding good salespeople was only part of the challenge.
They first had to hire strong sales leaders who would instill the right culture and direction. To solve that challenge Mr. Baker hired people with experience running the sales teams at his key competitors WebCT and Angel that had been acquired by Blackboard. They were a great cultural fit, understood the market, and had experience competing against Blackboard.
Next, they hired salespeople who had a strong track record of success and Desire2Learn provided them with a lot of in-person and online training on everything from products and services to sales methodologies to accelerate their onboarding.
This was followed by the hiring of solution engineers and operational staff to support the sales team and to help them stay focused on developing meaningful relationships with prospects
THE RESULT
In the last three years, Desire2Learn has grown from 140 to over 800 employees, with 100 of those employees involved in sales related activities. They've nearly tripled their user based in three years and now have over 10 million users within K-12, higher education, government and Fortune 1000 clients. Desire2Learn now has offices in the U.S., Brazil, Australia, Singapore, Netherlands and the United Kingdom and the company is quickly catching up to Blackboard in both market share and in employee count.
Their recent growth also allowed them to raise over $80-million dollars in venture capital financing to accelerate their growth, make improvements to client service, and development of their analytics and product capabilities.
"One of the benefits of our growth and recent Venture Capital investment is that they accelerated the development of our predictive analytics engine and data visualizations. These tools allow educators to predict a student's grade just a few weeks into a course and empowers educators to intervene earlier and engage students so they have a greater desire to learn," says Mr. Baker.
Craig Elias is the founder of Shift Selling Inc. and an entrepreneurship instructor at the Haskayne School of Business at the University of Calgary. This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Small Business website.
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