How do you sell a new product to large organizations? That was the challenge facing Mike Silagadze and Mohsen Shahini when they co-founded Top Hat Monocle Inc. in 2009.
Started in Waterloo, Ont., and now based in Toronto, Top Hat Monocle sells a learning platform to improve the classroom experience. Mr. Silagade and Mr. Shahini believed that students and professors would immediately see value in their classroom tool, but how could they convince universities to take a chance on it?
The idea for Top Hat Monocle stemmed from the founders’ own university experiences.
“Mike had recently graduated from university and Mohsen was completing his PhD, and they had not been satisfied with their classroom experience,” says Andrew D’Souza, Top Hat Monocle’s chief operating officer.
“They just weren’t engaged enough with the course material in many classes. Working as a teaching assistant, Mohsen also knew how difficult it was for professors to gauge how much of the material the students were picking up.”
What turned this idea into a business prospect was the realization that most students carried mobile devices – such as smartphones, iPods and tablets – to class, which could be used for in-class interaction. Mr. Silagadze and Mr. Shahini pitched their idea to some professors at their own university, developed a prototype product that focused on quizzing and polling students, and pilot-tested the prototype in two classes.
The professors asked the students to pay for it, just like they paid for textbooks. At $20 for a semester, 85 per cent of the students in these classes signed on.
The founders went to every class to try to gain a deep understanding from real-live situations of what worked well and what needed to be changed. At the end of the pilot test, the professors and students were happy, Mr. D’Souza says, and the founders investigated the possibility of doing a bigger test throughout the campus.
Just setting up a meeting to make that happen proved difficult. “They soon realized that by the time they got the right people in the right room to make a budget allocation just for a pilot project, the company would be out of business,” Mr. D’Souza says. “Selling to large organizations like universities, governments and big corporations is difficult and time-consuming. Large organizations have a very long sales cycle and if you catch them outside of a budget cycle, you may not get another chance for a year or two.”
How could they expand beyond two classrooms and get wider adoption?
Mr. Silagadze and Mr. Shahini decided to “consumerize the classroom” by focusing on individual professors, rather than universities. This made sense because the value proposition was focused on the classroom and because professors have much latitude in making adoption decisions.
To get professors willing to adopt the product, they knew they needed to hire a sales representative, but were not sure what type of person they needed.
“One option was to hire a senior executive with lots of experience and a big network,” Mr. D’Souza says, “but while they knew how to do institutional sales, they wondered if such a person would know how to go after customers one-by-one. In the end, they looked for experience but also prioritized energy and passion for this concept.”
Customer acquisition focused on professors who taught large classes, because that’s where the value of the product was most evident. By September, 2010, about a year after the company was founded, Top Hat Monocle had 20 professors on board, and was being used by 3,500 students in five Ontario universities.
At this point, the founders knew they needed to increase their sales effort, and that would be costly. On the basis of their initial success in the market, they were able to raise $1.5-million in seed funding from angel investors and used the money to go after universities on a larger scale. They put together a list of the 500 largest universities in North America, and hired another four sales representatives to find professors willing to adopt the product. Over time, these sales rep became specialized, with some better at pitching the concept and others better at presenting the product.
The “pitchers” typically make more than 100 short calls each day to people on the list, to determine which professors are interested in hearing more about the product. These prospects are then called by the “presenters,” who walk them through a live online demonstration of the product and describe how they can use it in their classrooms. Once a professor signs on, an account management team is responsible for providing training and ongoing support.
Focusing on the acquisition of individual professors has been an effective launch strategy for Top Hat Monocle.
This academic year, it is being used by 2,000 professors and more than 150,000 students at 300 universities worldwide. More than 80 per cent of these universities are in the United States.
The company has 75 employees, offices in three countries, and has been able to raise another $9.1-million in financing.
And their success with professors and students has reached the institutional level. “Now we have universities approaching us for site licences for all their students, and, with our track record with professors and students, we can have a very different conversation with them than we could have had when the company was just starting out,” Mr. D’Souza says.
Special to The Globe and Mail
Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.
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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