What is Perlego?
Q: Can you briefly introduce yourself and your company?
A: I’m Gauthier Van Malderen, originally from Belgium, and a co-founder of a company called Perlego. Perlego is an online subscription service for textbooks. The idea for Perlego stemmed from a personal pain point I experienced while at university – the high cost of books. We noticed that publishers were losing a significant amount of revenue due to piracy and the second-hand book market. This observation led to the creation of Perlego, which we’ve been developing for the past six years.
Why Founders Factory?
Q: What motivated you to join Founders Factory?
A: Founders Factory had significant investors, including Stefan Von Holtzbrink and specifically, Macmillan Learning at the time. What’s unique about Founders Factory is their model where large corporates invest and then facilitate relationships with these investors. For us, the most appealing aspect was the publishing angle. Being in a business that works extensively with publishers, the opportunity to connect and establish relationships with a major publishing group was a key factor in our decision to join Founders Factory.
Founders Factory Application Process
Q: How was Founders Factory’s application process?
A: We started with an online application, followed by two calls – one with an investment manager and another with a wider committee. The process was relatively smooth. Interestingly, this coincided with a broader fundraising effort we were undertaking. In 2018, we raised £4.8 million, and Founders Factory came in as part of that funding round. So, while the application process was straightforward, it was an integral part of a significant phase in our company’s growth.
Q: What do you think made your company stand out to be accepted into Founders Factory?
A: I believe our team’s passion and determination played a crucial role. We were all deeply committed to our mission, which was one of our main strengths. Additionally, our business model was a good fit, especially considering the interests of Founders Factory’s investors like Macmillan, a publisher. They were on the lookout for disruptive models in which to invest, and our approach to the textbook market aligned well with that. So, it was a combination of having a passionate team and a business model that resonated well with their limited partners and corporate investors.
Inside Founders Factory Program
Q: What was the program like once you joined Founders Factory?
A: The program is a six-month journey, offering comprehensive support in areas like business development, creative aspects, and hiring. It’s as if they become an extension of your own team, providing expertise in every field to help you build and scale your company. I had bi-weekly check-ins with the COO, Louis Warner, where we’d discuss progress and ongoing developments.
Regarding the kind of support we received, it was a mix of hands-on assistance and mentorship. For instance, in our paid marketing efforts, they had experts who provided direct help with various channels. Additionally, we received mentoring from the senior leadership team, which included insights on potential mistakes to avoid and strategic advice. So, it was a balanced blend of practical support and experienced guidance.
Q: Could you tell us more about the additional support Founders Factory provided?
A: Founders Factory offered a variety of supportive measures beyond just business guidance. They organized founders’ days, where all the participating founders gathered to share their stories and experiences. This was particularly valuable as it helped alleviate the sense of isolation that often comes with being a founder. It was a great opportunity to learn from peers within the network.
They also brought in inspirational speakers; for example, during my time there, the founder of Shazam shared their journey, which was incredibly motivating. Additionally, Founders Factory assisted in practical matters like scale group negotiations. We benefited from favorable deals with companies like Stripe and AWS, negotiated on behalf of all the companies in the program. These deals provided a significant competitive advantage, helping to reduce costs and facilitate growth.
Q: Did you receive funding from the Founders Factory program?
A: Founders Factory’s total package typically amounts to £250,000. That was the average investment ticket at the time. So, while I can’t provide details about their investment structure today, that figure gives a general idea of the level of investment they were making in startups during our involvement.
Achieving Milestones and Overcoming Challenges
Q: What significant milestones did you achieve during your time in the Founders Factory program?
A: There were two key milestones we achieved during the program. First, we significantly expanded our team. When we joined Founders Factory, we had about six members, and by the time we completed the program, our team had grown to around 12 or 13. Founders Factory played a crucial role in helping us identify and fill the gaps in our team.
The second milestone was in marketing. We discovered through various tests that Search Engine Optimization (SEO) was an incredibly effective channel for us. With guidance from their experts, we realized that SEO offered a scalable and cost-effective way to acquire new customers. This insight was pivotal, allowing us to scale our company more efficiently. So, team growth and identifying a sustainable marketing strategy were the major achievements during our time with Founders Factory.
Q: Did you encounter any challenges during your time with Founders Factory?
A: We faced quite a few challenges. One significant issue was our expectation of working closely with Macmillan Learning, which was an anchor investor for us at the time. Unfortunately, Macmillan ended their investment in Founders Factory, which meant we couldn’t leverage that relationship as much as we had hoped. This was a setback because one of our goals was to build a strong connection with Macmillan and potentially secure an investment.
However, this challenge was not due to any shortcoming on Founders Factory’s part. On the contrary, we found other corporate partners like L’Oreal and Easyjet through the program, with whom we had productive conversations.
Perlego’s Current Status and Future Goals
Q: What is the current status of Perlego?
A: As of now, Perlego has reached several significant milestones. We collaborate with over 9,000 publishers and have users in 191 countries. Additionally, we have established relationships with 350 university clients, including the University of West London and the American College of Athens in Greece, which is a notable achievement. Financially, we’ve raised over $75 million to date.
In terms of product development, we have localized Perlego to be available in seven different languages, including German, French, and Italian, broadening our global reach. The team has expanded considerably and now consists of about 125 people, based in London. This growth in our team size reflects the scale at which we are now operating.
Q: What are Perlego’s future plans and goals in the coming months?
A: Our immediate focus is on expanding our presence in the US market, which is a significant opportunity for us. The US represents a $9 billion market for Perlego, and interestingly, about 40% of our direct consumer revenue is already coming from North America. Our goal is to strengthen our position and become a leading player in the US, which is challenging as a European company.
Additionally, we’re planning to launch innovative features. We want to evolve from being just an e-book reader to incorporating AI-powered study tools. These tools will enable users to quiz themselves within the books and ask questions, enhancing the learning experience.
Another key objective is moving towards profitability. While we’re not profitable yet, we’re on a path to achieve this in the next 18 to 24 months. This shift towards profitability is a crucial part of our strategy going forward.
Final Advice
Q: Do you have any advice for founders considering joining Founders Factory?
A: From my experience, Founders Factory is one of the best accelerators out there. The learning opportunities it offers are immense, especially for successful founders who have exited their businesses and are willing to share their insights.
Moreover, the hands-on approach they take is incredibly beneficial. They act as an extension of your team, providing access to talent and expertise that might otherwise be unaffordable for a startup. This level of support and guidance is a huge advantage for any founder looking to accelerate their company’s growth. So, my advice to founders considering Founders Factory is that it’s a valuable opportunity that can significantly contribute to your venture’s success.