In this episode of Founders Friday on the 20 Minutes VC, host Harry Stebbings interviews Mike Silagadze, the CEO of Top Hat, a leading student engagement software company. Mike shares his journey from being an engineering student at the University of Waterloo to founding Top Hat, which has raised over $47 million and is utilized by millions across North American universities. He discusses the challenges of selling in the edtech market, emphasizing the importance of a go-to-market strategy and the unique approach Top Hat took by selling directly to professors. Mike also touches on hiring practices, stressing the need for a scientific approach over intuition and the value of internal promotions for employee growth. Additionally, he shares insights on the venture capital market, the potential bubbles in crypto and VC funding, and the future of Top Hat in transforming higher education with modern, peer-to-peer educational technology.
"Mike is the founder and CEO at Top Hat, the market leader in student engagement software now used by millions of students at three quarters of the top 1000 college and universities in North America."
The quote highlights Mike's position and the scale at which Top Hat operates, emphasizing its impact and presence in the educational technology sector.
"It was just based on my experience in undergrad... I found that the course environment just was out of touch with the way that students wanted to learn."
Mike explains the disconnect between traditional teaching methods and modern students' learning preferences, which inspired the inception of Top Hat.
"They are 100% correct. It is arguably one of the most difficult markets to succeed in."
Mike agrees with the VC community's hesitancy towards EdTech, acknowledging the challenges and the high failure rate of startups in this space.
"So ultimately, it's go to market. That encompasses a lot of different things, but it's very, very difficult to take products to market in education technology."
Mike identifies the crux of the challenge in EdTech: getting products successfully to market despite the complex and slow-moving nature of educational institutions.
"Mike, I'm utterly flummoxed then I wasn't expecting that. So tell me, where's the opportunity then that you see that maybe the past hasn't produced and the current"
The host expresses surprise at the challenges described and prompts Mike to discuss potential opportunities in EdTech that have not yet been fully explored or capitalized upon.## Educational Technology Market Challenges
"You're probably going to fail. This is one of the most difficult markets. In all likelihood, it's going to be brutal and frustrating for you."
The quote emphasizes the challenging nature of the educational technology market and serves as a caution to aspiring entrepreneurs considering entering this space.
"We had this crazy idea, what if we sell software or software product the same way the textbooks had been sold... we go to a professor, individual professors at university, get them to adopt the product and the content in their course, and then there would be no cost to the professor or to the university."
The quote outlines Top Hat's innovative sales strategy which involved selling directly to professors, a method that diverged from the traditional enterprise sales model in higher education.
"There's a handful of things that actually predict success in the workplace... work sample... intelligence cognitive assessments... Structured interviews... those are the things that we ultimately have implemented."
This quote summarizes the key components that predict success in the workplace, which Top Hat has incorporated into their hiring process, moving away from traditional, intuition-based hiring.
"There will be a cognitive assessment and a work sample... followed by a structured interview... finally, then we do competency focused interviews."
This quote details the stages of Top Hat's hiring process, highlighting the importance of a structured and scientific approach to evaluating candidates.
"Absolutely. Because most companies don't"
The quote agrees with the sentiment that there's a common imbalance in hiring priorities, with too much focus on culture and not enough on intelligence.## Correlation Between IQ and Job Performance
"There's a 0.6 correlation between IQ and job performance. And that is, in fact, if you could base your hiring decision on one factor, you could only base it on one factor. IQ is actually that factor."
The quote emphasizes the statistical relationship between IQ and job performance, suggesting that IQ is a strong predictor of job success when limited to using a single criterion for hiring.
"Internal hiring is essential to show people career progression, to show them that there's a future with the company."
This quote highlights the importance of internal hiring in fostering employee loyalty and showing a clear path for career advancement within the company.
"Promoting someone too early is quite disastrous. That's really something to avoid."
The quote underscores the negative consequences of early promotions, stressing the importance of timing and ensuring readiness before elevating an employee's position.
"I think all of my intuition about how to run a sales team based on how engineering is run was wrong."
This quote reflects on the speaker's realization that sales teams need to be managed differently than engineering teams, acknowledging the unique challenges in sales management.
"Resist the temptation to hire the gray hair. You need to figure out sales, but the way to do it is to go about it methodically."
The quote advises against the common practice of hiring experienced sales leaders as a quick fix for sales challenges, advocating for a more hands-on and methodical approach by the founders themselves.
"But I can certainly talk about particular lessons, which to probably anybody that knows anything about sales, these will seem borderline cliche."
This quote introduces the speaker's reflections on sales lessons learned, acknowledging that these insights might be well-known to sales professionals but were part of the speaker's learning curve.## Quick Fire Round
Absolutely. I completely agree with the focus on metrics, but I do want to dive into a quick fire round. The quote explains the introduction of a fast-paced Q&A section in the conversation.
Antifragile by Nassim Nicholas Taleb. It's a very profound book that radically changes the way you think about how to structure both your business and your life to benefit from unpredictability. Mike emphasizes the significant influence of "Antifragile" on his perspective towards handling unpredictability in business and life.
Many people believe education is an investment that makes you more productive in a sense. And I think beyond some of the very basic stuff that you learn in primary school, I don't actually think that's the case. Mike expresses his unconventional view that education, beyond primary level, may not significantly enhance productivity.
I would say there's a lot of periodic bubbles and market cycles that freak me out. Mike shares his anxiety about market instability and its potential impact on the economy and his business.
One, it's cheaper. Basically you're 30% smarter because of the exchange rate being in Canada, and that actually has a significant impact on your ability to build a sustainable business. Mike discusses the financial advantages of operating a business in Canada due to the favorable exchange rate.
Sometimes you just get either a trend or some sort of hype machine and people will get funded for things that really don't make a lot of sense. Mike reflects on the sometimes irrational trends and hype in startup funding.
Sure. Yeah, of course. I'm a free market guy. Mike affirms his support for free market principles.
Ultimately, what top hat is trying to do is to bring education, the higher education system, into the modern era. Mike outlines Top Hat's vision to revolutionize the educational landscape with modern technology.
I do also want to say it'd be great to see you on our Instagram at hDebbings1996, where you can see all things behind the scenes at the 20 minutes VC. Harry invites listeners to follow his Instagram for behind-the-scenes content and endorses Lisa and Zoom for their services.