Curacubby - Steven Khuong
Today we have Steven Khuong, Co-Founder and CEO of Curacubby, a software platform to combine touchless check-in, online business tools, and free payment processing for education businesses.
Brian Wei: Tell me about yourself and how you got into the tech ecosystem.
I've always been an entrepreneur. I started my first company when I was 12. I came from an immigrant family and raised in Oakland, California. I grew up in what people would consider the golden age of hip hop. Around when I was 12, I really wanted to be down with the scene. So I picked up scratching skills and mixing skills, and I started a DJ business. When I was in middle school, I was starting DJing high school dances. I was really into hip hop. By the time I was 15, I was producing music. By 16 years old, I started a record label. We released music on cassette tapes and vinyl records, and we sold them at dances. We sold them out of the trunk of our cars. By the time I was 17, I had sold the record label to a local distributor and then used money from the sale to fund my college education.
I attended UC Berkeley, studied Mass Communications, and graduated. It was 1998 towards the beginning of the first dot-com boom. It was an excellent opportunity for me to exit the music business because I experienced some violence in the hip hop scene. It just wasn't a space that I wanted to be in for the long run, even though I loved the music and the culture. I was lucky enough to join a technical recruiting startup upon graduation. I worked there for about a year, and then, because of my entrepreneurial bug, I pursued starting my boutique recruiting firm. It performed well until all the money dried up because, for every boom, there's a bust, and there was a dot-com bust.
From there, I ventured into the fitness market and started several fitness businesses, including creating products. To this day, we still have an e-commerce bestseller, KettleGuard. It's a patented wrist protection device specifically designed for kettlebell lifting. I would still be in the business of fitness today if it weren't for something that impacted my personal life.
I have a son who is currently 13. When he was about three years old, he was diagnosed with autism. During that time, we searched for an appropriate education for him and were unable to locate that locally. So, along with four other families, we decided to start a preschool for children on the spectrum. It began in a room of a church. As that slowly grew, we began to experience operational obstacles in the educational space: payment tracking issues, billing reconciliation issues, accounting issues, and paperwork.
I recruited one of my fitness clients, Brian Meckler, to help solve some of these problems for the school. We built some tools that worked quite well to address the issues we encountered. Then other schools in the area found out about this and wanted to beta drive as well. Before we knew it, we had schools willing to pay for it. We sold to about ten schools early on. Fast forward to now, we are a VC-funded company. It's my first tech company and my first VC funded company. We are working hard to grow it.
Why do child-related businesses rely on paperwork and manual data entry? Is it simply too costly to take online payments?
We should look at this from the operator's perspective. Because they're involved in so much stress, the focus on the educational curriculum will always take the front seat. Often, there is an inability to be aware of problems in the back office. So if you're not aware of problems, you're not creating solutions to the problems. After decades of doing things the same way, you start to believe that this is just the norm or the status quo.
To help our customers, the first thing we have to do is show them that we empathize. For instance, we say, "We understand everything that you're doing and why you're doing it." At the same time, we guide through thought leadership, help bring awareness to existing problems, and show that change management can happen successfully. There are tools out there that can help.
There's also an external driving force, particularly in the education space. Education consumers have changed. Fifteen years ago, you probably didn't have any parents say to the school, "I don't know how to write a check. I don't know how to get cash." But this is not the case now. Their consumers are confused that education businesses don't take Venmo. "What do you mean you don't have a PayPal account? I don't know how to write a check". Schools have a newfound awareness. Their consumers can no longer make financial transactions with previous forms of payment. These conditions brought us to the market.
Exactly, I haven't used a check once since I joined the workforce!
I don't think that we would necessarily be successful if we didn't experience this firsthand. When we were in the founding stages of the school, we experienced all of this ourselves. We didn't believe that it would be this difficult because we're somewhat tech-savvy. But when we went out to the market to look for tools, we realized it wasn't a trivial task to integrate all this stuff, you know?
As technology people, we tend to take the implementation process for granted. We think that anyone should be able to set up Venmo. Anyone should be able to integrate PayPal. Anyone should be able to call their local bank and get a merchant account for tuition management. It's not as easy as we think. Consider this - in enterprise resource planning for schools; you have to reconcile payment with metadata. If you're the school, and I decided to send you $1,000 through PayPal, and I have four kids attending your institution, how would you reconcile that transaction? The complications start to become very apparent.
How much time do Curacubby's customers save? How do parents feel about the product? I understand Curacubby also released a contactless tool during the pandemic.
On average, at the minimum, you're looking at 40 hours of manual labor saved per month. That's across all of our customers, from small daycares to large school districts. Some of our larger customers are saving 40 hours per week.
For example, let's say that we're talking about a typical application process. It would generally take schools two weeks just to get the PDF form signed by the enrolling families. The file may be stuck in the parents' email, and the school would call and ask the parents to look for it in their spam box. If the parents are lucky enough to find the file, they would have to print out that PDF, sign it, scan it, and then send it back to the school. In the process, the form may get stuck in the school's spam box. From start to finish, it can be two-week process. We help schools cut it down to approximately 5 to 15 minutes.
From Curacubby, parents access their cloud portal to get to their forms, sign it, pay, and submit it all from the same workflow. That's just one example. We're pleased to say that we always hover between 87% to 97% NPS.
What do you look for in a founding team?
Excellent question. Fortunately, for me, being an entrepreneur many times, I probably made most of the necessary severe mistakes before founding Curacubby. I was very mindful of recruiting a team of co-founders that I want to be around. For me, it's about emotional compatibility and drive. Those two things come first. I think the skill set is secondary. If you reverse these things, it can be perilous. We can have great operators who can fly the rocket ship, but if they're not going to listen to you, they could be heading to Mars or heading towards a black hole. I first ask myself if I want to be around these people. Do I like these people? Do we communicate well? The chemistry needs to be there.
Beyond that, do we have the skill sets to make it work? So fortunately for me, I've known both of my co-founders for a long time. Brian Meckler, our CTO, was my client at the fitness business for 15 years. I met our COO, Ross Lugos, through his wife when I produced music for her 25 years ago. So again, I feel that we must look at team chemistry. For many of my peers in the startup space, I think the common denominator between "make it or break it" is how well the co-founders get along.
What advice would you give to an aspiring founder to hit $1 million in annual recurring revenue?
I believe the way to do it is to get everyone in the early founding team involved in sales. Your VP of engineering, get him out of the basement to talk to customers. Your support person who is picking up chat calls needs to be upselling. The person that's writing the press release needs to be converting customers into ambassadors. Revenue focus should be at every touchpoint, with every member of the team, in the day-to-day activities across all departments.
How do you usually ask for feedback from customers? Is it prompted, or do they send an email/message directly to you?
We think about the customer journey as never-ending. The customer journey is evergreen. From pre-sales to the point of contract signing to onboarding, to deployment, to account management - there's a continuous loop that always goes back to the product and engineering team. If we're in the market and we're prospecting, that information goes back to product and engineering. If we're onboarding, the feedback is going back to product and engineering. We are building a culture within our company that is forever gathering input from the customer. There's never a point in time when we're not getting feedback from the customer. In terms of the methods we use to gather feedback, they include telephone, email, and surveys.
What are the most challenging aspects of founding a company within the education space?
The most challenging aspect is bringing awareness to the pain that school administrators experience. Often, we're dealing with administrators who have been in the business of education for many years. And it can be quite challenging to encourage positive change. We can look to human relationships as an analogy. How many people do you know that are not necessarily in great relationships, but they'd rather stay in the relationship than face the fear of change? It can be a scary process.
For example, how do you start a dialogue to highlight that 25 hours of manually transferring rows of data from Excel is unnecessary to the person whose primary job is to do that? It's difficult to leverage a narrative that says change is potentially useful. It's not just in the education space, but it's probably more challenging in the education space. Education innovation has been traditionally slower to change than say other industries, retailers, or restaurants.
What are some (if any) aspects of starting a company that you wish you would have known prior to starting a company?
It took me a little bit longer to accept that the primary job of the CEO, especially in the early stages, is to keep the company capitalized. We get into a startup, and there is a phase of romanticism. There's this idealized vision that you have about your company: "I'm going to go out there with this great mission statement and change the world and disrupt it. I wished that early on, somebody would say, "all those things are important, but they take a back seat to capitalization." Because without the funding, none of this stuff happens. You just can't scale. So, I would say personally that the CEO's number one job early on is to capitalize the company. Grow revenue, equity financing, debt financing, convertibles - whatever it takes to keep the doors open and extend the runway.
How do you think about approaching funding?
Of course, revenue comes first. But aside from that, always be raising. Some companies raise when they hit growth milestones, such as customer acquisition. For us, it's about the narrative, the story, and building the relationships necessary to raise funding from the story. Fundraising is a function of sales. It doesn't matter if we're striving for a term sheet next month or next year. I'm practicing the sale habitually. Just like any work that we do, our ability to be excellent is perishable. If you don't practice, you're not going to be good at it. My viewpoint on funding is to practice raising continually.
What are other problems you see within the education space?
What comes to mind right now is that there's a massive opportunity in the areas of risk management and compliance in the education space. For instance, we were one of the first companies to deliver a full contactless attendance check-in/ check out system for schools. Our engineering team (bravo to them) spun up this product in a matter of weeks. We are arming hundreds of schools with this essential tool. With the pandemic, I believe there are other substantial opportunities to innovate.