Q1 2023 Investor Report
Team Letter | April 17,2023
April 17, 2023
Hello, Team Alpaca!!
For this week’s team letter, I want to share with you our Q1 Investor Report, which I sent along to Alpaca’s investors yesterday. I hope you’ll find it helpful to understanding the mechanics of the business, where we’re focused in Q2, and how we talk about Alpaca to our investors!
Away we go!
Q1 Investor Report
4.14.23
Hello Alpaca Investors!
We’ve had a really exciting and productive first quarter at Alpaca, and I wanted to report out on a few key metrics, as well as what we’re up to in the second quarter — it’s already kicking off to be pretty amazing! Let’s get to it:
Key Metrics in Q1:
exact data points removed. DM me and I’ll share them
MRR
Cash in Bank
Months of Runway
Teachers receiving packs
New Schools this quarter
# of District Contracts
New corporate partnerships:
All-in cost per pack:
Biggest work of Q1:
- Built district sales motion and pipeline
- Built corporate sponsorship marketing motion and pipeline (check out the new page!)
- Hired sales rep to sell to districts
- Simplified and clarified our pricing model: $250 per year per teacher.
- Shifted marketing motion and dollars away from parent-pay-only
- Created major efficiencies in pack fulfillment and inventory management
- Reduced cash burn by half to extend runway while we build out sales motion
- Built brand partnerships with 2 local and 1 national brand to create co-marketing opportunities and bring down cost per pack
Q1 Overview:
In 2023, we have our eyes on $__ in ARR - that’s our North Star. As you can see, our Q1 growth obviously didn’t quite track to that goal. I expected that, because we took a moment in Q1 to make a shift in our revenue model, from a primarily parent-pay model (parents subscribe to a single school at ARPU of $__/mo) to a district sales model (Omaha Public Schools contracted for $__K MRR). Here are the details:
Sales Motions
In Q4 last year, we experimented with several parent-pay strategies, including our direct-to-consumer Holiday Pack, some influencer marketing, and a lot of content marketing to drive parents to their school’s page. Ultimately, we learned that the cost of acquisition on this motion is too high right now, given the current size of our audience and the fact that because we’re kind of a new idea, customers require a lot of nurture.
We also noted that going school-by-school, rather than district-by-district, is just a slower way of growing.
So in Q1, we shifted our focus to what we’re good at: selling districts. Leveraging our work with Omaha Public Schools this year, we focused on a key pain point for districts everywhere right now: teachers are leaving the profession in record numbers, and districts need ways to attract and retain teachers.
With the help of some of our investors (Thanks, Five Elms crew!), we spent time this quarter with Apptegy, a software company in Little Rock, AR that sells only to school districts. Their sales strategy is aggressive and innovative and I spent a few days on the ground in Little Rock learning how they do it. I immediately came back to implement some of those strategies.
To achieve the new model, I hired Julianne Mandolfo as Alpaca’s first Account Executive. Within her first month on the job, Julianne added three new districts in our “trial” program (a paid offering ofm3 packs from March - May to try us out) yielding _K of “trial MRR,” (aka I’m not counting it yet). She also secured three new corporate sponsors. She is fantastic and will run through a brick wall for this company. We’re so lucky we got her.
Marketing
To achieve this revenue model shift, I asked the marketing team to pull back on paid marketing to parents, instead focusing on building out sales enablement and marketing to corporate sponsors. Our marketing continues to attract sponsors, teachers, principals, and parents to our brand, yielding a huge amount of social proof every month, which is huge for selling districts. We often get the comment “Is this a national brand that you guys franchised? It looks like a BIG company!” — I like that people think that.
We also built the beginnings of a brand partnership plan with the help of the Scott Collier, who runs business development at Whole Foods and loves this concept. We are starting out with partnerships with companies like Calm Strips nationally and a couple of providers locally to place products in our packs and offer opportunities for co-marketing. We’ve got our eyes on bigger brands for our 2023-24 school year. Big dreams: Crayola, Post-It, Clorox, Whole Foods, The Home Edit, Delfonics, and Ticonderoga.
Operations
In operations, we built a small production team (they call themselves the Alpaca Pit Crew!) and focused on improving our product and how we deliver it. As of March, we no longer deliver our packs, (we figured out shipping!), creating efficiencies.
As we look forward, we’re focusing on designing and sourcing for the full 2023-24 school year, partly together with the Brand Partnerships effort.
Fun note for Omaha folks: April’s pack is a full collaboration with the new Kiewit Luminarium, providing kits of STEM supplies to teachers, while offering them opportunities to engage with this extraordinary new museum in Omaha. We’re welcoming every Alpaca teacher to Luminarium on May 16 for a party: join us!
Q2 Plans & Strategies
Q2 Revenue Goal: $XX,000 MRR
We began our district sales motion in earnest on April 1. It turns out, superintendents really want to talk to us about teacher retention. This is a great thing.
In the first 13 days of the quarter, we’ve developed the following pipeline with high interest after meetings with the Superintendent in each district:
Lincoln Public Schools (Lincoln)
Noble School District (Chicago)
Westside Public Schools (Omaha)
Ralston Public Schools (Omaha)
Norris School District (Firth, NE)
Freeman Public Schools (Adams, NE)
Current Pipeline: $XX,XXX
Needed Win Rate on current pipeline to achieve goal: 37%
Because we are focused on securing district contracts for the 2023-24 school year, Q2 is prime time for selling at Alpaca. At this moment, teachers are making decisions on whether to stay (so our pain point is highest) and districts are allocating their budgets for next year. We’re working as fast as we can to get in front of as many districts as we can, right now.
How to help
We’d love help! Here’s what we need:
1. Introductions to Superintendents or Assistant Superintendents in Omaha, Kansas City, Minneapolis, Austin, Chicago, Des Moines and literally any community within a couple hours drive from Omaha. Public or private schools are great. Our Impact Report for our 2022-23 year with Omaha Public Schools is attached here - please feel free to share it.
2. Introductions to Brand Sponsors, especially Crayola, Post-It/ 3M, Expo, Clorox, Whole Foods, The Home Edit, Delfonics, and Ticonderoga. If you know someone whose brand you think would be interested in being meaningfully associated with an amazing social mission, and that is relevant to teachers, I’d love to know about them. I can share with you a deck or draft an email — just say the word.
Last off, THANK YOU for your support! If I don’t say it enough (and I don’t), I am completely and forever grateful for your investment in this company, in our team, and in me. If I can do something to support YOUR efforts, I want to hear about it. And if you’d like to come see the impact you’re making by investing in a social business, I hope you’ll come see us. We’ll put you to work.
With gratitude,
KB