Ash Kaluarachchi: CEO Started – From Idea to Funded

Debbie Goodman:

Welcome to On Work and Revolution, where we talk about what’s shaking up in the world of work and Edtech. I’m your host, Debbie Goodman. I’m CEO of Jack Hammer Global, a global group of executive search and leadership coaching companies. I’m also an advisor to venture backed Edtech founders. And for those of you in Edtech who are hiring, we have launched a fractional leaders offering.

 

I’ll put the link in the show notes. My main mission with all of my work is to help companies and leaders to create amazing workplaces where people and ideas flourish. And so today I’m really, really glad to have Ash Kualarachchi as my guest. So here’s a little bit of an intro. Longish intro, because he’s done a lot.

 

Ash has advised, launched and operated multiple Edtech accelerators, which so far to date have enabled, listen to this number, more than 2000 education companies. Including 10 percent of the global Edtech unicorns out there. This has been in partnership with other organizations too, like Techstars, Google, Amazon, Kaplan, Intel, NYU, University of Penn.

Ash is also CEO at StartEd. We’ll talk more about this in a bit, and producer of Edtech week, which is one of the best Edtech gatherings on the conference circuit, according to me. And I’m sure a lot of other people, but definitely according to me. He’s been voted one of the top 100 influencers in Edtech, and he continues to support founders and investors solving problems in the pre K12 higher ed workforce and adult learning space, and there are a lot of problems there to solve.

 

And today we’re going to talk to Ash about what it takes for founders to get from idea to funded, which can feel a bit like an elusive Holy grail right now. Welcome Ash.

 

[00:02:00] 

Ash Kualarachchi:

Thank you for having me, Debbie. And that very generous introduction.

 

Debbie Goodman:

Okay. So before we get onto the topic of conversation, idea to funded, what is the difference between an accelerator, a venture studio an incubator and a mentorship program, because they sometimes sound a little similar, but I know they are nuances.

 

Ash Kualarachchi: 

Absolutely. And there’s probably 20 different variations of each as well. So let me place this in perspective by speaking about what good education is. The traditional accelerator model was analogous to what schools look like, right? So the factory model of education involves putting a group of students through a learning experience as a cohort and then some kind of assessment at the end, right?

The traditional accelerator model is very similar. The model that started out with Y Combinator and Techstars 20 years ago involves a cohort of companies applying for a few spots, the winners receiving some kind of investment as well as several months, usually about 3 months of mentorship, culminating in an assessment, ie. a demo day. A pitch to investors which then goes on to ideally raise funding for those organizations. Now, that traditional model I think has aged a bit. And those of us who are actually working in education, we can take a little bit of what we know, a little bit of our own dog food, and apply it to good learning and networking.

So what I like to think of a good accelerator is something that identifies what problems a company needs to solve at wherever they are in their journey, right? So personalized education and provides a special specific solution that involves various resources, whether they be asynchronous, whether they be synchronous coaching, whether they be mentorship, whether they be just pointing in the right direction and that allows that learner to solve that problem and see it being solved. So that’s traditional acceleration versus the current model. To briefly address incubators and accelerators, an incubator traditionally is a physical space, doesn’t involve some kind of, doesn’t involve any investment. But it does have all the amounts of mentorship and community related to it. And mentor-based programs are the same without any space.

 

Debbie Goodman: 

Okay. That was a great explanation. Thank you. And I guess as with all of these things, they evolve and need to respond to the time in the markets where we find ourselves, where some are better suited to one or other version of this. Right now, what is your view of the optimal model for a founder with a good idea, but no money or infrastructure, what would you recommend? 

 

Ash Kualarachchi: 

It’s different for every founder, just as it is different for every learner. The accelerator and let’s call them entrepreneurial support systems, right? Accelerator is a limiting term. There are universities, there are strategics, there are foundations, there are individuals who go about supporting startups and all of them need to be recognized in the support structure.

It’s up to the founder to navigate that ecosystem, right? So at StartEd, we consider ourselves a little bit of a map. And our program is a little bit of a compass in directing people, who knowing themselves, knowing what problem they need to solve for the organization, fundraising, sales, talent, product, what have you, as a priority, and then directing them to the individuals, organizations or content that is most likely to do so. Founders then kind of lily pad various different resources and kind of put their solution together themselves, much like how post secondary education is evolving. We’ve had the great unbundling of mentors and experts versus content versus community and a network.

So those three things used to be packaged up and we called it post secondary education. You can get them separately now, just as a founder can separate them out and build and customize what they need for the organization.

 

Debbie Goodman:

Okay. So I think you may have answered my next question, which is what is the model that StartEd is applying now? Because I imagine it would have evolved. I mean, you’ve been doing this for a long time, and you’ve clearly learned a lot about what works and what the ultimate goal is of getting entrepreneurs funded and accelerated and getting to their maybe unicorn dreams. But what is the model now? What is the value proposition, I guess, for entrepreneurs? 

 

Ash Kualarachchi: 

To put it very succinctly, it’s to accelerate what founders are already trying to get done, not create this additional burden of time or effort focused on learning, right? So the distinction there between kind of a traditional experience of learning is you go, you go to a traditional learning experience to learn how to do something. Yeah, sure, there’s some learning by doing, which is the best way to learn as adults. But in our world, in StartEd’s world you go through a program to accomplish your existing objectives, not the objectives of the program. So that allows us to accelerate a company reaching their existing objective much sooner where there’d be fundraising sales, hiring talent, getting a product launch, then having some stage gate of being certified or achieving a credential. 

Debbie Goodman: 

Okay. That really makes sense. And I guess that’s the exciting thing for an entrepreneur is that they’re not going to be held back by a curriculum that needs to be sort of ticked off one module at a time before they can get going on what they really want to be doing.

 

Okay. In my experience, entrepreneurs are not they really don’t want to be held back in any way, but sometimes they are, they need some course correcting from time to time. So how do you get involved? I mean, if you see an entrepreneur who’s like very dog headed about their idea, and sometimes they really do need to be, because that’s what gets them out of the starting gates, it’s hard. So they have to have that like passion and vision and forthrightness about what they want to achieve. But they could really be missing the track that’s going to get them to where they need to be. How do you work with an entrepreneur like that? 

 

Ash Kualarachchi: 

Such a great question. So in StartEd world, we have a measure of coachability and we have a measure of ‘stick-with-it-ness’, right. Those two things seem counterintuitive, but you need both, right? The coachability is, I think, more familiar. So I’ll maybe lightly touch upon it. It’s the ability to take multiple data points and opinions from different people from different walks of life who are giving you their opinions based on their subjective understanding of the world and then being able to synthesize a solution for yourself in what’s actionable. How do I solve this problem around go to market or fundraising, whatever it is, based on these usually differing opinions. That’s coachability, being able to take in data and produce a result for yourself.

It’s not taking advice for beta, right? That’s actually a negative outcome. If you take too much advice in, then you don’t know what you’re doing and you don’t have opinion. Stick-with-it-ness is a measure of sticking to a mission and being able to tweak it based on that data, right? So directionally, there’s a north star that that founder needs to be able to clearly communicate and she needs to be able to validate small or large changes to that north star based on what she or he’s hearing or learning. So they’re related but they’re not counterintuitive. Does that make sense?

 

Debbie Goodman: 

Totally. And I love the term stick-with-it-ness. I’m going to use that a lot. I love all the new terminology that I encounter when I interview guests. So that’s one that I’m going to stick with. Okay, so you guys have had some exceptional successes coming out of your accelerators. Companies like Degreed, Newsela, I mean, those are brands that, I mean, if you’re in the Edtech world, you know them. What is the secret sauce? What made companies like these break out and become the kinds of brands that they are today?

 

Ash Kualarachchi: 

Those two brands you mentioned were exceptional companies that came out of the program I ran at Techstars, but there’s probably dozens more that have gone on to some success. I think there isn’t one set of easy commonalities to identify between successes.

 

Debbie Goodman: 

What? do you mean there’s no, there’s no magic wand, no magic formula that we can just try it out. And if you follow them, then you’re going to be a success, no?

 

Ash Kualarachchi:

I wish it was, but I mean, I think it’s intellectually pleasing to imagine that there is, but definition success by definition is the exception. So it’s easier to understand on individual basis what the exceptional thing was about a company that, that made them succeed.

In, in our opinion. Those exceptions, those spikes can fall into four buckets. So just to put things in a friendly monomic we call them the 4 P’s. So people, problem, progress or product, and in some way founders and the companies they’re building spike on some of these things from the very start, right. So the exceptional ones spike on one or more of these things right from the get go and then some of them develop them along the way. Both are possible and there’s an element of obviously luck and market that changes. So imagine the four P’s resting upon a gigantic changing landscape. Either the wind’s at your back or not. The four P’s, if I can talk about a little bit of definition behind them it’s about a team. The people P is the most important. So they’re in descending order of importance. The people P is about an exceptional team having the right combination of skill sets and mindsets, and then they also having, differing life experiences. So their lived experience needs to be different in order for them to understand and create a solution. There’s a lot more to that people, but that tends to be one, a good one. And then experience with the problem, the second P tends to be another good signal. A large problem that the world hasn’t seen solved yet. It’s always a good thing to have. But in education, we don’t always have the luxury of big problems. There’s a lot of companies and fewer problems in our opinion. And some of them are very niche. It’s okay to go for a small, smaller market, in our opinion, if that’s what you want to do. It’s almost like healthcare where there are these often diseases that exist. Those still need to be solved, usually foundations and non-market forces solve them. Similarly in education, we still need solutions to small groups having really painful problems. The other two measures are more self-explanatory. It’s about evidence that you’re solving a problem that’s progress and then finally the product being differentiated and defensible in a more traditional sense.

 

Debbie Goodman: 

Well thanks for the four P’s. I’ve heard that spoken about differently depending on where it comes from. And I think that piece around the progress is not always given enough credence because making progress, particularly at the early stages can feel so damn slow.

And it’s hard to show evidence that early stage of getting out of the starting blocks for early stage founders or even experienced founders. I do this myself from time to time where I’ll launch a new offering and the pain of getting something from idea into the world is excruciating. And it feels like it always takes so much longer than, certainly than I want, and being able to get the resources to help get to that, get from out of my head into the world is hard to gather. So that progress piece isn’t given enough sort of a weight and value in terms of the success of even those small incremental moves that founders have to achieve in order to get to the point where they can even ask for money.

 

But let’s just talk about this. You mentioned earlier the wind behind their back. At this point, it feels like founders are just facing a gale force wind coming right at them. They’re in the middle of the hurricane and not much, not much smooth sailing. So you had some great advice for founders who’re just struggling at this point, getting out of the starting blocks, what would you recommend?

 

Ash Kualarachchi:

Yeah, great question. If I may introduce a visualization, I think founding a company feels like walking in circles, right? It feels like you’re going through the same kind of annual calendar, go to the same conferences, speaking to the same people, making the same kind of incremental progress until the lucky few have some kind of, get some kind of break, but the majority that in the 80 percent end up, it feels like walking in a circle. It’s really about what you are measuring as success that makes you feel like you’re walking in a circle. Right? In fact, if you take non traditional measures out, I mean, traditional measures like revenue and product releases tend to be great.

The Edtech ecosystem has taught us to value those things as progress. But in reality, getting from zero to just off the ground requires us to measure proxies. So things like memorandums of understanding that you may establish with strategic partners, conversations you may have with people who may join your mission later down the road. Simple website visits to whatever you’re doing, responses to service. That’s still progress. And if you start counting this progress and then keep tracking what you’re learning, that walking in a circle, if I may change the camera angle from ground level to looking from above, it actually looks like you’re walking up a spiral staircase. And that moment you realize that, is always one that I’d like to be around when founders see that themselves, having made more progress than they think.

 

Debbie Goodman: 

Yeah, that’s such a great point because ultimately it depends on the lens and the framing for yourself. You can start feeling like you’re circling the drain or you’re walking up the spiral staircase depending on your mindset and having those reminders is something that founders really need to do. So we know that founder led sales, particularly at the early stage is really critical. What if the founder sucks at sales, but is brilliant at something else? Are they doomed to stay in their mother’s basement or garage? What’s the verdict?

 

Ash Kualarachchi:

Some of the biggest companies were made in people’s garages. It’s not. I think it’s realizing relatively what competency you have versus what’s missing in your own arsenal and then figuring out whether you build it. Some people have to do that by default. Or whether you bring it into the team in some way, right? I think that’s the journey of self-awareness that is required.

I think for those who have no, almost no sales skills, but probably have some other domain expertise or product expertise and realize that, then it’s perfectly fine to go out and it’s a very learnable skill, sales, right? You just have to do it. And initially it really sucks.

Because like life, sales is mostly failure. But the nice thing about building a company in 2024 is that if you are self-aware and realize you don’t have that particular skillset you can go out and bring it into the team as an advisor and as you have so elegantly introduced this fractional talent component of where the world’s going.

 

Debbie Goodman:

Yeah. I mean, that’s you know, in terms of a very quick and easy way to buy your skills externally by hiring somebody on a fractional base that can be super affordable, even for an early stage founder. But you had touched on another really important point is that a lot of the time people think that that sales skill, that business development skill is inherent, you just come out of the womb and you can either sell or not. And that is nonsense. It is a learned skill that some people do have a predisposition or orientation towards, and it comes a little easier to them and others need to work at it a little more like any, like any other. And so for founders who’re saying, well, I can’t sell, I’m terrible at it, my opinion is learn, learn, there are so many, and people who actually learn how to sell and follow a good process and learn the techniques and the skills ultimately can become even better salespeople than those who are just winging it because they’ve never learned the method. And so they don’t necessarily have replicable success.

So I’d say get out there and learn those skills.

 

Ash Kualarachchi:

I want to add an important point here. Sales is the area that we have been misinformed and sold a particular story about just like in fundraising, right? We were taught in fundraising there’s kind of one way to go about it. There’s one kind of investment. In fact, for EdTech companies, there’s about 20 different kinds of dilutive and non-dilutive capital. Just like that in sales, knowing authentically how you go about solving a problem for somebody else, sales is actually about listening and understanding what problem you can empathize with and then figuring out whether you can go and solve it. That is a particular way of selling. That’s called consultative sale. There are other ways of selling and all of them. As long as you realize there are options, That’s I think the first step that founders don’t usually take. They usually take this approach of they observe one variation of it, and sometimes that variation of it is too hard for them personally to reach and not may not realize there’s a more authentic sales method closer at hand.

 

Debbie Goodman:

Yeah, absolutely. Let’s just actually double down on this because you started to talk about this unexpected common path and the range of options available now for founders, because we’ve had lots of easy cash, well, relatively easy cash flowing through the system for the last couple of years. It’s come to a dribble, if that and a trickle and so that may feel so frustrating for so many founders who are getting much, many more no’s than they could ever have imagined. But that is not the only option. So talk a little bit more about that.

 

Ash Kualarachchi:

Absolutely. I’ve been yelling this from the mountaintops for 10 years now, and what I’m about to talk about has existed for the entirety of that time. There are several different kind of categories of funding that an Edtech founder should know about. Some of these are only available to educational impact-oriented founders versus someone who might be building something more just purely financially oriented. There are resources from the government in terms of loans and grants. There are non-dilutive sources of loans like revenue-based financing that are now coming over from Asia and Europe and becoming more popular in the US. There’s crowdfunding methodologies and platforms, kind of the great battle between republic and B funder is only good for the ecosystem. And then you start getting into dilutive funding, which we’ve traditionally known as kind of angel venture capital, private equity and so forth. But all those types of non-diluted funding and grants that come before are great ways to build a company all the way up to what is the equivalent of a seed stage, right? You don’t have to give out your rule of thumb is go out 10, 20 percent of your company each time you do a round. So often founders have given out, you know, 30, 40 percent of their company by the time they’re ready to have market fit. If you chose this path of doing taking a grant, doing SBIR or something else, you’d still have more ownership of the organization and then optionality at the point where, you know, you have something that market wants.

 

Debbie Goodman:

Yeah. Okay. So now you were clearly an optimist because you’re positioning this somewhat, this little drought as an amazing silver lining for founders who now have these other options that they really need to look at. And as a result, they can end up by maybe growing a little slower, but not giving up equity early stage at very early stage before they actually really need to.

So that sounds to me like a very positive story.

 

Ash Kualarachchi:

Yes, I mean, there’s a silver lining. There’s the actual factual truth of what’s happening to VC and dilutive funding. That well has shrunk, the water level is low. There’s a bigger moat around whatever water that existed, however, everybody’s been going to that watering hole for so, for so long that no one really knows that just across the hill, there’s probably these other resources that are popping up, these well springs coming to bear because the market dictates that where there is something, where there is a problem to solve, solutions will approach it.

 

Debbie Goodman: 

I love your analogies, Ash. You’re very good at that. Okay. What lies up ahead in 2024 for you, for StartEd, for EdTech Week? I’m definitely going to be there. So tell me what’s happening. What are the, what are the exciting highlights up ahead for you?

 

Ash Kualarachchi:

Yeah, I’m wondering how much I can say it now. I’ll be transparent. So we woke up this year realizing that we’ve been around for 10 years. And sometimes we don’t, you know, recognize the impact that we’ve had as a small team on the ecosystem. And so I think finally, we’re deciding that that we’ve realized a couple of different things. Some of the companies we’ve been working with for, for 10 years, after 10 years, are now rather mature, right? So you would call them late stage, late early stage, or you could call them middle market organizations. Some of them are very large, but I’m talking about the big chunk of organizations that are between 5 million revenue, really showing promise and making impact. We’ve traditionally asked their founders to give back and mentor the companies that are coming up. But we are now solving problems for them. Our mission has always been solve problems for founders and entrepreneurs at every stage of their journey. So we are now eating on dog food, making sure that founders at a later stage are being supported as well. So we have some interesting things we’re announcing this year in terms of programming, research and events.

 

In fact at Edtech week, we will have a group of companies we think are the most promising most likely to do some kind of transaction and it’ll be a private event. We host for those CEOs and it’s a free invitation for them to join us in New York in October. In addition to highlighting those organizations and shining light on their work, we want to help by doing what we do best, learning and networking in the space. And so my team has developed some interesting ways. Of supporting growth stage organizations in the lead up to our own conference, but doing so with our philosophy, it’s don’t do something that is adjacent or separate or counterintuitive to what you need to get done. Get done what you need to get done this year in 2024 and translate our network and learning into that objective.

 

Debbie Goodman: 

Wow. That sounds like a lot. But very exciting. And I’m sure we will well, I’ll definitely be watching the space very attentively. Ash, thank you so much for your time and your input. I hope all the founders who’ve been listening to this podcast get a lot of value from this and have an amazing year ahead.

 

Thank you, Debbie. Bye now.