Meet the Trader 06: Active Grade

Meet the Trader is a series of interviews conducted to explore the people behind the Bitcoin economy.

Episode 06:  Michal Eynon-Lynch of ActiveGrade.   Michal co-founded Active Grade with two other educators six months ago and currently has seventy five paying customers.  Their company is bootstrapped and profitable.  Recently, Active Grade began accepting Bitcoin as a method of payment.

Active Grade and Bitcoin

{ Introduction }

The number of websites offering goods and services in exchange for Bitcoin has roughly tripled since the beginning of March.  Services listed on the English-speaking trade page have risen from 65 to well over 200 (not including charities or obscene businesses).  The BTC-Economy database has indexed ~6000 items for sale from approximately 100 websites.

Cool and useful services have begun arriving at the Bitcoin economy.  The Bulletin’s next interview will be with Wuala‘s CTO, Luzius Meisser, whose affinity for Bitcoin comes from its “its anarcho-capitalistic nature.”  Most growth in “services offered” has not been from BTC-exclusive websites but from more established companies adopting the currency as an alternative method of payment.

Active Grade is one of those companies.  This start-up is offering a super slick web app built for grade-school educators.  As you will read below, the co-founders happened upon entrepreneurship from their day jobs and have gotten their company off to a quick start.   Not only has the company begun accepting BTC payments (very recently), but it has found competition within the Bitcoin economy and education space in Project Fedena, which also accepts BTC.

While the Bitcoin economy is still atomically-small in comparison to e-commerce at large, there has been steady growth in the variety of services.  The volume of consumer to business trades may be low (as opposed to OTC), but it has had little effect on the positive maturation of Bitcoin’s usefulness.

Michal Eynon-Lynch:

______________________________________________

{ Interview }

Spencer: So in the school of a Bitcoin economy can the bully still steal the lunch money?

Michal: Hmm, I guess it depends on how computer savvy the students are and if they are allowed to have their portable devices with them all the time.  At a school we would run, they probably wouldn’t be allowed these devices, especially not at lunch where we would expect students and staff to engage in conversation with each other, so there couldn’t be much stealing.

If there were though, that student would see reflected in their ActiveGrade gradebook that though they had a high proficiency in adding and subtracting, they had a low proficiency in being decent to others.

Spencer: What’s the story behind Active Grade’s founders, and what roles do they have within the company?

Michal: T’was more than 12 moons ago when Riley and Michal were both teachers at a small, boarding high school.  Michal was always searching hither and yon for interesting, engaging ways to assess students’ abilities.  Riley became inspired by the Professional Learning Community (PLC) they were a part of that was focusing on assessment.  He began to learn more about Standards-Based Grading and decided to start a blog to focus his thinking about the methods he was using.  When he tried something in his classroom, he would write about it and get feedback from other teachers from distant lands.

Riley began developing excel sheets to handle his new grading method.  Michal began developing rubrics to better deliver the newly articulated expectations to her humanities students.  Both came home every night frustrated that there wasn’t a better way to keep track of all this information.  Riley said, “by gosh Michal, am I computer programmer or what?”  “Quite right,” replied she.  With that, they decided to leave their teaching positions and forge their own way through the world.

After Riley crowned himself Chief Programmer, he went in search of a designer, someone who could turn his code into beautiful pictures.  He didn’t have to look far to find Dan, a designer and teacher at the University of Iowa.  At first Riley assumed he would just contract Dan to do a little work, but it soon became clear that Dan’s beautification techniques were indispensible, his sage advice necessary, and his home brew delectable.  Dan, for his part, was strangely drawn to this new endeavor and decided to sign on as Designer Extraordinaire.

By this spring it became clear that Michal could no longer dally in other interests.  She joined on fully as the Director of Outreach. There you have it – the story of ActiveGrade LLC.

Spencer: Your story sounds so perfect – prototypical of the way a startup should be done.  Tell us what was out of the ordinary or not traditional about the company’s beginnings.  What were the early challenges or unconventional methods used in getting off the ground?

Michal: We are not business majors or serial entrepreneurs so some of the business end has caught us off guard.  Like many start-ups, we had a good idea and passion, but we didn’t necessarily get in it to be business managers.  Because there are so many awesome, cheap tools for programmers, we are hoping to get this off the ground without a serious cash infusion from investors that might have certain expectations about our growth and strategies.  The underlying values of our product are really important to us and we don’t want to have to compromise those in any way.

Spencer: I love how your company is built to sell — a simple service that’s not free. How have the first months of revenue been?

Riley: We have 75 individual customers using the beta version right now, but our business plan calls for sales to entire schools and districts, and that will be possible for the first time in the 2011-2012 school year.  We’re encouraged – several schools and a few entire districts have contacted us already, so we think we’ll have some larger customers next year.

Ad-supported business is not for us.  It’s too indirect, and the expense of the middlemen/women is too great.  We’re lucky to be in an industry in which it’s customary to pay for services!

Spencer: I am interested in the fact that Active Grade hosts a topical blog on education.  From an inbound marketing perspective, has it been worth it?  Has it helped you acquire new users?

Michal: Well, ActiveGrade was actually born out of Riley’s teaching blog at larkolicio.us/blog. He started writing it to focus and improve his teaching skills.  When we decided to start ActiveGrade he had about 500 readers, so the transition was natural.  Our blog is not primarily a marketing effort; it’s more valuable as a place to hone ideas and get feedback before spending a month developing a feature.  It’s also important to us as a place that teachers can find and give new inspiration, and as a contribution back to the blog network that inspired Riley to improve his teaching and ultimately to create ActiveGrade! That said, aside from the 20 clicks we got from $100 adwords credit, all of our outreach has been through the blog and other free networking avenues, so… yes, it’s definitely helped us acquire new users.  It was gratifying when over 200 people signed up for our beta test without a lick of formal advertising!

Spencer: How do you tap into the education community and stay accessible?  Do you have plans to attend any education conferences or trade shows?  So far for your product has good old word of mouth been more important than blogging and Internet ad campaigns?

Michal: A lot of friends and contacts are in education so we stay up-to-date on the issues facing educators.  Twitter has proven to be an excellent platform for meeting other passionate educators looking to improve their teaching.  A lot of word of mouth has been generated through tweets.  One teacher who found us this way, likes us so much he just spoke about ActiveGrade at a conference.  Our two blogs, Riley’s personal blog, and the ActiveGrade company blog, have both been very useful in generating interesting conversation around teaching and learning.  We hope our blogs can be places of spontaneous community where people come to discuss ideas and be re-inspired.

We only briefly dabbled in internet ads and it wasn’t nearly so successful as the word of mouth.  In the next year we hope to exhibit and or present at educational conferences but we are not yet sure which ones.

Spencer: The Active Grade product seems to have a focus on simplicity (in the vein of a product like Basecamp). What kind of design philosophy exists behind the user-interface?  Does the designer have any personal rules of thumb or is it all intuition?

Dan: Simplicity is key. Your product is only as good as the user’s experience with it so it is important to keep the interface elements meaningful and immediately understandable.

There is nothing more frustrating than encountering a piece of software, knowing what it is capable of, but being unable to understand how to accomplish that thing. Ultimately we strive to make interfaces intuitive to the point where–to the user–the UI disappears, and he or she is able to get their work done efficiently and with confidence.

Spencer: What do you think the most intelligently designed feature is within your product?

Dan: In the current product, the solution for adjusting the color levels and grading scale for standards is a very efficient and intuitive method for what could be a mind-numbingly tedious and repetitive task.

Active Grade - Standards Scaling

In the next major release of the product, the user is working with an entire school (or district) full of teachers, students, and classes.  The new features for comparing data inside the Gradebook are going to turn some heads.

Spencer: In your minds, how do you frame the competition?  Do you throw darts at a poster of Blackboard or admire something about them.  Who is your real competition, anyway?

Michal: Dartboards, definitely.  Mostly we invite our competition over for dinner and then insult them subtly all night long.  No, not really.  Our competition is different from us.  A lot of them are large companies offering full Student Information Systems (SIS).  We don’t have any plans to offer discipline reports, or bus route schedules, etc.  This is a disadvantage for us because a lot of schools want one connected program to handle all their different administrative systems of which grading is just one.  For us, we are excited about the feedback, communication, and learning, so we don’t know that we’ll ever try to compete with SISs.  Some of these products are PowerSchool, Infinite Campus, and SnapGrade.  Whereas some of these products have added on a Standards-Based Grading (SBG) component, our whole focus is on SBG, which allows us to do it really really well.

Spencer: What is Active Grade’s typical development cycle?  I’ve picked up on some hints that suggest new features are implemented at the end of semesters.  Does this allow for larger, more impressive updates or customer frustration?

Michal: We launched the service in November of 2010, so I’m not sure we can call any development cycle “typical” yet.  The upcoming update is a big one, with a fundamental change that allows schools to share data across classes.  We maintain our code in several branches, so we can release big updates like this one (months in development) and also small, 10-hour features.  So, we can also be very responsive to customer ideas and complaints.  Our average response time from complaint to live fix is four hours, and several feature ideas have been up within a day of the suggestion!  ActiveGrade is hosted on servers around the world, but thanks to the excellent design of our infrastructure (Google’s AppEngine) we can release an upgrade with zero downtime on every single server in about 25 minutes.  Since our launch we’ve put up over 50 changes (bug fixes, interface enhancements, and major features like report generation) with ZERO downtime.  100.0% uptime!

Spencer: Google’s App Engine really strikes me as something that’s a great deal for a startup (with its pricing, speed benefits).  Have you seen any drawbacks from launching on this platform?   If you have had a good experience with Google App engine, could you sing its praises?

Michal: There are a few drawbacks. It has a low guaranteed uptime (95%), but in practice its uptime is much higher than that. There is a learning curve.

I frequently sing its praises, though! The price is affordable, and since it’s free ‘til you’re successful, Google absorbs a lot of the risk for you.  The promises of automatic scaling are irresistible.  They’re set up to take you from a tiny startup to a huge operation and they can provide it at an incredible price.  The developer community around appengine and GWT is helpful, and the tools are rich, easy to use, and, somewhat shockingly, also free.

Spencer: How did your team hear about Bitcoin?  Were you all in agreement to add Bitcoin as a payment option?  Active Grade receives subscription payments, which there currently isn’t a Bitcoin service to provide for. Will this affect the pricing scheme for BTC customers?

Michal: Riley heard about Bitcoin on Slashdot in February, and was taken with the idea.  He’s actually the one taking Bitcoins, and will transfer the appropriate amount of cash to ActiveGrade whenever someone orders.  A payment mechanism is something we could definitely use – Mt. Gox has something that looks usable but it doesn’t support subscriptions yet so direct transfer is still the easiest and cheapest option.  We’re hoping Google Checkout will add bitcoin support!

Spencer: (To the developers) Do you have any insight into learning from user behavior?  Any cool tools you’ve used to learn more about your customer?  (User Testing or Mechanical Turk, for example)

Developers: We use GetSatisfaction.com to collect feedback.  We chose it because it allows users to talk to each other, as well as to us, and since ActiveGrade arose from a sense of communal learning and improvement (there’s a very rich teacher blog environment) it’s important to us that our customers be engaged in the philosophical underpinnings of the gradebook.  It’s got a design pretty drastically different from our competitor’s, so we think that sense of self-improvement in the teachers is almost a requirement.

Spencer: What sets the pilot school product apart from the original version?

Michal: For starters, the Pilot Program is cheaper.  We do not charge pilot schools any of our service/support fees because the feedback we will get from these early adopters is more valuable to us.  We will work closely with schools to develop features they want.  Our sincere hope is that ActiveGrade is useful and effective so it just makes sense to work with excited teachers and administrators to make it fit actual needs.

The flip side of that is that there are important features we have not created yet because we want to create them in conjunction with schools.  Also, since it’s brand new, it’s still in a beta version.  Pilot schools get a reduced price because there might be some bugs and because it won’t have all the bells and whistles at the beginning of the school year.

Spencer: So how would you explain Bitcoin to a class of 3rd graders?

Michal: Step 1: Find a situation to which they can relate:  “Have you ever traded part of your lunch to a friend in exchange for part of their lunch?”

Step 2: Ask questions:  Why did you do it?  Why did you trade your potato chips for fruit snacks?  Did you want the fruit snacks more?  So it was worth it to give up the chips because you wanted the fruit snacks?

Step 3: Describe bitcoins simply:  Bitcoins are similar.  I can trade US dollars for a bitcoin because the bitcoin is something I want more than US dollars.  But there’s a little difference. At lunch, once you trade your chips for fruit snacks, that’s the end.  You probably can’t trade back unless you both change your mind.  But once I have traded dollars for bitcoins, I can trade them back for US dollars.  What’s even cooler is that if I keep the bitcoins for a while, other people might decide they want bitcoins too and they might be willing to give me lots of dollars for them.  This means I could trade my bitcoins and get more US dollars than I had originally.

Step 4:  Make the analogy: This would be like you trading your chips for fruit snacks and suddenly 10 other kids really want them too.  One offers you his chewy granola bar. “No” you say.  The next offers you her yogurt and a piece of candy.  Finally, someone offers you a granola bar and his chocolate bar.  This is too good to pass up.  You started with a bag of potato chips and now you have a chewy granola bar and a candy bar.  On the other hand, it’s possible that the bitcoins will lose value.  This would be like you trading your chips for fruit snacks and then all of a sudden the fruit snacks turn in to dust.  You have nothing to eat and nothing to trade.

 

-End

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