Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Kidblog launched four years ago, offering its web tool to educators for free. Now, with more than 4.7 million users and a presence in 75% of U.S. school districts, it’s selling premium versions of the software—and getting help from another startup to handle the often complicated process of getting approval for a purchase.
Minneapolis-based Kidblog, a software platform for educators designed to create a safe place for students to publish their work online, started offering its product for free to teachers and school officials in 2010. Over the next four years, the company refined its product and grew its user base of students and parents to more than 4.7 million, with at least one teacher using the blogging platform in about 75% of all U.S. school districts, plus other clients around the world, says founder and CEO Matt Hardy.
That attracted some venture capital funding for the company, and also marked its readiness to move into the next phase: making money. At the beginning of the last school year, in September 2013, Kidblog began selling on top of the basic software premium features, such more storage space and the ability to embed blog content in Google Plus posts, Hardy says. Those features cost an additional monthly fee of $5 per month per class or $2 per year per student, depending on which upgrades a teacher selects.
Kidblog added payment processing technology from vendor Stripe to facilitate the switch into e-commerce, Hardy says. While Stripe is easy to use, most teachers can’t just pull a school credit card out and make a purchase for their classroom, he says. Instead, there’s usually what he calls “convoluted chains of approval” in which a teacher must request that a school administrator, a principal or even someone at the district level, approve the purchase. As a result, Hardy and his staff ended up manually sending quotes, invoices, purchase orders and the like back and forth between the necessary administrators to help a single teacher complete a transaction—which sometimes meant the teacher had to wait weeks to get the software.
Fortunately, another local startup company in Minneapolis, Apruve Inc., has created workflow technology to handle this common problem in B2B e-commerce purchasing. With Apruve, a teacher needs only create an account and enter the e-mail address of the other person in her organization who must greenlight an order. Apruve handles all the work of getting that transaction completed in the background. To the teacher, the process is much like using eBay Inc.’s PayPal to buy something online, Hardy says.
With Apruve, which Kidblog deployed just a few weeks ago, transactions typically close in hours, rather than days or weeks, he says. And for teachers, the transaction appears instant— once a teacher enters all her Apruve credentials, Kidblog “optimistically” allows the order to complete before the transaction is fully closed,. That allows her to download and start using the blogging software right away, Hardy says.
Without having yet measured Apruve’s direct effect on Kidblog’s sales—dozens of teachers have already used it to purchase upgrades—the time savings alone are already well worth the investment, Hardy says. “It really is a difference of what used to take days or weeks to close that sales cycle, that now takes a matter of minutes or hours,” he says. “It’s that stark of a difference.”
Additionally, because Apruve handles all the payment processing, Kidblog can offer it as easily to international customers as those in the United States. In fact, many of the Apruve sales at this time of year are coming from Australia and New Zealand, where the school year is just starting, Hardy says.
Kidblog is also helping a client in the United Kingdom switch from paying for premium features via Stripe to using Apruve, Hardy says. “We have been sending quotes, purchase orders and invoices literally by airmail across the Atlantic because their business office had limitations in how they could use Stripe,” he says. “Apruve will, if nothing else, save on postage and delays.”
Apruve charges fees equal to 3.5% of transaction values, plus 35 cents per transaction, according to Apruve CEO Michael Noble. Stripe charges 2.9% plus 30 cents per transaction.