Dobson Founders Series With Paper: “We Knew the Market Was There”

Perseverance is a good attribute for any company founder to have. Philip Cutler, the chief executive officer of Paper, honed it into an art.

Philip Cutler and Dobson Startup Founders

The McGill grad (BEd’ 13) and McGill’s Dobson Center participants (2014) spent four years refining the tech and business models for his online tutoring company before entering the market. He once gave 125 pitches for one round of funding. And in March 2020, he stood his ground against investors who were recommending he cut jobs.

The pandemic had just started, and as schools closed their doors, Philip foresaw they would increasingly rely on technology to enable remote learning. Sure, school districts were distracted, but they would eventually look for ways to support students from afar, he calculated, correctly.

“I was like, ‘Give me one quarter and if I'm dead wrong, I'll lay off 70% of the people and we'll figure it out,’” he recalled during a Dobson Founders Series event this month. “And by early June, we had closed our biggest deal ever, by a mile, with Atlanta public schools.”

Needless to say, there were no layoffs. From there on, Paper embarked on a super-fast growth path, signing up school districts across the U.S. that jumped at the opportunity to offer 24/7 tutorial access to students.


Good Timing

Before the crisis, Paper (then called GradeSlam) had 30 people at its headquarters in Montreal, and about 100 tutors across North America. Today, there are almost 500 corporate employees, and 2,300 tutors.

With demand booming, the company raised funds three times in 13 months, including US$270 million as recently as February. That was good timing. The tech industry has since been caught in a general market collapse that’s hit stocks of companies from Shopify to Meta.

The slump has also spooked investors and brought down the valuations of startups, making fundraising harder for companies in later stages, Philip said. He predicted younger businesses will be affected too but recommended they do not focus on the numbers.

“Valuations do not matter until it's your last valuation,” he told founders in the room. Choosing the right investors, on the other hand, is crucial, he added. “You want to work with the people that are going to support you to get as big as possible.”


A New Model

While studying at McGill, Philip had created a small home tutoring company to pay the bills. But once he started teaching at a school, he saw first-hand how children who couldn’t afford such private services were put at a disadvantage.

He decided to become a full-time entrepreneur, with a new premise: he would sell live online tutoring to school districts instead, so that all kids would have access to it.

There was a lot to figure out, including how to forecast demand to effectively manage tutors around the clock. Philip and his co-founder Roberto Cipriani received government funds for research and development, and went through an accelerator to refine the plan, but had yet to convince investors.

Most venture-capital firms didn’t see the potential for a big hit in the education technology industry, where many had tried and failed. Finding seed funding alone took some 60 pitches, Philip recalled. The breakthrough came when one of the partners at Birchmere, a U.S. fund, looked at it from a different angle.

“His whole conviction behind us was that so many businesses had come before, we could just learn from all of their mistakes,” he said.


Technology Push

Philip, who served two terms as a city councillor in Westmount, has deep roots in Montreal. So, it was a blow that Canadian investors (save for BDC Capital), had little interest until Toronto-based Framework Venture led a funding round in late 2020.

It’s also south of the border that Paper has found virtually all its clients. Even more so since the start of the pandemic, as emergency funding helped U.S. schools invest heavily in technology to make sure kids get connected. By Aug. 2020, 95% of districts could provide one device per student, from 60% before the crisis.

Growing so fast comes with new challenges, especially on the recruitment side. And Paper will need to convince districts to stay on once government funding tapers off. But Philip says strong renewal numbers, and feedback from schools, make him confident.

“People are asking ‘Are you surprised of where you’re at, that you raised US$400 million,” he said. “We’re like ‘No. We’re surprised at how quickly it happened, but we knew that the problem was there, we knew that the market was there.’”

Philip Cutler speaking at the Dobson Founders Series event

More Tips from Philip

Put yourself out there

Philip built his network in the Bay area from scratch. In the early days, that involved going there on a budget and attending free events for founders (food included a plus!), an experience he found taxing but that paid off.

It’s on one of these evenings, bonding over basketball, that he met one of his future investors.

“Spend some time in the Bay area, get connected,” he said. “You’ve got to be in the market, you’ve got to be doing it, living it and breathing it every day.”

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