The Childcare Industry Lacked an Online Presence. I Capitalized.

Hello! What's your background, and what are you working on?

My name is Craig Pearce. I'm the co-founder of DaycareIQ, a Canadian directory of over 15,000 childcare centers across Canada. I co-founded this business with Brandon Parsons about 3 years ago.

Our second product is a paid tool for childcare centers called KidGenius. KidGenius is a web app that helps childcare staff manage their day-to-day tasks and connect with parents. Our app allows staff to track attendance, share photos, record meals, naps, activities, toilet breaks, take notes, post documents on their online bulletin board, and more! KidGenius is available to any childcare center across the world.

Our current customers are daycares, preschools, and afterschool centers across North America. They use KidGenius to help cut down on the time they spend on administrative tasks and connect with parents.

Our current revenue is just over $300/month. It fluctuates month-to-month, since we charge on a per-child basis.

What motivated you to get started with KidGenius?

Brandon and I both became first-time dads in the fall of 2014. The advice we received from every parent we spoke with was to start looking for childcare right away, even though our wives would be on maternity leave for 12 months. Between diaper changes and sleepless nights, the search for childcare started online.

One of the first things we found was that many childcare centers lacked a great online presence. Additionally we found that the process to get our children placed on waitlists was all over the place. Some centers required a faxed form, some required attendance at an open house, others a simple email. Approximately 50% of the locations also had a "waitlist" fee that was between $20 and $150.

We both realized that this process was in need of fixing, and parents would appreciate a single location where they could search for, apply to, and pay for childcare. This led to the first iteration of our web app.

Brandon and I entered the childcare space with zero knowledge of the industry.

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We built an MVP that would help childcare centers manage their waitlists online. We approached many centers in Calgary and discussed the use of our app. Although many appreciated the need for a better tool for parents, many had an established admission process that they weren't willing to let go of.

During these discussions, we heard that centers were struggling with attendance tracking and other administrative tasks required by the provincial government. We pivoted from the the waitlist tool into KidGenius, our current app.

What went into building the initial product?

For our initial approach, we used the feedback we had already received while talking to customers. We began to build the product, and were very lucky to acquire a customer early on who was happy to be engaged in the process. She's an early adopter by nature, and was understanding of bugs and would email us when she found them. She provided a ton of feedback, and was valuable in steering our product where it is today. Many of the features present in the app today were requested by her.

We also met with local childcare consultants who could comment on the issues and gaps their own clients had with regards to administrative tasks they struggled with.

From the beginning, Brandon and I have worked full time in other industries. Brandon is an engineer in oil and gas, while I work in infection prevention at a large teaching hospital. We make time to work on the product on evenings, weekends, and lunch hours. We built everything in-house, including the iOS app.

One of the first things we found was that many childcare centers lacked a great online presence.

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Brandon and I live in the same city, but we now each have 2 kids and full time jobs, so we rely heavily on tools such as Slack and Trello. When we do meet, it's usually at the zoo or a playground. If we want to meet without kids running around, it's always after bedtime!

Our tech stack has evolved over time. The initial version of the app (waitlist management) was built as an Ember.js front-end application that communicated with a Ruby on Rails backend API.

Since then, we've been trying to reduce the complexity of the application. We have limited resources, and our users' needs didn't completely justify a single-page application.

The code currently in production is a plain-vanilla server-rendered Rails app with some Vue.js components used where more interactivity is required. The application and datastore is hosted on Heroku with CDN services provided by Cloudflare.

Going forward, we're working on a new version of the application that will run on Elixir/Phoenix. We're still early enough that a change is feasible, and we see some strong selling points in reducing complexity (through eliminating the caching that Rails tends to require), increasing the speed of the application for our clients, and reducing our ongoing server costs.

How have you attracted users and grown KidGenius?

We've tried our many different customer acquisition channels, and we continue to try and find our sweet spot:

1. Cold emails. Where possible, we have collected email addresses from childcare websites and reached out personally. This is very much a low-effort, low-reward channel, but one we feel we have to continue. We've tried many different styles of emails with various pitches and value propositions, though we haven't done a good enough job tracking response rates to various email campaigns. We're looking to improve this in 2017.

2. Advertising. We're in the early stages of advertising on Facebook and Google AdWords. We have found some success with Facebook as we can target a small niche using the Custom Audience tools. However, this is likely a blessing and a curse — we've seen our CTR and conversion rates drop recently, likely due to ad fatigue. Our audience might be too small.

We've also utilized Facebook's Look-A-Like Audience tool to produce larger audiences that we hope are involved in day-to-day operations of childcare centers.

Google AdWords didn't result in much success, although it was a limited trial. We found there wasn't much search traffic for childcare software and conversions were low.

3. Conferences. We've attended a few local conferences as a vendor in Alberta. They're fairly low-cost, considering the industry. Participants are usually only given 30-60 minutes a day to visit the vendor area. We've found some traffic during lunch hours, but the majority of customer engagement happens during the two 15-minute conference breaks. Staffing a booth for a whole day conference with only 30-60 minutes of customer engagement hasn't been a valuable use of our time.

Potential customers are especially willing to talk about their pain points.

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4. Direct mail. We recently trialed a direct mail campaign to 100 childcare centers in the Edmonton area. We printed postcards from VistaPrint, added our own ad copy on the back, and mailed them out. We included a special coupon code (6 months free) so we could track sign ups. Although no one used the coupon code, we did have a few centers sign up right around the same time the postcards should have been arriving.

We learned that users won't always read the entire ad copy so it's important to have another method to track conversions. In this case, we had the name of each postcard recipient.

We also learned to just go ahead and pay the extra money for two-sided printing. Getting card stock through some printers isn't easy.

Month DaycareIQ Unique Visitors
Oct 2597
Nov 2884
Dec 2335
Jan 4091
Feb 4154
Mar 4737

Over the past 6 months our monthly unique visitor count has been growing steadily.

Month Items
Aug 2312
Sep 5753
Oct 8664
Nov 7914
Dec 6106
Jan 8082
Feb 8304
Mar 11727

What's your business model, and how have you grown your revenue?

We'd launched our previous waitlist tool with a tiered pricing plan. Being tech-savvy people with lots of exposure to SaaS pricing, we were familiar with tiered pricing plans. But this wasn't always the case for our potential customers.

Our target customers are still likely using paper and pen for many of their administrative tasks, and weren't familiar with SaaS businesses or their pricing models. When we pivoted to our new product, we decided to have a single pricing model to simplify the sales pitch.

We charge the childcare center $1/child/month. If a childcare center has 60 children, their cost is $60 per month.

Unlike some of our competitors, we do not charge per licensed space at the childcare center (every licensed childcare center has a set number of children they can enroll, depending on the size and number of staff). For centers using other software, this sometimes means paying money for children that don't exist.

We believe our pricing should reflect the value our customers get from our software. Therefore we only charge for the children present. This creates some issues, as our revenue fluctuates with attendance at our customers' centers. For example, we can anticipate a drop in attendance in August/September, when many kids return to school. However, throughout the rest of the year, it becomes more challenging for us to forecast our revenue.

In March 2017, we collected $306 in revenue. The majority of our customers pay through Stripe. However, we do have one non-profit customer paying monthly by check. Due to their non-profit by laws, fluctuating payments require two-person sign-offs, while a flat-rate payment only requires one-time approval. Therefore, we worked out a deal with them to charge a flat fee that approximates their average enrollment.

We feel that, as we start up, every paying customer is important. So we were willing to work within their bylaws. This may not be a sustainable option in the future without additional services for invoicing.

What are your goals for the future, and how do you plan to accomplish them?

Our current goal is to continue onboarding customers to help build revenue. We are pushing the limits of some of our various plans (image hosting through Cloudinary and database through Heroku Postgres). Our next few customers will push us over our current limits, and we'll need their revenue to pay for the additional cost.

However, we've determined the next big feature to ship and have reviewed it with a number of childcare centers who are helping us shape the design and functionality. Once available, it will provide an additional revenue stream which should accelerate growth and provide higher per-child earnings.

What are the biggest challenges you've faced and obstacles you've overcome?

Our biggest current struggle is with users who sign up but never engage. A complete KidGenius signup requires the user to enter information on 3 separate pages, something we realize is a lot to ask of users. Surprisingly, many people complete this entire process. But once they get to the "Add Child" step of the flow, they drop off.

Our process is to email them that same day and on 3 subsequent days, each about a week apart. For unknown reasons, we get very few responses to these messages. For us, it's odd that someone would go through 3 signup pages and not respond to a single email or log in again.

Similarly, we've reached out to inactive customers asking them to fill out a survey, offering a gift card as an incentive. Oddly, only one person has completed this process, but they didn't leave their email address, and so couldn't claim the gift card.

Another ongoing challenge is that, approximately 2 months after we launched our KidGenius app, we learned of a company who had developed a very similar product and received a $600,000 investment from two well-known venture capitalists. They were offering a freemium product and received wide public media exposure. They've since raised a $10 million series A round. This validates our idea, but also gives our competitor a large pool of capital to win over the American market.

What were your biggest advantages? Was anything particularly helpful?

Brandon and I entered the childcare space with zero knowledge of the industry. We were able to research standards and legislation, but talking to users helped us the most. We found many childcare operators who were willing to open up about their struggles.

A big advantage we've had is that we're both very thrifty people and have been able to run this business with few expenses. Initially, we each invested about $1,500 into the business, and that covered our costs before we had any paying customers. Our current revenue covers all of our operating costs. That said, our advertising spend is slowly reducing our bank account.

We both have broad but complementary skill sets. Brandon is an incredibly talented web developer, but he's not as comfortable chatting with customers as I am. I've been able to step in and assume that role, meeting with clients, attending conferences, and setting up the marketing efforts.

What's your advice for indie hackers who are just starting out?

Our recommendation for new founders is to not be afraid to ask for help. You will be surprised how many people are willing to take an hour or two from their day to chat with you about your problems or issues. The same goes for asking for help online. Use sites like Stack Overflow, random Reddit subs, or Hacker News. You'll be amazed with the effort random strangers put into helping you.

Also note that potential customers are especially willing to talk about their pain points. It's important to get them on the phone early, maybe even before you've built a product. When we say to customers, "We are thinking of developing feature X. What do you envision it will look like?" they are willing to tell us. These early adopters (who will be your first customers) will also be the ones who recognize the opportunity to help shape the future of a company they might work with.

Where can we go to learn more?

If you're in Canada, and you're currently looking for childcare, we hope you turn to DaycareIQ to assist you. It's free, and we list childcare centers in every province and territory.

If you have children in childcare anywhere in the world, and you feel like you get too little communication from the staff, we recommend you check out KidGenius.

Reach out to us on twitter at @DaycareIQ.

We'll be hanging out in the comment section below, and are always happy to answer questions or chat about problems you're facing — maybe we can help!

DaycareIQ , Creator of KidGenius

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Courtland Allen , Indie Hackers founder

  1. 2

    Hi all! It's me, Craig, co-founder of KidGenius. I'll be hanging out, willing to answer any question you might have! Thanks for reading about our little startup :)

    1. 1

      Craig, great interview! What new channels do you plan on testing for user acquisition?

      When you do a phone call to discuss pain points, how do you start the conversation?

      1. 1

        Facebook advertising seemed to work quite well. We've turned it off for the time being simply because we are working on a rebuild of the site and will be implementing a drip email functionality once that is complete. Currently all emailing for new clients is done completely manually. It can be a lot of work.

        Usually phone conversations come from an email reach out. They usually have responded with a comment about their pain point and we go from there. Often it is about attendance reporting, which is fortunately one of our strongest features.

        1. 1

          are you going to manage the email drip with 3rd party software or with your own?

          1. 1

            Going to develop our own. We have built the flow sheets and associated emails already. We have a lot of events (adding child, adding program, marking attendance etc etc) so we felt it would be better to control it.

    2. 1

      really excited that you guys are going with elixir/phoenix ... It's such an impressive technology that should be adopted more often :)

      1. 1

        I can't really comment on it too much, that's Brandon's world (co-founder). If you had specific questions, I can bring him in here.

  2. 1

    Also- thanks for putting this out there Craig.
    Australia might be a good place to have a look as we have a reasonably advanced daycare system, though our government subsidy system probably complicates things a bit too much for an early bookstrapped product.

    1. 1

      Subsidy actually makes things better in a way. We have subsidized childcare in every Canadian province and it's different in each. Our attendance reporting feature allows you to sort/filter by various parameters including subsidy. For example, in Alberta (my province), childcare operators are required to report particular values including number of children on subsidy over 100 hours, number under 100 hours etc. Our tool does this in a few clicks.

      So Australia might not be too bad of an option! Thanks

  3. 1

    Hey @csallen/Courtland - is the DaycareIQ IH link under 'Where can we go to learn more' supposed to resolve to another IH interview? I'm really really really interested in the directory business ;)

    1. 1

      That should link to www.DaycareIQ.com our main directory.

  4. 1

    I'm impressed to see all the daycares in my town listed!
    Do you scrape the provincial government listings for licensed providers? Do you do any sort of manual verification (eg. phoning the daycares) to see if they're still around?

    Also, have you had any pushback on price? I don't know why, but I imagine daycares as operating with small margins.

    1. 2

      Hi - ya we scraped the data. Every province was different was it was quite a bit of work. We haven't verified data but every so often we find a location that isn't operating and we remove it. I've used Amazon Mechanical Turk (the obvious tool for verifying locations) for other operations and I don't trust the data that much.

      I also did quite a bit of manual data cleaning as some locations were obviously not regular child care centres (ex. in some provinces, child minding services at gyms are required to register as a childcare centre).

      For the operators we have a conversation with, they have no problem with price. Currently they spend many hours each month manually counting attendance hours (majority of provinces have attendance reporting requirements). Our app does it all automatically so the price ($1/child/month) is worth it alone for that feature.

  5. 1

    Would you mind mentioning that startup who got funded?

    1. 2

      Brightwheel. Received funding from Chris Sacca and Mark Cuban on Shark Tank. Now you know what I mean by "wide public media exposure" :)

      1. 1

        Hey @craigp - I run a startup in the same space called Munchkin Report.

        I wrote an essay on why Brightwheel being on Shark Tank doesn't matter (to me). Hope you find it interesting:

        https://medium.com/@rsobers/my-competition-was-on-shark-tank-and-frankly-it-doesnt-matter-1f44960b1e53

        Would love to know your take after reading it.