On Building An Education Tech Company With Projected Revenue Of $3M

Published: September 10th, 2020
Jacob Hanchar
Digital Dream Labs
from Pittsburgh
started July 2012
market size
avg revenue (monthly)
starting costs
gross margin
time to build
210 days
average product price
growth channels
business model
best tools
Github, Asana, Instagram
time investment
Full time
pros & cons
35 Pros & Cons
2 Tips
Discover what tools Jacob recommends to grow your business!
Discover what books Jacob recommends to grow your business!
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My name is Jacob Hanchar and I am the CEO and founder of Digital Dream Labs. We have several products we now sell, everything from educational video games to robots.

Our first product to market was Puzzlets and we continue to expand products to better the lives of children, teachers, and parents. Despite the difficulties placed on us due to the Covid-19 crisis, we are having one of our best years and have almost hit our projected revenue of $3 million for 2020.


What's your backstory and how did you get into entrepreneurship?

I have always enjoyed the sciences and loved learning for the sake of learning. Science and school came easily to me. I spent most of my early days in high school and college as a tutor for various topics like biology, chemistry, physics, and other ‘hard sciences’. I particularly enjoyed teaching to students who struggled with these topics because it was gratifying to see a student succeed. Another challenge I enjoyed was teaching students who were pressed for time, like college athletes, because I felt if I could reach them with a very simple and clear message, that would prove my mastery of the subject.

It is important to carry yourself with self-respect because it is a tiny few who have the courage to take on what you are doing.

I was the first person in my family to get a higher degree and education beyond college. My father was the first to go to college. Several people told me that I needed to become a doctor because I was ‘smart’ and I listened to them because I didn’t know any better. My parents were simply happy to have one of their kids to pursue the title of doctor in front of their name.

I enjoyed learning enough I applied to a few colleges and was accepted by a handful. My favorite experience in the recruiting process was UCLA. How can you compete with the weather in Southern California? As a young man in my early twenties, who grew up in rural Central Pennsylvania, the social life of Los Angeles was very appealing.

My scientific research was a lot of fun and extremely rewarding, not just from an intellectual perspective, but spiritually as well. I felt the work I was doing at UCLA was bettering people’s lives and whether I benefited from my findings either financially or from a career perspective or not, it was all worth it.

My first true interaction with business came as a result of my work on a particular receptor in the brain called GABA. GABA is an inhibitory receptor in our brains. Think of it as an ‘air brake’ on our brain. If we have too much activity in the brain going on at once, bad things happen. We have seizures, issues with learning and attention, and many other disorders when these receptors are not functioning properly. On the other hand, if they function too much, this can result in coma or death.

My research focused on how alcohol acted on the brain. My team and I discovered a spot on this GABA receptor that alcohol could bind to and turn on the receptor, a person getting drunk, and that we could reverse this action, a person getting sober. Further, we found that there were a variety of compounds that could reverse alcohol’s action on this receptor, we found a sober-up pill. Of course, having a pill that could cure your hangover sounds awesome, so we patented the action we discovered and attempted to commercialize it. This was the most fun I had in my research days, pitching this idea to large pharmaceutical companies. However, as we soon learned, there was a lot of liability associated with this compound. What if the person took this and then drank themselves to death? What happened if this compound encouraged alcoholism because you never got a hangover? What happened if a person took this compound and drove home and killed someone? There are very real questions that threw cold water on taking this compound public. Regardless, it was a wonderful experience.

Take us through your entrepreneurial journey. How did you go from day 1 to today?

After the adventure I had at UCLA, it was very hard for me to return to science. I continued on the path of what is called a ‘post-doc’ where you research until you become a professor. I was unhappy and stressed out. I was no longer feeling fulfilled. At about this same time my father, who ran a coal mine, asked if I could help expand the business and take on some responsibilities. I said yes and for the next seven years helped grow the business to the point where we had customers across the globe.

As we sold the business, it was time for me to find something that was my own and that I was passionate about. I looked at a lot of opportunities, but something occurred to me. I could never have a boss again. I needed to run the organization myself, my way. I dabbled as an angel investor, but always thought I could do a better job than the people I was investing in. For some reason, I felt I needed another degree and applied to Carnegie Mellon’s masters in business administration degree. During this time I met some engineers from the Educational Technology Center and the concept of Puzzlets (working title was originally Ludos) was refined and eventually brought to market.

During my first years with Digital Dream Labs, I felt I was out of my depth, that I didn’t have enough experience to understand the technology and the market. I struggled to deal with different personality types and was too reliant on the advice of people who, later on, I discovered, had no idea what they were talking about and that I had several options to improve the company if I just made the hard decision to hit the reset button.

After a while, I become more comfortable and confident in myself and my surroundings. I learned things I never thought I would learn in my life and feel like I have a Ph.D. in electrical engineering. I restructured the company and started to look at where our product Puzzlets was doing the best. Hands down teachers loved it. While we pride ourselves on having educational legitimacy, we had yet to make schools our exclusive focus and then expand from that market to others. As soon as I changed this direction, life became easier. I had a singular focus with a team who believed in what we were doing, not just sitting idle and hoping to collect a paycheck.

Soon after these adjustments, I felt it was time to start introducing new products into the market to keep the company fresh and innovative. As soon as I had this thought, a robotics company called Anki went bankrupt in April of 2019. I was able to successfully bid on the assets and rolled the patents and the entire platform, Overdrive a racing game, Cozmo a robot, and Vector an advanced AI/cloud robot under the Digital Dream Labs umbrella.

Initially, I only wanted Cozmo to interact with our Puzzlet products and didn’t see much value in the other products. After joining various online fan groups I discovered I was wrong and that I needed to bring back all of the products Anki had once offered.

Armed with the confidence of now knowing that I could accomplish anything, I began pulling the team together of people I had met through my times in Pittsburgh. By then I knew who the phonies were and who were the real deal. I believe that I have among the best teams in the world. We are driven by purpose and motivated every day to be better and to do better. I am incredibly lucky to have the team I have now and to have had the harder experiences in advance to teach me to run this team to its fullest potential.

How are you doing today and what does the future look like?

We now stand at the edge of changing several markets. Had a successful Kickstarter that focused on making Vector open source. This will change the way we think of robots forever. I discovered that all these robotics companies and robotics are making the same mistake. They are obsessed with features of and abilities of a robot when that is not what people want. What we see our customers, want, no demand is the ability to make a robot a companion, to be able to make them do what they want. We have launched what we call an Escape Pod. This allows the customer to no longer be reliant on the company and its servers and I imagine will change the way robots are sold in the future. Unless you have an escape pod for your robot, no one is going to buy it.

Frankly, it is the only ethical thing to do when you sell advanced robotics. Further, we have an Open Source Kit for Robots (OSKR). This will allow the user to program the robot anyway they would like. Robotics will never be the same with OSKR on the market. People will be able to program and share the abilities of their robots in ways no one has dreamed of. In a way, we have crowdsourced robotics. The implications are profound, and I think the impact often escapes us because we are stuck in the day to day activities of making this reality.

Another revolution we have kicked off is the idea of uninterrupted play with wireless charging. The racecar game Overdrive allows users to experience real-life toy race cars through an app, yet the charge does not hold long enough, 20 minutes, to keep enthusiasm high. Now with our wireless charging platform, InfiniDrive, racing never has to stop and this can go across several applications, not just race cars.

Through starting the business, have you learned anything particularly helpful or advantageous?

When a person is gifted in the sciences, many people will say, “Hey, you need to be a doctor!” or some other advice to that extent. I don’t think I ever heard, “Hey, you’d be great at business!” Somehow there is a disconnect in our society that business is somehow beneath the sciences. I can tell you from experiencing the sciences and business that business is much harder. Business requires pulling from multiple disciplines and understanding yourself and other people in ways that may not readily occur to a person outside of the business. In science you are hyper-focused and, outside of working on grants or research collaborations, you rarely need to pull from different areas of your brain like a business.

Another thing I particularly like about the business is the need to manage yourself, your expectations, others’ expectations, and their expectations of you. Many ask me, “Oh man, you have to deal with so many people daily, that must be hard.” And, yes, while dealing with employees, customers, vendors, and other ‘stakeholders’ in the business is a lot of work, it is what makes the business worth doing. The only way to scale a business is to sell a lot of products and to sell a lot of products, you have to have a lot of customers and that means having lots of employees and vendors to support those activities.

There were so many times I doubted myself. There were so many times I wanted to break down and cry. When you run a business, it is one of the loneliest things you can do. No one can truly relate to you. Many are so excited to see your idea, hear your pitch and then they go about their business, and say to themselves, “That guy has it made”. Nothing could be further from the truth. There is so much heartbreak involved in the journey. Colleagues are selfish and short-sighted and quit. Despite all your confidence in yourself and the product, investors or others will simply not see it. These add up to some very dark days where I’ve questioned what I was doing was worth it.

However, after a while, you get used to disappointment but better than that you learn how to navigate around it. Soon you understand that feelings are fleeting, and you question your motives more and more, in a good way that keeps you grounded and focused in ways you never thought you could. Personal growth happens whether you like it or not. Greatness is thrust upon you, as the adage goes. I’d say the best thing that has happened to me is I have formed my style. There are ways I navigate conversations, negotiations, tense situations, that comes to me with ease that only experience can provide. If something is tying you up in knots that you don’t like, you’ll learn soon to deal with it or else the business will fail and if you’re passionate enough about the work you're doing because it gives you a sense of purpose, you won’t let that happen.

What platform/tools do you use for your business?

An obsession that I think needs to go away and go away soon is that of using an app for everything. Many members of my team run to several applications in the hope that the applications will make the employees' lives easier. All this endless adoption of platforms does is distract from the actual work that needs to be accomplished because the team now is stuck learning someone else's system. Remember, as you’re starting, there will be plenty of people who will claim they have the answer and will gladly take your money.

The tools we use have come from an actual need that occurred inside our company. For example, everyone needs to know what their tasks are and check in daily. We did this through email until the group grew to more than ten people. We now use Asana to keep everyone on task and track tasks people are working on. The same is with GitHub. Of course, if you are an engineer you will need this tool eventually. However, there is a certain threshold where it becomes necessary versus trading emails. We found it helpful when the group grew to more than five engineers.

CRM or any methods to track customers, provide interaction, ascertain constructive feedback, is of top importance to our company as I imagine it is to many other companies. Yet, we only implemented this after we had a good idea of our team’s talents, our team’s individual needs, and the actual efficiencies we were lacking. My advice is to sign up for various free trials and cancel them immediately if you do not think they are positivity impacting your profitability.

What have been the most influential books, podcasts, or other resources?

I believe that most self-help books are simply rehashes of Think and Grow Rich by Napoleon Hill. Yes, occasionally there are breakthroughs in business techniques and innovations that can help us to succeed. However, these are few and far between and can simply be gleaned by reading the biographies of entrepreneurs you admire.

Books like “Only the Paranoid Survive” or “Winning Through Intimidation” are fait accompli simply because I lived these experiences in the day to day operations of my business. There is an obsession with a myth that CEOs read a lot of books all the time.

While I read daily, my reading is focused on a challenge I am dealing with at the moment. I simply don’t have the luxury of hypothetical lessons that I may apply to me or my business at some future point. Considering I come from the arena of hypotheses, the irony is not lost on me!

Advice for other entrepreneurs who want to get started or are just starting?

An idea that all starting entrepreneurs need to make certain they understand is that some build and some criticize. It is easy in this day of social media to be distracted by detractors, those who would like you not to succeed because they have not in their own lives and want you to experience the same hurt they are feeling. I mention this because when you are first starting you do need to determine the product-market fit and making the customer happy is important. However, there are limits and at a certain point you will have to proceed with a product that will not be one hundred percent perfect and you will have to proceed whether you like it or not, otherwise, you will go out of business. As you proceed there will be customers who will not be happy. While you have to provide service, you are not a servant. It is important to carry yourself with self-respect because it is a tiny few who have the courage to take on what you are doing.

To underscore this point I am reminded of an image when I was a young teenager. My father loved the National Parks and did everything he could so my sister and I could experience them. One year we went to Devils Tower in Wyoming. Many mountain climbers attempt to scale the flat face of this tall monument. My family and I were watching some of these mountain climbers. One mountain climber had taken a break and was opening a pack while suspended by his rope. He was looking for a gear or maybe taking a breather. Almost as soon as I saw this, a man who was clearly out of shape, next to me exclaimed, “Hey, why is he taking a break?” as he gobbled down a hotdog and dripped mustard on his shirt. I think of this image every time I see negative criticism bubble up in our email or social media channels. You are climbing the mountain, don’t let the detractors tell you what you should be doing. The climber finished his climb and I’m certain he never heard that comment; he was too high above us.

If you wanted to climb that mountain, who would you want to talk to? The hot dog guy, me, or the mountain climber? Of course, the mountain climber is the answer because he’s been there before. I was just an onlooker and while I’m a person who is going to be supportive, I haven’t done it. It is important to remember this distinction. Some people will encourage you, but be clueless as to how to help you. Out of embarrassment, they won’t admit to the fact they can’t do anything for you. Instead, find a mentor who has been there before and learn what you can from them. Sacrificing a small percentage of the company for their help will be more than worth it.

Where can we go to learn more?

Our latest developments are on our crowdfunding platform HoneyComb. Take a look!

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