Starting Virtual Reality Schools of The Future With Erika Donalds

Mario (00:00:00) - Hey, guys, Welcome back. I'm really excited because today I've got a guest that I happen to be friends with and is in some other mastermind with me, and her name is Erica Donalds and she's with Optima. Ed And this is going to be a little bit different angle to our discussions and I think you guys are going to be really intrigued in the type of business that Erica has been building, and I'm super impressed with it. Erica, welcome. Thank you so much for doing this. I know you're super busy.

Erika (00:00:30) - Thanks, Mario. I'm glad to.

Mario (00:00:32) - Yeah. So Erica's got a very unique background because she comes from investment banking and I'll let her kind of tell her story a little bit. But now she's in a whole different world, which is education. So finance to education. And she's actually in the virtual reality education space as well. So I guess you could define your two businesses as, you know, an education management company. So you manage schools, which is something that many people may have to think to get their head around.

Mario (00:01:06) - And then secondly, a virtual reality education company. So we're talking about, you know, futuristic type things that I definitely want to talk about where the future is going in education both nationally and globally. So let's dive right into this. Erica, if you could kind of just give everybody an, you know, a minute or two storyline, how would you get to where you're at? What were you doing before? What are you doing now?

Erika (00:01:33) - I definitely have gone through each end of the spectrum when it comes to my career. As you said, started in investment management. I'm a CPA. I spent 20 years in a Wall Street firm going back and forth between here and Manhattan, managing all of the operations, finance, HR, basically all the back office for an investment firm that was managing $2.5 billion in assets, I was really at the top of my career, was a partner and part of the management team of four in my company. And I kind of copy education bug at that point. When I ran for school board, I did that just as a mom, just with an interest in my local community.

Erika (00:02:13) - I like doing community service and volunteer work. I helped start a school here for my own children and just for my own edification as something to do as a volunteer and then decided to run for the public school board. Again, that's a part time gig. It's not something that I ever thought would be a career. But as I was serving on that school board for four years, I really discovered that there need to be more entrepreneurs in education. There need to be more problem solvers. I knew I had the experience both in compliance and finance and running a business that would be needed to help schools be successful. And I also knew that being in government was not the way to go to really impact children's lives. So when I left the school board, I started Optima, decided to start my own string of schools. So we operate sort of like a district. I think that helps people to understand what an education management company does is. We operate as a district for a number of schools, in this case classical charter schools, as well as our own virtual school and hopefully soon private schools.

Erika (00:03:14) - But we do all of the back office and we help to manage the academic quality control to make sure that students are learning and getting the quality education that they deserve. So I've had a great time over the past ten years being both a school choice advocate and now being actually able to offer school choice to families in a way that I'm really passionate about through classical education and through different modes of delivery, including brick and mortar schools, as well as now the world's first virtual reality school.

Mario (00:03:42) - That's so crazy. So I'm excited about this discussion. Guys, stick around till the end because we're going to definitely tie all this into what you're doing, both in entrepreneurship and even real estate. We can talk a little about a little bit as well. So, Erica, can you explain generally how a management company, a private management company, gets involved in managing a brick and mortar school?

Erika (00:04:06) - Sure. Now, in my case, I actually started the school and the management company at the same time. So in a place like Florida, in many states around the country, you can actually start a nonprofit school on your own.

Erika (00:04:18) - You can write an application which is very much like a business plan. You get approval from your local school district and that's different in every state. And you start up the school, you hire the staff, you get investors, you raise money, and that's a nonprofit. At the same time, I started the management company Optima at the time, it was Optima Foundation, and that company is where I hired the accountants. I hired the back office staff, the operations people, and we perform those services through a contract with the board of that school. And that's how the management company was born. I knew that it was going to take a little while to get to economies of scale, but I was quickly trying to get to three schools so that I would have the economies of scale to have an accountant that served all three schools or an person that served all three schools, etcetera. And so we opened a school a year starting in 2019, 1 in 2019, 1 in 2021 and 2021. Yes, I started my business in the middle of Covid and opened brand new schools in the middle of a pandemic.

Erika (00:05:21) - But that was fun. So we got to those three schools pretty quickly and we're able to achieve that economies of scale through the pandemic. We also discovered a demand for an online program and we started to develop that. And so that back office management function now serves multiple charter schools that we help to start up. We also have at least one client now that was an existing school that needed those services. So we brought them on as a client. And then of course, we service now our own virtual program.

Mario (00:05:53) - So if you guys are paying attention to this, we've got a bunch of different angles here. We've got for profit management company, we've got a nonprofit school, right? We've got interaction with government, we've got private sector. So this is very complex business model in the way that I've understood it. And when she's explained it and. There's a lot of moving parts to it. So just like how a lot of us are familiar with how a property management company operates, a commercial, you know, commercial property, apartment building or even single family homes.

Mario (00:06:28) - It reminds me much of that. Like you've got the business and then you've got or you've got you've got the real estate and you've got the the business itself. And then you've got a management company, a third party management company that essentially comes in and does all the administrative and operations side of it to manage the teachers, manage staff, do everything, grounds, maintenance, all of that, right. I mean, you guys are essentially a property management company for schools.

Erika (00:06:52) - It absolutely. And we also manage all the financing, which I know is a big part of your business as well. So we've done tax exempt bond financing for the nonprofit that owns the school. We've also done commercial financing. We've worked with EB5 financing as well as new market tax credits, which also, you know, if it's an affordable housing area. So so that's something that my my investment background really brought to the table because a lot of these well-meaning and academics, they want to start a school, but they do not have the business acumen to manage a multimillion dollar enterprise or to secure $26 million in funding in order to build a brand new building, which is what we do for our brand new schools.

Erika (00:07:38) - So I was able to get in there and evaluate the different financing options, find the best programs, whether they be government subsidized programs such as EB5 or new market tax credits, or if it's a tax exempt bond. Navigate the compliance through all of that and the different financing options and help to find the best deal on behalf of the school. So that's another function that we serve that, you know, you're when you're talking about to your point, some of these are more mom and pop. They're not, you know, trying to scale or expand. They're just kind of running it as they go along. And schools are virtually a lot the same way where they're really not trying to replicate. But we're coming in and saying, this is an amazing program. We need to reach more children with this and how do we do that in a scalable and a smart way that actually benefits not only the students, but also the communities that we're going to?

Mario (00:08:28) - Yeah, sounds like a pretty complex capital stack, too.

Mario (00:08:31) - Mean you're dealing with bonds, you're dealing with real estate finance, you're dealing with different government programs, things like that. So pretty interesting. Let's, let's take it now from the basic, which I say basic. It's really not that basic, but the, the education management or school management business. And let's take it into the future. Let's talk about how your virtual reality school has, how it started and where that is, what how it functions and how it works. And then I want to dive into some, you know, go down some rabbit holes on this.

Erika (00:09:05) - Or so like everyone else, we had to create a distance learning program during Covid, and this was the first year of our first school when the pandemic hit. So I was very fortunate that my school leader had done a hybrid program before. So she kind of knew what parents needed at home and how to set it up for them to best communicate what they needed to do or what the students needed to do. And we just set out to create the highest quality program possible that replicated the in-person experience for our students.

Erika (00:09:34) - And what we ended up with was a demand for our program outside of our own parents. So we had parents calling us whose kids didn't even go to our schools asking if they could participate in our online program. So we thought, Well, we have something here that's in demand during the pandemic, but what about when the pandemic is over? And once we were able to bring everyone back 100%, we had about 100 students and their families that wanted to continue the online program. And I looked around at the marketplace and found there really wasn't something similar available a classical online option with live learning every day that really replicated the in-person experience. This is prior to getting into the picture, actually decided to do a virtual school based on that demand and our experience during the pandemic and then look for a leader for that initiative because I knew I couldn't do it. All right. As a CEO, you're like, oh my gosh, I'm going to add another product to my plate here. I was introduced to my my new chief innovation officer, Adam Mangano.

Erika (00:10:31) - He's now been with me for over two years by a mutual contact. And he has a degree in the classics, which speaks to the type of education that we deliver. But he had also been working on a VR classroom initiative for about seven years. When I spoke to him, he flew to Naples, where I live, put me in a VR headset, and I was in a classroom with his eighth grade class at the school. He was head of school for at the time we were underwater and these classmates were talking to one another, interacting, labeling different fish and whales and talking about their projects. It was mind blowing like, this is such a game changer. In that same tour, we went to the moon. We went to just an actual classroom where it looked like a classroom. You could raise your hand from your seat. You could go to the board, right on the board, interact with your teacher and other students and thought, this is the thing that our program needs. And you put the two of them together, we are going to have the most amazing virtual online learning program that has ever been invented.

Erika (00:11:31) - And we've been working on it. We've built our own curriculum. We had a full time school that started in August and just finished yesterday, 173 full time students. And we have about 500 students signed up for next year. So it's actually exploded here in the state of Florida. And we've found other ways to serve students using that online program, including students with special needs who are able to access the standards based learning through the VR and really interact with the learning experience in a way that they weren't able to before. So it's something I never thought would be a part of, but it just it's one of those entrepreneurial things that happen, right? You kind of stumble upon something that has legs and you have a choice to make or you're going to do this hard thing that you didn't really set out to do and lean into it. And thankfully I did that. And I got the right people in place to help really take off with it. Or are you going to go, Oh, that's that's not really our bread and butter.

Erika (00:12:28) - You know, our bread and butter is brick and mortar schools. That's what we're going to stick to. And I'm really glad that I took the chance and grew in this way because it's now it's going to be such a huge part of our business going forward.

Mario (00:12:38) - It's so much more scalable, too. Mean if you've got you've got physical brick and mortar schools, which is scalable. I mean, you can take that all over the country really if you want to, but there's a lot of complexities with that, such as, you know, the brick and mortar building itself, building those buildings, hiring all the the maintenance staff and things like that. But with your virtual platform, you could take that globally. And, you know, obviously there would be some some government issues that you got to deal with in each country, but in each state. But it's far more scalable and more cost effective, I would think.

Erika (00:13:15) - Well, yeah, think about the government issues that you have to to deal with when you're trying to build a building.

Erika (00:13:20) - Mean we're building two buildings in Lee County here. It takes a whole year to get through the permitting process and then some and it's very expensive. Look at what the pandemic has done to building costs. So get interest rates, cash flow right now, don't have to tell you how difficult it is to get a hand on cash right now to even do any of that construction. So, you know, we couldn't have anticipated that. So it really is a diversification play for us as well. We were going to go into other states with our brick and mortar schools. We've had a lot of other states interested in bringing us there, but we just weren't able to figure out how to scale that brick and mortar in a in an efficient way. But we're already within the first two years of the business in other states, and we're able to offer it through their their own government funded education programs in Arizona, in Iowa, Idaho, West Virginia, much easier to get into those other states, even when you have to navigate some of the government approval process for education, you don't have to also navigate the government approval process for building and zoning and all of those things.

Erika (00:14:24) - And you don't have to secure 25, $26 million in funding in order to get these schools off the ground.

Mario (00:14:32) - That's awesome. So you've mentioned a few times already early in this discussion, people and you know, you talked about being a CEO. It's you get spread very thin very quickly, which we're all familiar with. But what you've done is you've found some really key players to help you both in the brick and mortar and the virtual world. Like you said, you had never done anything in the virtual reality world, but you found someone who had that experience and was doing it at some level, and then you implemented that into or basically started a new business but implemented that in and have now now basically created an entire business around it. Can you maybe talk about how you've been able to source and find some really solid people with the backgrounds that they have, especially for a newer business like yours?

Erika (00:15:21) - Yeah, this is so important and difficult, right? When I first started my business, I went back to the people who had worked with in various capacities over the years who are just solid, dedicated, hard working people who I knew would connect with the mission.

Erika (00:15:36) - And the mission of my organization is to make classical education available to every family. Of course, the mission of most organizations like ours is also to make a profit, you know, and to to hire people to grow, to scale. But think centering people around a mission that makes them feel good about what they're doing, like delivering a high quality classical education to families and to children, that is going to change. Their life trajectory is going to change our country and our culture. It really helps people to get buy in. So whether you're an accountant or a facilities manager or, you know, any anyone that's coming into the business, that's how you come in. You come in by connecting to the mission and the vision of the organization. So starting with the people who had worked with over the years, who I knew were very talented, whether they knew anything about education at all, I went back to those people and said, Hey, what do you think about this mission? I'm starting a new company.

Erika (00:16:24) - Would you come and work for me? And out of the six or so people that I first approached on that, all but one came with The one that didn't as an accountant and wasn't very is very risk averse. So she was like, It's a startup. I'm not really sure about that, but for the most part, those are all the people that are still with me and part of my leadership team today, the ones that I had worked with in politics or volunteer work or at my previous companies. So I'm really proud of that. And beyond that, the first thing that we do when we interview people, when we're looking for people is get them to connect to the mission and then also ensure that they're aligned with our core values. And those core values are service, professionalism, excellence, joy. And I feel like, you know, talent is absolutely important. We need that. In fact, we're a remote company as well. So it's really important that you have people who can manage themselves, are self-starters, you know, work hard on their own.

Erika (00:17:22) - They don't need to be managed. Um, but getting them to connect with the vision and the mission and the core values of the company is so critical right off the bat. And we've probably heard this many times, you know, hire slow fire fast. There have been situations where bring somebody on and it's you can tell right away that it's not the right fit and don't waste any time. Right. It could really damage your culture the longer you allow people to linger that are pulling away from the mission, the vision and the core values of our organization. So I think bringing people in from the private sector, um, in their accounting world or in other worlds that think like, oh, don't know about education because they don't think of that as a corporate job. Um, getting them connected to the mission and showing them that it truly is a professional organization and this is what we're doing, accomplishing and this is how we're growing that helps them to get buy in and see the growth trajectory for themselves and for their careers.

Mario (00:18:23) - So true. Mean, when I think of education, I think of a, you know, system and model that is and equated, just riddled with government inefficiencies, just, you know, nothing that really makes a whole lot of sense anymore. And you're talking about bringing entrepreneurs. You're an entrepreneur, right? You're bringing business people into a very old business and and completely turning it on its head and changing it around, which is pretty cool. And I can see how people would be excited about that vision. You've talked a lot about vision and core values and things like that. Are you guys if I if I remember correctly, you guys are operating on iOS, correct?

Erika (00:19:04) - We are, yes.

Mario (00:19:05) - Yep. So very systematic operating system that allows you to get very organized, which if every school is running on iOS, I mean we'd probably be have a much more efficient school system. So again, combining business principles into an education platform for our kids is pretty, pretty cool. Now, what kind of challenges, you know, do you have? To deal with in the education space, with politics and just with you know, it's a it's a it's a business that many of us aren't familiar with.

Mario (00:19:40) - What kind of challenges do you go through in that sort of a business?

Erika (00:19:45) - Yeah, there are definitely more challenges in education when it comes to politics than in other industries. But for example, when we started our first school and we had to get government approval, there were two different government meetings, public meetings of the school board where there were over three hours in each meeting of public comments against our application. And they were vile. Mean they were really nasty. They created charts of the conspiracy that was going on to break down the government monopoly. That and it was ridiculous, but it's something that we had to press through. And really, again, going back to being mission focused, it's it's easier to take some of that when, you know, you're on a mission. These people don't want you to achieve the mission because they have a monopoly and they're trying to protect it. And we just have to keep pushing through. The lesson there, though, is we went back again for a second location in that same community against that same board, and there were only five public comments at that approval and all of them were positive for our school.

Erika (00:20:49) - So once we were there, we were able to show what we were doing for kids and it completely turned around the narrative. So other industries do experience something similar where there's a monopoly or a virtual monopoly by a company that doesn't want competition. Mean look at the taxi drivers and Uber, for example. Right? They went insane when Uber came on the scene with innovation. Think any time that you're innovating an old school industry and bringing something that could bring real competition, you're going to get that pushback. So but because we are operating in more of a public realm, we have to go to public meetings and have approvals in front of school boards, in front of county commissions. There's opportunity for that opposition to be very loud, very organized, and we just have to do the same thing. We have to either press through with, try to do it quietly, and we've kind of done that before where we don't even bring anyone speak in favor. We just work behind the scenes talking to the people who matter and the people who are going to vote.

Erika (00:21:45) - We know there's going to be a lot of noise, but we just work directly with the commissioners or the staff. But we've also done where we've invited as many people as we can to those meetings to speak in favor. It just kind of depends on the situation. And you do have to know the politics. We've hired political consultants in some communities even to help consult with them over if we don't live there, You know, who are these politicians? Who are these elected officials? Who's influencing them? What's important to them? And help us to kind of navigate the waters. So sometimes you have to do that with zoning. I'm sure, with some of the other businesses that you talk to.

Mario (00:22:22) - So a lot to unpack there. One thing I want to also let everybody know is that, you know, when Erica talks about doing these public, you know, meetings and all of that and dealing with all this, the politics, a lot of times when you're coming from a very neutral standpoint, you're in a position of strength.

Mario (00:22:41) - Right? Because nobody really knows where you stand. But, you know, without getting into too much detail. Erica and her family are heavily into politics, so there's no question of where she stands politically. Very conservative family. And and so that also creates additional opposition because they know where you guys stand politically. And you guys are very bold about it, which is, you know, I would say inspiring because a lot of times people try and hide their political position to get what they want. But you guys, you're you're far more bold about it and not afraid to make that clear. And so I think there's additional challenges, but there's obviously been some success behind it. You've got people, you know, classical education and I don't know the exact definition of classical education, but tends to have a my understanding of it tends to have a very conservative view on on on education and things like that. And so you're also attracting people who have similar views as you and you get a much stronger base, a much stronger following, a much stronger client base when you are very defined and clear about where you stand on things.

Mario (00:23:52) - And could you maybe talk about that a little bit just, Erica, about how maybe not being afraid to to to be bold about your your stance on any views, not just politics, how that can maybe benefit you in business in general.

Erika (00:24:05) - Sure and think it sort of happened to me accidentally because before I was involved with politics and I was just a regular person, you know, working in investments and my husband was as well. We were we were vocal then about our opinions. But you didn't think then like, oh, no, this could affect me running for office someday. I mean, never, ever thought to be in politics or need to suppress my opinions at all. So kind of just started out life with being open and honest about how we feel about things, because who cares, right? I feel this way and I'm courageous about it. But then, yeah, once we did get involved, um, I noticed that when you speak out on something that you think is right and the only reason I speak out on anything is because think it's, it's the right stance.

Erika (00:24:50) - And I'm trying to convince other people of what I think is right for whether it's for kids, for culture, for our country. Um, and that I think speaking out will have a positive effect, you know, not just saying things, to say things or to create a reaction or to create controversy, but really to try to convince other people of what we believe is the right direction for the country to go or for our community to go or for education to go. So that's the reason for speaking out, the reason for continuing to be bold in your opinions, even if you're in a position of business or where you might need these people to buy from you. You know, for me, I want to be the whole person, right? I want to be authentically myself. That's kind of like a new buzzword. Everyone's saying, um, regardless of who the audience is and I think people respect that, regardless of whether they agree with you or not, as long as you're respectful in your tone and when you're in your discourse with other people, you're respectful about your opinions.

Erika (00:25:49) - Even if they don't agree with you, They are willing to do business with you because they trust that you're giving them what is real, right? Because you are so bold in your convictions. So I think there's a combination of things. One, of course, you're going to attract more people that agree with you and want to do business with you because they they believe that you are on the right side of things. But on the other hand, being courageous and upfront, but professional and diplomatic about your opinions build trust with people who either are apolitical, don't care about your political opinions at all, or may disagree on some things. But go you know what? At least I know exactly where this person stands and they're backing it up with action or with with convictions. So for me, um, it could cause a little bit of a problem sometimes. I've had some people push back and go, don't want to do business with them or her because of her opinions and. Okay, that's fine. Um, I don't have a problem with that.

Erika (00:26:46) - I just think, you know, we just have to keep our nose to the grindstone. And that's what I tell my team. Like, I don't want to do anything to hurt the work of my team. That would be my only concern about being vocal is that my team may be negatively affected by that. They're doing hard work and someone's like, Well, but Erica and I don't want to do business with you that would be my only concern about it. But at the same time, it has opened a lot of doors for us and given us a lot of connections and people who want us to come to their state or to their community because they know me, they know where I stand, and they trust that what we are doing is right and good and quality because of how outspoken am on on other things. So guess it could be a catch 22. But this is the way that we've chosen to live and to be. And so, you know, God is in control of the rest.

Mario (00:27:36) - I love it.

Mario (00:27:38) - Yeah. There's the passion also comes out more to when people are when they recognize what you stand for and what you what you're looking to accomplish. People that have similar similar views or like you said, are maybe apolitical. They they can get behind that because they actually know where you're going. Right. When you're when you're off. Often when you're, um, quiet about your opinions on things, people question where you stand in what direction you're going. But when they clearly know what you believe in, they know where you're going with it and they can get behind you and rally behind it. So you get very passionate followers, very passionate clients and even team members, you know what I mean? They may not agree with 100%, but they at least know she's committed.

Erika (00:28:21) - Follow you into the fire. That's right. And let me just go back real quick to classical education, because there is a connotation of conservatism in a lot of circles because of who's involved in classical education. But we really like to put it out there as an apolitical.

Erika (00:28:35) - It's really more traditional education because it goes back to the basics. It's not teaching one way or the other, but it really seeks to teach all sides of all of the issues of history. Um, both sides of politics mean these these students are going to read Marx and they're going to read John Locke, but they're going to read the best that has been written in history about all sides of both our political history, about education, about, um. The wars of the world. Right. They're going to read both sides. They're going to learn about both sides so that they can then decipher for themselves what they believe is right. And that's what it's about. It's about equipping students with all of the foundational knowledge that they need to navigate our culture and our future. And we believe that if you give students all of that information with a knowledge rich curriculum and all of the building blocks of language, including phonics, grammar, Latin, they actually will will be able to decipher all of those in such a rich and deep way and debate them with their fellow students and with their teachers.

Erika (00:29:43) - They can come to their own conclusions and they will be strong in their convictions of their conclusions of all of that information. So that's the goal of classical education, is to really pack these students with all of the background and content knowledge that we possibly can from original sources to let them critically think and draw their own conclusions and really be successful no matter what they choose to do in life.

Mario (00:30:06) - Love it. Yeah. You're you're teaching them to think versus just brainwashing them. Right? Right.

Erika (00:30:12) - How to think, not what to think.

Mario (00:30:14) - Right. Can we hop back a little bit? You know, you've you've been in the nonprofit world. You are in the nonprofit world and you're in the for profit world. Can you maybe talk about, you know, for a lot of us entrepreneurs, we think nonprofit and in government, which are two different things. But, you know, for nonprofit, a lot of times we don't really see that there's a business model there. Um, we just it's just not something that we're familiar with.

Mario (00:30:42) - Number one, um, can nonprofit be a financially rewarding business model for certain business types? And then also, you know, can you maybe touch on just a few few differences between nonprofit and for profit business models that maybe you're not familiar with?

Erika (00:31:03) - Yeah. And I started as a nonprofit partly because I didn't expect it to be a career for me. I was this was kind of a hobby. I was going to raise money, help people start businesses or help people start schools and then move on. And so I was just thinking I was going to raise money and and donate that money to help start up the schools. Not that I was going to actually work for the nonprofit and have it as a sort of going concern, doing accounting work for fees, right? So it did evolve after I originally started the nonprofit into more of a business, but we started the nonprofit for a couple of reasons. One was just raising you need to raise money to start these schools. There's no business. You have to either have investments or donation.

Erika (00:31:46) - And the schools are nonprofit, so that's how we chose to do it. However, once the business was going, we were offering accounting services, for example, to schools. We weren't offering that at a discount. And so, you know, all the attorneys and the IRS and all that decided that those types of for fee services that are not discounted to the schools really don't belong in a nonprofit. So that's how we ended up splitting it between a nonprofit and its nonprofit purpose and the for profit. So the for profit, if you're charging for services and you're competing with other tax paying businesses, you can't get around paying taxes by being a nonprofit, right? If you're both providing the same services at market rate, this business is paying taxes. And this business is a nonprofit. That's unfair. So the IRS says, nope, can't do that unless you're providing it in a nonprofit way for getting donations to subsidize it, you need to move it into a for profit status and pay taxes on those fees.

Erika (00:32:49) - So we move that out into the for profit taxable status. What the nonprofit does is continues to raise donations for the startup period of the nonprofit schools. So the nonprofit raises money to help these nonprofit schools get started. They have to pay a principal before they open. They have to buy curriculum and supplies. They have to pay support staff. They have to market all the things that a school needs to do to start up. So those can be done in a nonprofit purpose. And that's what the Optima Foundation continues to do. Then once the school is up and running and they're paying for services such as accounting and and and all that, that's where Optima comes in as the education management company and contracts with the school for those services. So we've been able to split the two into what is truly a nonprofit purpose and what is a for profit for a taxable entity purpose going forward. And there may not be very many industries that have that ability, but I've always also been very charitable or had a focus on helping others.

Erika (00:33:53) - And so I want to build up this foundation and this nonprofit not just to do what we're doing for these schools, but help educate people about school choice, you know, other nonprofit things, educating the community. Advocating for school choice initiatives and things like that. So I have a vision for the non-profit that goes beyond just the link to the schools and and my other business. So that's just more of a personal passion for me. And it's cool that it all kind of intertwines a little bit but in, in the right way. Yeah. So the difference is just, yeah, like I hope that's helpful that the and it was helpful for me and a huge learning experience for me because I just didn't anticipate it growing into what it's grown into. But think now we're in a good place where things are, where they are supposed to be in terms of the two different entities.

Mario (00:34:42) - Yeah. You know, there's what you're really showing is two different business models working together. And, you know, I learned a little bit about charter schools many years back, probably about, I don't know, uh, six years ago, I actually looked at, um, basically developing, being involved in the development of some charter schools and got my head around a little bit of the financing end of it, how the debt works and how, you know, the, the fundraising of those schools are and how complicated it is.

Mario (00:35:17) - I mean, one thing that really stood out to me and makes it challenging for someone starting a school is they don't get funding from the school district or from the local government for each student until they open. Right? So you've got to go raise money. You kind of touched on it. They've got to raise money. They've got a higher administrative people, the the principal, all of that, spend a ton of money, build buildings, do all of this, and they don't start getting paid till what the quarter after they open and.

Erika (00:35:45) - They start of opening year.

Mario (00:35:47) - Yeah so I mean there's a lot of risk in that and perceived risk in the sense of your, you know, for investors, for lenders, they're like, okay, well, we got to do all of this and then you're telling us the government's going to pay us after we're already open. And I've spent crazy money. So I think it's it's, um, is that partially one of the challenges of starting a charter school for someone who's getting into that business?

Erika (00:36:15) - It's the biggest challenge.

Erika (00:36:17) - You have about two years of work and we estimate about $1 million in expenses that you have to endure before you get paid. And you have to hire all of your teachers and all of this money. So we usually we try to borrow the million dollars by private what we call donor investors. So they're loaning money unsecured to the school to pay for all of those things in the first two years. And once the school's up and running, they can get their money back. So that's separate from the bond, which you also have to borrow before obviously the school opens. If you're going to build a school or even renovate a building. Um, so yeah, ahead of that, they have to lend that money before they even know if you have any enrollees or any, any students enrolled. So it is a huge risk. And I was fortunate that I had a story to tell with and I have a background that people can trust right to. I'm a CPA. I've done this before as a volunteer, filled the school and had a waitlist.

Erika (00:37:16) - So I had a little bit of a background to get individuals or companies to loan us the money to get our first school started. Then when we open the first school, it was full. We have a waitlist and it's done well. So we've got that story to tell. So we've had to build a track record of opening the schools, filling them with students because it's all about the enrollment. That's how you get paid with how many students are actually enrolled in the school, being able to deliver a quality product and keep the school full year after year. So thankfully, those have worked out in each subsequent school. When we open Naples, we had 3000 applications for about 1000 seats in its first year. So we're definitely able to show that there's a huge demand for the classical style of education, but it gets harder and harder to do because the cost of the building gets, you know, higher. Of course, especially right now, the interest rate, the teacher salaries are much higher now than when we first started.

Erika (00:38:14) - So the business model for schools themselves are getting tighter and tighter and tighter and more difficult. What is exciting in a place like Florida and what's also changing our business model is now we have these education savings accounts, which you don't have to have a charter. You can open a private school, take these education savings accounts. It's about the same amount per student as a charter school would be. But you don't have all of the compliance requirements that public schools are under, and you don't need government the same level of government approval to be a private school and to operate a private school. It's purely based on demand. And so, you know, that's an exciting thing. We're going to open a pilot or to next year of the private school model, which is also going to be primarily funded through government funding, but allows us a lot more flexibility in how we offer things and how we start them and where they're located. Hate it and all of that. So think it's exciting and something again, that's transferable as government maybe gets out of the way of your industry allowing you to innovate more.

Erika (00:39:15) - You've got to be nimble, you've got to be flexible to take advantage of the opportunities and be early. Right? This this just passed this year. This fall. It's going to go into effect for a lot of students who are already in private schools. They're just going to take advantage of that and use it for the school they're already in. So next year is the first year you're going to see private schools really pop up that are focused on this new manner of funding like ours. And we're going to be right there on the ground floor.

Mario (00:39:41) - Hey, guys, if you are looking to scale your real estate investment company management company or brokerage and want to use a system similar to what Erica is using in her multiple businesses and be able to systemize and create platforms for hiring and all that and meeting structure go to crops.biz that's ops.biz and check that out. We're helping companies scale both in the both virtual businesses and in person businesses as well. That's crops. Biz So, Erica, let's talk a little bit about raising money.

Mario (00:40:17) - You've got a lot of experience doing that. And what you just talked about here was pretty interesting. I mean, and this is something that all entrepreneurs have to go through is in the beginning, you don't have the track record, right? So going to investors, going to lenders and saying, hey, I need millions of dollars for this concept or for this business model or for this property that's that is vacant today or that I'm going to build. Um, you have to you have to get people to give you money, right? I mean, there's, there's, it's a, it's a, it's something that most entrepreneurs and real estate investors are going to have to go through. And like you said, over time, as you build that track record, it gets easier to raise money. Now the costs have went up, so you have to raise more money, which makes the business model harder. But generally speaking, building that track record, can you talk about how you used your background in the volunteer space volunteering and brought that in and pitched that you know what you're doing in your own business, basically.

Erika (00:41:20) - Yeah. And you have to make the case however you possibly can. Mean I used. Okay, well, I did this as a volunteer and this was successful. That was one part of it. But that can't even be the only thing, right? And here's all my background. I manage this much money so I can manage this money. And, you know, here's where a school like this was started and it was full and they had a waitlist and we're going to do it similar to what they did. And here's where all across the country these schools are going in and they're successful. I think we just pulled in every possible like positive case that was anywhere similar to what we were trying to do and tied it in to say this is why we're going to be successful. So whether it was me and my background and why my background of of success leads to success in this endeavor. But also similar endeavors have been successful like this. And here's how we are similar to them. But think we just came at it from every single angle we could when we were going to these investors to convince them that we could be successful because all of these other factors, we definitely did the 360 view on those of us who were involved in the effort, as well as the effort itself and how we could tie that into other similar efforts either in that community or across the country that were similar and think that's what you have to do with any of these things, whether it's a property or an investment.

Erika (00:42:40) - You have to just rock your brain and research like crazy to try to find examples that you can show of why this will be successful. And frankly, we should be doing that for ourselves too, right? We can't get rose colored glasses. We also should be doing that 360 view and making sure that it's a good investment or a good initiative. But it definitely helps when you show that you really done your homework and turn over every rock to the investors that you're going to to show them and convince them that it's going to be a success as well.

Mario (00:43:10) - So let's break that down a little bit. If you want to raise money and you and you haven't done exactly what you're going to raise money for, you want to start out by, number one, knowing your stuff, right? Know what you're talking about, Do your own due diligence and make sure that it's a viable and it's going to be a successful project for your own purposes, right? Not just to raise money, but know the information, have the data, be educated on it.

Mario (00:43:35) - Number two, you need to use any background that you have, any experience that ties in to build that storyline of, Hey, I've done this over here, this is how it translates into this. Then look at comparables, right? Look at other people that have done similar things in other markets and then explain how that correlates with what you're doing and how it's also going to be successful. And then you also talked about making sure that your macro information, you've got the macro data right that says that things are going in the right direction for what you're going to do and then ultimately sell the story, right? Sell the pitch, sell, sell the information, sell the big picture in the vision of why people want to get behind it and work hard. Would you say that the. First raise is the hardest.

Erika (00:44:29) - Yes, it is. If. So long as the rest of them are successful, right? If you have to raise money again after you fail, that's probably harder than the first raise, right?

Mario (00:44:42) - If your track record doesn't help you, then yes.

Mario (00:44:45) - Yeah.

Erika (00:44:46) - Well, and it's not even always necessarily your track record because just like we go in with all of these other projects and why they were successful, therefore will be successful if one other project similar to ours is not successful. And that's what I've dealt with. They're like, Well, how come you won't fail like them? Because you look just like that. And then you have to go in with all the reasons you're not like that. Even though you may have used that project before to say, Yes, we're like them, so we're going to be successful. So you also have to counter and guess you can go back to the original pitch with that too. If similar projects were not successful, you have to be able to say why you are number one as well and just like you like say why you are like the successful. So but going back to the first grade, it is very difficult because you don't have a track record. And to your point, you need to sell the dream a little bit mean It is a lot of relationship building.

Erika (00:45:39) - You know, I never was in sales before or any type of sales position or even so much customer service position. So I had to learn about how to build those relationships, maintain those relationships, um, even in a way where the business decision is easy. But people make decisions based on relationships, don't understand it. I have a brain, I make numerical decisions, data decisions. But a lot of people in business, including investors, make decisions based on their relationships, whether they like you, whether they believe in your dream and your vision, as well as all of the quantitative data that you're giving them. So that can't be neglected.

Mario (00:46:22) - So very good nugget there. Just because you buy in one way doesn't mean others buy in the same way. So you need to be able to sell the way other peoples want to. Other people want to buy. Right mean that right there for all the entrepreneurs and real estate investors listening to this. Take that, make note of that. If you got anything out of this.

Mario (00:46:44) - She just gave you a super good nugget there. You need to position yourself to offer the way people want to receive, not the way you do if you're analytical, data driven doesn't mean everybody else's. So that was really good. Can you just briefly talk about how you said, you know, and correct me if I'm wrong, but I think you were saying that your first venture was not successful, so it made potentially the second round harder. Can you just tell a little bit of that story and how that happened and how you overcame that?

Erika (00:47:14) - Yeah, and it wasn't my venture. Well, it kind of was. So the school that I volunteered to start and then I left and went and ran for school board, did other things. I wasn't involved in the school anymore. Okay. That's the one that I use to say, you know, we opened the school and we had 400 kids and we had 400 kids on a wait list. So therefore, I can do that again. And people definitely bought into that track record.

Erika (00:47:39) - Well, that school ended up with governance and management problems there in the fights with the district there. You know, there broke their relationship with Hillsdale and just a lot of issues and in the news, too, which is awful. Right. So these investors, when they Google that past work that I did, they see these news articles. And so I had to explain actually and guess I have a good explanation for it. Here's the way that I set up Optima so that those things don't happen to my future school. So I recognize their here's the issues that they ran into and why, and here's how I set up my business differently so that those things would not happen. So that's how I address the issue. It actually wasn't me, thankfully, that was involved at the time, but I did show them how I learned from that experience and made sure that those things were taken care of in my future school so that they wouldn't happen.

Mario (00:48:35) - That's so good because a lot of times, you know, we look at our past and we say, Man, I failed at this or something didn't go the way as planned as I planned.

Mario (00:48:45) - And in our mind, we think that that's going to hold us back. And so showing that you've either learned from your own personal mistakes or mistakes of others and utilizing that to not only improve your business model to be better on the next go around, but also showing other people that you've learned from either yours or other people's mistakes. To create a superior business model is crucial. And it.

Erika (00:49:13) - Worked. I did have to do that with with my own mistakes as well. When we launched the school, we had a whole different idea of how it was going to go. We thought it was going to be very much like a brick and mortar school, and it absolutely wasn't. It couldn't have been more different. So we set ourselves up as if we were doing a brick and mortar school just online. And it we did not get the traction in the beginning that we wanted. And so I did I did that a whole analysis of all the things that had gone wrong in the initial launch of the school.

Erika (00:49:46) - And for each one of those things, what we're doing differently to make sure that our second year is better than our first year. So that was our whole analysis that we did both for our team and our investors of why we didn't reach the goals that we wanted to reach in the first year and what we're doing differently in the second year to accomplish our goals. And now, of course, we're seeing that fruit of going through that exercise. So yeah, I think it's definitely something good and humbling to go through, especially when you go through it with your team. You know, what did we do wrong and what do we need to change? But doing it formally is really important.

Mario (00:50:25) - It definitely keeps you humble and it keeps you changing and innovating your business. And I think that's a great lesson too, when we have business ventures that maybe don't go as planned, don't hit Performa, don't, don't go exactly the way we originally projected, which is very common, I might add, because if you're getting into something new, often you don't know what you don't know yet.

Mario (00:50:46) - And so you're constantly having to modify and tweak your business model in order to be successful. Very few businesses start up in boom and have, you know, instant success. It's usually a constant revising of plan, revising of systems to ultimately hone in on what works and maximize it. Let's let's wrap up this conversation with one last topic here. And I think people are probably going to be very interested in this. Where is technology going with education? Because we see AI everywhere now. It's 2023. That's what everybody's talking about. Right. But where do you see education going when it comes to technology?

Erika (00:51:32) - And think it's more than technology think it goes into innovation as well. I really see education in the future of education as more of an a la carte service where families are able to really customize the educational experience for their children. I've actually been advocating for that for about ten years, and it's finally coming to fruition thanks to government kind of getting out of the way and allowing for that. But let's say, you know, you have a child who is really great in math.

Erika (00:52:01) - They are just off the charts in math. You want them to be able to do math and learn math at their own pace because they can get it and move on so that they're going to do self-paced and you just need to buy some software for them to do that. But they struggle with reading. And so you want them to have more of a one on one or small group experience in reading. You don't want them in a classroom with 30 other kids. So you you spend your your education scholarship account dollars on a small group experience for them for reading and your local history museum does history classes now that you get credit for. So they take the history class there and then they go to a regular, you know, traditional public school for the remainder of the day for and they play sports there and they, you know, take music and whatever. I see that as the future of education and technology makes that possible because you're going to need a lot of technology to facilitate those selections. Right. And kind of allow for this sort of gig economy when it comes to teachers and other talented people who are going to contribute to this.

Erika (00:53:04) - Um, but that doesn't mean everything is going to be on technology, right? It just kind of depends. Just like in work, right? We're seeing a lot more work from home, a lot more use of technology when it comes to work and for business. But it doesn't replace the in-person experience that we all need when it comes to closing the deal or building those relationships and think school and education is going to end up the same way, we're going to find the balance of these things can be done efficiently, online or in VR or on a phone or however things that we haven't even thought of yet. But certain children are going to need certain things in person in order to thrive. And it's going to be different for every person, every school, every, every mechanism and every family. So I just see a lot more of a dynamic experience for students and families going forward as the government loosens the reins on this uniform system that we've been used to for the last 100 years. And I'm here for it.

Erika (00:54:05) - I just can't wait for the education innovation to really take hold. Florida is in a good position. Arizona is in a good position to allow for that. I don't think we can even imagine what's possible if we actually have the freedom to innovate and the free market to allow people to make those choices.

Mario (00:54:24) - Eric, I think you just kind of bent a lot of our minds a little bit. You may be very familiar with these concepts and kind of that whole broken up education, I'll call it platform. It's not really a good way to explain it, but that may be very familiar to you, but for many of us, that is just wild to think that our kids and future kids will potentially be doing some of their school at home with glasses and being able to swim through the ocean and look at different fish real time or in a real world kind of atmosphere where they can understand things better. But then at the same time they're going to go for their stuff at local gym and then go to, you know, and and get involved with other students and outside activities, but kind of like mixing the different types of education or what they're learning with in different situations or in different either physical or virtual worlds, which is mind blowing for mind blowing for me.

Mario (00:55:33) - And really it's very relevant for everyone, whether people have kids or not or their kids are are out of school already. It's going to change our world a lot and it's going to affect our businesses. It's going to affect our future. So thank you for getting into that a little bit. Erica. This has been a ton of fun. You've expanded my mind a lot and hopefully the listeners as well. How can people get a hold of you? And more importantly, who should get a hold of you?

Erika (00:56:03) - Well, number one, we're here to serve parents and students. Our virtual school is available to any family in Florida. That's Optima Academy Online so they can go to Optima Academy online and register, check out our courses, tell your friends, your grandkids, your grandma, whoever about it. So that's our number one goal, is to serve families through Optima Academy Online. Of course, if you're a school, if you are interested in starting a school or you just want to learn more about what we do overall, Optima is our website and you can also contact me through there.

Erika (00:56:37) - Or if you're looking for a career, we are always hiring great people and you can find information on Optima about our career opportunities, whether it's at the corporate office or any of the schools that we serve.

Mario (00:56:49) - Love it. Hey guys, if you're an entrepreneur or investor, like most of you listeners are, you should really be following Erica and we'll make sure that you that the show notes have her all her social media links and everything. But you should really be following her because she's an entrepreneur. Definitely to watch. And I also want to give a shout out to Vintage and Damon for being able to have this relationship be built because that's how we know each other. And if you guys are looking to get into a mastermind with very top level entrepreneurs like Erica and others, you should seriously consider vintage in your local market. Thanks again, Erica, for being on and we'll see you guys on the next one.

Erika (00:57:30) - Thank you, Mario.

Mario (00:57:35) - Thanks for listening. I hope you got out of this as much as I did.

Mario (00:57:38) - I'd really appreciate it if you could leave a five star review so we can reach more people. Jump over to Mario de Tilo net and find out what else I got going on. Be sure to connect with me on all the socials and I'll see you on next week's show.