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Luke Sophinos
Founder & CEO at CourseKey
Luke Sophinos is the Founder and CEO of CourseKey, a leading education management software platform designed specifically for blue-collar education and training in the United States. He established CourseKey in 2015 while still in college, and since then, it has grown to support over 200 enterprise customers and hundreds of thousands of learners annually. The company has successfully raised $20 million in venture capital, reflecting its significant impact in the vocational education sector.124
Sophinos is recognized for his entrepreneurial achievements, having been named to the Forbes 30 Under 30 list in 2019 and selected as a Peter Thiel Fellow, a prestigious program that provides funding and mentorship to young entrepreneurs.13 His background includes experience as a venture capital analyst and advisory roles in tech startups, further enhancing his expertise in the field.23
In addition to his role at CourseKey, he is actively involved in promoting vocational education and addressing workforce challenges through various publications and articles.15
Highlights
Maybe, just maybe, study the GTM motions within your industry before investing years and years of your life as a founder/employee/investor...
I’d say nearly every founder I talk to starts with a business idea, typically to solve a problem they themselves have experienced or someone close to them has experienced.
That’s the impetus to go for it.
We’ve been taught that we have to follow our passions. That to build a successful business you have to be passionate about the problem you’re solving.
This goes for everyone beyond the founder too - “You should work at a company your passionate about” or “You should invest in a company your passionate about”
So maybe this is contrarian but can’t the act of business building be something you are passionate about? Irrespective of the problem that you’re solving or the market that you’re serving?
The problem with the former approach is that you miss a lot of the secret sauce that will act as headwinds when you’re building/operating/investing at said business.
The benefit of the latter is that you can stack the deck for success.
When you study multiple markets, you study their segmentation, you study what GTM approaches work in said industry, when you identify gaps that the competition aren’t solving, you greatly juice your odds of success.
Maybe I’m too rational, but it seems obvious that this would be the standard approach yet almost all of us don’t take that path. I sure didn’t in my first business.
So I want to talk about something I think so so few folks look at when starting out that greatly impacts the size of business that they can build. GTM Motions.
In almost all cases, there are four different types GTM motions that a business can deploy: product-led, marketing-led, sales-led, and partner-led.
Obviously as you scale you can mix/match all of these but in most businesses there is one specific approach that is driving the majority of revenue. That’s what we’re going to focus on today.
Product Led — you build a product that drives more $$ from your users as well as enables those users to drive more and more customers to come on board to your platform.
Marketing Led — You acquire the majority of your customers through marketing - digital advertising (facebook, LinkedIn, newsletters, etc.), email campaigns, or another marketing channel.
Sales Led — You acquire the majority of your customers through inside or outside sales people - cold outreach, in-person sales, etc.
Partner Led — You acquire the majority of your customers through a partnership with another company that is deploying one of the above approaches.
Let’s pull some data into the equation from @lennysan
Below is a list of 30 well known B2B SaaS companies and the GTM motion they started with:
Airtable ----------> Product Led Amplitude ----------> Sales Led Box ----------> Product Led Carta ----------> Sales Led Coda ----------> Product Led Dropbox ----------> Product Led Databricks ----------> Sales Led Datadog ----------> Product Led Figma ----------> Product Led Front ----------> Product Led Github ----------> Product Led Gusto ----------> Sales Led Hubspot ----------> Sales Led Intercom ----------> Product Led Looker ----------> Sales Led Notion ----------> Product Led PagerDuty ----------> Product Led Plaid ----------> Sales Led Retool ----------> Product Led Salesforce ----------> Sales Led Segment ----------> Product Led Shopify ----------> Product Led Slack ----------> Product Led Snowflake ----------> Product Led Square ----------> Sales Led Stripe ----------> Product Led Workday ----------> Sales Led Zendesk ----------> Product Led
One thing that you’ll notice is that 2/3rds of these companies primary GTM motion is marketing or product led.
One thing missing on the above table is ACV’s related to the companies.
Next, I used Vendr to look at average annual contract values (ACV) of every company that started with a Sales Led motion:
Amplitude ----------> ~$131K Carta ----------> ~$28K Databricks ----------> ~$508K Gusto ----------> N/A (Could not find) Hubspot ----------> ~$146K Looker ----------> ~$47K Salesforce ----------> ~$438K Snowflake ----------> ~$503K Square ----------> N/A (Could not find) Workday ----------> ~$172K
The Average Annual Contract Value of Sales Led companies is ~$246K
Two quick notes on this — I’d argue Square and Carta shouldn’t even be on this list. I couldn’t find their ACV’s but they are likely <$20K. Carta has such an epic viral referral component that I’d say that’s more of their primary motion than sales.
Now let’s look at ACV’s of every company that has a Marketing or Product Led Motion:
Airtable ----------> ~$55K Box ----------> ~$81K Coda ----------> ~$29K Dropbox ----------> ~$60K Datadog ----------> ~$386K Figma ----------> ~$30K Front ----------> ~$56K Github ----------> ~$68K Intercom ----------> ~$89K Notion ----------> ~$71K PagerDuty ----------> ~$64K Plaid ----------> ~$197K Retool ----------> ~$135K Segment ----------> N/A (Could not find) Shopify ----------> ~$966K Slack ----------> ~$115K Stripe ----------> ~$377K Twilio ----------> ~$334K Zendesk ----------> ~$137K
The Average Annual Contract Value of Product or Marketing Led companies is ~$180K.
I think this is overstated, especially if you take out Shopify who likely has at least 10X lower ACV's when they started, same with Plaid. Taking them out it drops the average to ~$130K. You could also likely greatly decrease Stripe if you don't include transaction take rates and solely look at their SaaS business.
The moral of the story is that sales-led motions typically have much bigger ACV’s.
But bigger ACV’s is NOT necessarily better…
It’s much easier to massively scale product and marketing led GTM motions.
You basically get to a point where acquiring customers becomes mathematical. If you put X dollars in you get Y dollars out.
If you’re ever fortunate to build or invest in a business that has figured this out it’s a beautiful thing.
Sales-led is much more difficult - it’s SO HARD to figure out the put X dollars in and get Y dollars out math.
You have a lot more variables you have to execute strongly against - rep ramp times, rep persona and profiles, sales cycles, ACV’s, etc. BTW - It’s much easier to get there in inside sales than outside sales but inside sales still harder than product/marketing led.
If you look at all the publicly traded SaaS companies that have sales-led motions, their ACV’s are MASSIVE. If you want to build a big company with a sales-led motions you can make up for the aforementioned by closing really big contracts. Veeva has done this. Palantir too. Their ACV’s are close to $1M annually. That solves a lot of problems.
So KNOWING THIS, I think it’s imperative that you do a few things before you found, join, or invest in a company…
Study the industry and go deep on GTM motions.
Look at all the software players big and small. What is the GTM motion of the biggest players? Is it working? How fast are they growing? You don’t need exacts you just need to get a directionally correct sense. An example is if the largest players in a space are PE owned legacy SaaS solutions there may be a strong product opportunity for you but the GTM may be incredibly time consuming and difficult, hence why the largest player reached scale through aggregation.
Talk to Sales Reps That Work At Software Companies In The Space:
You know the one persona that almost always replies to outreach and takes the cold outreach call? Sales people. They rarely get reached out to and are typically happy to change up their daily routine of tracking other people down. Ask them questions - how long do sales cycles take? Is this industry harder or easier to sell into than previous ones you’ve worked in? Why/Why not? How big are the ACV’s? How long are the sales cycles? What are quotas and how many reps are hitting them?
Talk to Bankers That Focus On The Industry:
Bankers are a wealth of knowledge. The great thing about them is they too will typically take calls. You can get a shit load of information from these folks - well beyond just GTM motions. But they will have a lot of great data/insights across a lot of different companies. They can also give you feedback on the product type that you’re thinking about building or the specific company you’re considering investing in or working at. Ask them all the same aforementioned questions you asked the sales reps.
In a few days of work you should be able to understand the GTM motion that is currently most effective in the industry, how difficult it is to acquire a customer, how long it is, and what typical contract sizes look like. If you think you can improve this or dramatically change the answers you hear — more power to you — but the best entrepreneurs and operators I meet with can only accelerate this only so much.
Make sure you’re starting/joining/investing in a business where you can acquire customers in a way that you’re comfortable with and one that can reach the level of scale you’re shooting for.
So go into it with eyes wide open.
Give yourself the best chance of success.
Stoked for my friend Todd. Well deserved and built a juggernaut !!