Building a $750M Edtech Startup 🚀 Newsletter #69
How Dan Sommer built Trilogy Education: a University-Edtech success story
Hi there! This is Michael, Alberto’s cofounder, and today’s author of the newsletter.
The Transcend Newsletter explores the intersection of the future of education and the future work, and the founders building it around the world.
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We are excited to present our very first edition of the Founder Deep-Dives, where we talk to the founders behind edtech’s largest succeses, dissect their story and what early-stage founders should learn from it! I’ll be leading this series moving forward, excited to hear what you think!
This first edition includes a legendary edtech founder and great friend of Transcend, Dan Sommer, former founder and CEO of Trilogy.
Before we dive in, I just wanted to let you know that we are now accepting applications from edtech & future of work founders looking to join the Transcend Fellowship!
We have already begun interviewing founders this week and will be accepting applications until October 13.
We are looking to work with 25 fellows in our TF12 cohort who will:
➡️ be mentored by experienced founders with decades of domain experience
➡️ run weekly PMF experiments to crack customer acquisition or scale, and
➡️ fine-tune their fundraising strategy
If you are in the early stages of building in edtech and are looking for tactical support & resources towards increasing customer traction and finding product-market fit, apply ASAP!
Link to apply ➡️ TF12 Application
Now back to today’s founder deep dive!
Most people’s careers are pretty straightforward – they work hard to get promoted and find better jobs, and the result is a straight line ticking upwards every few years, until you retire.
You know you’ve seen an entrepreneur when their career “line” is all over the place: as soon as they find some success, they start thinking about starting over and swinging for the fences.
This is one way to describe Dan’s career. He has started businesses since the dawn of the 20th century across a number of sectors, but eventually found a niche in higher education, primarily helping universities with marketing and recruitment.
Back in 2015, he was back to the drawing board, thinking about a problem he’d identified that may be worth risking it all for.
The problem statement seemed simple: as the “learn to code” fever swept across the US, why are students enrolling in unknown, new bootcamps instead of universities they already trust?
Dan started validating this problem, until he decided he was ready to build something to address it and go all in.
Validating the idea of Trilogy
Validating is simply working to figure out if the problem you want to solve is big enough to build a company around.
For B2C products, validation often involves building a product, putting it in front of people, and seeing how they use it.
For B2B products, validation can simply take one single conversation.
This is precisely how Dan found validation for Trilogy. Once he arrived at his problem statement, he bought a ticket to a higher education conference, set to talk to university leaders about this question: would universities be interested in providing upskilling bootcamps to new students?
He quickly learned that university leaders faced pressure to build new revenue-generating business lines, and that they immediately saw value in providing new upskilling programs as one such opportunity (check out our market map of higher ed’s Revenue Generators).
Universities wanted a reliable partner that could take on all the functions of launching and running these programs. This is what the earliest version of their website looked like:
He describes coming back from the conference saying “This is what early PMF looks like!”. None of the university leaders he spoke with “this is irrelevant” or “I don’t get it”. Everyone recognized this was a real problem.
If Trilogy could help universities build coding bootcamps as a revenue-generator for them, they had a chance to build something really big.
After one of these conversations, Dan managed to close one pilot with a university for a coding bootcamp with its own brand, but the Trilogy curriculum and student marketing. The MVP was a one-pager document, and a clear sense of why universities wanted this.
Now, he just had to go build it.
PMF Minitests
This set the tone for Trilogy’s road to Product-Market Fit: Dan would set up “PMF Ministests” to understand what to build to satisfy the demand of students and universities.
Each PMF minitest was focused on one specific step of the learner experience, starting with a sample size of 1. This was Dan’s very first university customer, Rutgers University, and they were the single focus of the Trilogy team as they built out the learning experience.
Dan’s mindset was “1 university, 1 lead, 1 prospect, 1 student, 1 graduate.” No more customers until each PMF minitest is validated. These were some of the steps he focused on through the early days.
To validate university demand → hold 1:1 conversations with university leaders, until they closed their first pilot with Rutgers.
To validate student demand → test different landing page copies and syllabi, until one leads to student signups.
To validate enrollment → test different types of messaging that will convert people from waitlist to enrollment
To validate student retention → experiment with different learning experiences, and test student engagement through each the program
To validate instructor recruitment → test different channels to identify and recruit great instructors for its courses
To validate job placement → test different industry partnerships, and compare placement rates for students
Dan and Trilogy went through this process before replicating it for a second customer.
The best thing about PMF mini tests is that founders don’t need any fancy tools to measure them – before they even had a CRM or a built-out product, they validated the majority of these tests with just a yellow pad!
Growing > Raising
The PMF Minitest approach meant that Trilogy only focused on one customer initially, before scaling to hundreds globally. Slowing down to speed up.
In that initial phase of finding PMF, it didn’t make sense for Trilogy to raise big bucks – Dan’s advice to founders is that they focus on “figuring out your North Star to retention before you can put capital into the business”. An initial pre-seed round is sometimes needed to get started, but why raise millions on a promise to investors before you know what your business really looks like?
As more parts of the process were validated, university referrals and word of mouth made the company grow very, very fast. That’s when Dan decided to activate the venture capital model, and raised a $30M Series A in 2017, followed by a $50M Series B less than a year later.
Universities rely strongly on colleague referrals to make purchasing decisions, so Dan’s approach of raising little to no capital initially can be highly relevant to university edtech startups, and then raising once there’s a clear pathway to scale.
Dan’s priority was figuring out the PMF before raising capital. This may sound strange for an organization that raised over $80M, but at the early-stages, Trilogy was extremely disciplined and focused on finding PMF at all costs before raising.
Let’s bring this home!
We want this to serve as a starting point for all the founders reading, this piece so you can apply this to your startup!
What are you looking to validate in your startup’s journey + what PMF mini-test would help to do so?
We’d love to learn more about your most burning PMF challenge and share any resources that could help!
Just respond back to this email with:
Share your startup’s website + any relevant context
Tell us what your main PMF challenge at the moment is
Tell us what kind of support are hoping to receive
We will be giving everyone a personalized reply with resources, relevant contacts, or even ideas that we’ve seen work in the space.
If you want to get the full picture, you can review the full Zoom recording of Dan’s interview.
Many many thanks to Dan for being so generous with his time and advice! 🙌
The Roundup ☀️
Transcend Fellowship applications are now open! Apply here.
Check out scholarships we offer founders building promising startups in 6 key themes. TF12 Scholarships.
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