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Luke Sophinos on How to Build Vertical SaaS
And why Peter Thiel gave him $100,000 to drop out of college
Michael Houck
January 02, 2025
Hey y’all — what would you do if someone had offered you $100k… but, in order to get it, you had to drop out of college?
And what if that person making the offer was Peter Thiel?
That’s what happened to Luke Sophinos.
Luke dropped out of college to join the Thiel Fellowship where he met incredible founders and gained a Silicon Valley network overnight. He niched down his startup and created a vertical SaaS business for trade schools.
He rarely does interviews despite being the most knowledgeable person out there on vertical SaaS.
Thankfully he’s a friend, so we sat down to go deep on why the highest-upside SaaS opportunities have shifted from horizontal to vertical, why owning the transaction layer is key to building a venture-scale vertical SaaS business, and tactical frameworks to grow a vertical SaaS product (many of which he goes into detail about in his Vertical SaaS Bible).
As a reminder, each Thursday I interview a world-class founder about their unique paths to uncover tactical insights they've learned about how to fundraise, grow, validate, hire, scale, and lead teams.
Also, after each conversation I write up my candid takeaways. Become a member and grab them ✨ here ✨ along with lifetime access to my private founder community and more.
In our chat we discuss:
Founder Mode
(00:00) — Intro
(01:18) — Luke's first business
(03:32) — Joining a VC firm in college
(06:33) — Becoming a Thiel Fellow
(11:26) — Dropping out of college & going all in
(15:33) — Why traditional education is broken
(18:04) — Why founders should target boring industries
(19:53) — Building trust
(21:04) — When to pivot
Vertical SaaS
(22:46) — Differences between vertical & horizontal SaaS
(23:53) — Why vertical SaaS has better opportunities going forward
(26:53) — What makes for a venture-scale vertical SaaS product
(32:38) — Why vertical SaaS is criticized for not being venture scale
(34:30) — AI's impact on vertical software
(37:37) — Why Luke is sharing the vertical SaaS playbook
(39:00) — The vertical SaaS bible
(39:53) — Where to start building vertical SaaS businesses
(41:53) — Raising venture funding & debt financing
Rapid Fire
(44:50) — Who is one investor you’d recommend?
(45:08) — One thing you'd change about startups?
(45:38) — Advice for first-time founders?
(46:00) — Something you believe that most disagree with?
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