The following interview is a conversation we had with Nicholas Rudder, Co-Founder & CEO of Sphere, on our podcast Category Visionaries. You can view the full episode here: Nicholas Rudder, Co-Founder & CEO of Sphere: $5 Million Raised to Build the Future of Corporate Learning
Nicholas Rudder
Thanks, Brett, very happy to be here.
Brett
Yeah, no problem. So, before we begin talking about what you’re building, can we just start with a quick summary of who you are and a bit more about your background course?
Nicholas Rudder
Yeah. So, my name is Nick. I’m the CEO of Sphere. I was born and raised in Australia. I’m not sure how much everyone knows about Australia, but the scale of, I guess, professional opportunities there is not quite the scale of the US. And I actually tried to get out of Australia when I was about mid 20s, went in to go do an MBA over in Europe, in London. I had really high hopes for it, actually, but it actually wasn’t quite the experience that I wanted. I found actually quite underwhelming in a number of ways. It really had ridiculously outdated subjects. Professors really didn’t have as much industry experience and everyone sort of wanted to be into either consulting or banking then COVID hit. So I was like in that whole, I guess, cohort of people that sort of had their MBA online. And really the education system at that point was a bit of a cartel, actually.
Nicholas Rudder
They refused to drop prices despite the fact that you weren’t getting the product that was on the tin. So at that point, that’s when I started working on Sphere. I really wanted to make something that was far better, that was more applicable, more engaging, taught by the best instructors in the world. And so I started working on the Sphere in London and then ended up moving it to the US. And that’s where I am now, in San Francisco.
Brett
And what was that journey like, moving to the US? Did you have any concerns or were you just ready to go and get to SF and get on the ground?
Nicholas Rudder
Yeah, so always wanted to move to SF, frankly. I’d been in Australia and the startup environment is nowhere near as big as the business SF and a lot of Aussies look up to SF as like, tech mecca. I’d always wanted to go there, hadn’t had the chance. Started working on the business in London and a lot of our customers were coming from the US anyway. So it was the perfect opportunity to jump over me and my co founder literally dropped everything. He was working in Oz at the time. We packed up our bags, moved our lives over here and gave it a go. And it’s going well so far.
Brett
Nice. That’s awesome. Who are like the Australian tech companies.
Nicholas Rudder
That you look up to?
Brett
The only one that I can even think of, which I’m sure there’s more, is Canva. They’re Australian, right?
Nicholas Rudder
Yes, they are indeed. I actually admire Melanie Perkins quite a lot. She’s awesome. She basically showed a lot of Aussies that you can create one of the most valuable companies in the world, regardless of where you came from. She came from WA. And as far as Australia goes, Australia is a small pool, but WA is like an exclusive pool of WA for everyone who doesn’t know is Western Australia, as I said. So I really admire what she’s done with Canva. It’s just a bit of a juggernaut now. And I also admire the fact she did it with her husband. I think it would be super hard if I think of me and my client starting a company. I don’t know if I could do that, but she’s managed to do well. But I will also say there’s been lots of other amazing Aussie companies and actually, our current investor, Felisas, has backed a lot of them.
Nicholas Rudder
So they backed Canberra culture. Amp is an Aussie company. Atlassian another one. And there’s some up and cutners as well, dovetail. So, yeah, there’s lots of good talent in Oz. They tend to jump over to the US, though, because they want to get out of the small bubble of Australia.
Brett
Yeah.
Nicholas Rudder
I will say, though, that it is one of the most beautiful countries in the world and it has so much going for it. And I do think the startup scene is getting better, but I think it’s still got a ways to go.
Brett
Do you ever plan on returning to the homeland and moving back to Australia? Is that the long term goal?
Nicholas Rudder
I would love to do that. I mean, that’s what Atlassian did, right? They sort of came here, they grew it, came here to SF, they grew the business and then they sort of relocated the whole HQ back to Sydney and Mike, Hannah Brooks and Scott Fargo. I never know how to pronounce his name, Scott. But anyway, they’re very involved in Aussie politics now and very big icons over there. I love to build a business here and bring it back to us because, frankly, the quality of life is pretty hot. To Pete surfing sunshine. Yeah.
Brett
Nice. Love that. Another thing I wanted to ask you about is just the fact that you’re here in SF. And as we talked about in the pre interview, I’m here as well. When I moved here six months ago, a lot of my friends who don’t live in SF were asking, what’s wrong with you? Have you lost your mind? Have you not seen in the news.
Nicholas Rudder
What a shithole it is.
Brett
And the homeless and the drugs and all of that type of stuff. You moved here, you said, what, two years ago, which I’m guessing was even worse back then. So did you have a lot of people asking, what are you thinking moving there, or was it pretty obvious and clear what was guiding your decisions?
Nicholas Rudder
I did have a lot of people questioning our decision. We were going there when everyone was leaving. It was like right at the end of COVID there was all these headlines around the mass exodus of SF. But as I said, I’d always wanted to give it a shot and so I wanted to come here and check it out. And frankly, my journey with Sphere has had me explore the Australian startup ecosystem. The British Startup Ecosystem. But I’ve got to say, honestly, it doesn’t even compare to San Francisco. Obviously were helped going into the Y combinator batch. That does help get attention of investors. But the sheer volume and number of VCs means that terms are far more agreeable for founders. Whereas in London and in Australia, you tend to see basically a collection or like a group of VCs being the top VCs, they get all the deal flow and then they push pretty average terms to founders.
Nicholas Rudder
And just comparing what terms were between that and SF, it was a stark difference.
Brett
Yeah, makes sense. Sure. It’s a no brainer at that point.
Nicholas Rudder
Yeah.
Brett
Two questions we like to ask just to better understand what makes you tick as a founder. First one is what CEO do you admire the most and why? And we already talked about Canva, so it can’t be someone from Canva.
Nicholas Rudder
Canva was literally the one that’s interesting. But yeah, look, I would say then the other one, again, going off the Aussie line, my tenant Brooks, I would say, is someone that I also look up to. It’s hard not to look up to people that have come from where you’re from. Like they’ve sort of come from very normal backgrounds. They’ve built something that is a globally recognized company and product and they come back to Australia, they bring jobs back, they help build the startup ecosystem in Australia. So for me, I really look up to those founders, the Alaskan founders and the Canberra founders as well.
Brett
Nice. Those are good call outs. Did you follow? I guess he’s NSF as well, michael Dunworth, do you know him?
Nicholas Rudder
I do not know Michael Dunworth. Who’s he the founder of so he.
Brett
Started Wire, I believe is the name. And they had that kind of devastating news. I think they sold for $1.4 billion or something like that. And it was all over there was some news in Australia that I read about the Aussie founder moved to the US. Came back, walked away, I think with like 400 million. So it was all over Aussie news. And then the deal got pulled and they ended up not selling and I think companies closed up. So, random side note, but I was just following that story a couple of months ago and thought that was just pretty brutal.
Nicholas Rudder
That is definitely brutal. But yeah, unfortunately I wasn’t following that story. Definitely not fun. Definitely not a happy ending there.
Brett
Yeah, it’s tough. All right, now let’s talk books. So is there a specific book that’s had a major impact on you? And this can be a business book or it can be a personal book that’s just influenced how you view the world?
Nicholas Rudder
Yeah, I’m going to take it down a level of grandioseness and it’ll be a shout out to a recent one that I led and it had a big impact on our business. And that’s Pete Cassanji’s, book founder, led sales, basically. So just for context, Pete sanji basically is very reputable person in the sales space. Sort of has a community called Modern Sales Pros and has written this book, which is all around like, sales strategy, GDM strategy for founders. And I read it over, actually, the Christmas has just gone and pointed out all the things I was doing wrong as a founder. Sort of driving the GTN motion in my business. Gives you a step by step guide on how you should be running sales at the early stage. Yeah, and for me, the key takeaways I took was how important it was for me to be really driving that GTN effort.
Nicholas Rudder
I was already doing it, but really making sure that you’re on all the demo calls, making sure how to set up a good sales telemetry system so like tracking your metrics across the whole funnel. And then also what are the key sales assets that you want and that you should be having, you should be creating and improving upon. So for us, it’s massively improved. I go to market in a very short space of time, so that’s had a big impact on the business for sure.
Brett
And how far out are you away from having AI transcription from founder Led sales, would you say?
Nicholas Rudder
I think we’re pretty close. So at the moment we’ve closed a number of enterprise deals or I closed number of enterprise deals. And this is something actually that he covers in his books, like, when should you bring on first sales hire? We actually just brought on our first sales hire again because I closed 20 to 30 of these larger scale enterprise deals and the rule of thumb is about 20 what I hear from my advisors and other founders. And I think even when you bring that person on, you still want to be driving the effort and have that salesperson ghosting you seeing how you’re doing it. And yeah, I think for me, when is the point? I guess when that new sales client takes over, I think we’re still a ways away. I think we still have some things in the go to market that we need to finalize just around creating that repeatable playbook that you can just put more people on.
Nicholas Rudder
I don’t think we’re quite there yet though. So basically when that person takes over, we’ll probably be, I would say another couple of months from then.
Brett
Is that scary? That idea of having a salesperson take over these conversations and having sales happen without you?
Nicholas Rudder
I think it comes down to hiring the right person and sort of having them ghost you enough so that they’re very confident and clear on what the playbook and the angles are. I guess there always is a bit of nervousness, especially when you’re a type A person, which I would say I am, is you always have a bit of trouble letting go of what you’ve been running for a while. But I do trust the person that we’ve brought on and I think we put the right training in place so that when it comes time to hand over the reins, I’ll be pretty confident in his ability.
Brett
Nice. Very cool. Now I know we touched on the origin story there at the start and it really blended together with your personal journey. So let’s just talk about the product. So what are customers paying you for and what does the product do for them?
Nicholas Rudder
Yeah, so basically what our platform does is that we’re a platform that allows businesses to upscale their workforce through live interactive courses. So right now what happens is businesses buy these live courses as the name suggests, they’re synchronous, so learners and professionals who are coming into the courses can ask questions. They join with a community of other professionals, so they’re also learning from the challenges that their businesses are facing. And the content is very hyper targeted to learning a functional skill for a particular job. So we tie all the course objectives and learning objectives to moving the needle on a business KPI. So the whole idea is that businesses sending their courses, their people, through these courses, they’re going to get an economic ROI and we actually work with companies where they’ll share data, pre and post the course on those KPIs to be able to show up.
Nicholas Rudder
So that’s really what the businesses are coming in for initially. Then on top of that, they get access to a broader platform where they get so on top of the live courses they get an Asynchronous content library around the particular topics, which includes templates job AIDS that learners can take to their business, apply to the current challenges they’re facing. And then on top of that, we also have an alumni community. So it doesn’t just stop after the course finishes. You get ongoing access to a broad range of over 3000 professionals, all in similar roles, and exclusive alumni events with other leading ML and AI experts. And sorry, the other thing that I should have maybe clarified is a lot of what we focus on right now is technical skills around machine learning, data science and data engineering which is very hot topic and something in a lot of demand from Enterprise at the moment.
Brett
Yeah, I can imagine. And can you define what interactive means to you? Is that just they can send emojis and thumbs up that they like what they’re seeing, they can comment and speak with each other as they’re listening into the instructor. What does interactive mean?
Nicholas Rudder
Yeah, so interactive really revolves around this idea of live cohort based courses. So people join these live sessions. The sessions are usually live sessions across three weeks. That’s the average course structure. And what happens is they’ll join those live sessions and they’ll be live with the expert who will be delivering content but also there’ll be activities within those sessions as well. So you’re able to ask so as the expert is delivering content, you can ask questions, which is a natural thing that you want to do when you’re learning. You’ll also be engaging in exercises where you’ll be working with other cohort members to apply the learnings. So it really is something that it’s a two way sort of interaction and experience. Whereas the old school Elearning, the Courseras and the Udemies of the world is very one way. It’s just video on demand. You’re working through modules and there’s no interaction with other people or the instructor.
Brett
Makes a lot of sense. And then what does that competitive landscape look like then? Is it those companies you just mentioned with Coursera and Udemy? Or who are those big competitors? And then who are the other competitors that are emerging?
Nicholas Rudder
So there are three big buckets in house training. It’s a big one. So basically a lot of companies will look to develop their own content. But obviously that’s expensive, it’s time consuming. They’re only limited to the experts they have within that company and obviously the same networking there as well. Maybe within the company but not outside of it. Then on the other bucket I would say is what we call Elearning 1.0 providers. It would be the Courseras. The Udemy is the Asynchronous learning providers there because everything’s one way. You really have very low engagement rates from learners. The completion rates on Coursera we have widely known as being around 4%. So low single digits, our completion rates are 80% plus. So it’s a vast difference and really like what a lot of really a lot of businesses when they do use an external learning provider it is those big Asynchronous learning libraries.
Nicholas Rudder
They’re very much a tick the box solution versus a move that needle for your team solution. Then you’ve got live learning. We’re in that bucket. There are some players that we compete against in that bucket. Maven is probably one that we come up against although it’s not really they’re the only other, I would say live learning provider. So co op based courses but it’s very much B to C focus, not b to B focus. They’ll allow anyone to come in and be an instructor as well, whereas we very much curate our instructors. They’re all like top industry leaders from leading companies. And so, yeah, they have a very much B to C focus. We’re very much B, two B focused, so no one competing in that B. Two B. Live Learning marketplace right now, which is what gets us excited, makes a lot of sense.
Brett
And looking through the website, there’s some very impressive logos there. So you have Shopify, you have Tinder, Flexport, Stripe, and that’s just a few of the big logos. What’s the secret, man? You got to tell us. So, being an early stage startup, I know enterprise sales isn’t easy. How’d you pull it off? How did you manage to land such an impressive list of logos?
Nicholas Rudder
Yeah, so we have a product led sales strategy and I would say that’s like part of our secret sauce is it’s not really a secret. Lots of companies now are employing this, but it’s very much a novel, go to market approach. So what happens is, individuals from a company sign up for our courses, they see these amazing instructors, they want to learn from them, they sign up for the course, they’ll expense it to their L and D spit end. Then what happens is they have a good experience, they go tell the rest of their team, more from that team comes in. And then what happens is you start to accumulate a certain number of people within a business. So we tend to ask sort of magic numbers around like ten to twelve people within a business. That’s when the sales team will come in. So previously me, but now me and my sales and my account execs will come in and then have the conversation with the business.
Nicholas Rudder
Like, look, you’ve already spent 2030K with us, you may as well jump on an enterprise subscription. You get a discount on all courses in the library, plus a number of other value add features. So when we go in for the enterprise sale, we actually already have leverage because we’re basically pointing to the 20 or the ten to 15 people that have already spent money on it. So that’s something that has helped a lot in the conversations and has helped us move quickly through sales cycles.
Brett
Did you know it was going to be PLG from day one when you launched the company, or did that just naturally kind of develop as you were bringing it to market?
Nicholas Rudder
It naturally developed, to be honest, when we first started, it was quite B to C focus. Then we just noticed that the topics that were sort of creating courses around were just drawing in a professional crowd. 80% plus of people were using the L and D step end, and we just were looking at the alternatives to what these businesses were buying for employee upskilling and they were so lackluster people literally weren’t using them. And were like, look, this is a great opportunity to, I guess, disrupt those incumbents. And that’s what we did. And then the thing that’s even more exciting is the areas that we focus on now, which is AI, ML data science. That field is changing so quickly that our model, which is live courses, and we can spin up those courses quickly, allows us to produce fresh content in a roughly like a two month period, whereas the Courseras and the univies of the world will need to take nine months to create a course.
Nicholas Rudder
They’ll spend quarter of a million dollars per course, and they just can’t compete with the speed to market that we can basically execute on.
Brett
And I know you sell or learning and development departments are, I’m guessing, the decision makers. Is that correct?
Nicholas Rudder
It’s not quite. So what happens is actually we sell to team leads. So when we go in for the enterprise subscription, it’s normally the team lead that we’re selling to because they’re the ones that care about functional skills. I would say that L and D have more of a focus on compliance and leadership training. But often what will happen is team lead will bring in an L and D person to help execute the transaction. But really the decision is made by the team lead for bigger deals, where you’re starting to go across multiple different teams in a business, that’s when you’re dealing with central L and D. So it’s a progression. You go like individual team lead, and then L and D. And does L.
Brett
And D report to HR? Or who does L and D typically report to in these big massive organizations? Is it part of HR? Yeah.
Nicholas Rudder
So typically it changes business to business, but L and D will typically report to HR. There are sometimes some caveats to that, but that is normally the status quo.
Brett
And over the last few months, have you seen buyer behavior change in any way? Obviously, the whole tech ecosystem is going through some changes right now. Have you felt any of those changes or have there been any changes for you in terms of buyer behavior?
Nicholas Rudder
Yeah, there has. So everyone is very well aware of what’s going on in AI right now. There is obviously a bit of a tectonic shift happening with GPT Four on the horizon. Everyone’s seeing the hype around Chap GPT, but some of our instructors who are at the forefront of AI are basically saying that’s the tip of the iceberg. So in terms of how that’s translated to buyer behavior, who we normally sold to, let’s say for the last year and a half, it’s been forward thinking tech companies, usually series B plus, where there’s an L and D budget pipes. But with this whole wave of new artificial intelligence company, that is not only going to impact how engineers work, but also how salespeople work, our content works, how finance works, there’s going to be a lot more larger, more traditional businesses looking to upskill and leverage artificial intelligence so as to not get left behind.
Nicholas Rudder
And we’re already starting to see that. So that’s exciting to see. It’s a wave that we’re definitely riding and we’re very well positioned for it because AI is not just going to be a plug and play thing, it’s businesses are going to have to learn how to leverage AI in their jobs in order to have the competitive edge, otherwise they will get left behind. So that’s something we’re really excited about and we’re seeing a shift happening right now.
Brett
Nice. So you must have been pretty stoked then. When did chat GPT come out? Was it November last year?
Nicholas Rudder
I think it was this year, I believe. I don’t know the exact date, but I believe it was a couple of months ago or it may have come out a little earlier, but yeah, definitely there’s a huge amount of hype now. We did go to the open AI offices this week. It was a YC founders event. And yeah, as I said, there’s some extremely exciting things in the works and I think that’s why we’re certainly doubling down in AI and we’re looking forward to helping upskilled businesses around the world to take advantage of it.
Brett
Nice. I love it. And when it comes to market categories, how do you think about your market category? Is it corporate education? Is it live learning then, depending on what it is that just disrupting or transforming an existing category or is this a category creation play for you?
Nicholas Rudder
Yeah, so we see ourselves in the corporate education space. It’s been dominated by the traditional Elearning players Courseras, as I said, the Udemy’s, the plural sites, but they’ve largely just been tick the box solution. And I think businesses are cottoning on in the fact that no one’s using them. And there is this demand for a more engaging learning experience that has an economic ROI for businesses that actually makes learners feel more engaged than sitting in the dark brain clicking through modules. And yeah, so that we see ourselves as disrupting that space. And then also, again, as I mentioned in my previous question, pitching ourselves to this whole wave of AI that those traditional players are just going to take a long time to get any content up and running for.
Brett
What excites you most about what’s coming with AI? Obviously, there’s a lot of I feel like there’s been buzz around AI for the last, like, five years, but there was nothing really tangible there. At least from my perspective, it didn’t seem like there was anything tangible. Chat GBT seems very tangible. My mom was asking me about it. People can actually touch this technology and play with this technology. So just looking at AI, what excites you most about what’s to come?
Nicholas Rudder
What excites me the most is that the use cases are now just so real. Like, take a classic example of a software engineer. There is this fable of like, the Ten X software engineer and everyone wants to get that Ten X software engineer in their business. Every software engineer going forward is going to work with an AI and that AI is going to make them ten times more efficient. By virtue of that, if the whole team learns how to leverage that, you will have a business that will be at a far huger advantage than a business that doesn’t take advantage of that. And that is sort of, I guess, the shift that we’re on right now. I think before in AI, it was all around tinkering with models. There was obviously some great use cases, but now it’s just becoming widespread. Now it’s becoming available to the masses.
Nicholas Rudder
I mean, it really has a huge impact on business, as I mentioned in that example, but also for the individual as well. Think about how Search is going to change. It’s been dominated by Google, but now you’ve got basically, I guess, like a speech interface that could effectively give you everything you need. I mean, there’s obviously lots of things to consider there and it’s not going totally change everything overnight. But what excites me is just the use case ability, the fact that there are just so many use cases and opportunities of, I guess the models that people like OpenAI are releasing. And as I said before, it’s just the tip of the iceberg. There are much more interesting things in the works and it seems like we’re on a bit of a new wave here and something that could be equivalent to what happened when the internet was first launched.
Brett
Totally. It’s such exciting times, you know, it’s exciting times when people are having a genuine conversation about how Bing could compete with Google, I don’t know, headlines now and it’s actually viable. It does make sense that could happen. Everything.
Nicholas Rudder
Microsoft has just made some very wise decisions there. I was reading an article in the Washington Post that was written by a guy was posted in it called David Hart. He’s a very notable prompt engineer at the moment. Prompt engineering is a very hot skill area right now because that’s one of the key skills in generative AI. So it’s something we’re very focused on. But anyway, this article was basically talking about how Google could go down in history as the company that had such a massive accumulation of amazing AI talent that have all gone elsewhere to start their own businesses, whereas Microsoft has made some very wise choices to keep it in house. So, yeah, I don’t know what’s to come, but as in, I’m not sure what’s going to happen and who’s going to be the winner, but it’s definitely exciting times.
Brett
Yeah, absolutely. Couldn’t agree more. All right, Nicholas, unfortunately, that’s all we’re going to have time to cover for today’s interview. But. Before we wrap. If people want to follow along with your journey, where’s the best place for them to go?
Nicholas Rudder
Yeah, so, three things you can do. Follow me on LinkedIn, me personally. Nicholas Rudder, you can follow Sphere as well. Again, you can find us on LinkedIn and Twitter. And if you want to know about our courses, go to our website, which is getsphere.com, and sign up to our mailing list there. And that’s the best place to keep up to date.
Brett
Awesome. Thanks so much for taking the time to talk about what you’re building and share this vision. This is all super exciting and look forward to seeing you execute and come back on in a couple of years and talk about everything that’s happened.
Nicholas Rudder
Cheers, Brett. Appreciate it. Care.
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