education

Udacity and Coursera See Strong Growth

A winning formula for online learning
article cover

Francis Scialabba

· less than 3 min read

Keep up with the innovative tech transforming business

Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.

Massive, open, online courses peaked in the hype cycle in the early 2010s. Lacking a critical mass of users or adequate completion rates, MOOCs faded away quietly into the night.

Or did they? Online learning platforms recalibrated their strategies and now, during the pandemic, they’re seeing huge surges in usage.

Udacity

A few years ago, this online learning service pivoted to become a vocational/technical finishing school. This week, Udacity said its annual recurring revenue grew 260% in the first six months of 2020. Since March 26, Udacity says average monthly usage for individuals is up 50%.

But the real traction comes from enterprises and governments, which make up the majority of Udacity’s revenue. Government/enterprise cohorts have 80% graduation rates, compared to ~40% for individuals.

“Enterprise spending on training has historically gone down during recessionary periods. We have not seen that at all,” Udacity CEO Gabe Dalporto told me. He says Udacity is profitable, but “would at least entertain” raising money.

A bigger competitor did just raise money

That’d be Coursera, an online learning platform with a wider range of offerings. Last week, the nine-year-old company announced $130 million in fresh financing at a valuation of $2.5 billion.

“The increase in traffic, volume, and learning has been off the charts,” Coursera CFO Ken Hahn told me. Each business segment saw sizable year over year increases in March-April enrollments:

  • Consumer: 398%
  • Business: 324%
  • Government: 277%
  • Campus: 1,662%

Coursera is currently unprofitable; Hahn says it’s investing in growth instead.

A blip on the radar?

I’m skeptical that the platforms’ growth and engagement rates can stay this high. But over the long term, they do have the headwinds of 1) everything shifting online 2) adoption curves moving up and 3) a growing shortage of tech talent. “There’s not enough data scientists and machine learning engineers on the planet to satisfy demand,” Dalporto said.

The equation: High unemployment + public/private interest in reskilling + automation + social distancing = online learning platform success.

Keep up with the innovative tech transforming business

Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.