With 150,000 courses ranging from how to win at online poker to principles of quantum mechanics, online education startup Udemy is thriving during the pandemic.
Gregg Coccari feels torn. It’s early June, and the coronavirus pandemic has thrown tens of millions of people out of work. But the company he runs, online learning platform Udemy, is thriving. “Of course we’re very excited about that,” he says. “But we’re also watching people get laid off, and we see them struggling.”
A lot of those people are flocking to Udemy’s selection of 150,000 online classes, most of which sell for from $10 to $20. In May alone, the company logged 25 million new enrollments, compared to 9 million the previous May. Its Udemy for Business division, which sells annual subscriptions for $360 per user to companies including Adidas and Toyota, is booming, too. Among the most popular classes: best practices for Zoom videoconferencing and how to manage a virtual team.
From March through May, Udemy’s sales were double the total for the same period in 2019, says Coccari. Surging demand will likely drive revenue above $400 million this year, according to two sources with knowledge of Udemy’s finances. (Coccari says that number is “in the ballpark.”) He says Udemy would be profitable if it weren’t planning to hire 200 people this year and investing in overseas expansion. It already has courses in 65 languages and customers in 190 countries.
Clad in a roomy grey T-shirt, Coccari, 67, is running things from a bedroom in his 1920s Spanish colonial home in Santa Monica, California. Starting in early 2019, when he became CEO, most Mondays he caught a 6:30 am flight to San Francisco, where the ten-year-old company is based, or he headed to one of its branch offices in Denver, Dublin, Ankara, São Paulo or Gurgaon, India. Now his life imitates a Udemy course, and he’s not thrilled about it. “Yesterday I had ten hours of Zoom meetings,” he says. “I’d like to break my laptop. I prefer human interaction.”
But Udemy is benefiting from worldwide social isolation. While K-12 schools and colleges struggle to teach online, Udemy is simply opening the spigot on a business model it pioneered. Its platform hosts unaccredited courses taught by instructors who independently create videotaped lessons and answer email questions from students on a Udemy message board. The company collects a share, usually 50%, of the course fees. Users determine which courses get the most traffic by posting star ratings and reviews.
Founder Eren Bali, 35, who chairs Udemy’s board, got the idea for the company after growing up in an impoverished village in southeastern Turkey where he pursued his math obsession by researching problems on the Web. He believed that great online instructors didn’t need fancy degrees. “We wanted to create a marketplace-based education company where any expert in the world could teach their own course,” he says. He tried launching a livestreamed version of the site in Turkey in 2007. It flopped but SpeedDate, a live online dating site based in Silicon Valley, recruited him as an engineer.
He and two cofounders bootstrapped Udemy’s U.S. launch (the name is a portmanteau of “you” and “academy”) in 2010 after more than 200 funders turned them down. Edtech investor Daniel Pianko of New York-based University Ventures regrets passing on the opportunity. “I thought the idea was too crazy,” he says. Online education at the time was dominated by accredited for-profit giants like University of Phoenix. “It was a totally revolutionary concept, that someone unaffiliated with a university could teach a course,” he says.
While K-12 schools and colleges struggle to teach online, Udemy is simply opening the spigot on a business model it pioneered.
The first Udemy courses included how to make money playing poker online and how to pick up women. But the founders soon realized that coding and business skills like data science and team-building were more in demand. Those courses make up two thirds of Udemy’s selection. But the platform is still open to anyone who wants to teach. Portrait drawing and Reiki massage courses have been popular during the pandemic.
Competing online education sites including LinkedIn Learning and Coursera work with university professors (Coursera) or they heavily screen would-be instructors (LinkedIn Learning) and reject most applicants. By contrast, Udemy instructors just have to satisfy six items on a checklist of minimum requirements like posting at least 30 minutes of video content per course. All subject matter is welcome aside from a shortlist of no-nos like porn, firearms and hate speech. A handful of top Udemy instructors earn as much as $1 million a year.
Coccari says several hundred instructors make at least six figures annually, and that number will likely double this year. They include Teresa Greenway, 61, who earned $12,400 this May from her bread-baking courses. A high school dropout who married at 21, she had 10 children including a son with autism before she escaped her abusive marriage a decade ago. “I had no degree, no work history and I was pretty battered emotionally,” she says. In 2015, she stumbled on Udemy and put together a three-hour sourdough course.
She now has 13 courses, which feed several other income streams, including eight self-published books, which she sells on Amazon. She records all her Udemy videos in advance. Once posted, they run on autopilot. Her only interaction with students is through a Udemy message board where students post questions. She spends 20 minutes a day writing answers. Last year Udemy accounted for the biggest chunk of the $78,000 she earned. This year she expects her income to double.
Bali left as CEO in 2014 and the company churned through two more bosses before Coccari took over last year. (In 2014 Bali cofounded a San Francisco startup, Carbon Health, where he is CEO.) A Wharton grad and serial startup CEO, Coccari’s last job was heading Milwaukee-based premium pet food purveyor Stella & Chewy’s. One of that company’s backers, Ken Fox of New York-based venture firm Stripes, is a Udemy investor and board member. He asked Coccari to take the CEO job and manage Udemy’s expansion.
In February Coccari closed a $50 million investment from Benesse Holdings, the publicly traded Tokyo-based education and senior care conglomerate that owns the Berlitz language schools. The deal brought Udemy’s total capital invested to more than $200 million and vaulted its valuation from a reported $710 million to $2 billion. Though Japan’s pandemic lockdowns were less restrictive than other countries’, Udemy’s Japanese revenue in the first five months of 2020 tripled sales for the same period in 2019, according to Benesse CEO Tamotsu Adachi.
Udemy welcomes all subject matter aside from a shortlist of no-nos like porn, firearms and hate speech.
Coccari is cautious about predicting how the pandemic will shape the future of education. But online learning cheerleaders like Chicago edtech investor Deborah Quazzo of GSV Ventures believes the virtual education market will hit $1 trillion in 2026, more than double what she expected before the pandemic. She says Udemy is poised to balloon in size and regrets that she didn’t fund the company. “I was stupid,” she says.
Coccari says he’s concentrating on the present. “We’re just really focused on making sure we can handle these massive spikes in traffic,” he says. “We don’t know what the world is going to look like at the end of all this.”