Coursera: Deep Dive Interview with Former Executive (Part 1)

Below is an edited transcript for an interview with a former executive at Coursera. Key issues discussed in this interview include: Why the reach of Coursera matters

  • How Coursera acquires content and audience
  • The differing motivations of university partners and industry partners
  • How Coursera faces multiple competitors on multiple fronts
  • Macro headwinds and tailwinds

ARPU!: Can you describe the Coursera platform in your own words, and also the key problems that the users, both from the supply side and the demand side, are looking towards Coursera to solve?

Value Proposition of Coursera

Former Executive: Coursera is a two-sided platform. And it is a way to connect educators with consumers, and so it solves problems for educators, in that it helps educators reach a broad audience.

And even from the beginning, when at first they put a couple of courses on the platform, it was, "Oh, I wonder if people are interested." And immediately, they saw thousands of people interested in this course from Stanford. So the value prop from the very beginning was reach a large and new audience.

You are not just reaching the folks who'll typically take a Stanford course, but you're reaching people all around the world, older people, younger people. And so the value prop for educators, whether it's actually IBM or Stanford, is reach a large, diverse audience.

Why the reach matters

That reach matters for a couple of different things. For educators, sometimes it is about mission. There's still universities that really care about kind of mission and expanding their reach. And that's part of the reason why they exist, so it's kind of reach and social impact and brand, building brand awareness. The second is build a brand awareness for specific purposes. So it might be that it is regeneration for other products that you have. It might be that - I would say the third, and sometimes it's the first, is direct revenue. So there were several partners for whom Coursera actually did deliver significant revenue that contributed to their school's budget.

The purpose for enterprise partners is slightly different. Typically, for enterprise partners, it's more about reach, knowledge building and mission, and typically less about revenue. But that might have changed with kind of some of the smaller partnerships.

It is an audience that otherwise, for most of the partners, would be very difficult to reach on their own, especially because from the start, it was highly global and highly diverse.

Although I say revenue is usually not the top purpose — it can be for some, especially in the beginning. For some folks, they definitely made significant revenue. And sometimes the school takes large cuts, sometimes the actual instructor gets a large piece of it as well. Funny example, there's a guy who created the first series of Python courses on Coursera, and he credited Coursera with fully being able to buy his million dollar house thanks to Coursera, He also has a tattoo with Coursera's symbol on his arm. So he's a full devotee, but there aren't as many like him that have been able to make significant money from Coursera.

I want to understand a bit more on why people come to Coursera. Obviously it is a learning platform, but can you walk through the main motivations?

For B2C users, the pitch is traditionally to upskill, to change your career. I think at some point, there was this idea of you go on LinkedIn to prepare your LinkedIn learning, maybe to prepare for your next presentation. You go to Coursera to prepare for your next job. I think there's a consumer base that just likes to learn. And a lot of it is just they enjoy learning. And I think that's actually still a significant audience that is important. Because if you think about like, a competitor, like Masterclass, which you wouldn't typically think of as a competitor for Coursera, a lot of the audience is mostly just there because they want to become experts, and they just like the idea of learning. So that's still, I would say, significant for the identity of the Coursera consumer.

Now you also have B2B users, and a lot of it also has to do with upskilling. There are two main reasons why a company buys Coursera's product. The first is, it is seen as an important part of a package and a way to differentiate the company. So just saying that they offer learning and training development for their employees, it's an incentive for employees to retain, to join. So it's just seen as a perk.

For other companies, and they were the ones that I think were most eager, it's to train on specific skills, because the company feels like they are behind, and they can't hire fast enough. And so instead of hiring data scientists, they're taking their data analytics folks, and putting them through a data science specializations. And so that's the motivation for maybe a European company that can't fire people easily, but really wants to upskill and is having trouble hiring new talent. We also had a company in India that used it for their new hire. So before their new developers, even like started, during their training they used Coursera products to onboard more effectively. So there's a couple of different B2B use cases for the Coursera content. And Coursera developed the B2B platform, the enterprise side of the platform and the data integration. So to me there's that specific demand, which I think is important, because there's a lot of revenue in B2B. And not all education content providers are able to effectively tap into it. So just a side note there.

And then also a small segment, I think it has definitely grown because of COVID, is universities using Coursera content from other universities to supplement their own education. And used in a kind of a variety of different ways.

Would you say there's any commonly shared characteristic of the user base of Coursera? Is there any sweet spot for Coursera?

A internationally diverse audience base

It's an interesting question. So I would say that the audience is fairly diverse. It's still heavily international. I think there is still an oversized part of the revenue coming from the US, versus an oversized part of the learners coming from outside of the US. I would say that it's a balance typically between wanting to learn soft and hard skills, although there's typically more of a conversion to payments and willingness to pay for hard skills and get a certificate in those as opposed to some of the softer skills. It's really hard to say what the commonality is in terms of income level or like race or even educational background. I think that a lot more of it is for the B2C users. I think a lot more of it is, frankly, about attitude towards education and the need for education, and the willingness to be self-motivated, which is much harder to segment for. But that's kind of the true differentiator.

I want to pick up on the theme of active learners. As far as you can observe, how many of the users are actually active learners in the sense that they will come back to the platform regularly to pick up new skills? Or is it the case that the propensity to learn kind of decreases with age and over time?

Again, this is kind of a very dated snapshot in time. But just to give you an idea, there was a point where only about 50% of those who logged in to Coursera and created an account immediately took a course. Not everyone in the Coursera database becomes an active user immediately. But what was observed is that someone might register for Coursera, then come back months, or even a year later, and then they have a specific course need. They might start a course, never finish it, but then come back for a degree. And so there is a very strong value in old leads, if you were to put it that way, for a learning product, especially if you have really good brand association. And so when Coursera launched a degree product, they were able to tap into a large user base.

LTV of Coursera users

So that's a long winded way of saying, if somebody is not active, it does not mean that they are less valuable of a consumer. Their LTV has a very long time span. Whereas for most products, I would think that you either get money out of them in the first two years, or never, you know. I would say Coursera is a little bit different, because we did see people come out who hadn't been on the platform in a year or two years, when there was new products that Coursera launched.

That being said, obviously, the more active someone is, the more likely they are to enroll in a new product. And if they finish one course, they're more likely to go on to the next course. So completion and being active is still really important.

I'd also say that Coursera only more recently started putting out shorter content. And that's something that we've seen demand for, and that enables a more frequent interaction with the Coursera platform, when you have less time to spare, and so Coursera moved into more of the micro-learning and more of the LinkedIn kind of length of experience, in part to have additional content to actively engage learners when they're not ready for the longer courses. So I think that you are right to ask, when they publicize X millions of learners, how many of those are actually going to create value for the company, but I will say while it decreases over time, there's still a huge value in that overall user base population.

Value of Free Learners

The other thing that I would add to it is the value of free learners. So, sometimes there's this assumption that if somebody comes in, and they have taken a free course and they're only interested in free courses at the time, that they're always going to be a free learner. And that's absolutely not true. And so I think over time, you know, there was a movement away from making free very visible. And now if you go on Coursera's platform - and I mentioned this a little bit - now, if you go on Coursera's platform, you can very clearly see how to take free courses. And they're putting a little bit more money into not just on the product showcase, but even advertising the fact that there's free content. And that's to grow the user base, because that user base is also incredibly valuable, because they can convert to paid courses in the future.

Talk to me on how Coursera look at product and growth.

( be continued in Part 2 of the interview)