There are no shortage of companies trying to disrupt education but not many have been particularly effective so the question is why? In particular, I don't think online learning is ever going to be an acceptable substitute for in-person learning. People (especially kids) need human interaction and accountability. There's also the social aspect to consider. Virtual reality may likely play a part in future education but I don't see any companies who are leading on that front. Coursera doesn't feel revolutionary but it is probably the most respectable option in terms of learning recognizable skills. Udemy is VERY hit and miss but also worth considering with ~600m annual revenues. It's possible we have no idea what the future of education really looks like.
This analysis needs to address the dozens of well funded and high valued private companies tackling the same market segments to be credible. Neither of these companies is founder-led nor do they have particularly interesting technology.
Fair, and thanks for living up to your Substack title! But some rebuttals:
- these midweek pieces aren't meant to be exhaustive. We could have covered competition more in-depth, certainly, and probably should have touched on it more, but these midweek pieces are more about an overview than analyzing every aspect of the investment case.
- we're admittedly not experts in the private market, and it appears you have more insight there, but our research didn't uncover dozens of "high valued" private companies as direct competitors to either Coursera or Stride.
For Coursera, we're kind of eliding Eruditus and UpGrad given they're targeting a different geographic market, Noodle has raised ~$125M, and the public OPM companies (Wiley, Pearson) are growing slower than is Coursera. The course offerings I'm sure has many entrants, but how many really are moving the needle right now?
For Stride, kind of the same thing. Tons of companies trying to do the same thing, but has anyone captured critical mass? (Honest question.) Stride/K12 was first, they're competing against rivals, they'll be competing against rivals until the day they fold up shop, whether they fail or we don't have education anymore because of ChatGPT (I kid). It's the same story for nearly every public company that has some kind of leadership position.
- with all due respect to your expertise and experience as a VC, in the public markets the history of the past 15 years does not at all suggest that being founder-led is prima facie a good thing. Stride in particular is 20-plus years old and much more in profit maximization mode, they need (and I'd argue now have) grown-up leadership.
- are these necessarily technology plays? The tech needs to work, and surely user interface and content delivery truly matter (particularly for Stride which is teaching 6- and 8-year-olds). But it's the content (and, to be a bit cynical, the perception) that seems more important, and as far as we can tell Coursera has compelling stuff and Stride has significantly improved over the past 6-8 years.
-Understood. This was the first piece of yours I've read
-Coursera and Stride have a several different business lines and the competition looks indirect sometimes. For example, Stride bought a bootcamp business called Galvanize that has dozens of competitors some independent, some part of bigger platforms like Adecco.
-For Stride, the market will always be fragmented so they'll never have breakout growth or margin expansion. Pearson bought Connections Academy which was always on the heels of K12 Inc. It's becoming easier for new online curriculums to compete against the Strides and Connections Academies because they can tailor the curriculum with less cost using technology. Parents are demanding better quality and b/c Stride and Pearson are public they never invest that much into new product development.
-Your point about the Stride leadership and their desire to profit maximize is why they will suffer from innovators dilemma ultimately. It might just take a while. I was an executive at Pearson when Connections made the transition to 'grown-up' leadership and saw what that looked like first hand.
-Regarding being founder-led, how would you analyze Duolingo into the mix of these two companies? Luis von Ahn is an incredibly impressive technical-founder CEO who has delivered steady revenue growth. If you want 'disrupting education' in public markets this is the bet.
-I doubt their content is anything special. They have distribution advantages for now. Content is becoming easy to reproduce, personalize, and arrange into tailored courses on demand. Everyday I see technology that produces great content like magic. I give a peak into the future on my other substack called Obviously the Future - https://obviouslythefuture.substack.com/p/efficacious-edutainment
Great debate. Would love to continue the conversation sometime.
the broader competitive dynamics really are worth thinking through (for us and for readers). The default perception in these platform businesses is that they're "winner take most", but you make some good points that this space is not and will not be like that.
In fact, if "content is becoming easy to reproduce, personalize, and arrange" — that sounds a lot like commoditization, which is a pretty strong pillar for a bear case toward these names (plus UDMY and others).
To be honest, I personally don't know Duolingo well enough to have an informed take. Know enough to be impressed with von Ahn and the business model from a distance, but haven't really looked enough into what their roadmap is, etc. But DUOL might need to go high on the list after that intriguing comment.
definitely, great conversation - we'll think through a possible way to extend it. thanks for the comments, .
There are no shortage of companies trying to disrupt education but not many have been particularly effective so the question is why? In particular, I don't think online learning is ever going to be an acceptable substitute for in-person learning. People (especially kids) need human interaction and accountability. There's also the social aspect to consider. Virtual reality may likely play a part in future education but I don't see any companies who are leading on that front. Coursera doesn't feel revolutionary but it is probably the most respectable option in terms of learning recognizable skills. Udemy is VERY hit and miss but also worth considering with ~600m annual revenues. It's possible we have no idea what the future of education really looks like.
This analysis needs to address the dozens of well funded and high valued private companies tackling the same market segments to be credible. Neither of these companies is founder-led nor do they have particularly interesting technology.
Fair, and thanks for living up to your Substack title! But some rebuttals:
- these midweek pieces aren't meant to be exhaustive. We could have covered competition more in-depth, certainly, and probably should have touched on it more, but these midweek pieces are more about an overview than analyzing every aspect of the investment case.
- we're admittedly not experts in the private market, and it appears you have more insight there, but our research didn't uncover dozens of "high valued" private companies as direct competitors to either Coursera or Stride.
For Coursera, we're kind of eliding Eruditus and UpGrad given they're targeting a different geographic market, Noodle has raised ~$125M, and the public OPM companies (Wiley, Pearson) are growing slower than is Coursera. The course offerings I'm sure has many entrants, but how many really are moving the needle right now?
For Stride, kind of the same thing. Tons of companies trying to do the same thing, but has anyone captured critical mass? (Honest question.) Stride/K12 was first, they're competing against rivals, they'll be competing against rivals until the day they fold up shop, whether they fail or we don't have education anymore because of ChatGPT (I kid). It's the same story for nearly every public company that has some kind of leadership position.
- with all due respect to your expertise and experience as a VC, in the public markets the history of the past 15 years does not at all suggest that being founder-led is prima facie a good thing. Stride in particular is 20-plus years old and much more in profit maximization mode, they need (and I'd argue now have) grown-up leadership.
- are these necessarily technology plays? The tech needs to work, and surely user interface and content delivery truly matter (particularly for Stride which is teaching 6- and 8-year-olds). But it's the content (and, to be a bit cynical, the perception) that seems more important, and as far as we can tell Coursera has compelling stuff and Stride has significantly improved over the past 6-8 years.
Thank you for thoughtful reply!
-Understood. This was the first piece of yours I've read
-Coursera and Stride have a several different business lines and the competition looks indirect sometimes. For example, Stride bought a bootcamp business called Galvanize that has dozens of competitors some independent, some part of bigger platforms like Adecco.
-For Stride, the market will always be fragmented so they'll never have breakout growth or margin expansion. Pearson bought Connections Academy which was always on the heels of K12 Inc. It's becoming easier for new online curriculums to compete against the Strides and Connections Academies because they can tailor the curriculum with less cost using technology. Parents are demanding better quality and b/c Stride and Pearson are public they never invest that much into new product development.
-Your point about the Stride leadership and their desire to profit maximize is why they will suffer from innovators dilemma ultimately. It might just take a while. I was an executive at Pearson when Connections made the transition to 'grown-up' leadership and saw what that looked like first hand.
-Regarding being founder-led, how would you analyze Duolingo into the mix of these two companies? Luis von Ahn is an incredibly impressive technical-founder CEO who has delivered steady revenue growth. If you want 'disrupting education' in public markets this is the bet.
-I doubt their content is anything special. They have distribution advantages for now. Content is becoming easy to reproduce, personalize, and arrange into tailored courses on demand. Everyday I see technology that produces great content like magic. I give a peak into the future on my other substack called Obviously the Future - https://obviouslythefuture.substack.com/p/efficacious-edutainment
Great debate. Would love to continue the conversation sometime.
really great points, thank you.
the broader competitive dynamics really are worth thinking through (for us and for readers). The default perception in these platform businesses is that they're "winner take most", but you make some good points that this space is not and will not be like that.
In fact, if "content is becoming easy to reproduce, personalize, and arrange" — that sounds a lot like commoditization, which is a pretty strong pillar for a bear case toward these names (plus UDMY and others).
To be honest, I personally don't know Duolingo well enough to have an informed take. Know enough to be impressed with von Ahn and the business model from a distance, but haven't really looked enough into what their roadmap is, etc. But DUOL might need to go high on the list after that intriguing comment.
definitely, great conversation - we'll think through a possible way to extend it. thanks for the comments, .
Vince