Episode Transcript
Speaker 1 00:00:08 Hello everyone. Today I want to talk a little bit about Udemy, a very interesting company that could end up becoming one of the largest market cap companies in the corporate learning industry, believe it or not, which sounds a little bit odd, but I'll explain that in a minute. As a preface, I want to talk about the podcast for a quick second. We do these podcasts periodically. They're not scheduled in any particular tempo, but when I find something important, I put it together. We do not have sponsored podcasts. If you are a vendor and you would like to be featured in the podcast, obviously contact us. We want to hear all about what you're doing, but we don't do this as an advertising model. There are no sponsored or ads included at all. This is all part of our research and attempt to try to educate you on what's going on in the world of HR and the world of HR tech.
Speaker 1 00:00:55 Now, you, to me, as you all know, the corporate learning space is huge, 360 billion or more. The average company spends 12 to $1,500 per employee and many thousands of dollars per employees for higher level people. Companies like Target and Walmart and Disney have spent more than a billion dollars on tuition reimbursement. There's a massive spending going on to re-skill and create new career pathways for people as jobs change from the pandemic and from automation. So this is a huge market, and content is a big part of it. Some of it is off the shelf, some of it is custom. I'll talk about custom in a minute. 70 to 80% of content is custom to your company, but the off-the-shelf content market is massive because companies all need very similar skills and topics addressed. And there's some incredibly smart people out there who develop content and have great expertise in instructional design, including obviously us, which we've done for HR with our academy.
Speaker 1 00:01:57 But the problem with the content market is that the traditional model of content development in learning is what I call the publishing model. A business person decides they're gonna build a course, they hire an instructional design team, they do research, they collect intellectual property, maybe they already have an intellectual property, they develop an instructional design, they build the course, they test it, they launch it, they sell it to you, and you consume it in your employees hopefully like it. And around that course, they have assessments, they have skills models, they have tracks, multiple courses in a given curriculum. There are certificates or credentials based on completion status and all sorts of complicated things that might have to do with legal regulation, compliance with various regulatory bodies based on the kind of content that's being developed. And it's pretty complicated. So it takes a publisher, a good three to six months at minimum to build a course and get it into the market sometimes longer.
Speaker 1 00:02:59 And so it's a little bit like the book publishing model. The problem with that, of course, is that the rate of change of business is incredibly fast. And every day there's something that's being invented that your employees need to know something about. Do you know what an NFT is? Do you understand all the new technologies in crypto? Do you know all the new cybersecurity issues? Do you understand all the issues of the metaverse? New technologies in sales, new technologies in marketing, new technologies in every part of business is changing all the time, and these publishers can't possibly build courses in all of these things. So the innovators and pioneers at Udemy about a decade ago figured, Hey, let's try something different. Let's create a marketplace. Let's create a creator market. At the time, it wasn't called that and let anybody publish any course they wanted to develop, and we'll just put it into the market.
Speaker 1 00:03:52 I actually was involved in this kind of a business in the early two thousands at a company called Digital Think. We actually published courses on wine tasting and sales and all sorts of interesting topics at the time that didn't work out super well for digital think for a whole variety of reasons. But it was very successful in its early days. People got interested in MOOCs and YouTube and TikTok and other technologies, and now it's back. And so what Udemy has done is built an enterprise class platform for creators or instructors to build courses and for consumers and organizations to buy courses. And it's a really good platform. I know that because I used it in the early days and it was good in the beginning, and it's much, much better now. The courses have chapters. You can upload videos, you can create assessments. There can be a small amount of branching.
Speaker 1 00:04:42 There's resources that you can assign to different topics. You can get all sorts of collaborative feedback. The instructor gets all sorts of analytics. You can rate the course. And of course, there's all sorts of interesting AI to recommend courses to students based on other courses they've taken and to downgrade courses that are rated poorly. So the nice thing about a Udemy marketplace of courses is even though there may be junk in there, you'll never see it because it'll be poorly rated and it'll just disappear. Whereas in a published library, if there's a course you don't like, you're stuck with it. It's published and it's available and may have poor ratings, but the publisher paid to build it, so they're gonna try to get you to use it. Well, in the early days of you, to me, I actually built a course on HR there maybe six or seven years ago, and it was pretty successful.
Speaker 1 00:05:29 It, it went pretty well. A lot of people in India bought it. It was like a 30 or $50 course. I decided to experiment with a very low price. And thousands and thousands of people have now built content and they have 183,000 courses. And some of the instructors are making a lot of money. There's at least one many that make more than a million dollars a year. And some of them have built entire curriculums for cloud technology and cybersecurity and data science and all sorts of curriculum that every organization needs. And the author doesn't have to be a publisher. The author can be an inspired individual with all sorts of expertise, who just wants to basically develop something and become a little entrepreneur. And what better way to build a company than to empower entrepreneurs? You, you kind of never go wrong when you do that because there's entrepreneurs everywhere in the world that have important things they wanna share.
Speaker 1 00:06:22 In some ways, this is what Sal Khan did with Khans Academy. Khans Academy was the first model that I was initially planning to do for our academy, and I later realized it was not really complete enough, and I needed some more help to build something more integrated. But Udemy is that Udemy is a place for an expert or a subject matter leader to build a course and share it with thousands and tens of thousands or hundreds of thousands of people and make some money. So what happens in the Udemy marketplace is courses are being developed every day. They're all getting updated constantly by the authors. The ones that are good are getting rated highly and they're moving to the top. The ones that are doing poorly are going down and Udemy's taking them off the system. Authors are coming and going. Great authors are doing more and more because they see more revenue and more potential.
Speaker 1 00:07:15 And the company has built a huge brand and a great sales force to promote this to the corporate market. The way the corporate solution in Udemy was developed is the Udemy team started to sell to corporations. And corporations of course have very unique needs. They want integration with all their corporate learning systems. They want fairly traditional topics like leadership development, diversity inclusion, digital skills, cloud engineering, data science, analytics and so forth. So the Udemy guys built a taxonomy for business courses and took the highest rated courses in the marketplace and turned them into an offering called Udemy Business. Udemy business now has more than 150,000 courses. It has assessments, it has credentials, it has labs, it has learning paths, it has a skills model. It is a legitimate, credible corporate learning solution that competes with LinkedIn learning, Skillsoft, Coursera, and lots of other well-known curriculum providers that are in the publishing model.
Speaker 1 00:08:19 Why is Udemy so different? It's different because it is a marketplace. The courses in Udemy are newer, more refreshed, in some cases, more comprehensive than the ones in the publishing environment. I'm not saying that Pluralsight isn't a great company or any of these other vendors. They build great content and they spend a lot of time and money building certifications and all sorts of technology around it. But Udemy has the benefit of leveraging the expertise of millions of people, all of whom know things that a publisher may not know. So the Udemy corporate solution has turned out to be a pretty good thing for a lot of companies. Now, where's this going? The growth rate of the Udemy business and the Udemy content offering is absolutely outstanding. I won't go through the numbers, you can read them in the article I just wrote or look at them online.
Speaker 1 00:09:11 But this has viral growth similar to the growth of an offering like TikTok or YouTube or Instagram or you pick the creator tool that you like. There's a lot of creators around the world. There's a lot of people like me and many of you that would like to author something that you feel passionate about and you'd like to make a little bit of money doing that, and you're willing to put your own professional credentials on the line. And Udemy is great for doing that. And there will be other players, and there are other players, but none of the other players have reached the level of scale and technology and platform expertise of Udemy. The other thing that Udemy did most recently is in the area of soft skills or leadership development where the company had some content, but not a lot. They acquired a company called Corp U Corp U is founded by Alan Todd, a guy who's about my tenure in the market, who built a small company that developed cohort based online learning from designated experts at universities or other practitioners who are well known in management, leadership, supply chain and other business topics.
Speaker 1 00:10:14 They're much more expensive than the typical Udemy courses that are thousands of dollars per course. But you go through a facilitated experience in a cohort similar to the Josh Bur Academy, and you get support from an instructor during the process that is now part of Udemy. So Udemy is building a expanded version of the Corp U offering that offers cohort-based, high level instructor-led learning or instructor facilitated learning for senior leaders, mid-level leaders, managers, professionals, and a lot of companies wanna buy that stuff. Not everybody wants to buy a $10,000 course from Cornell or Harvard for their leaders and fly them to Boston or New York, but they would be willing to spend a thousand or two or $3,000 for something that's really good, facilitated by a well-known expert where they learn with their peers and can meet other people in their domain or within their company to learn the topic.
Speaker 1 00:11:10 Now, this domain of the creator economy is much bigger than Udemy. Udemy may be one of the biggest benefactors of it, but it's much bigger than this. You and your company have this opportunity, and as many of you know, since 60 to 70 to 80% of your content is internal and exclusive to you, and by the way, that is the highest rated content from all of our research. You have authors all over your company, you have experts, you have leaders, you have technical professionals, gurus that everybody loves. Why not give them a place to develop courses and share inside of your company? Well, this is a massive idea. It's not new. There were products in the early two thousands that were called PowerPoint to Flash. I used to call them rapid learning back then that allowed subject matter experts to put their content online. There were companies like Brain Shark and others that got into this.
Speaker 1 00:12:05 But now that we have Udemy and other products like that, you can do this inside of your company. One of the vendors, for example, that a lot of you maybe have not heard of is a really fast growing company called 360 Learning. 360 Learning is a creator platform for highly validated and significant corporate training that you can build and you can offer to your employees, and they can share content and build pretty robust curricula with each other. And companies like the French Railroad, some of the aerospace companies in Europe and a lot of big companies have found 360 Learning, and it's a pretty amazing tool for developing and facilitating an internal development from experts to other peers inside of the company. Another company that's taking advantage of this market in a huge way is Articulate. Articulate was really the pioneer of e-learning tools, a very well run company.
Speaker 1 00:12:59 They've been very, very successful. They're now valued at multiple billion dollars and Articulate sells a slightly more complex but easy to use development tool for experts to build courses and share with each other. At Kaiser Permanente, for example, we just interviewed them. They have articulate experts all over the company in the nursing departments and different regional locations that build courses locally by experts with support from instructional design that are used all over Kaiser. And because they standardize on the Articulate tool, they can use the templates and shared content across different courses in the various different programs that people build on Articulate. And 360 learning works the same way, and there will be other tools like that. So I think in your learning and development strategy, you should spend a significant amount of time deciding what your creator tools will be for your subject matter experts, and then put together a team that helps subject matter experts develop content.
Speaker 1 00:13:57 I've now interviewed maybe 20 or 30 companies about their internally developed content, and it isn't enough to say to an expert here, use this tool and build a course. I'm sure people will like it. The expert might end up building a four hour video that nobody ever watches. What most companies have told me is that when they unleash these tools, by the way, another very popular tool for this is a company called Fuse Universal in the UK that has been very successful in retail and hospitality and telecommunications that is also very easy to use authoring system that allows you to socialize and share content all over the company. What these companies told me they do is they give employees tips and small techniques and suggestions so that they build content that's short enough and interesting enough that other employees will use it and it won't just sit there and nobody will take the time to understand it.
Speaker 1 00:14:45 Now, the third part of this market is the LX P market, and let me talk about that for a minute. When L LSPs were first introduced, the idea was they were going to democratize the discovery of training. And instead of having to go to the LMS and wait for the LMS administrator to publish a course, you would just put something in the LX P something that you liked and other people could find it. And that is essentially what a creator tool does. But the L X P vendors have nothing for authoring. So in a sense, they're kind of an empty vessel that is really good for discovering and curating and organizing content, but they don't help you build the content. So if you have Degreed or EdCast or Viva Learning or the new learning hub from LinkedIn or Llamas, some of the other great L XPS out there, they do not necessarily have authoring tools.
Speaker 1 00:15:37 So you might want to think about standardizing the formats of internally developed content so that your employees recognize the content and they feel familiarity from program to program. As much as it sounds interesting to let anybody build anything they want, people want a predictable experience and they want to know what to expect when they open a piece of content from somebody else inside of the company. And that's really an opportunity for you in l and d to add a lot of values, to build some structure around this, build a taxonomy around it, create some rules, obviously protect people from putting stuff out there that's premy or perhaps incorrect, and that will allow you to unleash this marketplace opportunity inside of your company. We're just finishing a big study of the l and d market. It'll come out early next year, and there isn't enough focus on internally developed content inside of companies.
Speaker 1 00:16:27 It is still largely outsourced in a professional way to professional publishers or content developers. You'd be surprised that having your own Udemy type platform inside of your company is very transformational. And we have a whole series of case studies on companies that have done this. If you'd like to learn how, let me sort of wrap it up there and just go back to Udemy for a minute. I am not a stock picker, but I think if you look at the market cap of companies in HR Tech, they do tend to tell you something about the growth rate, the success, the management team, the business model, and the robustness of the solution. Udemy went public just a couple weeks ago, hit a $4 billion market cap on the first day. It's been juggling around that. And if you remember, the last large publicly traded company in learning that was at that scale was Cornerstone, which went private at about 5 billion.
Speaker 1 00:17:21 So my argument that Udemy could end up being one of the biggest companies in corporate learning is simply built on that. This is a company that's growing at 80% per year in its business area, generates very high margins. They have a very, very scalable business model, a great management team, and I think it's worth looking at. But again, make sure you think about the creator economy inside of your company as well. Hopefully this is interesting information and stay tuned for a lot more in corporate learning as we roll out some of the research we're finishing. Thank you very much.
