#13: 🎓 How Coursera won the Enterprise segment
by Tom Willerer / in partnership with Reforge
🎉In this edition of Productify newsletter, I am excited to partner with REFORGE (Do check their cohort based programs, content and community!) and guest author for this post Tom Willerer.
Tom is an Executive in Residence at Reforge and was previously Opendoor’s Chief Product Officer. He oversaw the company’s product and design teams to launch new products, acquire companies, and led teams of over 150 Product Managers, Designers, Engineers, and operators. Prior to Opendoor, he was Chief Product Officer at Coursera, where he helped to scale the company from $1 million to $100 million in revenue. He also led product teams at Netflix as VP of Product where he helped to expand the company’s subscribership from 8 million U.S.-only users to over 40 million globally.
Tom shares with us his stellar journey building and scaling the enterprise segment for Coursera. So put on your seat belts and let us dive into the Coursera Enterprise story 🚀
✊🏽 The Movement: How it all started
Coursera started as a movement that focused on benefiting the world through learning. The company was started by Andrew Ng and Daphne Koller when they created a version of their Stanford courses (Daphne’s Probabilistic Graphical Models and Andrew’s Machine Learning) and saw hundreds of thousands of learners signing up. Both the founders saw an opportunity to create a platform for other universities to do the same. These courses were called MOOCS (massively open online education) and caught fire quickly with universities clamouring to get involved for fear of being left behind (the year Coursera was founded, the New York Times published an article declaring 2012, “The Year of the MOOC”).
At around $1M in revenue, the team had just one product manager, two designers and lots of the world’s best engineers from the Stanford Machine Learning Lab (which the founders co-led). The team was incredibly young, inexperienced but very talented (with at-least 5 past student body presidents at ivy league schools).
The culture at the company was quite altruistic and focused on opening up access to education everywhere and breaking down educational barriers. The team started experimenting with monetization by providing a free version and a paid version of the course completion certificate. This monetization strategy didn’t go too well. The challenge was to continue looking for a monetization strategy that worked with the unique culture at Coursera and was acceptable to our University partners that provided the content.
💭The Balancing Act: Figuring out monetization
A major advantage for Coursera was its culture. We attracted the best and the brightest because of our mission, which was (and remains) “We envision a world where anyone, anywhere has the power to transform their life through learning.” But this culture had some unintended consequences, with one of the main ones being that many on the team were resistant to monetization as they believed it would come at the cost of access to learning. We had to figure out ways to drive revenue without limiting access to educational content. We needed to evolve into a generational company that can drive fast revenue growth but also benefit the world, not just profit from it. So, the next two steps were critical.
Step 1: Figure out B2C monetization beyond certificates
Step 2: Validate if B2C monetization can create demand among enterprise customers
Source: Experimentation & Testing Program at Reforge. Find out more:
Observation 1:
The first hints of the Enterprise opportunity came from the B2C product users. We saw large groups of people registering for Coursera using their work email addresses. Hence, the team could then get an understanding of the potential enterprise clients by the volume of user email addresses belonging to each company.
Observation 2:
It was also observed that learning and development was a growing trend in 2013 and large companies were allocating substantial budgets to spend on training their employees, especially around in-demand business, technology and data science skills.
Observation 3:
Although Universities were worried about monetizing consumers directly because their goal in teaching on Coursera was to reach the world beyond their physical boundaries, they had no concerns around monetizing companies.
Observation 4:
Everything was free on Coursera other than the certificate of completion, which companies didn’t care about (they trust their employees and don’t need verification of completion and don’t want to give them a credential that might help them land a new job).
So in order to unlock the B2B opportunity, we needed to figure out what else beyond the certificate should be behind the paywall. The opportunity was massive but there were real obstacles to overcome.
✴🌠Product Mindset Shift for the Enterprise Opportunity
At that time, the product teams were organised into a Growth team, Monetization team, and Learning experience team. Step 1 (figuring out B2C monetisation) was led by the Monetization team, who spent time doing qualitative research and A/B testing with consumers. Step 2 (Enterprise opportunity) was led by the business development team to test ideas with enterprise customers.
The Monetization team, working on B2C, found through research and testing that putting assessments behind the paywall was the best fit for Coursera because of how it accommodated the vision and culture of Coursera and the existing mental models of learners and universities:
This approach kept substantially all content open and free
It aligned with currently existing mental models: this is how it works on a university campus. One can sit through a lecture but won’t get a grade, credit or even their assessments graded without paying tuition dollars
Assessments are important to some students, especially those taking courses to further their career where they will get economic upside from taking the course
Assessments could be packaged with certificates (and a final grade) as a bundle, and importantly assessments on Coursera were not just simple multiple choice questions; instead Coursera’s assessments were a mixture of projects, essays, coding assignments, and multiple choice questions.
The question for the Business Development Team then was whether enterprise partners would value the assessments enough to pay? This was quickly validated with potential clients, and we then spun out an EPD team focused on Enterprise and began building out a sales team. The next task was to figure out the operating model for the EPD team.
We realized that the EPD team had to have a different cadence and approach to building products than the consumer teams. This primarily stems from addressing different customer segments (purchasers in the case of enterprise vs. users in case of B2C), building administrative tooling and being more deliberate about roadmap planning, e.g. publishing out to provide predictability to enterprise customers. That said, we kept the learning experience between our enterprise learners and consumer learners unified. This ended up being a key decision as it allowed us to move faster, simplify our organization (we didn’t have to maintain two different core learning experiences), and allowed the fast pace of learning on the consumer side to flow through to our enterprise customers.
Lastly, within Enterprise, we debated a lot around who our target customer should be - the end user (learner) or the administrator (purchaser) and although we kept our focus on the learner we acknowledged that we needed to spend some 10-20% of the roadmap building tools for the administrator too.
🤝Product and Sales Coordination
The relationship between Product and Sales can often become tense, especially when either of the teams start focusing on protecting their turf and incentives rather than the user needs.
While we were validating and scaling up the enterprise opportunity, the biggest friction point between Product and Sales was that the Product team wanted to introduce a self-serve go-to-market motion to our enterprise product, which is often referred to as Product Led Growth (PLG) in addition to a top-down sales motion and our consumer experience. The product team believed that introducing a PLG motion would make it easier for teams of 10-20 to sign up for Coursera, as they didn’t want to talk to a sales rep to buy 20 seats, nor is this worth it for a sales rep. And teams found it daunting to coordinate a group purchase using Coursera’s B2C experience because that experience is optimized for the individual learner. But the Sales team was worried introducing PLG would eat into their commissions AND decrease the average purchase amount.
We heavily debated whether PLG was the right approach and I finally aligned with the Head of Sales to try it. After running a few experiments, we saw that introducing PLG increased total revenue, dramatically increased the number of enterprise customers, and gave the sales team a new “inside sales” channel to optimize, i.e upselling large potential customers that came through the self-serve channel.
When it came to product planning, Sales was an input into product planning but their input was balanced with our overall strategic goals, vision and customer insights. And our primary focus was finding real problems and solving them for our learners, whether they came from enterprise or consumer. One of our values was “Learners First” and this was especially true for how we did product development.
The ‘Learners First’ value was tested when one of our big enterprise purchasers was asking for various ways to customize the learner experience by adding custom content from the enterprise, not just the university. This wasn’t something that was on our roadmap since it wasn’t a feature that would benefit the network, instead the content would only be accessible to that one enterprise customer. So instead of building this feature out directly, we instead took the feedback as inspiration that companies were looking to augment university content with industry content. This inspiration led to us beginning to partner with companies to provide in-demand skills training, helping us expand beyond university only content.
🏃♂️Ensuring monetization is not overshadowing the learning experience
Although we had figured out the monetization approach for Enterprise (paid assessments), we also worried that by charging for more parts (certificate + assessments) of the learning experience, we would end up extracting more value from learners than we were creating, and this was especially true for our consumer learners who were paying for Coursera out their own bank accounts. That said, we believed that IF we were creating value for learners, then it is ok to extract some of that value. To get a better understanding of the value that we were creating and ensure everyone, regardless of their economic status, had access to Coursera, the team focused on two things:
Coursera introduced financial aid to ensure that those who are unable to pay for the certificate can be helped. This was critical for our mission and our university partners.
The team also ran a Learner outcome survey (the results of which were published in Harvard Business Review, which you can see here) to see if the courses, especially in career oriented subjects, were having a significant impact on learners with respect to getting a new job, promotion or switching careers. After observing that Coursera courses were having a significant impact, it gave us confidence to keep moving forward with monetizing more of the course experience.
Taking these steps ensured that our monetization approach was in line with the values and vision of Coursera, “We envision a world where anyone, anywhere has the power to transform their life through learning”
Source: Experimentation & Testing Program at Reforge. Find out more:
💡The Impact of Enterprise Opportunity and Key Learnings
Today, Coursera has reached over 100 million learners from all backgrounds and from all over the world and has nearly 1,000 enterprise customers also from all over the world. It may seem like everything was easy and “up and to the right” but I hope this behind the scenes look at how we built the Enterprise business at Coursera shows that was not the case. Building anything of value is hard and building at a startup takes persistence and conviction. I’m glad we had conviction and persistence in the enterprise opportunity at Coursera as it has certainly paid off in big ways!
Some takeaways from my experience scaling the enterprise opportunity:
Launching a new business line is hard and not to be taken lightly. It adds another type of paying customer that you need to listen to and build for. You should be ready to invest heavily and develop a system for synthesizing feedback from enterprise customers. I tried to prioritize across a few different dimensions:
Learners: It’s the product teams’ job to take what they are hearing and turn that into unique solutions to the problems they are hearing.
Vision: We had a unique vision to create a world where everyone has the power to transform their life through learning.
Business: We needed to become a generational company. This requires focused planning to put in place the necessary pieces across monetization and scalable systems.
Focus is great except when it leads to irrelevance. In the beginning, I resisted expanding the business as I was worried about distracting the team from the growing B2C business but ultimately I came around to building out the Enterprise business and it was the right call. Enterprise is now the second largest segment for Coursera and fastest growing. Coursera did $124.8 million in revenue in Q2 of 2022, with $43.7 million of that coming from the Enterprise business, which is growing at 55%.
You can start new initiatives in a small way, using existing teams but quickly you’ll need teams singularly focused on one customer or part of the user journey. Without that focus, it is hard to make significant progress on anything of value.
It’s easier to launch an Enterprise offering as a B2C company than an Enterprise company launching a B2C product because
Brand and Product awareness is high for a B2C company - many employees have heard of Coursera and/ or have used it. This super-powered Coursera’s sales motion.
It leads to a natural Product Led Growth focus with the B2C product that could be carried to B2B as well.