The real reason to care about Udemy and Coursera now stepping into the stock market

It’s boiling. Udemy and Coursera, are currently planning for their billion dollar IPOs. But why bother, really? You may just be a teacher, a single person who likes to learn things, a university, or a private education company. Though that’s when you really should care. This post explains why, and most importantly how, to care.

It was expected. Digital education has grown significantly in recent years. Then came the Corona: a turbo effect. That now more money than ever is being invested in this industry is not so strange. Quite the opposite actually.

Why, in fact, did it take so long for the big financial investors to discover that education is a trillion-dollar business?

The lack of interest, so far, is probably due, to be honest, mostly to the fact that financial players are rarely interested in industries where the structures are fixed and no major changes take place. Then there is not much to do, nor much money to earn. But now there are things to do, in and with “education”.

So, what will they now start to do?

Let’s use the two companies that are currently planning their respective IPOs as a starting point for a reasoning I think you can benefit from. It’s about Udemy and Coursera – both supposed to be on the stock exchange within maybe a month from now. Both of them have been said to be worth around $ 5 billion, each, but ignore it right here and now (well, I know; it´s quite a lot of money).

Superficially, these two companies are quite similar. In reality, they are distinctly different…at least so far. Coursera is a platform for universities, at least for now (!). Udemy is a platform for individuals, at least for now (!). But in this particular post, I thought I would be content to state their similarity, as a platform.

They are thus digital platforms for education. They connect educational providers with end customers in a similar way as, for example, UpWork does in the labor market, Uber in the taxi market, AirBnB in the housing market, Spotify in the music market or Netflix in the film market.

It is not unique that new types of digital intermediaries, connecting points, are now emerging. That, if anything, digitization has shown us time after time after time. Already today, there are actually thousands of digital platforms for education – no one knows the name of everyone, even though some make lists on it.

But some of these platforms seem, at least so far, to have had the ability to become a little bit bigger than others. They are often the ones many people are talking about, right now. Udemy and Coursera are examples of such.

Udemy has about 40 million users. Coursera has about 80 million users.

Ignore trying to understand more exactly what these numbers really say – it is not possible to really figure out unless you work for them. Be content with the rough figure itself. And content yourself with stating that it cannot be trivial to get that number of “students” together. It took both of these companies about 10 years (Udemy founded 2010, Coursera founded 2012). On the other hand; pretty quickly marched, or what do you think yourself?

But, is it a lot, or even a little?

Depends on how you choose to see it actually.

It can be extremely much, in comparison with, for example, my own recently started YouTube channel. But a little in comparison with, for example, PewDiePie´s YouTube channel (over 100 million subscribers).

It can be a lot if you compare with the really big universities in the world which have maybe 50,000 – 100,000 students. It can be even more if you compare with a private education company. But a little if you, for example, compare with the number of people who have an iPhone.

It can be a bit if you compare with my own courses I have at Coursera, right now. Though, on the other hand: How many courses at a normal university have several thousand students?

And it can actually be relatively small, if we instead, for example, compare with the digital E-learning platforms that have emerged in China and India over the past 10 years. Those that are seldom talked about in the western world, but that the big investors follow and definitely compare things like this with – if they are smart, that is (trust me: most of them Are smart).

So, if you think about how big the education market is (or; will become), well then there is not much to cheer for to have less than 100 million users (But it´s still somewhat mind blowing, I know).

It is actually entirely conceivable, even strikingly probable, that within the next 10 years we will have digital training platforms with several hundred million users. Maybe even a billion.

The potential for digital education platforms is of course at least as great as it is, for example, for music or film.

Spotify may have 150 million users, already today, but at the same time it is clear that they, still, can grow significantly. Netflix has 200 million, but expects to continue to grow. In their industries it is not a question if things will grow, but only a question on “whom” is going to grow.

Here we also find a central reason why companies of the type Coursera and Udemy are now doing an IPO (there are many more reasons, but let’s ignore them here). If you want to grow, fast, external capital may be needed.

Neither Spotify nor Netflix would have been where they are today without external financiers being prepared to pump in money.

If then also other, latent competitors, run fast, which they do here, you yourself may not even feel that you have a choice, if you want to be able to maintain a strong position you have already started to create for yourself. Then you have to run even faster than you might already do. Also then external capital can be useful.

It can sometimes be that simple in the digital world.

It’s a completely different kind of world than the one we had before we got the, so called “internet”.

We really could not talk like this before we got the internet – actually the reason I wrote this book a few years ago.

But then; why is any external player willing to pump in money to “only” make an already relatively large platform larger than it already is?

Because, of course, they see a future opportunity for great returns.

If you succeed with the piece of art in becoming a dominant player in a changing market, the future possibilities for high returns are enormous.

In any case, it is as you think, if you play in this league.

Companies such as Apple, Amazon, Alibaba, Google, Facebook are already there.

But it’s not just that you can make big money by being a dominant player. It is also the case that you then set the rules of the game for everyone else. Sometimes it is not more difficult than it is those who roll over to the future “commando height” who will decide what our lives will look like.

And this is important.

This has always been the case, even long before the internet. And; on all markets.

Netflix has, already, completely changed the movie industry, even what types of movies are to be produced and how they are to be produced. Spotify, in turn, has already changed the music industry, and not just at the level that record companies and musicians have begun to adapt, because they have even succeeded with the piece of art in redefining the very length of a pop song. This means concretely that the product called “movie” and the product called “song” has now been changed due to actors such as Netflix and Spotify.

Exactly the same thing will happen with education, if/when players like Udemy and Coursera become even more dominant platforms than they already are.

With that said, the question may not primarily arise as to whether Udemy and Coursera in particular will be profitable as investment objects or not. If they do not succeed, others will. Instead, the question becomes: What do these players want the future education market to look like? And this also begs the question: what “educational products” do they think the world should even see? Yes, how do they really think that “education”, in a digital world, should look like?

Follow their further development is my suggestion. Even if you are not a big investor. And in just this way.

Udemy and Coursera are well much more interesting than you would be content to consider them only as latent investment objects.



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