Skillshare: The Future Belongs to the Curious

The Business

Founded in 2011 out of New York City, Skillshare is an online learning community where students can take pre-recorded, project-based, self-paced classes on a myriad of topics they might find interesting, from “Calligraphy for Beginners: The Foundational Styles of Calligraphy” to “iOS Design III: Prototyping and Testing.” Students pay ~$10/month for unlimited access to Skillshare’s thousands of classes. The decision to use this payment model, which is akin to that used by media companies like Netflix and Spotify, is “key for us as we move to a lifelong learning model,” CEO Michael Karnjanaprakorn has said. “We want Skillshare to be the place where you can keep learning.”

Skillshare seeks to effect a philosophy that “anyone can learn anything, at any age, at an affordable cost, anywhere in the world.” While this mission in and of itself is not unique – one might immediately think of MOOCs like Coursera and Udacity, which offer courses from elite universities like Harvard and Stanford to internet users – Skillshare is differentiated in its approach to sourcing content: anyone can sign up to teach a course on Skillshare. As the founders see it, a freelance motion-graphics artist can teach a terrific course on digital visual effects, even if he has no formal teacher training. In fact, almost anyone in the world can teach a class under one of Skillshare’s diverse categories, which range from Design or Business to Technology or Writing. By widening the funnel for potential teachers and providing the resources to help those teachers set up classes, Skillshare accesses a previously untapped resource and offers it to students around the world for a small subscription fee.

Several other advantages accrue to the business from its operating model as well. For example, since classes are pre-recorded, once the content has been created, it is permanently a part of Skillshare’s portfolio of classes, replacing the highly labor-intensive, repetitive, and ethereal process of traditional teaching. Additionally, since a network effect underlies the community of teachers and students on the platform – teachers come on Skillshare because there is a large student audience, and students come Skillshare because there is a significant teacher presence – the “go to” brand that Skillshare has built as the first mover in this space represents a significant competitive advantage.

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Business and Operating Model Alignment

The most elegant alignment of the operating model and the business model occurs around the Skillshare teacher, who is paid according to how successful his/her class becomes. Skillshare sets 50% of total membership revenues aside for a royalty pool that goes to teachers. Once a class has enrolled at least 25 students, teachers begin earning monthly payments from this royalty pool, in directly proportion to the number of monthly enrollments and student projects in their classes.

Of note, Skillshare chose not to pay a teacher for his/her class until at least 25 students had enrolled in the class. In fact, before that threshold is reached, the class is not even posted in Skillshare’s Trending page, where students browse and discover popular classes. According to Skillshare’s Teacher Handbook:

Once your class is live on Skillshare, the best way to make it trend is to market it to your own networks throughout the first 2 weeks to increase your number of trending points from enrollments, projects, and positive reviews…Here are the 3 easy steps to market your class:

• Make signing up easy. Email a free enrollment link to at least 20-30 friends, family and colleagues, and ask them to support you by enrolling in your class for free.
• Spread the word. Post your class referral link to all of your social media channels with an engaging image and caption.
• Grow awareness. Feature your class on your website or blog if you have one.

Thus, the teacher effectively becomes a marketing engine for Skillshare. To earn any revenue themselves, they first tap their own network to bring more students onto the website.

This relationship is beautifully synergistic: for the teachers to do well, they have to help Skillshare do well. And as Skillshare does well (through more students joining the platform), the teachers do well too (through a wider audience having an opportunity to take their classes).

Performance

For a business that started its core offering in 2012, Skillshare appears to be performing well. As of November 2015, about 1 million students across 150+ countries and approximately 1,000 teachers are on the platform. The online courses offered now numbers at ~2,400.

Individual Skillshare teachers earn $3,500/year on average, with the top 10 most successful teachers on the platform earning $30,000+/year. These numbers suggest Skillshare is currently earning $7M/year in revenues – obviously a far cry from the $120M implied if all 1M students were paying subscribers, but encouraging nonetheless given the age of the company.

Several respected investors appear to agree, with Skillshare having raised over $10 million to date from VCs such as Union Square Ventures, Spark Capital, Founder Collective, SV Angel, and David Tisch.

Sources: Skillshare Teacher Handbook, NYTimes (“Anyone Can Be a Teacher at Skillshare, an Online School,” 3/19/2015), VentureBeat (“Skillshare debuts new Spotify-like membership model for online education (exclusive),” 3/19/2014), Inc. (“Skillshare Takes on the Education Gap,” 4/2/2013)