Udemy (pronounced: you-duh-mee) is an online learning and teaching platform where students can pick and master new skills with the help of video courses taught by experts. Founded in 2010 by Eren Bali, Oktay Caglar, and Gagan Biyani, Udemy now offers over 80,000 courses (as of 2018) across a plethora of categories, including language, music, business, academics, photography, health and fitness, and technology. As a member, you can either join the 24 million students already using it to improve their skill set or become an instructor yourself and earn money through the platform.
However, before Udemy became a known name in the world of online education and the go-to platform for teachers and students alike, Bali and his co-founders needed to figure out a way to push their product to the market, fund their project, and (ultimately) grow it to the business it is today.
The Idea That Gave Life to Udemy
We can trace Udemy’s humble beginnings to 2007 and Turkey, where Bali was living at the time and where he came up with and built software for a live virtual classroom. As Bali explained in an interview, the idea to build such software came from watching his classmates in Turkey struggle to get to school on a daily basis, determined to learn what they can and improve their lives, despite the bad weather and miles they had to walk to do so.
However, neither Turkey nor the year 2007 were able to support this software (liquidity was one of the main problems, as were other issues such as bandwidth, audio, etc), and Bali had to shut it down for a while. Despite this, Bali was determined to see his idea see the light of day, and he soon moved to Silicon Valley with his Caglar, where they founded their own company and went on to pitch the idea to various investors in order to get capital funding.
According to Gagan Biyani, the investors were not impressed and the live virtual classroom project was rejected more than 50 times.
50 rejections still weren’t enough to discourage the group from pursuing their goals—instead of pursuing the development of the teaching tool that sparked their move to the US, they simply redirected their focus and launched Udemy in May, 2010.
Since Bali’s main goal was to create a place where anyone could learn anything they wanted, he realized that a marketplace model was the best and most realistic way to achieve this goal. The idea was to make it easy for experts to not only teach courses, but also exchange ideas and learn from one another, and to be able to monetize and digitize their expertise.
But in order to get to the point where this marketplace of his would thrive, he first needed to face and overcome a number of challenges in his way.
Raising the First $1 Million
Udemy’s main obstacle in the beginning was creating content quickly (they needed content if they wanted to move forward with their development, but there simply wasn’t enough time to do that), so what they did was use a strategy similar to the one Quora had already implemented.
They took the courses from the OpenCourseWare, because their materials were free to use online, and said that the first 100 courses had come from prestigious universities like Stanford, Yale and MIT. This strategy was a great way to attract attention of the tech world and its press, such as Mashable and TechCrunch, and thanks to this initial press coverage, Udemy was up by approximately 10,000 users within a few months, with 1,000 instructors who had created about 2,000 courses.
By August, 2010, Bali and his co-founders had managed to raise $1 million in venture funding—their first successful round of financing—which was enough for them to get professional instructors and academics onboard.
Raising Capital for Startups
However, while the problem of instructors and academics might have been solved, Udemy still needed something catchy that would attract users and investors alike to their marketplace. They overcame this obstacle by deciding to film meetings with their investors, and created a course named “Raising Capital for Startups”, in which 7 top founders and CEOs explain how you can raise money for your startup.
The course was released in different formats, and each format brought between $30,000 and $50,000 to Udemy. The platform got real traction and showed their investors its true potential. From May 2014 to May 2015, Udemy saw a 300% growth rate and raised $48 million in funding, and in June 2016, the company raised $60 million from Naspers Ventures.
After the success of the “Raising Capital for Startups” course, Udemy’s Instructors started earning more money, and in May, 2013 Udemy reported that its top 10 instructors had earned more than $1.6 million by selling their courses.
Thanks to its huge success, Udemy launched an app for Apple iOS in 2013 (the Android version was released in 2014), which allowed its students to take classes directly from their iPhones. Since 2014, the iOS app had been downloaded over 1 million times, and 20% of Udemy users now access their courses via mobile.
Although Udemy is incredibly successful now, Bali, Caglar, and Biyani definitely had to face many challenges along the way, and building a highly scalable online learning platform was the biggest one for sure. A combination of site optimization, A/B testing and different referral programs was what helped them find the best growth channels and strategies for their business.
These strategies got them a high level of customer satisfaction and a word of mouth that increased their LTV. Udemy is just one great example of how you can stand out from the crowd even if you have very strong competitors.