Udacity, a pioneer in the online teaching of IT skills, is celebrating a milestone today—50,000 students have now graduated from one of its revenue-generating “Nanodegree” programs.
Launched four years ago, the Nanodegree courses allow students worldwide to gain expertise in areas such as data analytics, machine learning, and autonomous flight engineering by completing coursework that can take as little as six months.
In a blogpost touting student successes, Udacity co-founder Sebastian Thrun (pictured above in 2014) said Nanodegree graduates are reporting average salary increases of 33 percent in the United States and Canada when they score new jobs after updating their skills. In other countries, the pay bump averages 18 percent, he said.
But in his post, Thrun kept mum on Udacity’s own path to success as a business, and about a recent shakeup at the Mountain View, CA-based company.
Back in February, Udacity’s then-CEO Vishal Makhijani told Reuters the private company was starting to tee itself up for an eventual IPO by unveiling some details about its revenue for the first time. Due to growing student enrollment, revenue in 2017 reached $70 million, more than double the $29 million Udacity brought in the previous year, he said. The number of students in Nanodegree programs rose from 16,000 to 50,000 in 2017.
The company, which has raised a total of $163 million from investors, was valued at $1 billion at the time of its last fundraising round in 2015—a $105 million Series D round, a company spokesperson told Xconomy.
Late this year, Udacity began a series of substantial layoffs, and Makhijani departed the company in October after more than two years on the job, as recounted by the Silicon Valley Business Journal. Thrun, now executive chairman, and the company board are running daily operations on a temporary basis during a search for a new CEO, according to the Udacity spokesperson. Thrun had served as CEO until April 2016, when he handed the reins to Makhijani and concentrated on his role as chief executive of the flying car startup Kitty Hawk.
Udacity’s first small wave of layoffs came in August, according to TechCrunch. Then in November, Thrun and the board “made the painful decision” to part ways with 125 employees, which will bring Udacity’s staff count from 455 to 330 by the middle of 2019, the company spokesperson said.
The workforce reduction is part of a company reorganization “to focus on the most impactful parts of the business,” according to Udacity’s spokesperson. It may be part of Udacity’s long movement toward revenue-producing services such as helping businesses meet their growing needs for tech-savvy workers by training their existing employees, as well as teaching outside job candidates. The top priorities are “growth areas like enterprise and career development,” the spokesperson said.
Udacity currently has more than 10 million registered students from more than 160 countries, including about 40,000 enrolled in Nanodegree programs. In the United States, the tuition for those programs ranges from about $1,000 to $2,400, depending on the topic and the length of the courses. Many of the other students are taking free online courses such as “Intro to Computer Science” and “Java Programming Basics”—a remaining legacy of Udacity’s origins as one of the first providers of MOOCs, or Massively Open Online Courses.
Udacity was one of the first startups to demonstrate the startling potential scale of online learning, and it helped to inspire the growth of the international educational technology industry. When Thrun was a tenured Stanford professor in 2011, he and fellow faculty member Peter Norvig opened up their “Introduction to Artificial Intelligence” course to anyone online—and 160,000 people signed up for the MOOC. Thrun co-founded Udacity in 2011 to mine the global commercial possibilities of remote learning via the Web, and the startup tried various business models, including collaborations with universities such as San Jose State University and Georgia Tech.
The company’s early experiences raised a question that many edtech outfits still have to answer: Can students easily navigate an online learning experience by themselves, or do they need substantial support from coaches and mentors to help them if they get stuck? When Udacity offered its first three free MOOCs in 2012, only about three to four percent of students finished the classes, the company spokesperson said. Pass rates were also low for a course offered in a partnership with San Jose State.
Udacity is still evolving its approach to student support. “Some Nanodegree programs are now seeing close to 50 percent completion rates and we continue to work hard to increase that rate across all programs,” the company spokesperson said.
Meanwhile, Udacity has been forming partnerships with big tech and telecom companies to help design courses that address their hiring needs, such as a Nanodegree program in robotics in collaboration with leading chipmaker Nvidia. In 2017, Udacity saw rising demand and a doubling of deal sizes for its enterprise services, which help businesses build new skills among their existing workers, CFO Nikhil Abraham said in February.
In addition to its courses, Udacity provides other student benefits due to its close ties with major tech companies including Amazon, IBM, and Mercedes-Benz. Partners including Google, AT&T, Bertelsmann, Google, Facebook and Lyft have provided scholarships to 12 percent of students in Udacity’s Nanodegree programs, according to Thrun’s blogpost. Udacity also offers student job-seekers a connection to employers, who often have trouble filling positions due to the high demand for programmers, developers, and engineers.
“Udacity partners with more than 200 companies that are eager to hire our graduates,” Thrun said in his blogpost. And more than 50 companies have formed collaborations with Udacity to upgrade the skills of the employees they already have, he said.
Udacity’s task is to attract and retain students in a growing and more competitive global edtech market. A host of other companies also offer opportunities to learn IT skills online—some in conjunction with formal university programs. They include Microsoft unit LinkedIn’s edtech division Lynda.com; Mountain View-based Coursera, which offers single courses as well as accredited degree programs; and enterprise platforms such as Degreed, which provides employers with a menu of online learning resources that their workers can use to upgrade their skills.
Although Udacity is shedding some workers, it will still be hiring in “priority areas” at the same time, the company spokesperson said. Udacity may be repositioning its global resources across geographic regions. VentureBeat reported last month that company offices in Germany took the brunt of the first wave of layoffs in August, and said that Udacity also had plans to close an office in São Paulo, Brazil.
The countries with the highest student enrollments in Nanodegree programs include the United States, India, and China, the company spokesperson said. Udacity found that it could boost graduation rates to 90 percent for students in China who benefited from support services including mentors and tutors, VentureBeat reported in November. Thrun was quoted saying that Udacity was looking at ways to extend that success to other regions.
“By the end of this year, 70,000 people from 100 countries will have graduated from Udacity Nanodegree programs,” Thrun said in his blogpost Thursday. “That’s up from 18,000 alumni this time last year.”
Does Udacity still have its sights on an IPO in a few years?
“Udacity is on a great growth trajectory and our aspiration is to become a world-changing company,” the company spokesperson said in response to the IPO question. “Our current focus is on putting our students first and building a valuable business, and doing both will provide plenty of options to scale.”
Photo credit: Udacity