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How Pluralsight grew an online learning business that made its tutors millionaires

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Michael Kappel

Founder and CEO Aaron Skonnard reflects on the dizzying rise of the Utah-based edtech unicorn.

Eleven years ago in Utah, Aaron Skonnard and his colleagues were trying to work out how to make professional software developer training better.

They had lots of ideas about content and teaching methods, but it soon became clear that the bigger challenge was access.

That was when the lightbulb moment happened: do it online.

The Pluralsight online learning library began with 10 courses based on Microsoft technologies. Today, it has more than 600 authors and over 3,500 courses. Users pay from $29 a month for unlimited access, while enterprises can buy subscriptions from $299 per user per year.

And so many of them do thatPluralSight is set to post revenues of over $100 million this year.

Hot Topics quizzed Skonnard on the past, present and future of this online learning pioneer…

You started the company in 2004. When did it really start to fly?

It was when we switched to a monthly option in 2011. We had three plans: from $500 to $1500 a year. We didn’t have a monthly plan. So it took us a while to realize there was likely to be a real benefit in changing the pricing structure. Our thesis was that our product was equivalent to professional corporate training that people spend thousands on a year. Making it $29 a month to individuals – that was a risk.

What were the biggest fears?

It was obvious it would get us more customers, but there was real concern around piracy: the idea that people would come in and just steal content. Getting people to make a longer commitment stops that.

The other issue was how to generate enough online learning content quickly. You worry it’s not possible. That was when we began to think about how we could produce content at a faster rate to counter that problem too.

But it was still like stepping off a cliff.

Yet it worked…

Yeah, it took off. It just exploded. That was right where the hockey stick growth began.

What happened with piracy?

It was never a major issue. People are generally good. Companies mostly abide by agreements. Yeah, people steal, but there are enough good people to build a great business.

There are philosophical reasons to not throw up all sorts of barriers. But also practical ones. We don’t want to hurt the good guys’ experience because we’re trying to stop the bad guys. All DRM does is hurt the online learning experience. So we don’t do it. Obviously, we track YouTube, and send out cease and desist letters and so on.

Did people spend less time on Pluralsight when they were offered monthly online learning access?

Retention was quite strong. If they left it was mostly because they ran out of courses to take. It improved when we stepped up course production.

How do you on-board tutors and ensure the quality is high?

We figured out right at the start was what makes a good tutor. We’d done it in the classroom for years. The challenge was where to find these people. They tend to hang out at conferences, so we have a team that attends these events all over the world. They’re basically spear fishing.

Tutors are assigned an editor to guide them through the process, recommend the right equipment and so on. There’s a set of tools and systems, but in the end they do it themselves. There’s lots of diversity in the teaching, but you definitely know you’re watching a PluralSight online learning video.

Tutors make their online learning courses at home. Why not bring them in to high-production studios?

We think a little differently about what quality means. I think it speaks to the difference in approach between us and, say, Lynda.com. Our customers value the teaching, the examples and the authenticity of the tutor more than anything else.

Learning about Ruby from one of its creators from their basement in Norway is more compelling than having a shiny high-quality production. We prefer the top people with a minimum production bar.

How many Pluralsight tutors are there?

About 600 to 700 who have published with another 300 or so waiting to publish.

How often do you reject applicants?

All the time. We prefer to reject them early. We figure it out pretty quickly, but there are times when someone just doesn’t follow the process. They go rogue and say ‘here’s the course’ and it turns out they’ve not adhered to the rules.

How do you pay tutors?

Because we sell subscriptions, there’s no sale for an online learning course. It’s all done on views. So we look at the top line revenue, determine the percentage of usage by course and share the revenue accordingly. Tutors are paid on an agreed rate per course.

Has the business model changed the way tutors construct their courses?

It’s driven the length down. We provide the authors with loads of data, and these people are all programmers so they geek out and think ‘what can I do differently’.

Now, you’d think longer courses would get you longer views. But actually good short online learning courses scale better and get more word of mouth. Also, more demos and few slides. That works.

How can you ensure tutors don’t just courses based on obvious big-selling subjects?

We offer a model that gives the option to receive more money upfront on delivery of the course material. And that goes up to tens of thousands of dollars if we really want it on the program.

What do the top tutors earn?

Our top author Scott Allen made $1.5m last year. Three or four have done $1m in lifetime revenues. The average is around $50k a year. Some do much more. It’s pretty similar to the book industry. But it’s definitely a career for people. Others supplement their income with it. Overall, we paid out $19.7m in 2014.

How do you encourage female participation?

We sponsor virtually every women in tech group we find, and give them free online learning access – maybe send them some swag. Obviously we try to attract the best women to be tutors. Currently there are 119 courses from female teachers. That hopefully provides role models. In fact, we just published some videos on the company blog featuring women discussing this problem.

How do employers view a Pluralsight qualification?

Enterprise customers actually use our courses as a proof point that someone is actually trying to improve their skills and be an active learner. If someone can show they took 25 courses over the last two years, that’s pretty persuasive.

You just bought the online skills testing specialist Smarterer. How will that help your mission?

It’s going to help us build a more skills oriented credential in the long term. With Smarterer we can instantly rank a person across the entire industry of professionals we know about. Say someone says they know Javascript – in two minutes we can score them. That also helps us found out better where people’s skills gaps are, so we can help them decide where to focus their learning.

Do you think online learning can displace traditional methods of learning?

Depends on the time frame. It will be complementary for five to ten years. After that the pendulum will move towards our model. People will really start to question traditional models.

It’s also true that degrees just don’t matter that much to tech employers. It’s all about what you can do.

Having said that, at college you get networking and social interaction – that’s all part of becoming a professional. So maybe we can be complementary. Embedding online learning in that context might empower colleges to focus more on practical stuff they are probably neglecting.

Some MOOC students have created their own classrooms so they can study online courses with others in the same location…

That’s happened to us too. People have spontaneously formed Pluralsight study groups. There are 25 of them now. We’re thinking about that very carefully. A year or two from now you’ll see more of what we have planned.

Could Pluralsight offer courses in the humanities?

This is where brand strategy and focus become important. We could do it. But I think it makes sense to stay centred around the technology landscape, which is really growing. We’re skating towards where the puck is going to be.

You’ve been quite vocal about company culture in the past. How do you sum yours up?

We only have two rules. First is always do what’s in the company’s best interest. Expressing it that way means we don’t need dress and vacation policy and so on. Second is be respectful even when you disagree. We want people to defend their opinions. But we just say don’t be an asshole about it.

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