The coding bootcamp space has seen its fair share of turbulence recently. But despite recent announcements that longtime players like Dev Bootcamp and The Iron Yard will shut their doors at the end of the year, rumors of the sector's demise are likely greatly exaggerated. It is much more likely that these recent woes are merely growing pains, brought on by a large number of providers competing for a finite number of students in an environment where they don't yet have the same access to support from federal funding that their traditional for-profit peers enjoy.
Codecademy is no stranger to this struggle.
Launched in 2011 with a goal of teaching people the programming skills they needed to find jobs via an engaging, accessible and flexible product, the free service became incredibly popular, growing to 45 million users and partnering with several governments. But in 2015, it faced an existential crisis that necessitated monetization. Enter Codecademy Pro, three new paid products offering additional help, content, structure and a credential.
We recently caught up with Codecademy Co-Founder and CEO Zach Sims to talk about the current bootcamp environment and his company's new products, which launched last Thursday.
EDUCATION DIVE: The coding bootcamp space is going through some growing pains right now. What are some of the biggest ongoing challenges?
ZACH SIMS: I saw your posts on bootcamps shutting down and I think you hit the nail on the head. The challenge for a lot of these bootcamps appears to be scale. There are a lot of costs involved in the bootcamp model. Obviously, you’re paying for the instructors, paying for the real estate of the classrooms where you’re teaching people, you’re paying for curriculum development — and doing so in a way that still requires really hands-on, intensive faculty-to-student ratios. It appears to be really, really hard to scale. I think that most of the best bootcamps today have a model where they have really, really strict, excessive criteria, and they make sure that people are super motivated and they’re able to kind of have good raw clay to mold their graduates from. As you scale, it becomes much harder to maintain that level of selectivity, as well as to provide an accessible education to people that isn’t $15,000-20,000 for a three-month experience.
What do you think will ultimately end up stabilizing the situation? I know, for example, there’s been talk of opening federal funding to bootcamps. Do you think that would potentially help with the scaling issue?
SIMS: There’s a lot of potential for federal funding for bootcamps and alternate forms of vocational education. As you know, the previous administration did a bunch of work on EQUIP in an attempt to find alternate methods of funding vocational education, and a lot of the challenge is in figuring out what would that look like. A lot of these different bootcamps promise different types of jobs, and the ability of the bootcamp to provide those kind of outcomes is challenging.
I think federal funding could unlock a lot of new opportunity in the bootcamp space. It could also lead to a lot of dangerous circumstances where students are taking on lots of debt for sub-optimal programs that aren’t necessarily providing them the ability to pay back the debt they’re taking on — which we’ve seen, in large part, in a lot of the for-profit higher ed coverage in general. And that’s what led to gainful employment, obviously. It’s plenty of opportunities, but also lots of risky waters ahead.
We definitely participated in some of those [EQUIP] conversations with the Obama administration, and it goes back to a lot of the questions I’m sure you ask a lot of these bootcamps, like what are the standards, basically, that they’re being held to? An interesting angle on a lot of this comes from a lot of the lenders that are doing this now. I know institutions like Climb Credit or SkillsFund … approach potential applicants differently based on what they anticipate the outcomes to be, so I wonder if there’s a way for the government to try to find a similar solution to judge outcomes for bootcamps that acquire federal funding.
Do you think that with the high number of bootcamps in existence overall, it was kind of inevitable that a few would fall to competition?
SIMS: There’s definitely a lot of bootcamps. One of the big questions has always been is there a network effect or any kind of scale advantage for bootcamps across lots of markets — where you have regional players that are super strong, and then you have players that focus on opening as many different bootcamps as you possibly can? And that’s where the model starts to struggle, when you go from being like the Harvard of teaching people this stuff to an organization that tries to scale at all costs. I haven’t really seen that be super successful yet. There’s a lot of competition. There also remains to be a question of “Does the market size tap out at any point?” Because I’ve seen so far, if you look at a lot of the studies that are being done, there’s just been tremendous growth in the number of people participating in bootcamps and interested in getting these technology-enabled jobs. There seems to be a space where maybe they’re not all necessarily competing with each other for students yet because there are enough students to go around, but I’m sure that’ll happen soon, where there won’t necessarily be enough students to fill all of these.
I heard Codecademy had its own near-death experience. What led to that and how did you all recover?
SIMS: [In about late 2015] we realized that we needed to figure out the next step for the business, and needed to figure out how to do so in a way that would keep the company sustainable and growing. 2015 was a time when there was a lot of global macroeconomic instability, and we saw a lot of challenges in the funding climate. To date, the company had raised about $12.5 million and we were really focused on providing that accessible, free education to people. It was purely about putting up big user numbers under the belief that, as you know, in education, brands are built over a really long timespan. And building a brand with tens of millions of people that had taken courses, we thought, would be really important when figuring out how to monetize.
We picked our heads up in August 2015 and realized that the next step for the business was figuring out how to generate revenue and build something our learners wanted in order to do so. That realization came among all of this macro instability, and it happened at a time when the company had about nine months of runway left in the bank. So we had this real issue of figuring out “There’s nine months. We have this product that’s growing that’s available to people for free. But we think the real next step for the business is trying to become sustainable and profitable and making sure that we don’t have to rely on future venture capital financing and can really build a sustainable education technology business. There are plenty of carcasses in the space, and we didn’t want to end up one of those.
We went back to the drawing board and started talking to a lot of our learners — something we do normally around here but did very much more so this time around, with the whole team getting on calls with people that were using the product and figuring out what their biggest wants and needs were.
A couple of key things kept surfacing. Among them was people wanted a lot more reinforcement, so figuring out ways to really solidify the concepts they already learned. People wanted extra help, so when they’re confused, they would press a button and get extra help. And lastly, people wanted an easy way to piece together everything they were learning in order to figure out how to combine it all to get a job.
We spent some time taking those nuggets that we learned from our learners and trying different permutations of those as the clock ticked on the amount of runway left in the bank. We sent out emails, tried to figure out what people clicked on, spoke to learners, and ran some small tests for coaching people over text message, for instance, trying to figure out the right recipe of products to help our learners most and also to help keep the company afloat.
In November 2015, we set an internal revenue goal to try to get to a million-dollar run rate by the end of that year and figured we had to launch something to a small test group of learners to hit that and figure out if we could scale something to a much wider group of our learners. We launched an early version of a product then that was originally called Codecademy Pro. It gave people lots of extra content like quizzes and projects and different new learning modalities. It gave people instant access to extra help, so when you pressed a button, a chat window popped out so you could get your questions answered. And the last thing was that personalized learning plan that I mentioned.
We launched that in small numbers and hit a revenue run rate that was higher than we anticipated — we got to a $1.5 million run rate. We kept iterating on that product and felt pretty confident that we struck something that really, really helped our learners get closer toward the jobs they wanted. At the same time, we ended up raising another round of capital — $30 million last June.
Tell me about the new products.
SIMS: Thursday, we’re launching Codecademy Pro, which is a set of products for our learners that helps them get even closer to learning the skills they need to find jobs, with more intensive learning experiences. As you know, the free version of Codecademy is pretty large at this point and has more than 45 million people who are taking courses all around the world. Those people use the free product and engage with it, and I think at this point, that makes Codecademy the largest place anyone goes in the world to learn technology skills.
At the same time, with the launch of Pro, we have three new premium products that will help them get even further on their learning journey. The first that I mentioned is Codecademy Pro. That, for $20 a month, gives people access to extra help in the form of the advisers that I mentioned. We have dozens of those people around the country now who help when you’re confused, most of whom we hire from our learner base. We’ve got a bunch of extra content, quizzes and projects, and the learning plans I mentioned, as well.
We think of that kind of as the Amazon Prime of learning for people who are learning these technology skills, where people should be perpetual subscribers to that product. The next product that we’re launching, Codecademy Pro Intensive, is something that you’ll take probably on a yearly basis [at $200 annually]. With Intensive, you’re taking an 8- to 12-week class that comes time-boxed, a certificate, review from mentors who read your code and give you feedback, weekly video seminars, and also a cohort of other students who you are learning with. The real focus is giving people that intensive, short, time-based experience where they learn a set of skills and earn a certificate.
The last component of that is Codecademy Pro Intensive at $500, which offers everything the $200 Intensive offers but with mentors. That product is, again, designed for a 30-minute, one-on-one conversation every week on top of all the certificate offerings you can get for $200 with Codecademy Pro Intensive.
We’re launching five of those over the course of the rest of this year, starting with two that we’re launching on Thursday. The first is “Building Websites From Scratch,” and the second is “Building Front-End Web Apps.” Both of those really aim to give people basic skills they can use to apply technology on their jobs and be better at those jobs, hopefully get promotions, or be able to change into new jobs — all while kind of staying true to this same product ethos we’ve had from the beginning. Building something that’s engaging and super interactive, something that’s accessible and at a low price point, and something that’s flexible that fits into your life.
We’ve messed around with the features of all of these products over the past 18 months to try to get them right, and at this point in our beta groups have more than 20,000 actively paying for these products that we’ve marketed to a small subset of our user base. And we’ve done more than $6 million in revenue on this small group of learners.
With the certificates, what format do those come in? Are they like a digital badge that can be displayed on a LinkedIn profile?
SIMS: Right now, it’s a feature on your Codecademy profile, and we’re looking at ways to make those much more applicable over time.
One of the things that also sticks out to me is the parallels with some of the MOOC providers, with how they started out offering services for free and scaled up with paid offerings and credentials.
SIMS: Yeah. For us, the really key thing is not just offering the credential — I think that’s almost a secondary thing that we’re offering. But the real thing we’re offering here is the extra help and support. It’s really about finding a way for people to get instantaneous help when they’re confused, extra content, a cohort of other people that they’re learning with. It’s much more about that extra support to make people successful than it is about the credential. The credential is meaningless if you don’t finish the course in the first place.
Which also all makes sense in the context of research on the benefits of peer-to-peer learning.
SIMS: Exactly. And that’s a lot of what we think about when designing products like this, is how can the product feel more like a classroom so we can enable students to have that really important student-to-student interaction. We’re providing the scaffolding around the learner experience, and from there, people are able to help each other and really build community. We can help with a lot of extra help, but really the community can help itself, as well.