Last week, the $1B e-learning startup Udacity announced the appointment of Gabriel Dalporto as its new CEO. The appointment marks the end of a 10-month search initiated following Vishal Makhijani’s departure from the helm of the company in October 2018. The search was overseen by Sebastian Thrun, Udacity co-founder and former CEO, who retook the reins of the company in the interim.
Prior to joining Udacity, Dalporto spent 8 years at LendingTree, an online lending marketplace. His roles at the company included chief marketing officer and chief financial officer. And his responsibilities included leading major strategy shifts in the company’s core activities. This experience likely played a role in Dalporto’s new appointment, since he is joining Udacity in the wake of an important restructuring plan.
Recap: From Unicorn to Restructuring
In 2015, Udacity made headlines by becoming a unicorn — that is, by reaching a valuation of over 1 billion dollars. Between 2016 and 2017, the company continued to grow rapidly. But in 2018, growth slowed down, partly because of the lack of Nanodegree blockbusters that year. This prompted the departure of Makhijani and the return of Thrun, and called for a fundamental transformation of the company’s core business.
This need for change crystallized in a restructuring plan that involved:
- Increasing prices: In May 2019, Udacity effectively doubled the cost of its Nanodegrees when it switched from fixed prices to a subscription model. The year prior, Udacity had already doubled — sometimes tripled — Nanodegree prices.
- Reducing pays: Udacity Mentors, who support learners during their Nanodegrees, saw their responsibilities change and their pay shrink.
- Cutting staff: Over three rounds of layoffs, Udacity parted with over 40% of its workforce. In addition, some open positions were left vacant. And the company closed or downscaled several of its offices worldwide. In the wake of these measures, many of Udacity’s long-standing instructors left the company.
In addition, the restructuring plan involved changes to Udacity’s main product: its Nanodegrees. These changes included:
- Speeding up Nanodegree production: By adopting a leaner approach to course development, involving smaller content creation teams, Udacity says it is on track to roll out 24 Nanodegrees in 2019, as opposed to only 8 in 2018.
- Revamping mentorship model: In May 2019, Udacity formally restarted pairing learners with dedicated Mentors to guide them through their Nanodegree. In addition, learners would receive support from career coaches to help with their job searches.
- Scrapping some Nanodegrees: Some upcoming Nanodegrees were cancelled, such as the Cybersecurity Nanodegree. And some existing Nanodegrees aren’t accepting enrollments anymore, such as all the Virtual Reality Nanodegrees.
Through these measures, Thrun hoped Udacity would reach profitability by the end of 2019. And it seems the plan is already paying dividends.
Early Results of Restructuring Plan
According to Thrun, the company continues to grow aggressively — in particular, its corporate and government businesses, which entail creating courses allowing companies and institutions to upskill and reskill their staff.
In addition, Thrun says that learner satisfaction and completion rates are up, and that Udacity just reached 100,000 Nanodegree graduations.
Finally, Thrun says that since June 2019, Udacity is cash flow positive — meaning that its monthly cash inflow exceeds its outflow — which, albeit not a guarantee of long-term profitability, is an encouraging sign.
Regarding revenue, Thrun said in May that he expects Udacity to reach $100 million in revenue in 2019, up from $90 million in 2018. But Dalporto has so far preferred to remain silent on the subject, stating that making projections at this point would be “premature.”