Bootstrapping an Online Education Company to $12M: Pluralsight CEO Aaron Skonnard (Part 4)

Sramana: When did you release your first ten courses online?

Aaron Skonnard: In 2008, just as the banking system collapsed. Training budgets were slashed, and Wall Street fell apart. We had an early adopter price of $699 for full access to the library of courses for a year. The idea was that we would move up to $999 three months later. People would pay $2,500 for a five-day classroom course. Because of the business climate, we received a good response. Companies were slashing training budgets and saw us as a viable new option. The revenue started to come in.

Sramana: How did you market your new product?

Aaron Skonnard: We did some advertising in various Microsoft Developer journals. We also did some online Google and banner ad campaigns. It was very limited. Most of our marketing was word of mouth through the developer channels. Our premise was that if the idea was good, it would take off. Six months later we realized that our online model had a lot of attention, and we decided to focus even more on the online training and scale back the classroom training.

Sramana: At what point did you start seeing traffic converting from advertising?

Aaron Skonnard: It took about six months before that started to take off. The market started to realize that our method was good, and we also started to release more courses. The more content we publish, the faster our revenue grows. It is all about the content. The more content you have, the more opportunity for other people to find you. We doubled our library in the first six months.

Our authors started to get more committed at that time as well. That gave them incentives to produce more content, which fed us more content and resulted in even more revenue. It was a beneficial cycle. That cycle has continued since then.

There are a few key things we did to accelerate our growth. At one point our cash flow got to a point where we were able to offer incentive cash payments up front in addition to royalties when we tried to sign a new author. We were able to use that to find a sweet spot with each author. We made sure royalties were made on a title-by-title basis. That was a key optimization for us. Each title can get its own royalty rate. If an author wants $10,000 up front, he or she gets a lower royalty payment.

The other big change happened in February 2010, which is when we dropped our prices and introduced a plan that cost $100 a month. We also had a three-tiered plan. Our $500 plan required you to be online to access any of our course content. The $1,000 plan allowed you to access the lab material offline and required you to be online for other course content. The $1,500 plan allowed you to download the course videos to watch them offline as well.

That cost structure worked well, but deep down I knew we needed to have a low monthly price point. A year later we launched our current prices. Today we offer a free 10-day trial. We have a $29 a month plan and a $40 a month plan. We simplified to two options because it was too complex before.

This segment is part 4 in the series : Bootstrapping an Online Education Company to $12M: Pluralsight CEO Aaron Skonnard
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