Online learning is hot!
How about creating an online course to promote your business?
In this interview with Udemy CEO & co-founder Eren Bali we’ve been talking about online courses, the hottest sectors, how to craft a great course, pricing strategies, promotion ideas and more.
About Eren Bali:
Eren is CEO & co-founder of Udemy, a startup that aims to democratize educations by allowing anybody to teach and learn online.
Prior to Udemy, worked at SpeedDate as a founding engineer and Director of Engineering while the company grew form 0 to 10 million users in 2 years. Also worked as a developer at BitGravity in very early stages.
Graduated from METU (Turkey) with a degree in Computer Science and a double major degree in Mathematics. Won several awards in Mathematics, Physics including silver medal in International Mathematics Olympiads
Marco: Hello everyone. Marco Montemagno here, The Tech Alchemist, techalchemist.com, and today I’m here with a great guest. Eren Bali, co- founder of Udemy.
Hello Eren, how are you doing?
Eren: Amazing, thanks for inviting me.
Marco: Thanks to you. I have to say, before we begin, that I’m absolutely a great fan of Udemy. I’m not affiliated in any way, but I’ve been discovering, I think a few months ago, I was looking for a tool, or a platform to promote some stuff, some material, and I discovered Udemy. And I thought, in the beginning I was not so convinced, I thought, it would be good, would be bad, then I started to try it and I’m an enthusiast, really. I’ve done three courses, so I think you did a great job honestly, and I am very happy. Very happy. So, with this confession in the beginning I will try to be hard now, not to be too much in love.
Okay. So Eren, first of all, I want to understand- where are you from? I was particularly interested, because on Tech Alchemist, we have not only people from Silicon Valley but from all over the world. So, you’re from Turkey?
Marco: All right.
Eren: Yeah, I grew and went to college in Turkey and I moved to Silicon Valley four years ago.
Eren: So, I haven’t been here for long.
Marco: Okay. And Udemy, how many founders? Are the founders of the company . . .
Eren: We have two co-founders. I’m the CEO.
Eren: And there’s another Turkish co-founder, so we moved to the Silicon Valley together and launched Udemy.
Eren: For while we had another American co-founder who joined but is not [inaudible 01:47]
Marco: Cool. By the way, how is it to go into Silicon Valley, I mean, coming from Turkey and arriving in Silicon Valley, I don’t think that people say, “Oh great.” Probably people say, “Mm, who are those guys?” So how was the first impact.
Eren: So, I’m just going to give you guys a quick history of the company, and then it will come all together. So, we first started Udemy in Turkey almost six years ago.
Eren: It was the same vision. The vision was very simple. There are millions of experts around the world, like yourself, who had something to teach, but there was no easy way for them to teach and share their expertise to the rest of the world. It’s a pretty simple vision, just like any successful company, we wanted a very straightforward, simple vision.
So, the vision was the same. We launched our first product in Turkey. It took us a little time to bring it to the market and launch it, but the moment we launched it we realized it wouldn’t work in Turkey.
Eren: So, we had this amazing engineering team. We built a large classroom education, so experts could teach live classes to the rest of the world and share it online. And if they wanted to make it for free, everything would be free for them.
Eren: And if they wanted to charge then we would let them make some income from this teaching and we’d just be getting a small cut.
Marco: All right.
Eren: But when we launched in Turkey, we had a few small issues. First of all it was way to early. Right now Udemy is really rising, getting amazing growth, but it’s 2012. So when we launched in 2006 first. Most of the [inaudible 03:40] were extremely early, so the technical infrastructure wasn’t good there. And people weren’t really online nearly much as they are now. Just getting people to be online at the same time was very hard. And also, the other thing we learned was, if you want to start something like Udemy you need a huge amount of users and experts in a dense environment.
Eren: One thing was [inaudible 04:10]. So, we realized we had to move to the Silicon Valley.
Marco: All right. Sorry to interrupt, but this is one topic that is always interesting I think if you do an online business. First, of all, Udemy can be a great tool for online business but I’ll get back to that topic in one second. The other point is that if you are doing something, I don’t know a platform, or whatever, where it’s a market and on one side, in your case, you have instructors and on the other side you have students. So, where do you start from? Because if you don’t have instructors, you don’t have students, but if you don’t have students you don’t have instructors. So, how did you handle this problem in the beginning?
Eren: I will get into that in a second, I just realized that I never told your viewers what Udemy is, so in case there are people who don’t know what Udemy is. Udemy is a place for online courses. So there are all these experts around the world who have something to share but there was no platform for them to do that so we created those websites as a user who can go to Udemy.com and take an online course from an expert, from a real world expert. That’s the simple idea.
Back to the problem we discussed. This is what people call a chicken and egg problem. You don’t have any instructors, no students come to your website and if you don’t have any students [inaudible 05:41] would bother taking courses. But this is a very common problem that several companies go through this and it’s notoriously hard to…
Marco: Hard to solve it. How did you make it?
Eren: The [inaudible 05:55] we made was we launched Udemy in the US in 2010 and we realized that the easiest audience for us was the tech audience. We were in Silicon Valley and we got some of our investors and we asked them to join a panel for us so we created a curriculum of start up related or technology related courses. The executives told me what they should talk to me about and they went in front of an audience and they videotaped us and converted it to a course. We had organized this as a course. We had already structured it not as a conference but as a course. We took the videos and launched the courses and then we went to some distribution channels, some new start ups with a lot of traffic with a lot of users were interested in technology and…
Marco: Like AppSumo.com or something like that?
Eren: This was before AppSumo. The first one was started by Jazz. It was [inaudible 07:08] for entrepreneurs. So we took our start up course and we made a deal with them to promote those courses on [Stepped Up Digest] or their user base. We just gave a decent part of the revenue to the Stepped Up Digest guys. The course did pretty well in the sales, they were happy, our executives were happy, the distribution channel was happy and then we started giving them more courses, launched more courses.
Marco: I stop you on this because I think it’s very interesting. I try to recap what you just said. On one side you focused on a niche, very specific, so the tech people because you were in Silicon Valley. Then you produced some courses directly by filming experts and creating a course out of it. By the way, Udemy has got all the paragraphs and all the structure of the courses so I guess the platform was very good to create a good story of the course. And then you find the right partner to promote and they obviously were happy users and then you start to build from it. We’ll come to this point, Eren, a little bit later because I want to ask you about tips and advice about promotions. One thing first about Udemy. You passed through a Founder’s Institute? Or am I wrong?
Eren: Yes. When I first moved to Silicon Valley I knew simply nobody so we attended the Founder Institute with [inaudible 08:47]. This was the first time I started building some network in the Valley.
Marco: By the way, I saw today they graduated the start up number 650. I think it was on TechCrunch. They said great start up to pass through Founders Institute was Udemy. I thought, okay. I didn’t know that. For people who don’t know what Founders Institute is it’s an accelerator program like YCombinator where there is a program. I think Adeo Ressi is the founder, a very smart guy.
Eren: [inaudible 09:28] are like YCombinator but I would say it’s slightly different because it’s a little bit more early stage. Anybody who has a good idea who wants to start a company can go there. It also acts like an academy, almost like an MBA program for entrepreneurs.
Marco: I think a good way to network if you arrive in Silicon Valley and you want to launch a business.
Eren: Exactly. It’s a lot larger in terms of number of companies in it.
Eren: [inaudible 10:00] more than 500 companies around the world [inaudible 10:05]. This would be a larger [inaudible 10:06] versus [inaudible 00:10:07] is more like a very small, really [inaudible 10:09].
Marco: Yeah. A [elite of] small… Okay.
Eren: [inaudible 10:15].
Marco: Cool. Okay, Eren, I’ll go back to the marketing strategy. For me, my mantra as a tech entrepreneur is marketing is education. In 2012, there’s no way out. It’s easier to sell something if you are perceived an authority and teaching something is one of the best ways in my opinion to create your authority with your audience. So, Udemy can be a great platform. That’s why I’m using it and that’s why I think a lot of people are using it. It helps to teach in a better way with a lot of tools.
So, can you tell me and can you explain to us a little bit, what do you think are the most powerful tools in a platform like Udemy for teaching? I mean, why people shouldn’t just use something else or upload a video on YouTube and teach in there?
Eren: I think the thing that was most unique for Udemy was that it wasn’t just [inaudible 11:12] people would watch and [grow]. We asked [inaudible 11:17] to create a curriculum, a set of lectures that will take somebody from knowing nothing about the subject to a certain level. It’s closer to how we go to school and most of the time you have no idea. First they teach you what you should be learning and then every lecture you start [inaudible 11:37] on the thing we are learning versus [inaudible 11:38] very small.
For example, for you to be the [teacher] [inaudible 11:47] to the certain type of fish. [inaudible 11:53] you want a structure of curriculum. That was the biggest distinguishing point for us. People weren’t really creating courses when we started. It was a completely new idea for them. They were used to [inaudible 12:10], they were used to going to seminars and [inaudible 12:13] and they were used to launching small short video clips on [YouTube], but [inaudible 12:22] weren’t very happy because they their margins were very small.
There’s a very small chance that they’re [group] would make it and even if it makes it, they actually get a very small cut of the revenues and they don’t own the [inaudible 12:37]. Because [inaudible 12:39] create video clips on YouTube, it gets some views but they don’t get a real strong audience. You can’t build a community with the [inaudible 12:49] people that are strong [inaudible 12:51]. If you go on seminars and if you do talks, it’s awesome you can make a decent living but after some time you get sick of hearing the same talk a 100 times in a row. You want to do it once in high quality manner and you want to be able to share with a lot more people. As you know [inaudible 13:12] users in terms of the location and [time]. If I want to attend your amazing seminar and I’m not [Intel] right now, I have no way of attending it. There is a very [inaudible 13:25] but it was just that people didn’t know they should be [inaudible 13:29].
You said that [entrepreneurs] education and teachers say that education is marketing [inaudible 13:36]. First you have to educate experts around their [purposes] of teaching their [products] because they have no idea. That’s how we earlier got the momentum.
Marco: I just want to remember to do people watching this video, you can use Udemy for free. Correct me, Eren, if I’m wrong but you can use it for free if you just create a course for free and that’s it. Or, anyway you use it for free as an instructor and you get all the margin, the cut of you to me. I never remember if it’s 15% because it changes your affiliation code or 30%. I think it changes based on the link. You tell me Eren.
Eren: We are very similar [inaudible 14:26] If you create a course we don’t charge anything. Although it takes you [inaudible 14:33]. If you have a paid first, then you get 30% of the revenue and we pay you 70%. It’s very similar to [Apple] but we advance [inaudible 14:42]. If you bring your own users to the platform, then you only get 15%.
Marco: All right. So I hope the next step will be that you give me 100% and that’s it. What a [inaudible 14:56]. That’s the dream of our instructors. All right. Cool. In my opinion, as I think I told you, the promotion is a very interesting part so I want to go a little bit deeper into your promotion marketing strategy in the beginning and now. In the beginning you had to build your base and now I would say Udemy is already a growing company so it’s probably changing the user acquisition strategy. Can you explain this topic to us a little bit?
Eren: Yes. You guessed it very accurately. When we first started and we had no traffic we were using four or five distribution channels as a way of bringing [inaudible 15:42] to the market. So we had existing versatile relationships with Amazon, Groupon, Living Social, [inaudible 15:48] and six other distribution partners. So we had all different sorts of set ups so when we wanted to run a deal with them first we had a trust relationship between them and us so it doesn’t make sense [inaudible 16:04] the same thing. Then we were launching the process in all different channels [inaudible 16:10] own channel.
Marco: Excuse me. Sorry to interrupt you. Why did you say Amazon?
Eren: Because Amazon has the Amazon has Amazon Local Offering [inaudible 16:23] with some of our courses.
Marco: Okay. I didn’t know that.
Eren: They choose what courses they want but we give them a catalog of different courses and they test the courses. Then if the courses do very well with their audience then they run a national deal on that. [inaudible 16:43]. It took us two years to be able to get all this reselling relationship but now [inaudible 16:56] for promotion. But now we’re at the point that Udemy’s own traffic and user base is actually a lot bigger than our reselling channels. I think as of this month 70% of [corporate] revenue’s coming from our own website. Because increasing user base of students which first of all [shot] the Udemy. When you [inaudible 17:24] online first, the biggest problem is we don’t trust whether it will be, this course [inaudible 17:30] because [inaudible 17:32] expert and you may not know whether this would work well or not. But if you already took a course on Udemy you have a certain [inaudible 17:43]. It’s just about whether this is actually a satisfactory courses [inaudible 17:47]. They also know that we are very consumer friendly so if any user is dissatisfied we [inaudible 17:56]. What we saw was the conversion rates of people who are taking courses on Udemy were five times higher than people who don’t know the Udemy brand.
Marco: I think also about myself as a Udemy buyer, obviously. When something is coming out and I think it’s cool and I’m definitely going to buy it. The price, just to remember, on Udemy goes from $19 or $5 to…I’m selling a course at $597 so a high price I would say in comparison. All right. Cool. If you say today what works best for you is the Udemy user base are you using any advertising? AdWords, Facebook advertising or deal partnerships with AppSumo-like style? AppSumo is a website I think with 650,000 subscribers so it’s a huge geek daily deal website.
Eren: To be honest, we are around the size of AppSumo. AppSumo still [inaudible 19:10] a very small [inaudible 19:09] of our sales right now just because we grew…we grew almost ten times this last year. What’s working best right now is that [inaudible 19:20] their own [inaudible 19:25] site and they see a lot higher conversion rates [inaudible 19:30] Udemy than previously [inaudible 19:33] but I think the majority of the sales on Udemy is coming organically from people discovering courses. People just visit [inaudible 19:49] conversion takes a while. It takes a month until [inaudible 19:54] but then you start sharing with your friends. That happens pretty heavily on Udemy.
We just made a survey: 70% of our users told us that. they shared video with just one more [inaudible 20:08]. That’s a huge number. All these network effects once we have more users, more sectors create courses it brings out their user base, some of their audience, then when those people start taking other people’s courses ,so then 5,000 instructors all bring their small audience and each of them take each others’ courses [inaudible 20:33] everybody to take courses then.
Marco: Right. Multiplying effect. About this topic, I was curious. I’m thinking about people doing business online and they not only have freelance or small to medium sized businesses or solo entrepreneurs. You have so many people that want to do something online, promote themselves or their companies or they’re digital managers for a company and so on. There are so many people that can use online courses to promote, teach and make a living or even improve their business. Whatever they want. What are the hot topics? What are the hot sectors that you would recommend to create a course at this moment? You are in a great position, in my opinion, because you see what people want to learn. This is great. You can understand the best and hottest areas where it’s good to create courses because you know that there is market demand, a market request.
Eren: We started with technology and business so there were some very hot areas. When iPhones, Apple store, app store starts growing it [inaudible 21:55] very hot topic. The first people who made taught a course hundreds of thousands of dollars [inaudible 22:03]. Then all a sudden sometimes new markets emerge and then there’s a new opportunity to make just the right course at the right time. If you’re a marketing person, for example, Pinterest is a new growing marketing environment channel. If you have an amazing Pinterest marketing course you will probably making a lot of money on that. Outside the [niche] or marketing areas things like photography are very hot because increasingly more and more people are being semi- professional about photographing. They want to go out one step beyond taking video portraits on their iPhone.
Personal finance is a really big…there’s a lot of demand around that. People like music, just playing musical instruments. This a pretty interesting market because I had a harmonica and I was able to find zero resources about learning to play it. If you want to play the piano or guitar of course there’s something because more people do it but the harmonica was almost non-existent. It’s a very long tail subject. But if you think about the whole world how many people want to play the harmonica? There’s still a very large audience. If I can find all those niche long tail subjects, just because of the power of the Internet, then you can [inaudible 23:35] pretty strong revenue [inaudible 23:37] find things that people really need and [inaudible 23:45] that they’re not doing available on that. [inaudible 23:48] particular product.
Marco: Is it right that a good approach can be also to have a focus on what’s coming next, what are the hot news and in the news and probably from there you can understand what people will want? You say, iPhone 5 is coming out. People probably want to know the 100 best tips to use iPhone 5 to supercharge, to become a power user of iPhone 5, as an example. It also probably works like this with dancing; maybe a new dance is coming out, a new dance or any music that people want to learn. It can be a good approach in your opinion. I keep my eyes on the news and then I try to create a course.
Eren: That’s actually a very good point. That’s one of the ways you can do it. People call this “trend jacking”
Marco: Tell me again, the name.
Eren: Trend jacking. It’s similar to groups actually. If you get groups about trying video topics, some of them are things that you could never guess and even though we say all this [inaudible 25:03] and all this merchandise, [inaudible 25:06] the course is launched, it is not going to make anything but then, suddenly, it becomes a huge success. There’s always this factor of using something really neat, really interesting and new, and then you can make [inaudible 25:24]
Marco: For people doing online business, would you recommend to start with a free course just to make them visible, promote themselves, and then try to convert on the product that they sell, the service or whatever they want to do? Or, would you recommend to position themselves with a paid course because free maybe is perceived not as professional? What’s your experience and tips about?
Eren: I think the more successful way has been [you first create] a paid course, you make it really affordable and then you make a free version of it, maybe the first chapter, first four lectures and maybe you create a new free course about that. Just because [distribution] product, your free course gets a lot of response, people will take it first. And then you promote your paid course through the free course as improved version. On App Store there are light versions of the game and the pro games, which you pay for.
What happens is, you service if you are actually giving a service, let’s say you are giving a consulting service. It’s probably significantly more expensive than your paid products. What happens is that [from you paid products] then you can upsell your services. [inaudible 26:58] make this in a very gentle way. Because people hate [direct promotions]. I can tell you if you’re not paid first and if you make your contact information visible, people will already come back for just direct [help].
Let’s say you are a person whose an expert on pricing, that is like pricing consultancy practice. You can teach a course in pricing and people usually get benefit from that and you probably [inaudible 27:33] profitable and they will call you. And there may be a small part of [those] people who wants to work for a large company and they’ll actually call you [inaudible 27:46]. Think about it, when I was in college, most of our best professors were also pretty wealthy consultants. They would come to the school and say, “Okay, I have this consultant service,” and they will promote [inaudible 28:04] but people would quote them as the expert which they make a lot more money from the direct service if people call you versus you try to sell [inaudible 28:13]
Marco: On that, it’s not dangerous, but I’m always afraid that if I have a lot of free users, they will never buy from me because they are free [category], they just want the free stuff and then they will never buy from me. Do you see this risk, or not, or maybe people that go to learn free stuff when they trust you then they conversion rate can be better? I never understood this.
Eren: That’s a [inaudible 28:53] really because getting free stuff is one of the best marketing techniques [inaudible 29:00] but then if you do too much free offers then you [cannibalize] your potential paid users. So there’s a fine balance. You have to give a few things free but not too much so that they will ignore you [main] products. [inaudible 29:17] most businesses have [premium models] which work very well but then some companies do something like everything’s free but you only pay for just not seen advertising and then they don’t get any conversion; it’s because this is not such a big addition.
Marco: It’s not a big deal.
Eren: Yes, it’s not a big deal. You have to layer this [inaudible 29:40] so [inaudible 29:43] just let your name [inaudible 29:45] people can watch them but they can get the full experience but maybe one of the upload kind of ideal access [inaudible 29:54]
Marco: Right. That’s interesting. Just a couple of questions more and then I’ll let you go because I know you’re super busy. Are there particular tools that you use or that you would recommend for online business to improve, to support your online business maybe, or marketing tools, or production tools, or website to improve your video or whatever? If you should say your top three websites that you would recommend to a friend or [hero] for improving his online business, what would you recommend?
Eren: It won’t sound like a new idea but I can still say that having a central blog where you constantly share information is very valuable, but you need some [patience]. You don’t get a huge success overnight. Blogging or just constantly giving out information is a slow process. It’s nice if you can get momentum, you don’t move yet. It just always goes up and up, right? Just having your blog, sharing and shifting ideas of [inaudible 31:11] and constantly building this [inaudible 31:16] that is very good. [inaudible 31:18]. Wed don’t try to sell directly, you just have [people come here].
Teaching a Udemy course is [inaudible 31:27] businesses, especially businesses which sell expertise in that [inaudible 31:33]. Consulting businesses, teaching businesses [inaudible 31:38]. I don’t know, music companies. Directing video is actually pretty [inaudible 31:45] video and [images]. So very shareable images or videos. Sometimes [inaudible 31:50] they bring together some insight about the market. They do some research, and then you can hire graphic designer on all [inaudible 32:01] pretty affordable way and then you also [inaudible 32:06] from the research it makes. So that’s [in close] kind of images. Infographics are very shareable items. They get [inaudible 32:15] sharing social media [inaudible 02:19] and those kinds of things are making you look like the real expert about those subjects.
Eren: And if people join you then you have a very active community of instructors so we have actual [T] people on the team because on the job is helping instructors with these kinds of opportunists.
Marco: Okay. I remember for people watching this video [orders.com] or 99 designs There are several crowdsourcing platforms where you can find coders and designers to create images or software, or mobile app, or whatever you want for you.
Last question, is there any, have you seen any topics areas of business where you wouldn’t recommend to create a course? Or you think an online course can be sweet spot in any way a good edition for any kind of business? Or is there some one particular that you say, “No, this one better not.” What do you think?
Eren: I would think there’s not too much too many [inaudible 33:29] I wouldn’t suggest but I think a good way of looking it is if there are enough [fictional] groups about the particular subject that are successful and that means that’s a good chance that the client will also be successful. Because when you think about it people used to read books to learn different subjects. But it’s just the old world of thinking. It’s not attractive. There’s no way you can actually communicate around [inaudible 34:00] that you are learning. Reading text is a lot more boring than watching media, media lectures. So they can actually look at books and [inaudible 34:09] a certain subject, the books [inaudible 34:11] maybe [inaudible 34:14] a course may not work as well. But this is not a perfect[method]. There’s always a chance to do something which most people don’t do and have a huge success because it’s [needed].
Marco: Right. By the way Udemy has got a great feature. Congrats for it, Eren, which is the mash up feature where you can easily sync your video and your slides. I’ve been using it really. I think that will be a website by itself. A really cool feature and it helps to maybe create a video and not be boring but you add the slide in sync with your [special]. This is a good tool, I think.
What’s next for Udemy, Eren? What’s coming next? Are you going international? What will happen for Udemy in the next six months?
Eren: We have huge plans. If you could see what has been going on inside the company, you’d be really surprised. There are a few things I can share and there are other things that I can’t share. [inaudible 35:15] launching the new version of our course creation platform. It makes it even easier than what is right now. [inaudible 35:24]. We put a lot of time into making it very seamless. We made it so that my mom could easily do that.
Marco: Okay. That’s good. Tell me the not shareable ones.
Eren: [inaudible 35:40] private because we haven’t really launched it and told the press about it but we [inaudible 35:47] education so people can take courses on their iPads. Yeah, a little bit of iPad application. You can also download the lectures so when you are flying somewhere and don’t have the Internet you can still take your courses. That’s pretty neat. We’re actually launching on several different platforms in the near future. iPad was the first one. iPhone, Android, even TVs. Udemy courses will be everywhere that users want them to be. You will even be able to watch your courses on your TV. We’re really thinking hard about the course platform. This will be for us. What else is really soon. I think the assessment and [inaudible 36:43] can be a bit more interactive courses than just about watching the lectures. It will be more interactive. We have some really strong engagement tools that I can’t say. [inaudible 36:54] when I say it, in the next month you will see what this is.
Marco: Okay. Eren, thank you so much sharing some tips and advice. I really appreciate it. Congrats to Udemy. For people watching this video I hope you will give it a try. I also think of Udemy as an excellent ecosystem, I would say. As an instructor, I’m sharing tips and I get tips from other instructors so you’re not alone in creating your online course. That often is the reason that you say, “Why should I create an online course and stay there alone?” This way you have a little bit of a family feeling is good also that I have and I think is another thing. The tools are easy so you just create your video, or PowerPoint, or notes, slides, and then you upload it so it’s easy and the platform is doing the rest. I really appreciate it. Once again, Eren. We met here for the first time on this video but I’m in love with Udemy so I hope other people will use this platform for their online business and [inaudible 38:05].
Eren: Thanks a lot. This was a great conversation for me.
Marco: Thanks so much. Bye. Next time we’ll meet in San Francisco and I’ll be there.
Eren: Totally. Just give me a call and we should [inaudible 38:19]
Marco: Absolutely. Good luck with everything. Bye.
Eren: Have a good day.