Newsletter 63 Coding 3

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“It is in fact nothing short of a miracle that the modern methods of instruction have not yet entirely strangled the holy curiosity of inquiry”  Albert Einstein

Codecademy, the free online coding school, raises another $30M led by Naspers

Posted Jul 12, 2016 by Ingrid Lunden (@ingridlunden), Jonathan Shieber (@jshieber)

Codecademy, an online coding school with 16 million registered users, has built out its footprint without charging its students a penny to use it. Now, as more questions arise about  how and when the startup might start monetizing its services, it is announcing $30 million in new funding that could be an indication of what might come next.

Naspers, the (for-profit) media giant based out of South Africa, is leading the Series C round, which the company says it will use to continue to expand its product globally and to develop more platforms for using it, such as mobile.

In an interview, Codecademy co-founder and CEO Zach Sims said that the company is already generating some revenue from a paid “professional” service, which adds a layer of mentoring and assessment to the company’s self-guided coding content (and costs about $20 per month).

But as Sims hinted in an interview with TechCrunch earlier this year, there are other ways that the company can look to monetize its base of 16 million registered users.

“Prosumer tiers, additional content, mentoring, or even helping you get from zero to a full job and charging a fee for that,” are all areas that Sims had mentioned in his interview with us at the World Economic Forum in Davos earlier this year.

The longterm vision is around that job placement thesis — which has been a problem for coding training programs. Many of the pricier options for an education in programming promise a lot but don’t end up delivering a job at the end of the process.

With all of the data that Codecademy collects about its users through its online training program, in the long term Sims thinks his company can better place its “graduates” in a viable job than other schools. And Sims hopes to make money doing it.

Indeed, the company is already practicing what it hopes to preach by employing graduates from its curriculum as advisors, who serve as mentors to people paying for its professional-grade service now.

“We think of ourselves as a gateway to economic opportunity,” said Sims. In an industry that’s been controlled by gatekeepers who often have no real sense of an applicants’ ability, a service like Codecademy can help place vetted talent within companies that need it, according to Sims.

And as Codecademy grows, the 26-year-old co-founder is hoping to expand its online training platform into other digital fields.

Tapping into a coding zeitgeist

The market that Codecademy — based out of New York but incubated at Y Combinator in 2011 — is tackling is a massive one.

There is a technology skills gap today both in terms of what is being taught in the classroom, and in terms of what the current workforce knows and what kinds of jobs need to be filled (or businesses need to be created): technology is everywhere now, and that means we need tech skills in all industries and levels of jobs.

On top of this, there is also a large addressable market for its courses, with now more than 3 billion people online. (Recall that Codecademy says currently it has only 16 million registered users.)

The startup today focuses on different programming languages and components like HTML/CSS, Javascript/jQuery, Python, Ruby, PHP, and APIs. The premise is not only to learn directly from the lessons but to do so by simulating a classroom-like situation, where the code and other work that you produce gets feedback from others also on the platform.

But Codecademy is not the only online platform that helps people learn to code. Others in the same space include LinkedIn-owned, Thinkful,, Coursera, Udacity, Pluralsight, Khan Academy and Treehouse.

On top of this, there is an even longer list of companies that are developing online learning tools, from pure-play education specialists to companies like Amazon, which potentially also lays the groundwork for developing content that targets the same skills gap that Codecademy seeks to address.

In that sea of competition, one of Codecademy’s unique selling points has been that it is free to use. That lowers the barrier of entry for those curious to try something out, although some have noted that it also fails to go far enough in its teaching and so serious students eventually have to look elsewhere. (Indeed, developing deeper, higher levels of learning a particular skill is one obvious area for monetizing, as Sims has pointed out.)

More to the point, the existence of so many competitors points to the fact that Codecademy has tapped into a bigger wave of interest in learning more about how computer programming works.

“Since we founded Codecademy in 2011, we have seen an explosion of interest in learning to code as a key component of a 21st century education,” said Zach Sims, CEO of Codecademy in a statement. “With millions of monthly users, and more than 50 percent of those outside the US, there is a great opportunity in partnering with Naspers to expand our business to deliver a wider breadth of courses in more languages and new geographies to create an education that allows anyone to access economic opportunity.”

As part of the round, Larry Illg, CEO of Naspers Ventures, has joined Codecademy’s Board of Directors.

“Traditional universities are poorly equipped to meet the evolving demands of technology students and employers, and Codecademy fills an important and valuable gap in the market,” said Larry Illg, Naspers Ventures CEO. “The quality of the Codecademy product and the team’s execution have enabled a global footprint today and positions it well for future expansion.”

In fact, Naspers has been long on the education space in the U.S. The firm’s commitment to Codecademy is the third deal that it’s done in ed-tech on American soil. The other companies in its portfolio include Brainly and Udemy.

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