Eight years later, Codeacademy achieves what many coding schools do not: it’s cash-flow positive

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Codeacademy, the New York-based online interactive platform that offers coding classes in a wide variety of programming languages, is a little like background noise; it’s been operating reliably since founder Zach Sims created the company while still a Columbia University student in 2011. It’s a brand that people know and that millions have used, but because it has grown steadily, without headline-making funding rounds — or, conversely, newsworthy layoffs —  the 90-person company doesn’t routinely attract a lot of press attention.

That’s fine with Sims, who we spoke with last week following the most recent bout of bad publicity for Lambda School, a younger rival that has raised $48 million from investors, compared with the $42.5 million that Codecademy has raised over time. Sims says the company is continuing to chug along nicely.

The question is whether that’s ‘nice’ enough for VCs. Indeed, Codecademy — like a lot of startups right now — is in the awkward position of being a smart, solid, steadily but not massively growing business — which raises questions about its next steps.

The last time we’d spoken with Sims, roughly two years ago, Codecademy — which struggled for years with how to produce meaningful revenue —  had recently launched two premium products. One of these, Codecademy Pro, helps users who are willing to spend $40 per month $240 per year on the service to learn the fundamentals of coding, as well as develop a deeper knowledge (and receive certification from Codecademy) in up to 10 areas, including machine learning and data analysis. Sims says this has taken off, though he declined to share specifics. A second offering, Codecademy Pro Intensive, that was designed to immerse learners from six to 10 weeks in either website development, programming or data science, has since been dropped.

Sims say the company’s international users are also growing steadily, with 60 percent of its paying users based in the U.S. and the rest elsewhere, including in India and Brazil. (The need for coding skills “isn’t a U.S.-only phenomenon,” Sims notes.) He also says the company’s users often fall into one of two buckets: those who are learning a discrete skill set, perhaps to build a website in a pinch, and those who are perhaps employed but looking to climb the ladder or switch jobs and see Codeacademy as a way to spend a couple of hours a week to develop the skills to get there.

Sims says the payback is typically quick and that it easily rationalizes the cost of the courses, which are exceedingly affordable as these things go. Comparatively, some on-premise coding schools charge upwards of $20,000 a year — a big enough expense that in order to make themselves more accessible, they invite students to pay nothing upfront and instead collect a percentage of their salary once they find a job.

Naturally, because the company largely lives online, so, too, do criticisms sometimes about its perceived shortcomings. One customer — a self-described computer science major — authored a thoughtful review in December, writing that “being a programmer is more than simply being able to memorize syntax,” While Codecademy has introduced “thousands to the fundamentals of computer science,” through “addictive bite-sized pieces that are easy to accomplish,” it falls short in helping cultivate a “coders’ mindset,” he wrote, adding: Codecademy “teaches you the basics of a number of programming languages without much instruction on how you’d apply them to real-life problems.”

Still, enough people are finding value in Codecademy’s vast number of offerings that it recently reached an important milestone —  it’s now cash-flow positive — having doubled it revenue last year. Sims is understandably proud of this accomplishment, noting that “there are few [coding platforms] that are growing sustainably and profitably and generating cash that can be invested back into the business.”

Codecademy is enjoying the same tailwinds it has from the start, too. As software eats the world, the ability to shape, correct, and protect it will only grow more valuable. Receiving an education that comes affordably and doesn’t require an income-share agreement remains an appealing proposition, too.

The company is continuing to paint that picture for consumers and, we gather, it’s talking more to enterprises that are starting to offer Codecademy type classes to employees. Indeed, Codecademy already sells classes in volume packs, and Sims suggests that a big push in 2020 will involve tie-ups with companies that want to provide what it teaches as a perk.

Whether it intends to paint a picture for investors, too, is another question, one that Sims declined to answer when we asked about fundraising more broadly.

Certainly, follow-on rounds are growing harder to land, as described in our piece last week about “portfolio bloat.” The reason: VCs have raised so much money in recent years that they’re funneling it into new startups faster than ever, too (They need to find the Next Big Thing to return all that capital.)

That’s leaving a lot of solidly run companies to fend for themselves for now.

Given Codecademy’s cash-flow positive status, at least, it can afford to wait.

Codeacademy has already outlived many rivals — is that enough?

This post was originally published on this site

Codeacademy, the New York-based online interactive platform that offers coding classes in a wide variety of programming languages, is a little like background noise; it’s been operating reliably since founder Zach Sims created the company while still a Columbia University student in 2011. It’s a brand that people know and that millions have used, but because it has grown steadily, without headline-making funding rounds — or, conversely, newsworthy layoffs —  the 90-person company doesn’t routinely attract a lot of press attention.

That’s fine with Sims, who we spoke with last week following the most recent bout of bad publicity for Lambda School, a younger rival that has raised $48 million from investors, compared with the $42.5 million that Codecademy has raised over time. Sims says the company is continuing to chug along nicely.

The question is whether that’s ‘nice’ enough for VCs. Indeed, Codecademy — like a lot of startups right now — is in the awkward position of being a smart, solid, steadily but not massively growing business — which raises questions about its next steps.

The last time we’d spoken with Sims, roughly two years ago, Codecademy — which struggled for years with how to produce meaningful revenue —  had recently launched two premium products. One of these, Codecademy Pro, helps users who are willing to spend $40 per month (or $240 per year) on the service to learn the fundamentals of coding, as well as develop a deeper knowledge in up to 10 areas, including machine learning and data analysis. Sims says this has taken off, though he declined to share specifics.

A second offering, Codecademy Pro Intensive, that was designed to immerse learners from six to 10 weeks in either website development, programming or data science, has since been dropped.

Sims says the company’s international have meanwhile been growing, with 60 percent of its paying users based in the U.S. and the rest elsewhere, including in India and Brazil. (The need for coding skills “isn’t a U.S.-only phenomenon,” Sims notes.)

Who are these users? He says they tend to fall into one of two buckets: those who are learning a discrete skill set, perhaps to build a website in a pinch, and those who are gainfully employed but looking to climb the ladder or switch jobs and who see Codeacademy as a way to spend a couple of hours a week to develop the skills to get there.

Sims says the payback is typically quick and that its customers easily rationalize the cost of the courses, which are exceedingly affordable as these things go. By way of comparison, some on-premise coding schools charge upwards of $20,000 a year — a big enough expense that in order to make themselves more accessible, they invite students to pay nothing upfront and instead collect a percentage of their salary once they find a job.

Naturally, because Codecademy largely lives online, so, too, do criticisms sometimes about its perceived shortcomings. One customer — a self-described computer science major — authored a thoughtful review in December, writing that “being a programmer is more than simply being able to memorize syntax,” While Codecademy has introduced “thousands to the fundamentals of computer science,” through “addictive bite-sized pieces that are easy to accomplish,” it falls short in helping cultivate a “coders’ mindset,” he wrote.

Either way, enough people are finding value in Codecademy’s vast number of offerings that it recently reached an important milestone —  it’s now cash-flow positive — having doubled it revenue last year. Sims is understandably proud of this accomplishment, noting that “there are few [coding platforms] that are growing sustainably and profitably and generating cash that can be invested back into the business.”

Codecademy is enjoying the same tailwinds it has from the start, too. While skepticism has grown around coding schools more broadly, the ability to design, shape, correct, and secure software will only grow more valuable. Receiving a related education that comes affordably and doesn’t require an income-share agreement remains an appealing proposition, too.

In fact, the company is continuing to paint that picture for consumers and, we gather, it’s talking more to enterprises that are starting to offer Codecademy type classes to employees. Though Codecademy already sells classes in volume packs, Sims suggests that a big push in 2020 will involve tie-ups with companies that want to provide what it teaches as a perk.

Whether it intends to paint a picture for investors, too, is another question, one that Sims declined to answer when we asked about fundraising more broadly.

Certainly, follow-on rounds are growing harder to land, as described in our piece last week about “portfolio bloat.” The reason: VCs have raised so much money in recent years that they’re funneling it into new startups faster than ever, too (They need to find the Next Big Thing to return all that capital.)

That’s leaving a lot of solidly run companies to fend for themselves for now.

Given Codecademy’s cash-flow positive status, at least, it can afford to wait.

Fifth Wall’s Brendan Wallace on coronavirus, WeWork and what’s shaking up proptech

This post was originally published on this site

Last week, we interviewed Brendan Wallace, a real estate-focused venture capitalist whose portfolio companies include Opendoor, which buys and sell homes, and scooter company Lime, which helps building owners navigate around parking requirements by installing docking stations instead.

We first talked with Wallace almost exactly three years ago when he and partner Brad Greiwe took the wraps off their venture firm Fifth Wall Ventures and its $212 million debut fund. What really stood out to us at the time is that it was backed by a long list of real estate heavyweights. They’re understandably eager to get a peek at up-and-coming technologies and, in some cases, deploy them.

Wallace and Greiwe have been awfully busy since that initial conversation. Last year, they closed a second flagship fund with $503 million in capital commitments. Fifth Wall is also working to close two other funds, including a $200 million retail fund focused on matching online brands with real-world real estate and a reported $500 million carbon impact fund whose capital will enable its limited partners to expressly invest in sustainable technology.

Wallace declined to discuss the last two funds, presumably owing to SEC regulations, but he did talk with us about what he says is the biggest thing to shake up the real estate industry in “the last five decades.” We also chatted about how the coronavirus impacted a recent fundraising trip to Singapore and how WeWork’s public retrenching has affected how investors feel about real estate startups right now (he suggests WeWork’s fall definitely made an impression). Some excerpts from our conversation follow, edited lightly for length and clarity.

TechCrunch: We’d read that you were recently in Singapore meeting with new investors.

Brendan Wallace: Yes, I was in Singapore meeting with our existing investors and it was a pretty unique time to be there. When I went, which was about two weeks ago, the outbreak of coronavirus was fairly contained in China. But then as you probably read, it spread pretty rapidly in Singapore, so at the moment, I’m actually kind of self-quarantining myself in my own house.