Scaling Skillshare As A Leading Online Learning Marketplace With Matt Cooper | EM Group Chat #180

Welcome back to Everything Marketplaces, where we talk about founders and leaders from some of today's top marketplaces. So this is episode 180, which was really great group chat that we just had with Matt Cooper, who's the CEO of Skillshare. So Skillshare is one of the largest marketplaces for online learning, thousands of classes in creative categories like music, film, creative writing, and more. So prior to joining Skillshare and then becoming the CEO in 2017, Matt was the CEO of Visually, and before that was an early executive at oDesk, or now Upwork, So some really awesome marketplace experience. Matt was also a past Group Chat guest when we first started the community. So this is great to welcome back on. And we started off with a quick refresher on his early experience and learnings from oDesk, or now Upwork, what led him to joining Skillshare. We did a deep dive into it as a leading online learning marketplace, got to learn more about how it's evolved and scaled, the recent growth. We discussed topics like how AI is impacting marketplaces and also had a great group Q&A. I really enjoyed this conversation and you're going to find it a great watch to the end. So Matt, I mentioned it to you right before we started recording, but it's been a while since you're a past Group Chat. You've been a highly requested Group Chat guest more recently. So I'm really excited to have you join us here today and wanted to start off by saying huge thanks for taking the time to do so in advance. So we have a lot that we're going to dive into with all of your incredible marketplace experience and also the latest with Skillshare. But I thought it might be great if you can start off with a quick refresher on your background. And also for those that might have just joined us here.

Thanks for having me. Thanks everybody for joining. Hopefully, some of my hard-earned scar tissue can save you some pain and suffering. So my background, I actually started out in investment banking, did that for 4 years, moved out to California in 2022 and kind of got into the startup world. First startup I worked for was an outsourced recruiting business. So we sort of bring our people process technology to kind of fully outsource the recruiting function for start— primarily startups in the Bay Area, but some larger companies. So we, we were— had also started to build the supply side of the equation. So we didn't quite get there, but there were some of the early fingerprints of a marketplace business in there. Next company I went to was oDesk, now Upwork. So joined in Well, it was 2009. So I was employee number 23, and that was a good kick, a good case of it better to be lucky than good. I just joined right at the right time. Company was really taking off. Came in running operations, so customer service, trust and safety, built out the enterprise business, ran BD, built out international. So just got to do lots of different stuff there over 5 years. When I started, I think we were doing about $6 million a month in gross services. When I left, we had acquired Elance and we were doing about $1.1 billion a year in gross services. So again, just magical experience. Left there to be the CEO of Visually, which was kind of a similar model to what we were doing on the enterprise side at Upwork. We would, we had a sort of freelance workforce that we would package together. to do visual content work for brands and agencies. I was a turnaround situation. I came in to replace the founder. We sold the company in 2016 and then I joined Skillshare in 2016 originally as the COO and then took over the CEO role about a year later. So I've been there a little more than 8 years now, which is kind of hard to get my head around.

Really incredible background. So, so much that we're gonna get into here. But I did wanna kind of go back to, you know, your experience at oDesk or I guess I Now, you know, now Upwork. So, you know, what were some of the biggest challenges that with it as a marketplace at the time? And what were some of your key learnings from it?

Yeah, I mean, you know, Upwork, oDesk, you know, I think I, again, I got really lucky. I just, we were sort of really at the knee of the curve. And I think the first learning, you know, I think, you know, a good business model when you stumble into it. And, you know, people would ask what we were doing to drive all this growth. And there's sort of a joke that we'd say, you know, we're just trying to stay the hell out of the way and not screw it up. So there are definitely, you know, and meanwhile, I've also been around long enough and been both, you know, running businesses and been advising businesses that you see businesses like Upwork that just take off and they just have phenomenal product market fit and a lot of organic healthy growth. And then you have Businesses that you just feel like you are constantly swimming upstream and everything is just a lot harder than it should be. And I think, you know, that was one of the learnings certainly in hindsight is just how good that business model was and how, you know, they had such strong network effects. Everybody wants to have network effects and everybody thinks that every marketplace should have network effects. It's not the case. And it's also not binary. You can have very mild network effects, you can have very strong network effects. So some of it is like when you stumble across the right business model, you can just feel it. The other thing that we talked a lot about early days at oDesk was just that chicken and egg dynamic, right? You, you have to get that supply and demand liquidity and transaction flowing. And generally early on, you have to fake the chicken. which is, you know, one of Gary Swart, the former CEO's favorite phrases. We spent a lot of time faking the chicken. Before I arrived, if you posted a job on oDesk, they'd say, great, let us, let our magical algorithm go to work and find you the perfect freelancer. And so you would get on the phone and actually get on Skype and start pinging people all over the world trying to fill that seat, right? So they were faking the chicken behind the scenes. trying to fill that supply. And, and, you know, they, they were generating the demand and then they were running around sort of faking the supply side of the marketplace to fill that. And then once they got a certain level of volume and liquidity, then they kind of burned the boats and said, all right, we've got enough supply now, we've got enough demand, we're going to set up the profiles, set up the process and get out of the middle. So as you think about particularly early stages, don't feel like it all needs to happen automagically from the get-go. You can and should be putting a lot of manual effort into at least one side of the marketplace just to get that liquidity flowing. And then I think the other sort of major thing that I played a role in is just the idea that like marketplaces need moderation and rules and every single marketplace startup I have either been a part of, advised, consulted, everybody thought that you were supposed to just let the marketplace sort itself out. That does not work. Like you need rules, you need guidelines, you need moderation, you need curation. If you let the marketplace sort itself out, what that means is 10, 20, 50, 100 of your customers have a terrible experience. Before you have enough data to know that that supplier sucks. And that is not, it's not a great way to build your business. So you have to be in the middle and, and play a role to make sure that your early users in particular are having a phenomenal experience. And that's where that ficking the chicken comes in. If you gotta get in there and make sure that they get what they need, do it. And then you can figure out how to automate that function over time. But You know, users who have a bad experience, they don't blame themselves for picking a bad seller. They blame you and your brand and your name and they go and put your name on Trustpilot, not, oh, I feel really terrible that I picked the wrong freelancer or I picked the wrong class or I picked the wrong project leader. It's on you. So just know that and build that structure in. And you know, the, the, I ran trust and safety, I ran customer service. And again, when I started at Skillshare, like we had very little moderation curation of our classes. When you stumbled upon the class, the cooking class of the guy in his white tank top cooking rice in his apartment, it's not what you're paying for, right? So, you know, we had to step in and put some, some manual curation and moderation in place.

Those are lots of great learnings and also examples, you know, doing the things that don't scale in the earlier stages. And then also, of course, kind of Jumping over to, to Skillshare as far as the, you know, the role marketplaces play moderating. So, so definitely wanna, you know, talk about that in a little bit more detail. But I guess, you know, to start with, you know, what, you know, what led you to joining Skillshare in 2017, I believe, as the CEO? And could you give us an overview of it as a marketplace when you joined?

Yeah. So, you know, I think the, there were sort of 3 things that I liked. I mean, one was the model. I love marketplace businesses. They're hard, they're frustrating, but when they work, they're wonderful. I loved the stage that we were at. We had just raised a Series B. They clearly had product market fit, but they're just having trouble scaling and go to market and just kind of all the usual aches and pains that come along with trying to grow a business. And then the third thing was the mission. I had this in spades at oDesk, but it's just, it's a business that people want to root for, you know, has such a clear and tangible positive impact on all the users on both sides. Having that mission-driven model is just a huge advantage in every aspect of the business, in marketing and recruiting and partnerships and fundraising. It's just, it's one of those businesses that people want to be part of and people want to succeed. So those are kind of the, the 3 things that, that hit for me. You know, again, I think for You know, the status of the marketplace, again, it was a lot of that letting the marketplace sort itself out. And in theory that works great, but again, in practice it does not. So we had to put in some curation, we had to put in some moderation. We have now deleted, like we have 30,000 classes on the platform today. We've probably deleted 45,000 to 50,000 classes off the platform. So like we've taken a, you know, a much more aggressive stance on content moderation. We've also changed the onboarding. Like you can't just walk in the door and post a class. Like, you know, we've gone to this more apply to teach model so that people have to jump through some hoops because we are not supply constrained. So if we're not supply constrained, let's put a little bit of friction in to keep that quality bar high and make sure that the teachers coming onto the platform are really good and what our users would expect of a premium subscription model. So that's been a pretty dramatic shift. I think the other dramatic shift was the vertical focus. Over the years, we had organically developed a strength in creative topics. When I joined, we were still doing a little bit of everything and I was actually making a push when I first joined for us to get into business and technology in a more deliberate way. What we found was everything we did that was adjacent to creative did really well. Anything that was too far afield was suffering. So in business, marketing did great, very adjacent to creative. My accounting and finance class was crickets chirping. And I think this is again something we saw at oDesk and a lesson I learned again at Skillshare. There is no monolithic marketplace, right? There, you're ultimately a bunch of subcategories and a bunch of verticals stuck together. So as we looked at our strength, we were clearly really good at creative. That was where our supply was best. That was where our demand was best. So in 2019, we just declared a major and said we're gonna go all in on creative. So that's been a pretty significant part of our, just how we've grown and scaled. And then I think the third thing in terms of the status of the business, we had product market fit, but there's no clear go-to-market strategy, kind of all of the organic stuff. just had tapped out. With any subscription business, it's how fast can you outrun your churn and the organic, you know, word of mouth stuff just was no longer outrunning our churn. So we had to figure out how to do paid acquisition in a more deliberate go-to-market in a more scalable way.

That's really interesting. And now you did, of course, mention that subscription. I feel like that is, you know, somewhat unique to us to go share as a marketplace. So could you maybe share more about, you know, some of the considerations with a subscription model as far as when it comes to the monetization? And then also too, like how that impacts your business.

Yeah, I think one of the, one of the founders' early thesis, which I wholeheartedly agree with is, you know, the incremental cost of consuming media on the internet was going to approach zero over time, right? And you look at, you know, iTunes early days at $1.25 per song, versus Spotify at, you know, $10, $12 a month. Spotify killed iTunes and guess what? iTunes is now subscription. It's all you can eat. Same thing with Netflix. Netflix killed video on demand at $4 a movie. Now you just pay Netflix and you get it all. So that all-you-can-eat model was clearly where the world is heading. So that was one of his early Areas of focus. Now the trick then is how do you pay teachers in a way that makes sense? We pay royalty model. There's some intricacies of that. I think the, what has evolved over time and I think has raised some recent questions. Every business wants to be a subscription model because you love the repeatability, you love the consistency, you love the forecasting. Can, there's a bit of a consumer backlash against subscription. Not everybody wants it. And, you know, I think our business is built around that. I think I've looked at lots of à la carte content models where you do pay per class. The economics aren't great. You know, the hierarchy of an annual subscriber is better than a monthly subscriber. A monthly subscriber is better than an à la carte single class purchase user. You look at Udemy, the number of classes purchased on average per user is like 1.1, 1.2. Like there's just not a lot of repeat purchase, but we're also dealing with this consumer backlash, particularly coming out of the COVID era. Everybody signed up for a truckload of subscriptions and now everybody doesn't want to pay for them anymore. So, you know, I think this is kind of actually a recent open question is what is the best model for the consumer? And maybe it's a combination of you can pay per class and you can pay subscription if that's what you want. But I, you know, that's, that's a pretty dramatic shift in a, in a company's economics and something we would totally think about carefully before we flipped that switch.

Definitely. And I guess it's also worth noting too that, you know, not only does it impact kind of the economics of the business, but even too, like how you think about kind of marketing and, you know, acquiring customers, right?

Yeah. Your whole, Your whole onboarding funnel changes, your whole marketing approach changes. And there are companies out there that are doing this that offer, you know, you can pay X dollars per class or per, per unit, and then you can pay Y for an all-you-can-eat subscription. But it's a pretty dramatic shift in your, your entire user experience.

Yeah.

So, so on that note, like, as far as like when it comes to, you know, acquiring students on the, on the demand side, you know, what are some of the specific ways that you're doing so?

We were one of the early companies to figure out influencer marketing on YouTube in particular, to the point that, you know, 2021, '22, there were memes about, you know, you couldn't watch a YouTube video on Skillshare, but, or on, you couldn't watch a video on YouTube without a Skillshare influencer spot popping up. We had found early on there's the There's sort of this sweet spot in the mid to long tail where it was very, very efficient. Obviously, we're not the only ones who have figured out influencer marketing. So a lot of that efficiency has been sucked out of the system. It's still a major channel for us, but not nearly as big as it was. You know, I think we've shifted a lot of our focus now toward organic channels, SEO-owned channels, like our own YouTube channel, Instagram channel. We've sort of just dipped our toe in TikTok. We'll see what version of TikTok is alive in 60 to 90 days. There will be something, you know. So I think that's, you know, it's interesting. I've advised companies that were amazing at the organic and had really strong SEO and word of mouth and viral loops. Then they end up getting frustrated because they don't have a knob that they can turn when, when they want to dial things up. There's just no lever. You can't dial up organic. You either have it or you don't. And on the flip side, we've probably erred too far on the paid acquisition side. And now it's all right, how do we invest more in the organic and balance things out a little bit? In a perfect world, you've got this nice steady base of organic and then You've got some knobs and levers on the paid acquisition side that you can dial up and dial down as you see pockets of efficiency. If I were to go back in time when we had that massive COVID tailwind in 2020 and 2021, we should have been investing more in organic. Instead, we hit the gas on paid. Again, it worked. The economics were great. Valuations were high. It made a ton of sense at the time. But I think there was an opportunity to invest in the future that we didn't take advantage of. So just as you think about scaling and growing your businesses, you need both. You need to keep laying those long-term investments in organic, but also get good at it, at sort of optimizing those shorter-term levers around paid.

That's a really great tip. And, you know, somewhat related to that topic as far— and we kind of— you mentioned that right before, as far as, you know, some of the categories that you serve. But like when it comes to, you know, growth and expansion, can you walk us through, you know, how you're thinking about that at Skillshare?

Yeah. I mean, I think, you know, with growth and expansion, you know, again, coming out of our sort of focus in 2019 on vertical, I think our focus is really kind of the, the big word right now. And I think that's another thing that, you know, as companies evolve and grow and, and look to scale, There's an overpowering urge to go wide, you know, and again, I had, I made this mistake coming in, right? We had a strength in creative. My initial reaction wasn't to get better at creative. It was, well, let's add business and let's add tech. And what's funny is now I've been here 8 years and we're not talking about business and tech. We're talking about how do we go deeper in our strongest categories within creative. Like we're unbelievably good at illustration, design, animation, film and video. Like how do we go after those categories where we are without a doubt the best on the planet? Because we haven't come anywhere close to tapping out the global demand and the global supply in those narrow verticals. So, you know, I think expansion and growth If there are obvious easy adjacencies to where you're already strong, okay, great. A lot of times that will happen on its own. But I, I would take a hard look at, do you need to go deeper in the areas where you're best as opposed to go wider and start to nibble into the, the adjacencies to where you're currently strong?

Yeah.

And that's definitely something that we're always talking about. And I guess, you know, to, to learn a little bit more about that, you know, how, on, on like a category level, like how do you like look at a category and evaluate them?

Yeah, that's, it is a constantly moving target because I think, you know, once we said, all right, well, let's get really good at creative. Well, then we started to look at all the, you know, sort of level 2 categories within creative. Well, if you're creatively focused now, those level 2 categories become your level 1 categories. Well, then you start to get into what used to be your level 3 now that you're level 2 and, you know, they, And then you start looking at your taxonomy and like knowing that we're strongest in these 5 categories. Well, should those be level 2 or should they be level 1, right? Because now we've got level 2 categories underneath illustration that are actually larger than our level 1 category in, I don't know, you pick it. So that taxonomy and how you think about those subcategories and those verticals, becomes another sort of strategy and tactic in and of itself. And then as you start to pair that with your organic growth strategy, your SEO and your paid acquisition and your go-to-market, you know, if we're gonna go after influencer marketing, should we be going after sort of general catch-all learning channels or should we be going after 3D animators using Blender? Right? Well, I can tell you the conversion rates and the retention rates and the engagement rates of someone coming in from a 3D Blender channel is gonna be infinitely higher than someone who's on sort of a more generic learning, fun, entertaining to watch channel. So there's a lot of juice to be squeezed out of getting really smart about your subcategories. And again, where do you see conversion? Where do you see engagement? Where do you see retention?

Definitely lots of considerations and, you know, nuance as well. So we could probably go super deep on that. So I did want to kind of, you know, zoom out. And it's, of course, been a few years since your past group chat. And of course, you know, Skillshare has definitely, you know, scaled quite a bit. So, you know, what have been some of the more recent challenges with it as a marketplace and maybe some of your learnings?

Yeah, I mean, I think the, you know, with any, you know, this is where probably the challenges of the subscription model probably come in more than the marketplace. You know, we are, we've always had a really, really healthy supply side. We, as we have focused on categories, you know, you end up with categories that just don't get as much attention and some legacy teachers there who just aren't earning what they used to earn. So I think we've had, you know, sort of minor things to address on the supply side, but on the demand side, It's really sort of refocusing the business around where are the users that are getting the most value, generating the most engagement, and they're therefore driving the most retention. But then I think there's also been, we've, we've looked at a lot of sort of additional revenue streams and expansion opportunities above and beyond the marketplace model. Enterprise is one for us that You know, we are almost entirely, or well, probably 95% now a consumer, you know, B2C business. But we have a lot of enterprises coming in wanting to buy subscriptions for their creative team or their marketing team or for their employee base just as a perk and a benefit. We do a lot of partnerships. We have a lot of companies coming to us because we have this creative audience and because we have a brand. We have brand equity within the creative community. You know, we do a lot of work with Adobe and Procreate and Confluence and Mozilla, and we're in the seatback entertainment of American Airlines. So we have companies coming to us because of the community we represent and the content that we, that we generate through our model. They wanna stay in front of that creative community and really love the health and wellness aspects of what we do. And then we've recently added some, some add-on services. So we have this amazing supply side of teachers and experts. Well, we see them offering all of these other services on other platforms, one-on-one coaching, digital products, live sessions, weekend retreats, you name it. How do we bring some of that activity back onto Skillshare? So we lot— we did an acquisition that allowed us to do one-on-ones and live sessions and sell digital products. So now our teachers, they have a whole new way to earn. Our students have a whole new way to engage and learn. That's great for the marketplace. That's great for driving that, that sort of 2-sided back and forth approach. So, you know, we've sort of come at it from a couple, couple different ways. But those add-on, you know, once you've got the supply and demand set, what are other ways for them to both sides to get value out of the platform? That's been a big area of focus.

Yeah. And I guess, you know, on, on that note, that's something that we are, we are talking about quite a bit here in the community and albeit a little bit earlier stage for founders, right? So when I'm thinking about like, you know, add-ons and the importance of kind of sequencing with that, like when to do so, are there any maybe like tips that you could share with early stage founders on, you know, when to add on those services or value add to this marketplace?

You know, I think this is the, it's the constant debate of whether or not the distraction is worth it. And so, You know, I think you'll never go wrong with too much focus. But you also need to find just light, easy, creative ways to test how to expand. So it's, it's a tricky one. You know, I think again, for us, knowing that our teachers were already doing this in other places, like we knew that there was demand from the teacher side. There are entire marketplaces like Creative Market and Gumroad that do nothing but sell digital products. And now Etsy, I mean, significant amount of Etsy's volume is digital products. So we sort of know that there's supply and demand. It's just how do we lift that model and put it onto Skillshare? So it felt like a pretty low-risk approach. Now that said, it still takes a lot of work. It still takes product, it still takes distractions. So I, you know, I wish I had an easy formula on, you know, when is the distraction worth it? I think the easiest way to manage that is just to come up with really lightweight tests and painted door models to see if anybody clicks. And then if people click, great, then, you know, to go build something behind it. But it's, that's a tough one.

Definitely is. That's gonna be great tips. And I think it's also important here to note that it's much easier when you have that existing customer already, right? So you're not having to go acquire a new customer.

So, yeah.

And, and And that's, I mean, look, I, if you are in the early stages of building a marketplace and your core experience isn't generating liquidity, okay, then maybe you do need a pivot. But just know that, you know, I wouldn't, I'd be very cautious to add another thing to figure out until you're confident that the first one's dead. If you're confident it's dead, then great. You got nothing to lose. Go try something else. But just make sure you're not getting a false negative because you're switching gears too quickly.

Definitely. So another topic that I wanted to chat about, and this is something that we, I feel like we're talking about on every group chat now, is AI. So, you know, how are you seeing AI impact marketplaces? And are there maybe any kind of specific ways that you're leveraging it at Skillshare?

Yeah, when generative AI came out within the creative community in particular, there was definitely a For a pretty visceral reaction against AI. I think some of that has tapered. I think increasingly creatives are looking at it as just, it's just another tool, right? I mean, computer-generated animation has been around for a long time. We still have animators, right? We're not drawing on plastic cells like the old Disney movies. So AI is just another tool to get whatever is in your brain out onto paper or into digital form. So I think after that initial backlash, we have seen a lot of demand for classes around how to leverage it, the new AI tools. And a lot of the creative software technologies are now leveraging AI, Adobe in particular. So it's just another thing you need to go learn to stay current and stay hot and stay ahead of other people doing what you do. So I think there are kind of a couple layers for us. You know, one is just there's a lot of demand for content around how to leverage AI in a, in a creative context. I think there are increasing number of tools to use AI to make it easier to create content. Right, to make it easier to edit, to make it easier to create an outline. So I think our teachers are more interested in that. Our students are still really interested in the techniques and approaches of our teachers, right? They don't want to learn the generic, you know, how do I make the button green instead of orange? You can learn that anywhere. I wanna learn how Aaron Draplin does his logo design. I wanna learn Cat Coquillette's approach and how she comes at the problem. So it's really about the teacher and the cult of personality around the teacher. So I think that has sort of tempered some of the angst around it. Internally, we're still like in the early days of learning how to leverage AI tools just to make us more efficient. Our engineers are using Copilot and some of the new, you know, the coding tools. We've used a lot of it to automate certain tickets to make our customer service more efficient. We've, you know, that, that sort of content taxonomy and categorization I mentioned, we've used that to make that process a lot more efficient and effective. AI is great for things like grouping. So I think there's just an unlimited number of internal efficiency operations that we've used and we're, you know, we're just Barely scratching the surface there.

It's definitely super early, but it's been really interesting to see how well, you know, marketplaces are already leveraging it. So, yeah, well, so we're gonna get into the, into questions here in a little bit. Otherwise, you and I could just go on talking for quite a bit here about things. But, you know, right before we do, do you have any tips for marketplace founders at their earlier stages getting started?

Yeah, I mean, I think I touched, I touched on 2 big ones. One is, you know, the faking the chicken dynamic. Don't be afraid to get in there and Do it manually to make sure your early users are having a phenomenal experience. I think the second I touched on just that balanced go-to-market, have both organic and paid. Don't get, you know, the analogy of you don't want to be the guy at the beach with the huge biceps and the little tiny twig legs. You gotta make sure you're, you're balanced in your approach. The other thing that I see a lot of, don't confuse your top line GMV with your net revenue, right? Your net revenue is what matters. And I see all these companies are like, oh my God, our GMV is huge, but we take 1.5%. Like, you can't build a business that way. Like, you're never going to be able to fund any kind of sizable operations until your GMV is like extraordinarily large. Keep a close eye on your take rate. And what that really means is your net revenue is your revenue. That's your earnings, not, not your GMV. Nobody cares about your GMV. In terms of paying your bills. I think a lot of companies have learned this lesson, you know, in the ZIRP, you know, 2021, 2022 days. Don't let your headcount grow faster than sales. Maybe when you're early, early, early, because, you know, you're pre-sales or whatever. But if you're doing that when you're Series A, Series B stage, it gets really hard. to find any kind of operational leverage in your business. If your headcount is constantly growing faster than sales, you will run out of money or you will have a massive layoff, one or the other. It just doesn't work. So just as you're scaling and adding headcount, adding headcount is like pouring concrete. It goes in really easy and it takes a shit ton of effort to get it out. So just be very, very cautious about adding headcount, particularly in a marketplace business. Where you have a small take rate. And then I think the, you know, the last thing, and again, another lesson a lot of people learned over the last couple of years, raise as little money as possible. And when you're raising money, don't solve for the highest valuation. There are so many startups that could have exits that may not be venture scale, $1 billion exits, but would be life-changing and generate multi-generational wealth for the founders. A $50 million exit, if you've raised a seed or a Series A, you're gonna walk away pretty damn good. Whereas if you've raised $10, $15, $20 million, now your exit's gotta be $200 million, you know. So just think about that as you're raising money, as you're thinking about your long-term sort of fundraising structure. The other thing is raise money from the best partners and not the best, the highest valuation. Like your valuation should be like the third thing you're worried about when you're raising money. Bringing the wrong investor in at an overpriced round is a recipe for disaster because you will have a down round and you'll be in living hell working for, you know, an investor that is just really difficult and not fun and not supportive. So just be really, really careful. who you bring in. You may be the founder, but once you bring on money, it is not your business anymore. Like you just got married, you're now raising a child together. And if you don't, if you're not careful about and deliberate about who you bring in, it just, it makes it not fun. So just be very, very careful about who you bring onto your board and, and, and into your investor community.

Those are gonna be really helpful tips here. So, well, cool. We're gonna go ahead and get into questions, but I actually had a question that a founder sent me and it was, is for, and related to the search and discovery process. So, you know, what, what is that like on Skillshare? And, you know, how does personalization play a role in this?

One of the things that gets missed is how does the consumer lifecycle play into search and discovery? What I want to show you as a first-time user is very different than what I want to show you as a grizzled veteran. And I saw this at, at us, Podask, Upwork, You want a recipe for disaster? Put a new customer on a new freelancer, right? Because neither one knows what they're doing. They're both trying to figure out how to do it for the first time. Like, if you're a new customer, I wanna show you nothing but grizzled veterans of oDesk, Upwork, right? You know how to work online. You know that you know how to do it better than the customer does. You can train the customer. How to get a good experience out of Upwork. And, you know, vice versa, if you are a longtime oDesk user and you know every nook and cranny of how to manage freelancers, great. That's the one to break in the rookies. Same thing with Skillshare. Like if you come on new, I don't wanna see you, I don't want you to see like the hinterlands of the long tail of content. I wanna show you the hits. I wanna put you in front of the teachers I know you're gonna love. I know you're gonna connect with. You're gonna immediately get our value. So that's, that's a really important aspect of search and discovery. And yes, the more personalized you can get, the better. One thing that I think we, we actually, there was a period where I think we were over-indexing on personalization and we were under-investing in in search. Like, you can spend a ton of time trying to guess what people want. Sometimes when they tell you, just take what they tell you and just give it to them and give it to them quickly and easily. So you can spend a lot of time trying to predict and like, ooh, well, you came in from this channel and these are your demographics. I think you're gonna want this thing. Put in the, our latest mockup. I've called it the BFSB. the big effing search bar, put it front and center, let them tell you what you want, and then give it to them.

That's, that's great. And I like how you, you know, highlighted the point kind of earlier as far as like de-risking that transaction, right? So not kind of bringing, you know, 2 kind of new users together on that. So cool. Hey, Dimitri, do you wanna come on? I saw you raise your hand.

Yeah. Thanks, Mike. I have a question for you about competition and sort of one of the things I'm really interested about the Elance oDesk merger Is that, you know, you guys were going head to head, going after the same customers. And after, you know, you merged, you combine your data warehouses, you started having conversations with the people on the other sides. Is there anything that surprised you that you learned about competitive strategy or anything that, that, that, that any other learnings? For example, like you were probably bidding on each other's keywords during the initial period. And, you know, after you could check like how was affected that for the other party?

I mean, I think for early stage companies and I think when we merged, if I recall, I wanna say the combined business was a little over $100 million in net sales, net revenue. So like we were a good size, but we weren't massive. I think the Upwork, you know, the Elance, oDesk combination to to create Upwork made a ton of sense. It was really hard. It was really painful. And you know what's funny is this is like merging the Red Sox and the Yankees. I mean, we were like, you know, bitter enemies. And once we merged, it was actually a lot of fun because like, you know, we all got along. Everybody was working overtime to like be partners. We were friends now. We were on the same team. And I think That's one thing that we did really well in the merger process is it went from mortal enemies to great friends really quick. And, you know, on the enterprise, I was running the enterprise business, my 2 sort of cohorts on the Elance side of the enterprise business, like we would laugh about how often and the lengths we would go to to put our thumb in the other one's eyes, you know. So I think that part we did really well, but I think the We underestimated how hard the technical integration would be. I think the, we, you know, there's a lot of overlap in customers. So we sort of took a couple steps back through the merger. Now, in the end, it worked out great. But it was hard. I mean, it was difficult and it took a long time to really get things right and to get the infrastructure sort of fully merged and It's don't underestimate how hard those integrations are and don't overestimate the power of the combination. Now, I will, I'll put an asterisk on this, sort of, I'll shorten my answer here. But right now there are a lot of really small companies that are subscale and they need help and you're not gonna get any more money and it's gonna be really hard to claw your way into market share. So I do think there is a unique window and you see this right now. There was an article in The Information, I think last week around VCs looking at acquisitions the way private equity firms normally do. Because I do think there's just, there's a need for consolidation in a lot of sectors right now because there was so much money coming into venture 2, 3, 4 years ago. So it is hard, it is difficult, don't underestimate it. But I think there are certainly times when it makes a lot of sense.

Awesome. That's a good question. Another question someone wanted me to ask, and it was more on the going down the managed marketplace route versus an open marketplace. And a lot of times at the early, I guess for context, at the earlier stages, a lot of marketplaces, you know, tend to do it kind of more quote unquote managed, right? Kind of doing the work, you know, themselves as the marketplace. So I guess, you know, what are some of the considerations? And maybe do you have like tips for founders as far as like when it comes to taking the more managed versus open marketplace approach?

It needs to be as managed as required to deliver a great customer experience, right? And then, then you can go back and say, all right, where, what are the most time-consuming slash expensive slash painful parts of the manual process? And then go build the product to address that. But if you have a fully automated, hands-off, zero-touch marketplace that delivers shitty results, You're dead. So I just, you know, I would— don't be proud of a fully automated marketplace that doesn't work. So I would have very little concern about managing it manually. And then when you can't keep up with demand, great. That is a high-class problem. Then go automate it and fill out you know, figure out how to get rid of the hamster wheel.

Definitely is a good problem to have once you get there, right?

Yeah.

Well, good. Tika, do you want to come on? Raise your hand.

Hi, Matt. Thanks for sharing your insights. My question is, it seems that supply was not an issue, but once you shifted focus to the creative vertical focus, where— what were the strategies to grow the supply? Was it still just influencer marketing, or were there other strategies as well?

Yeah, it's funny. I think actually focusing on creative made the supply side easier. So it actually got, you know, it wasn't much of a problem before. It got less of a problem because now we are clearly focused on creative. Like that's where we had the most students. That's where we had the most liquidity. A, an animation teacher was just going to make a lot more money than an accounting teacher. So once we stopped focusing on non-creative supply, we just, then we could really mod— and then we could spend more time helping and building relationships with our best suppliers within the creative vertical. So we kind of shifted our time and energy and resources away from, hey, let's get business and tech supply in the door to let's lock down our best suppliers, our best teachers within creative and make sure that they love us, So we shifted resources and energy toward, toward really retaining and engaging our best as opposed to bringing on new.

So it was, it was always a surplus. You didn't have to do outreach to new teachers.

No. And I mean, there was a, there was a period before I arrived. So in 2016, I joined like November of 2016. I think we went from like 2,000 classes to 12,000 classes over 2016. So we just had this massive explosion on the supply side. The problem is, you know, Econ 101, your supply-demand curves. What happens when supply explodes? Prices drop, right? So you had all of these teachers coming in, uploading all of these classes. Well, the average teacher earnings started to decline because there's just, there's so much content. Students couldn't possibly get to all of it. And so if our supply is growing significantly faster than revenue, then the teachers make less money. So that was another sort of interesting learning. You gotta think about those, those supply-demand curves because if they get out of whack, now your best teachers are pissed because they're just not making as much money as they used to because there's too much competition. So there might be a situation where you're actually better off having a smaller supplier base making more money and being happier than sort of just a willy-nilly throw it wide open. Let's get as much supply as we possibly can.

Awesome.

Well, that was a great last question here. So we're almost out of time here, Matt, but, you know, really appreciate taking the time to join us here today. This is a fun chat to, you know, go back to some of your earlier experience at, you know, oDesk or Upwork and then hear the latest with Skillshare and also dive into some, you know, some topics in more detail here. So We really appreciate, you know, joining us here. And actually, I had one last question for you before we wrap things up. And this is probably new since your last group chat, which is if you could go right back to before you entered the world of marketplaces, you know, maybe at Upwork or Odesk or Upwork, you know, what would you tell yourself about marketplaces specifically?

I think the— honestly, I think the managed part of it is the one thing that we sort of learned early and that has really stuck with me. I mean, I, again, early days of oDesk, it was the wild, wild west. I mean, you just, you had no idea what you were gonna get. And, and the funny thing is there was an early set of users who loved that, like that made it their secret weapon because they knew how to use it. Nobody else did. That was great for building early word of mouth and like a super rabid early user base. It is not good for scaling. And so I just, I think that magic of sometimes just a little bit of touch and a little bit of service and a little bit of handholding can go such a long way and then figure out how to work yourself out of a job. But I, you know, whether it was again on oDesk applying a little bit of recruiting support to help someone find a great engineer, if I help you get that first job, and, and it goes really well with the right person, we gotcha. So I, I think that's the one thing that, you know, and again, I sort of went through the process all over again visually at Skillshare. A lot of my advising, you know, it's just, it's a consistent theme. So do whatever it takes to deliver an amazing experience for that first-time user coming onto the platform and then figure out how to automate that over time.

Yeah, that's great parting advice and it's also great and, you know, encouraging for us or assuring since, you know, we're always doing the things that don't scale at the very beginning so that it eventually pays off here. And, you know, last but not least, time for a quick plug. Where can we keep up with you at?

Yeah. So probably easiest on LinkedIn. And actually, I think I mentioned Skillshare has launched like these one-on-one coaching sessions. I'm, I'm, I'm dogfooding our own products. So if you want to book a one-on-one with me, you can find the link on LinkedIn and they'll take you to my Skillshare profile and You can grab a time.

That's great. I'll include a link to it. So hopefully we'll have lots of founders here kind of checking it out. So we, we really appreciate you taking the time to join us. And thanks everyone for the great questions today.

Yeah, appreciate the questions. Thank you.