If you’re into learning new things, chances are you’ve heard of Udemy.
Founded in 2010, Udemy has grown into the #1 educational marketplace in the world with over 55,000 courses taught by 20,000 instructors to 17 million students in 80 languages.
They’re also the 5th most visited website in the WORLD in the “Education” category.
Oh, and in case you’re curious, they’ve raised $173M in 6 rounds from 17 investors.
Looking at those numbers, it’s hard to imagine a time when Udemy was struggling to get off the ground.
But like any marketplace, they initially dealt with the “chicken and egg” supply/demand dilemma (i.e. how do you get students without courses? How do you get courses without students?).
Solving that dilemma and scaling to the education marketplace giant they are today took a serious amount of hustle and hacking.
And today we’re going to find out how they did it.
Because Udemy is a two-sided marketplace, the tactics laid out in this post bounce back and forth between growing the supply side and growing the demand side.
Each tactic is labeled so you’ll know if you’re dealing with supply or demand. (Though I’m sure you’d have figured it out anyway.)
When applicable, each tactic also includes quantifiable results from Udemy, as well as takeaways for you and your business.
One last thing before diving in
I think it’s important to understand the context in which a tactic is successful in order to successfully replicate it.
To help give you a better sense of context for each tactic, I’ve done two things:
- Organized this post in chronological order (or at least tried)
- Labeled each tactic based on the business lifecycle stage Udemy was in at the time.
The stages are:
- Seed & development
For more info about these stages, check out this article by Neil Petch.
Understanding the stage Udemy was in when using a tactic will help you better understand if it can help your business and at what stage.
Please note though, a lot of these tactics can be employed at multiple stages in a businesses lifecycle.
Table of Contents:
Tactic #1 (Supply): Seed your marketplace with free content from someone else
According to a Quora post by Udemy co-founder Gagan Biyani, their first attempts at seeding the marketplace included reaching out to authors, professors, and public speakers, asking them to create courses.
The trouble with this initial approach was two-fold:
- At that time (2010), most people weren’t comfortable with the online course medium and preferred to stick with what they already knew like publishing books, workshops, and live presentations.
- Gigan and company hadn’t proven that online courses were worth the time and effort it would take to create.
Since these efforts weren’t panning out as hoped, another Udemy co-founder — Eren Bali — devised a clever plan: obtain creative commons-licensed courses that were part of the OpenCourseWare movement to seed the marketplace (done legally, of course).
This plan was ingenious for two reasons:
- They were able to launch the marketplace with 100+ courses for free. At this stage of the game, Udemy hadn’t raised any money, so this was pretty crucial.
- The majority of the courses were from prestigious schools such as Stanford, Yale, and MIT. Umm, hello instant credibility!
With the marketplace seeded with 100+ quality courses, Udemy could then turn their attention to the demand side of the equation, which takes us to Tactic #2.
Tactic #1 Summary:
Business Stage: Seed & Development
1. 100+, high-quality courses available on Udemy for free.
2. Established credibility with courses from prestigious schools.
Takeaway: In order to exist, every marketplace needs a supply. Seed your marketplace with low-cost, high-quality content. And don’t afraid to get creative with acquiring it. Besides the millions of creative commons-licensed courses online you can tap into, there is a never-ending amount of content online you can leverage one way or another.
Tactic #2 (Demand): Get 10,000 users with free press coverage and gated courses.
Armed with 100+ courses, the co-founders of Udemy set out to officially launch to the world on Tuesday, May 11th, 2010 at 10 am.
They received coverage from TechCrunch, Mashable, VentureBeat, ReadWriteWeb, Silicon Alley Insider, Under30CEO, and Vator.tv, which roughly 3X’ed their average daily traffic over the next two+ weeks (they were doing between 200-500 before the coverage) and drove 10,000 new users.
The beauty about the Udemy launch is that the co-founders were just three guys hoping to get their product launched and noticed.
They had zero funding, no experience in PR, and weren’t famous entrepreneurs with connects to the media (i.e Slack’s Stewart Butterfield).
Their strategy boils down to 3 steps:
Step 1: Create a kick-ass product.
This should go without saying, but if your product isn’t worth talking about no one will talk about it. In a blog post discussing the launch, co-founder Gagan Biyani mentions that,
“The only thing you can guarantee when you build relationships [with the press] is that they will read your e-mail. They will not cover you just because you know them, unfortunately.”
As mentioned above, Udemy had built up an impressive library of free courses from prestigious schools, as well as a platform with some kick-ass features.
Without this, it’s highly unlikely any PR efforts would have panned out.
Step 2: Hustle to build relationships with the media.
Leading up to the launch, Biyani spent a good amount of time hustling to build relationships with media outlets they’d eventually be covered in.
His approach varied (and some weren’t even on purpose), but they included:
- Interning as a writer for MobileCrunch (TechCrunch) and using that as a way to build relationships with everyone at TechCrunch.
- Approaching VentureBeat founder/editor Matt Marshall at an event and pitching him on Udemy.
- Randomly running into Mashable editor Ben Parr at an after-party and chatting him up.
When it was time to launch, Mr. Biyani reached out to each of his contacts using the template below.
He received a response and coverage from every media outlet he reached out to except one, and that was the one he didn’t have a prior relationship with.
Step 3: Increase sign-up conversions by gating content
While encouraging to see an initial spike in traffic from media outlets, press traffic is hardly ever quality traffic.
In order to make the most of the bump in traffic, Udemy required each visitor to sign in before they could view a course.
This increased their conversion rates from 10% to 25%, which is great!
Tactic #2 Summary:
Business Stage: Startup
1. 3X in average traffic
2. 10,000 new students
3. Conversion rate improvement from 10% to 25%
Takeaways: Hustle to build relationships with the media prior to launch. Remember, the goal is to get your email read. If you have a great product, people will want to talk about it.
Tactic #3 (Supply): Leverage established distribution lists to generate $30K in revenue
After this first go through of seeding supply and demand, Udemy had a library of content and students on the platform. Now they needed to figure out how to scale.
At this point, Udemy had grown their course catalog to roughly 2,000 courses and raised their seed round ($1M).
Courses were still being offered for free and they were searching for a way to achieve real traction and demonstrate the marketplace was valuable to instructors.
They solved both of these in two steps:
Step 1: Create content in-house using experts you know
Though they were spending a lot of time reaching out to industry experts, they still couldn’t convince anyone high profile to create courses for Udemy. At some point, the co-founders realized they had a group of experts right at their fingertips; the investors that just funded their seed round.
They convinced the investors to speak in an event series titled “Raising Money For Startups”. They recorded the series and edited it into their first “active” course.
Step 2: Leverage established email lists
Now that they had active content, the founders needed to sell it.
By a stroke of luck, Biyani’s roommate at the time was Chris McCann, co-founder of Startup Digest.
Biyani pitched McCann the idea of running a series titled “Startup Digest University” where they could sell the newly created course to his email list of 100k-200k (at the time).
McCann agreed, and the first email for the course “Raising Capital For Startups” ended up generating between $20K-$30K in revenue from that single course.
They went on to create two additional courses, and in total generated between $30K – $50K from the content they created.
It’s worth noting that after having success on Startup Digest, Udemy was able to use those results to convince other email lists like Noah Kagan’s AppSumo to partner up and sell their courses.
Not every course they promoted via these email lists was a hit, as Andrew Warner from Mixergy pointed out in an interview with Gagan Biyani, but this strategy was incredibly lucrative for Udemy in the early days and played a huge role in their early growth.
Tactic #3 Summary:
Business Stage: Startup
Result: Generated $30K – $50K in sales
Takeaways: Find blogs, newsletters, social media accounts, etc where your target audience hangs out. Develop partnerships and create a high value offers for their audience to help grow your sales.
Tactic #4 (Supply): Use social proof and perceived guarantee of success to rapidly grow supply
Once the Udemy squad had proven real money could be made publishing a course on Udemy, they reached back out to the authors, professors, and public speakers who had turned them down earlier.
Highlighting proven case studies that showed instructors could make real money publishing courses, they were able to add two more instructors — Zed Shaw and Bess Ho — to create courses for the platform.
Once their courses did better than any other previous courses, they were able to add an additional 10 instructors to Udemy over the next couple months.
In each email they sent out, they made sure to highlight the success of past courses and instructors. According to Dinesh Thiru, the SVP of Marketing at Udemy, every email they sent out included the line “Instructor X has made $20,000 in the last three months!”.
The supply side of the equation exploded with word of mouth from instructors resulting in 90% of all future sign-ups.
The other 10% was accounted for in the instructor lead generation engine they created, which we’ll get into in Tactic #5.
Perceived guarantee of success
Another incredibly successful social proof tactic they used was what’s called a “perceived guarantee of success”.
In May 2012, Udemy announced that the top 10 instructors on Udemy had revenue of $1.6 million in their first 12 months.
The perception here is that everyone has the opportunity to be successful teaching on the platform. Instructors joining the platform think “I have a 25% chance of making $10,000 or more teaching on Udemy?”.
Mix that in with the relatively passive nature of earning income after publishing a course, and it’s almost a no-brainer to teach on Udemy.
Tactic #4 Summary:
Business Stage: Startup / Growth
Takeaway: Use social proof to grow the supply side of your marketplace. When applicable, employ a “perceived guarantee of success” to help motivate suppliers to participate in your marketplace or prospects to use your product.
Tactic #5 (Supply): The 3 step funnel to automate your lead generation
I mentioned in the last tactic, organic growth of the course catalog eventually kicked in as instructors were making money publishing courses on Udemy and telling all their friends.
But in order to help kickstart this growth process, Udemy co-founder Gigan Biyani created a 3 step funnel to automate instructor outreach:
Step 1: Outsource lead gen to data miners
Udemy needed a huge amount of leads, and fast. At first, they went with interns to prospect them but eventually switched to low cost ($3/hour) data miners in the Philippines they found through oDesk (now Upwork).
The data miners searched for terms relating to courses they wanted to see in the marketplace. Something like “learn python” or “what is python”.
When a data miner found a relevant site, they’d copy/paste the site author’s email in a Google doc. The result was 100s of viable emails collected a day.
Step 2: Send individual emails to each potential instructors
Once they had the emails collected, the data miners started manually emailing each one-by-one using multiple templates Gagan provided them.
They tracked which emails performed best, and eventually switched to the winning template after ~500 emails.
The result was hundreds of instructors signing up to teach on Udemy.
Step 3: Add a deadline to close leads
Things were looking good up to this point, as instructors were signing up in droves. However, there was one glaring problem: most instructors weren’t completing their courses.
So Gagan decided to add a little artificial pressure.
Udemy reached back out to any instructor who hadn’t finished their course and said, “Hey, we wanna run a promotion for your course in 3 weeks…can you get it done by then?”.
This artificial deadline gave instructors the incentive they needed to complete their courses in a few weeks time, drastically increasing conversions.
Tactic #5 Summary:
Business Stage: Startup / Growth
Takeaways: Create repeatable processes to scale lead generation, and delegate where possible. A/B test multiple variations of your message so you make sure you’re maximizing your conversions. Improve conversion rates by adding a deadline to create a sense of urgency.
Tactic #6 (Demand): Encourage your supply to bring your demand
From early on, Udemy recognized the importance of rewarding instructor for promoting their own courses.
This is reflected in Udemy’s revenue share with instructors:
- If Udemy sells a course through their marketing, they take 50% of revenue and instructors keep 50%.
- If an instructor sells the course through their own marketing, they take 97% of revenue and Udemy takes 3%
Why is this important?
Think about it: with a marketplace filled with thousands of high-quality courses, Udemy was (and still is) willing to forgo revenue up front knowing they could then market other courses to the new students brought in by instructors.
In return, instructors are out using their instructor coupon to promote their courses to their audience, bringing new students to the platform which helps improve the entire Udemy marketplace.
Tactic #6 Summary:
Business Stage: Startup/Growth
Takeaway: Find a way to incentivize your supply to bring your demand, whether through generous revenue splits or some other way. Remember, it doesn’t cost you much of anything to acquire a referral, and you’re foregoing short-term revenue for long-term growth and success.
Tactic #7 (Demand): Use user-generated content to dominate long-tail SEO and drive traffic
Udemy’s long-tail SEO game is silly!
From what I could count, they rank 1st on Google for 5,218 keywords and 2nd or 3rd for thousands and thousands more.
What’s most impressive about this though is that — relatively speaking — they don’t create much content in-house.
Compare this with content marketing/SEO titan Hubspot who has 5,905 TOTAL first page keywords on Google, and you start to understand why this is such an impressive feat.
So how do they do it?
Every time an instructor posts a course on Udemy, they create a landing page for the course.
With 55,000+ courses, that means each new landing page has the opportunity to rank in Google.
Udemy guides it’s instructors through the process of optimizing their course landing pages to make sure they get the most bang for their buck.
You can check out Udemy’s complete guide to optimize a course landing page here, but I’ll lay out the main points below as it’s a nice refresher in SEO basics.
1. Make sure the landing page has good, helpful copywriting
Let’s take a quick look at a prospective student’s view of a Udemy course landing page:
This heat map demonstrates where potential students look when checking out a course and what aspects are most important to them. From the heat map we can see that the most important elements are:
Title —> Goals —> Course Preview —> Curriculum —> Description —> Rating
Now time for a quick pop quiz:
Question: What’s the cornerstone of any good SEO strategy (hint: it’s not keyword stuffing).
Answer: Being useful to your audience!
Udemy knows this very well, and makes sure to let their instructors know, saying:
“To optimize for Search, as well as attract Students, you’ll need to have top-notch copy on your [course landing page]. You might be thinking that these are two different things, and that in order to optimize for search you need to include as many keywords on your topic as possible. THIS IS NOT THE CASE ANYMORE. Google uses real human auditors to create the criteria for their search rankings. Having natural sounding, non-spammy copy is necessary to make it to their list. So to optimize for Search and Students you actually need to follow the same best practices.”
A major part of optimizing for students (aka being helpful) and search is copywriting.
Here’s a quick refresher on writing good, helpful copy:
- Use language your audience would use
- Do not use spammy or sales-y language
- Reduce the number of vague, generic words
- Double-check for misspellings
- Be natural, informative, and action oriented
2. Write helpful, eye-catching course titles and subtitles
The course title and subtitle are the most important portion of the course landing page because it’s the first introduction the prospective student sees both on the landing page and in Google search.
Along with the copywriting tips above, guidelines for optimizing your title and subtitle for search include:
- Creating a title 55 characters or less
- Creating a subtitle 160 characters or less, using complete sentences and covering the most important aspects of the page (or in this case, course)
Here’s an example of good and bad course title/subtitles.
3. The remaining sections: goals, previewable lectures, course description, instructor profile, and course image
I’m going to lump together the remaining sections of a Udemy course landing page because the lesson is the same: be useful!
Tactic #7 Summary:
Business Stage: Startup/Growth
Takeaway: User-generated content is a great way to boost your SEO. However, don’t leave it up to the user to optimize their content. Guide them through by creating detailed resources as well as requiring them to fill out specific fields before publishing.
Bonus: These are similar tactics mentioned by Moz’s Rand Fishkin in his great long tail keyword Whiteboard Friday video.
Tactic #8 (Demand): Use deep discounts to drive traffic and boost sales
As soon as you land on Udemy’s home page you’ll immediately see a list of top courses, and literally, ALL of them are offered at a discount.
As a student, you might think “I can grab a $200 course for 75% off? Hells yeah!”.
And that’s exactly what Udemy is hoping.
When you publish a course on Udemy, you automatically give them permission to promote your course at a deep discount. (This practice tends to annoy Udemy instructors, but if you are an instructor please note – you CAN opt out.)
Udemy views these deep discount promotions as a win-win-win situation:
- Students win by getting a high-value course at a deep discount.
- Instructors win by acquiring a new paying student they may not have otherwise (who is also a potential lead for other courses offered by the instructor).
- Udemy wins by generating revenue and adding more students to the marketplace.
Discounting digital goods is a savvy marketing tactic because, unlike most physical goods, the margins are large and it doesn’t cost any additional money to deliver digital goods to customers once it’s published.
Tactic #8 Summary:
Business Stage: Growth
Takeaway: Utilize discounts to entice customers to buy a product/course they might not otherwise have bought. Make the discount time sensitive to create a sense of urgency.
Tactic #9 (Demand): Use free blog content as lead generation for paid courses
As I mentioned in Tactic #7, Udemy crushes the SEO game due to their massive course catalog and making sure each page is fully optimized for search.
That being said, as Udemy was searching for new marketing channels they realized they had a big opportunity to provide free, lightweight content that could serve as lead generation for their paid courses.
For example, they have a course on Excel that does well and ranks highly for a big keyword like “excel formulas”.
The Udemy team would then create a high-quality blog piece focused on the same topic (like the post in the image above).
Within the blog piece, they’d collect emails and highlight the paid courses that would help take their Excel knowledge to the next level.
Besides leading to an increase in leads and sales, focusing on this strategy helped Udemy grow their traffic 800% over the course of 8 months.
Tactic #9 Summary:
Business Stage: Growth
Takeaway: Create free, lightweight content to both increase your traffic and drive sales for your paid content.
Bonus! Tactic #10: Once you’ve identified your strengths, go all in!
I’m calling this last one a “bonus tactic” because it’s less of a tactic and more of a strategy.
If you take a look at Udemy’s traffic broken down by country, you’ll notice that less than 24% of their total traffic comes from the U.S.
That means a whopping 76% of Udemy’s total traffic is international.
So why is this?
As explained by former Udemy CEO, Dennis Yang, one of the reasons lies in the difference between the perceived core problem of education in the U.S. (affordability) versus education in developing countries (accessibility).
Udemy with their large, democratic, high-quality education marketplace, had begun to solve the problem of accessibility of education in international and developing countries.
Whether this was done intentionally from the beginning is up for debate, but it’s tough to ignore when your business has grown organically to the point that two-thirds of your users and half of your revenue originated outside the U.S. So Udemy did what they needed to do and bet big on the international play.
In June 2015 Udemy raised $65 million to focus on expanding their international presence.
While a good portion of that money went toward expanding the Udemy For Business offering, most of it went towards specific international growth initiatives.
Things such as; expanding the course offerings in local languages, offering courses in local currencies at affordable prices, and shoring up the product features and capabilities to support the international growth.
And it’s paid off.
At the end of 2015, Udemy offered 16,000 courses. Two years later, they offer 55,000 courses in 80 different languages.
Tactic #10 Summary:
Business Stage: Expansion
Takeaway: Be patient but vigilant when growing your company. Once you’ve found product-market fit, traction, and experienced growth, the opportunity to go all in on a specific channel will present itself. Once you’ve identified that channel, don’t be afraid to pour your resources into it.
10 Key Takeaways From Udemy’s Education Marketplace Domination
Here’s a recap of the 10 takeaways from above:
1. In order to exist, every marketplace needs a supply. Seed your marketplace with low-cost, high-quality content. And don’t afraid to get creative with acquiring it. Besides the millions of creative commons-licensed courses online you can tap into, there is an endless amount of content online you can leverage.
2. Hustle to build relationships with the media prior to launch. Remember, the goal is to get your email read. If you have a great product, people will want to talk about it.
3. Find blogs, newsletters, social media accounts, etc where your target audience hangs out. Develop partnerships and create a high value offers for their audience to help grow your sales.
4. Use social proof to grow the supply side of your marketplace. When applicable, employ a “perceived guarantee of success” to help motivate suppliers to participate in your marketplace or prospects to use your product.
5. Create repeatable processes to scale lead generation, and delegate where possible. A/B test multiple variations of your message so you make sure you’re maximizing your conversions. Improve conversion rates by adding a deadline to create a sense of urgency.
6. Find a way to incentivize your supply to bring your demand, whether through generous revenue splits or some other way. Remember, it doesn’t cost you much of anything to acquire a referral, and you’re foregoing short-term revenue for long-term growth and success.
7. User-generated content is a great way to boost your SEO. However, don’t leave it up to the user to optimize their content. Guide them through by creating detailed resources as well as requiring them to fill out specific fields before publishing.
8. Utilize discounts to entice customers to buy a product/course they might not otherwise have bought. Make the discount time sensitive to create a sense of urgency.
9. Create free, lightweight content to both increase your traffic and drive sales for your paid content.
10. Be patient but vigilant when growing your company. Once you’ve found product-market fit, traction, and experienced growth, the opportunity to go all in on a specific channel will present itself. Once you’ve identified that channel, don’t be afraid to go all in!
I love Udemy’s growth study because of a) it’s the story of first-time entrepreneur’s hustling to succeed, and b) marketplaces are arguably the hardest businesses to get off the ground.
The founders didn’t have the advantage of money or high-powered connections to get started, and the solution to a lot of their early successes can be directly attributed to failures they needed to overcome.
They’ve succeeded in their goal of democratizing education and provide a blueprint for any digital goods marketplace looking to get off the ground.