The counterintuitive secret behind Coursera's $5 Billion IPO

Conventional startup wisdom is to focus intensely and not get distracted.

Coursera was the largest edtech IPO of the decade and is projecting $400M in 2021 revenue. It got there not by focusing, but by staying distracted.

Coursera started with free MOOCs, then built a certificates business, then an enterprise business followed by an online degrees business. All this happened within 3-4 years. Running 3 product units in a small company was grueling. Every strategic planning session was jammed with agitation around resource tradeoffs. All employees, from executive to new grads, lamented the lack of focus. Ultimately though, those bets paid off. Coursera is a successful business precisely because of the ecosystem it created.

Hyperfocus has a few drawbacks:

• You find product market fit in a small market, but miss a much larger market.

• You miss adjacencies that make you a lot more valuable to your customers

• You double down on false signals of product market fit instead of continuing to test opportunities for much stronger P-M fit.

As a startup, you should be investing in a couple of bets that could become the next S-curve of growth for the company.

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Vinod Khosla @vkhosla

@rabois As a former board member I can say there were those who wanted the company to “focus”. There is a delicate balance between focus and “exploring” what might become a new “S” curve. At any time in the middle of the main “S” curves company should have 2-3 potential new “S” curves.

A simple way to find new growth bets is to look at what your customers are already doing.

At Coursera, we saw that our learners were working professionals and were telling their employers and coworkers about Coursera. That became the insight for the enterprise business. Many learners applied for Degree programs after the confidence they gained from taking Coursera classes. That insight drove the foray into online degrees. The enterprise and degrees businesses are the new growth engines for Coursera after the core consumer business.

Fire bullets then cannonballs - Jim Collins

Each new bet should start really small. You can double down once you have strong signals of Product Market fit.

At Coursera, we invested only a handful of people focusing on 1-2 pilots for each new product line. Some of the products went through ups and downs. There was strong pressure from many to shut down floundering products. But while resourcing levels fluctuated, the company kept the lights on. That helped these products catch the big waves when they came.

Find and articulate how the bets reinforce your flywheel.

If you pick wise bets, your flywheel will go faster. You also need to make sure that every single one of your employees internalizes this.

When Jeff Maggioncalda took over as CEO, he spent a lot of time re-articulating Coursera's 3 sided platform strategy and flywheel till every single employee was sick of hearing it. This drove internal clarity. Employees were able to find opportunities for leverage across the business units.

This strategy is now the bellwether for the industry. Competitors are making acquisitions to emulate the Coursera strategy. I've seen ed-tech startup pitches inspired by Coursera as a model for their growth.

It could help you too. Stay a little distracted.