What Skillsoft's Acquisition of Codecademy Means for Edtech in 2021
2021 was a big year for Edtech acquisitions- 2022 might be even bigger
The news today that Skillsoft acquired Codecademy for $525 million dollars (40% cash, 60% stock deal) is worthy of notice another domino in several longstanding patterns for Edtech in 2021:
2021 Trend: The Combination of B2C and B2B/B2U/B2G Edtech Companies to Combine Complementary Strengths
Skillsoft’s last two acquisitions in 2020- for the IT training and certification company Global Knowledge and the digital coaching platform Pluma- were clearly intended to further extend Skillsoft’s B2B offering into the IT and executive coaching space, respectively.
Skillsoft is something of a dinosaur in the edtech space- not only it is one of the oldest modern edtech companies in existence, founded in 1997, but it’s also been firmly B2B for many years. Its original insight- that corporate training should include both hard and soft skills (Skillsoft, get it?), seems rather quaint in the age of ‘perishable vs. durable skills’ and discussions about how people can maintain their advantage over AI in the ‘fourth industrial revolution’.
Codecademy, on the other hand, has always branded itself as one of the younger, cooler, edtech companies on the block- started by two Columbia college students in 2011, and accelerated through Y Combinator that year, Codecademy was a successful first mover in the B2C learn-to-code space. It was designed from the beginning explicitly to be approachable, fun, interactive and, well, cool. According to Crunchbase, its official company name is “Ryzac”, clearly an adorably leftover portmanteau of its’ founder Ryan Bubinsky and Zachary Sims. It has $87 million in funding from cool blue chip investors, including edtech firms like Union Square Ventures and Owl Ventures, Silicon Valley legend Kleiner Perkins, and internationals like South African Prosus Ventures and Index Ventures. Richard Branson is an investor, for goodness’ sake- you don’t get much cooler than that.
For the difference between Skillsoft and Codecademy in a nutshell, compare the polished B2B look of the Skillsoft “Software Dev Practices” Catalog…:
To the cutting-edge design aesthetic of Codecademy’s catalog page:
Opposites attract, huh?
In the years since 2011, the ‘learn to code’ space has gotten extremely crowded, and Codecademy, even as a first mover, has surely struggled to keep its advantage among customers. Thus the inevitable move into B2B: in January 2021, after a year in beta, Codecademy publicly launched Codecademy for Teams with progress reporting features, and in October, it announced Teams+, which provides customized pathways and collaborative coding projects for its corporate customers.
However, fast-moving B2C startups with great UX designers and cutting edge content developers often have trouble getting real traction with B2B sales; they simply lack the infrastructure that massive B2B operations like Skillsoft have built up over time, such as huge sales teams, libraries of white papers and webinars, technical integrations, ‘learning solutions’, and a global partner network. An acquisition is a major accelerant; while Codecademy reached over 45 million users (almost all B2C) and 500 corporate clients in 10 years, Skillsoft has 140 million users (almost all B2B) and 4,500 corporate clients, many of whom will be happy to offer Codecademy to their workforces.
For a neat corollary, look at Pluralsight’s 2015 acquisition of Code School. Pluralsight had already built a moderately sophisticated B2B business, with a vast catalog, Learning Paths, certification prep, company assessments, and benchmark assessments, while Code School had a modern, gamified and super-fun look and feel, fashioned directly after classic Nintendo games. I would imagine that Code School courses still have at least some of that same fun look and feel- but now they’re heavily paywalled inside Pluralsight’s walled garden.
We’ve seen a number of acquisitions in 2021 that somewhat match this pattern- acquisitions designed to bring a ‘sexier’ asset under a brand umbrella and/or to expand offerings to include a more modern catalog:
B2C/B2U leader 2U acquired global B2C MOOC leader Edx to create an international funnel of education consumers around the globe, as well as to borrow the latter’s positive brand.
SNHU’s acquisition of Kenzie Academy and American Continental University’s acquisition of Digital Crafts allow these universities to extend their brand to younger audiences and offer modern tech stacks.
Renaissance Learning, which is a major provider of important but unsexy products like reading assessments to schools, purchased Nearpod, which uses virtual reality content and partnerships with game providers to create engaging content. Renaissance’s B2G acumen (specifically in the K-12 market) combines with Nearpod’s teacher and kid-friendly user experiences.
Kahoot acquired Clever in a slight reversal of the pattern; Kahoot is the ‘sexier’ of the two companies- a classroom favorite with colorful, kid-friendly, gamified learning- and it will be able to leverage Clever’s behind-the-scenes single sign on technology to rapidly accelerate its growth in the US school market.
This complementing of strengths for different audiences is a trend that I expect to continue in 2022. We will see larger edtech players (including universities!) acquire small and medium edtech firms that have grown during the pandemic, but need an acquisition to find new audiences.