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Case Study #1

Lynda.com: How an E-Learning Entrepreneur Rides Waves of Change

Lynda Weinman, cofounder of the online learning company called Lynda.com, says, “The first time I ever used a computer, I went to the manual to try to teach myself how to do it, and I was mortified by how it was written.” Like many others, she struggled to teach herself and decided there had to be a better way.

Weinman first decided to write a book on web design, one that became a widely used textbook at universities and colleges around the world. She and her husband Bruce Heavin moved to California and began offering face-to-face classes on web design, and many of their eager students were trying to start high-tech businesses of their own—the so-called “dot-coms.” Business was booming, and the couple began exploring new instructional strategies—recorded videos, in particular.

But in the spring of 2000, the dot-com bubble started bursting. Most of those high-tech online companies took huge hits in their stock prices; Amazon.com, for example, went from $107 per share to $7. Many companies—like Pets.com, which sold pet supplies on the Internet and was becoming a household name with ads airing during the Super Bowl—failed completely, and investors lost more than $300 million. (The URL pets.com now belongs to retailer PetSmart.) As their funding dried up, the dot-coms stopped sending students to Weinman, and business plummeted.

Changing the Business Model

The 9/11 terrorist attacks in 2001 hit the U.S. economy even harder, and CEOs slashed spending on travel and training. Weinman, however, saw an opportunity to fill a need and decided to try a new business model. She and her husband had a growing library of training videos, but rather than sell them individually as DVDs, they decided to offer them as an online library with paid subscriptions. Subscribers could watch any video in the growing library for a flat monthly rate.

The switch was risky, especially because most of their revenue was coming from DVD sales. Weinman and Heavin frankly admit that marketing was never their strength, but they stuck to their decision. Unlike most of the dot-com entrepreneurs who wanted to build a business quickly and then sell it, the pair wanted to stay with this adventure. Because the subscription price includes the whole library, Lynda.com encourages browsing and developing new computer skills. Those who took one course were tempted to try others.

Their strategy worked, and subscriptions began to soar. Companies that could not afford travel bills and instructor-led training purchased volume subscriptions for their whole organization. Government agencies and universities began buying campus-wide subscriptions, and the New York Public Library purchased access to share with library visitors.

The company received $103 million in venture capital to expand worldwide. By 2013, sales topped $22 million and Lynda.com employed 450 people—teachers, designers, content developers, and support personnel.

Riding the Next Wave

Lynda.com began before the explosion of free online videos, and the company will need to find new ways to compete if it maintains the subscription model. YouTube, for instance, features thousands of free instructional videos—from pruning fruit trees to using Excel pivot tables. Many are contributed by experts in the field. YouTube mainly earns revenue through advertising. Khan Academy also offers thousands of free instructional videos, mostly in math and science. That site has no advertising but attracts funding from donors such as the Gates Foundation. The massive open online courses (MOOCs), which are also free, present another challenge to Lynda.com’s subscription model. For-profit Coursera, for example, offers hundreds of free online courses contributed by dozens of universities.

Lynda.com focuses on excellence in teaching, high production values, and advanced training in software development; so far, that strategy is succeeding. Recent releases, for example, feature Universal Windows app development, HTML 5 projects, and new features in AutoCad 2017, the 3D design tool. But competing against the growing volume of free videos that help people acquire high tech skills will be one of Lynda.com’s next challenges. The professional network LinkedIn purchased Lynda.comin 2015 to offer those educational services to its members, and then Microsoft purchased LinkedIn a year later, so Lynda.com will have plenty of backup and capital to face those challenges.

Discussion Questions

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2. 9-17.When Lynda.com began offering subscriptions to a library of e-learning courses, what new value did the company provide to its customers? What advantages did e-learning from Lynda.com have over traditional in-person education?

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2. .           

9-18.What kind of changes to company’s information systems would be needed to support this new business model?

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2. .           

9-19.What types of training would Lynda.com have difficulty providing customers? What kinds of education are less appropriate for e-learning than traditional in-person courses?

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2. .           

9-20.What kind of challenges does Lynda.com face today? How might the business be changed to address these?

1. .