How Codecademy Grew to 50M Users, then 4Xed Revenue in Two Years
What I Learned from Two Years as Codecademy's Head of Marketing
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From 2012 to 2017, Codecademy grew from 0 to over 50 Million users, with no marketing team and no advertising. Then, from 2017 to 2019, we grew revenue 4X before being acquired in 2022 for over $500M.
That’s incredible user growth! Followed by a sharp strategic shift and very sharp revenue growth. I spent 2 years at Codecademy and the last 5 years reflecting on what set Codecademy apart. This is what I learned.
Codecademy's Growth Blueprint: 5 Tactics Every Consumer SaaS Platform Can Emulate
Codecademy was able to grow to 50 Million users without any advertising. How? Let's dive into the strategies that drove Codecademy's meteoric rise:
1. Codecademy Grew the Market By Focusing on Just Before the Beginning of the Existing Customer Journey
In 2011, Marc Andreessen famously proclaimed “software is eating the world.” Amazon was eating retail, Uber was eating taxis, and Airbnb was eating hotels. If every industry was being eaten by tech, this begged the question: was every job going to become a tech job? And if so, shouldn’t we all be learning to code?
Enter the founders of Codecademy: bright-eyed Columbia dropouts Zach Sims and Ryan Bubinsky. Their mission: to make it easy for everyone to learn to code.
It’s hard to imagine now, but before Codecademy, it wasn’t easy to start learning a programming language. If you wanted to code “Hello World” you’d need a text editor like Sublime, a versioning tool like Git, a server on AWS, a domain registrar like GoDaddy, and an understanding of how they all fit together. Feeling overwhelmed yet?
Zach and Ryan saw this complexity and asked: "What if we could make it easy to ‘just start?’"
They simplified the developer environment down to a single browser window that would let you edit the code, compile the code and deploy all from within the web app. In fact, they put a code editor right there on the homepage!
Take a look at the screenshot below:
On your left are the instructions.
In the middle, you type your code and just hit enter.
And on the right, you can marvel at your creation coming to life.
Critics (myself included) called Codecademy “just a toy.” As head of marketing for Codecademy’s competitor Bloc.io, I’d often remark that “You can’t get a developer job by learning in Codecademy’s dumbed-down sandbox.” But the genius of Codecademy was that they met users where they were, and dismantled the barriers that deterred most from even starting.
By moving upstream, they dramatically increased the total market size. Yes, you probably needed to get off Codecademy to get a job. And a new product category (coding bootcamps) emerged to solve that problem. In the subsequent decade, the number of people graduating from coding bootcamps surpassed the number of individuals graduating with Bachelor's degrees in Computer Science, effectively doubling the US supply of developers. And survey after survey I conducted in those years showed that nearly all those bootcamp grads got started on Codecademy.
In addition to making the critical product choice to make Codecademy browser-based, Zach and Ryan made one other deeply important choice. They removed one final barrier and made the product free.
2. Codecademy Cracked PR: One of the Most Unpredictable Channels
PR is a crapshoot. Everything has to click: the timing, the narrative journalists want to write about, your product being relevant, etc. And it’s damned hard. In 17 years, 99% of the startup PR pitches I’ve worked on never resulted in a story. How did Codecademy buck that trend?
Product-Channel Fit for PR
The prevailing media narrative was that software was eating the world. This was an optimistic moment. Everyone wanted to ride the wave and build an app. So journalists wanted to write stories. Lots of stories! But what startup should they write about?
Udacity and Coursera were focused on all academic subjects, not just code
Udemy’s courses were all video-based, and often cost money, making them less accessible
Khan Academy was primarily for children
But Codecademy was completely free, with an interactive whiz-bang code editor.
The result: Codecademy was best-positioned to soak up all that media interest.
Founder-Channel Fit for PR
Codecademy also had the right founders.
Zach fashioned a persona similar to Zuckerberg, an Ivy League dropout with unkempt hair, backed by top VCs like Y-Combinator and Kleiner Perkins. He appeared on Good Morning America and charmed Stephen Colbert.
Zach was also genuinely interested in media. He cultivated a persona on Twitter, he genuinely enjoyed networking with media types and kept the conversations going on on Twitter. Zach also had great instincts for PR.
All of this came together when Codecademy launched the ‘Year of Code’ a campaign that saw Mayor Bloomberg and Karlie Kloss sign up.
It was the right national moment, the right product for mass consumption, the right price (free), the right carrier (Zach). In the years since then, I’ve led PR campaigns for a dozen startups and never once have I seen the type of traction that Codecademy achieved.
3. Codecademy Translated PR Into a Defensible Moat with SEO
PR is also a flash in the pan: you get one big surge in traffic just after the story drops. But within a week, the effect has dissipated to near-zero.
Thanks to all Codecademy’s press coverage, they had a wealth of backlinks: a key ingredient for your SEO domain authority.
But here’s where Codecademy made an interesting choice. Normally products, even free ones, will wall-off the core product behind a wall: only users who sign-up can see every screen of the product. The conventional wisdom is that you should always make users sign up for the product first, so you can get their email and bring them back.
But Codecademy made a contrarian choice. They exposed every page of every course without requiring sign-in, letting users (and Google’s crawlers) experience the product.
The example would be if you’re marketing a textbook, and instead of making users sign-up to get the full textbook, you give away every chapter and every page. Now there’s no incentive to sign-up at all. But, on the other hand, if someone’s searching for an esoteric topic like if/else statements in JavaScript, that specific Codecademy exercise now shows up on the first page of Google.
This is how Codecademy translated their prowess in unpredictable PR to a defensible SEO moat.
4. Gamified Learning Platform
Unlike nearly all its competitors such as Udacity, Udemy, and Coursera, which offered video-based courses, Codecademy built an interactive, hands-on learning experience that gave users instant feedback. Every time a user completed an exercise, they would submit their code, and the app would let them know if they got it right. This resulted in an immediate feedback loop. Borrowing techniques from social gaming companies like Zynga, Codecademy was able to gamify the learning experience with elements such as confetti, badges for completing each lesson, and “hot streaks” for consistent progress.
Codecademy's playbooks offer more than just lessons in brand-building. It's a masterclass in digital acquisition and retention strategies. You can see echoes of Codecademy’s SEO strategy in the strategies of companies such as Pinterest and Canva, and you can see parallels to the gamification techniques in apps like Asana today.
Codecademy's Revenue Pivot: A Blueprint for 4X Growth in 2 Years
Stepping into Codecademy HQ in 2017, I found myself part of a thriving community of 50 million users and staff of 75. The mission: to pivot the business from free users to paying customers. With that North Star, our small team set to work. Here’s the tale of two pivotal strategies that grew our revenue by an astounding 4x in just 24 months.
Flipping the Script: From Freemium to Free Trial
Consumer SaaS Interviews and Benchmarking: As we set out to shift our strategy from user growth to monetization, we wanted to learn from the best. The leadership team set out to interview growth leaders from other freemium consumer apps like Duolingo, Evernote, and Dropbox. Through these interviews, a new hypothesis emerged: could a free trial drive a higher conversion rate vs. our freemium model?
For context: “Freemium” typically means you offer a complete, fully-functional product that’s free forever, with the option to upgrade to unlock extra stuff. Examples include GitHub and Dropbox.
“Free Trial” typically means ou give the user a complete, fully-functional product but they quickly hit a wall (i.e. 14 days). After that point, there’s little value to the product unless you pay. A gym that offers a free 3 day pass would be an example of a Free Trial. Most PLG companies do free trials.
Through interviews and online research, we found benchmark data suggesting that freemium / free trial businesses typically had between a 1% and 10% conversion rate from free signup to paid subscription. Our current conversion rate was close to the low end of that range, so we hypothesized that by shifting to a free trial and paywall, we could dramatically increase that conversion rate.
Prototyping: we formed a small cross-functional pod: 1 PM, 1 Growth Marketer, 1 Designer, 1 Data Analyst, and 2 engineers. We asked them to do user research, then start mocking up and prototyping solutions. Because the stakes of this project were high, the exec team was very hands-on in offering functional expertise to the pod. The solution we came to was to shift from having a free-forever tier to having a 14-Day Free Trial. If users didn’t upgrade, only the first-third of every course would remain unlocked.
Split-Testing: The risk was that we’d face user backlash: Codecademy had long been the best place to start for free, and now our free offering would become significantly less useful. So we decided to roll this out very incrementally. Initially we funneled just a few hundred new users into the new experience, and watched both our metrics as well as discussions in our community and on social media.
The first big win: The user cohort receiving the experimental free trial experience was converting to paid subscribers at a 4X higher rate.
A Gradual Transition : We gradually increased the percentage of new users, then dormant users, and only after 6 months of testing and refinement did we transition active free users.
Tracking & Tweaking (Monitoring and Optimization): As we expanded the test to a bigger segment of users, we continuously monitored conversion, engagement, and retention rates. Our top concern: by introducing so much friction on the front end by forcing users to pay to continue accessing the product, were we going to shift our problems downstream and see much higher churn rates? This is where we saw our second big win: retention rates held!
The results: within months, 100% of new users were receiving the new Free Trial experience. 4X higher conversion with the same retention rates, which translated to a 4X growth in revenue.
Shifting Product Packaging From “Courses” to “Skill Paths”
Another major shift that drove our revenue growth, but one that got far less credit, was the way we shifted our course “packaging” from being oriented around courses like “Intro to HTML” to outcome-oriented skill paths like “Build A Website.”
How the “Jobs to Be Done” User Research Framework Helped Inform Our Shift
The value isn’t in learning to code itself. The value is in solving problems using coding skills. So we set out to identify what those problems were.
Using the Jobs to Be Done Framework, we began to flesh out user personas.
Some users were here because it was part of a school assignment; those users would likely never pay us.
Some wanted self enrichment (i.e. a crossword puzzle). They, also, would be unlikely to pay.
A third group, which we called “achievers” were here because they wanted to be more successful in their careers. And these folks had the highest willingness to pay. This was the group we’d double-down on.
Through additional user research, we uncovered that some of these Achievers wanted to become software engineers. They would start on Codecademy but quickly leave to join a coding bootcamp. Our courses were far too rudimentary.
But there was a much larger group of Achievers who didn’t want to become a developer. They were in-industry (i.e. marketers, designers, business analysts) and wanted to learn to code to be more successful at work. This is a group that our introductory-focused curriculum could credibly serve. And this is the group we organized our strategy around in the two years I led marketing at Codecademy.
One-Dimensional Courses - we began to realize that our courses were “packaged” in a very 1-dimensional way i.e. “Intro to HTML” and “Javascript Fundamentals.” However the users' job to be done, the desired outcomes they were looking for, cut across multiple languages and technologies.
Two-Dimensional Career Oriented Learning Pathways - we decided to repackage our existing 1-dimensional courses into two-dimensional career-oriented Skill Paths. For example, “Build a website from Scratch” or “Intro to Data Analytics.” The “Build Websites from Scratch” learning path gathers everything a student needs across HTML, CSS, JavaScript, GitHub, and GitHub Pages to build and deploy a static website online.
Every day at Codecademy brought with it fresh challenges and insights. As I reflect on my time there, I continue to be impressed with all that the team was able to accomplish to convert that early product and PR success into a defensible growth engine that eventually sold for over $500M.
Amazing read...