Udacity CEO Sebastian Thrun lays out the company's challenges in an internal email, says it still isn't profitable even after generating $90M in revenue in 2018
Kirsten Korosec / TechCrunch : Tweets: @michaelbhorn Tweets: Michael B. Horn / @michaelbhorn : Fascinating look inside @udacity @TechCrunch seems to me they had become a blockbuster driven business model. http://techcrunch.com/...
Context & Ripple Effects
The internal email closes a loop that opened years earlier: Udacity was profitable as of August 2015 on the strength of its nanodegree programs, but by the time Sebastian Thrun — who had already handed the CEO role to Vishal Makhijani in 2016 while staying president and chairman — wrote this note, $90M of 2018 revenue still wasn't covering costs.
The disclosure matters because it frames what came next: within weeks Udacity restructured and cut staff, and the company's own later account of a profitable pivot to enterprise services reads as the direct answer to the consumer-model economics Thrun was flagging here.
First-order effects
- Udacity's leadership now has public confirmation that its consumer nanodegree business cannot carry its cost base at $90M revenue, putting immediate pressure on spending decisions across the company.
Second-order effects
- The cost reckoning arrived fast — Udacity laid off 20% of its staff, about 75 employees, weeks after this email surfaced, explicitly to bring costs in line with revenue.
Third-order effects
- If the pattern holds, standalone consumer upskilling platforms migrate toward enterprise contracts and employer-funded training — the path Udacity itself took when it declared profitability after pivoting to enterprise services — leaving pure consumer subscription models as the minority structure in edtech.
The trend: Consumer-paid online education platforms are being forced into enterprise-led business models as individual-subscription revenue fails to cover their cost bases.