MasterClass cuts 20% of 600-person staff to ‘get to self-sustainability faster’
MasterClass, an education platform that sells subscriptions to celebrity-taught classes, has cut 20% of its team to “adapt to the worsening macro environment and get to self-sustainability faster,” CEO David Rogier tweeted on Wednesday afternoon. The layoff impacts roughly 120 people across all teams, but no C-suite executives were cut, a MasterClass spokesperson confirmed to TechCrunch.
“Our mission — to make it possible for anyone to learn from the best — hasn’t and won’t change,” Rogier continued on Twitter. “This very tough step will strengthen our position both financially and strategically, allowing us to serve our members, employees and instructors for many years to come.”
Today is a sad day @masterclass. I made the really hard decision to reduce our team by 20% to adapt to the worsening macro environment and get to self sustainability faster.
— David Rogier (@drogier) June 22, 2022
A MasterClass spokesperson said that the company will be offering 11 weeks of base pay to all employees as part of a severance package, with one additional week for every year spent at MasterClass. The company is also waiving the one-year investing cliff, and employees will have the chance to extend options. The startup has committed to covering employee healthcare through the end of the year. It is also providing mental health counseling until the end of the year and job counseling for the next three months. Laptops can be kept for personal use.
There is no hiring freeze, the spokesperson confirmed. When asked for more specifics on what triggered the layoff, the spokesperson pointed to Rogier's Twitter and LinkedIn statements.
MasterClass made a splash during the early innings of the pandemic by meeting a newfound consumer interest in remote education with aspirational content (aka, entertainment) from celebrities such as Serena Williams and Issa Rae. Offering paywalled, documentary-style content, MasterClass has raised more than $460 million in known venture capital from investors including IVP, NEA and Owl Ventures. Its model even inspired other companies: Outlier, founded by MasterClass’ co-founder, closed a $30 million Series B, and former Chess World Champion Garry Kasparov launched a “MasterClass for chess lovers” platform.
MasterClass charges a $180 annual subscription fee for users to access its library of content. The subscription model was responsible for 80% of the company’s revenue in 2018, and, as of late, is responsible for 100% of its revenue. The company was last valued at $2.75 billion, sources told CNBC.
While it is celebrated for leading the edutainment category, MasterClass has always had some clear hurdles to surpass, including getting users who gravitate to the platform for one class to stick around for other classes. The company has also spent heavily on marketing and on instruction. In 2017, the Hollywood Reporter said that most MasterClass instructors are paid at least $100,000 up front and receive a share of at least 30% of the revenue; it seems likely that those numbers have increased over the last five years.
MasterClass isn't the only edtech scaling back after a period of spotlight. Eruditis, an edtech unicorn, laid off 40 people and had 40 people resign voluntarily, reports Inc42. The publication says that people on the talent acquisition, or hiring, team were impacted as Eruditis scales back its hiring plans, from bringing on 1,300 people over the past 12 months to only wanting 150 more people, at most, this year.
Section4, an upskilling startup launched by prominent NYU professor Scott Galloway, also laid off a quarter of staff, largely impacting the product team. Then, of course, in April, per the Economic Times, richly valued Indian edtech Unacademy laid off 1,000 employees as part of a cost-cutting measure. The same outlet reports that Vedantu, another edtech unicorn, cut 200 employees. Public edtech companies Duolingo and Coursera have also seen stock values slashed.