MasterClass, the San Francisco startup that offers online courses by tennis superstar Serena Williams and celebrity chef Gordon Ramsay, announced today that it has raised $100 million in new financing. The deal reportedly values the company at $800 million but CEO and cofounder David Rogier, 37, says that number is wrong. “The valuation is way above that,” he says.
The funding round was led by Fidelity Management & Research, an arm of the Boston-based investment company. Since MasterClass launched in 2005, it has raised a total of $240 million.
Rogier won’t share 2019 revenue numbers. But in 2018 he told TechCrunch that his company would match online education provider Udacity’s $70 million in sales. Now he says MasterClass’s revenue more than doubled from 2018 to 2019.
Since the pandemic, demand for online classes has surged. “There are weeks we are doing 10X what we did last year in revenue,” he says
MasterClass will use the new investment “to put our foot on the gas,” he says. He wants to add to its offering of 85 courses and to grow internationally. A third of sales comes from outside the U.S. but courses are only offered in English. He also plans to up the company headcount from 250 to at least 300 by year-end.
For a $180 annual subscription, users get unlimited access to courses. Most are comprised of 10-20 short lectures that run for a total of four hours. The lighting is good, the production values high. Instructors who can demonstrate what they do, like playing tennis, cooking or shooting a basketball, do that on screen. Steph Curry’s ball handling course includes footage of him scoring at real games.
MasterClass has been portrayed as “doubling down on celebrity glitz,” as opposed to offering courses that teach much of anything. A story in Vox described Serena’s tennis class as “just technical enough to be useless to a novice and inane to anyone who has taken a tennis lesson.”
Rogier, a Stanford MBA and grandson of holocaust survivors, is unapologetic. “My grandmother instilled in me that the only thing in life that can’t be taken away from you is education,” he says. But is a Steve Martin comedy master class, education? “We give you the chance to learn from the best and you learn not only skills, but what those instructors have learned over their entire life,” he says.
“It’s an investment idea we believe in,” says Deborah Quazzo of Chicago-based GSV Advisors, who invested in an earlier round. “It’s Hollywood meets Harvard. Education online has not been adequately engaging and it has not driven the type of retention of movies and TV shows.”
Competitors grumble that subscribers will dwindle since most people won’t sign up for courses from multiple instructors. Rogier declines to share specifics but he says most subscribers watch at least three classes in the course of a year.
He also won’t say how much he pays celebrities to become instructors. “It’s a partnership with them,” he says. “Every deal is different.” Three years ago, the Hollywood Reporter said that most MasterClass instructors get at least $100,000 up front and a share of at least 30% of revenue. Recruiting the first instructors was challenging but Rogier says he now turns away nine out of 10 people who want to offer courses.
What are the most popular classes in the pandemic? The Art of Negotiation, taught by former FBI negotiator Chris Voss and a creativity and leadership course by Vogue’s Anna Wintour.
Rogier also won’t say whether the company is profitable, but it’s doubtful, given how much it’s investing in growth. It’s spent extra on advertising since the lockdowns took effect. He says MasterClass is “on the path” to an IPO.
The company recently achieved a certain celebrity status of its own when Saturday Night Live ran two subsequent skits it called “MasterClass Quarantine Edition.” One was a fashion class by actor Timothée Chalamet by new SNL cast member Chloe Fineman. The class includes low-quality video footage of Fineman showing off a selection of 75 dark blue hoodies. Rogier declined to comment on whether he’s trying to recruit Chalamet to teach a course.