Tuesday 23 January 2018

To IPO or not to IPO: that is the modern unicorn question

Aaron Skonnard leads one of the world's most successful online training companies, Pluralsight. But as he ponders whether or not to take the company public, he tells our technology editor of the pitfalls he might encounter

Online training supremo Aaron Skonnard.
Online training supremo Aaron Skonnard.
Skonnard's Irish counterpart Mike Feerick
Adrian Weckler

Adrian Weckler

To float or not to float: that is the question facing dozens - if not hundreds - of tech companies in Europe and the US. It's a particular one for Aaron Skonnard as he sips a coffee on a wet, windy Irish morning. Skonnard, the co-founder and chief executive of the fast-growing online training firm Pluralsight, doesn't really need the money.

His Utah-based company closed a $135m (€124m) funding round last year and is set to double its 2014 revenues of $85m (€78m) this year. There's still plenty of money in the private markets if Pluralsight ever needs more.

Going public brings hassle, too. Michael Dell recently described his relief at returning Dell to private ownership, likening his existence as a public company to that of being on a "90 day shot clock" with investors and analysts.

On the other hand, being a publicly traded company brings a certain stature and respectability among bigger customers. And at some point, the company's backers - which includes heavyweight VC firm Insight Venture Partners - will look to cash in on their investment.

It's something he's thinking about "a lot", he says.

"There are so many downsides," says Skonnard. "It's certainly not a foregone conclusion that we'll do it. The private markets look much more compelling right now for a lot of reasons and there's lots of capital that's flowing there.

"There's a lot of chaos in the public markets right now, too. There's a lot of risk, a lot of fear. It certainly does seem today with what's happening in the public markets right now that there'd be more downsides than upsides."

And yet, and yet. There is one golden, compelling reason to take Pluralsight public. It has little to do with cashing in for Skonnard.

And it is why the company has reportedly hired banks to investigate the possibility of an IPO, possibly valuing the company at around €1bn. "It's the strategic benefit it would offer with our enterprise customer base," says Skonnard.

"With our enterprise customers, the credibility that it would offer might really enhance our relationships. They would have more transparency and visibility with our financials. And we're working with Fortune 1000 companies all over the world."

Around 60pc of Pluralsight's customers - 12,500 companies in all - fall into this enterprise category. This segment is also the fastest growing, most profitable part of the business.

"But I think it's very hard for most companies to do. It does certainly worry me. It's something I think about a lot. And I think it takes a really strong company to do well in the public market, one that's driven by vision and purpose and isn't going to be impacted too much by the short term quarterly cycle. I think if there is a company like that, we're certainly one of those. But obviously I'm not commenting on the timing at this point."

Pluralsight is one of the new wave of online training companies that is taking aim at conventional college degrees as the most relevant metric to judge a person's suitability for a job. It offers a range of courses that are taken seriously by large private employers, some of which can't find candidates among conventional college graduate classes.

It is also being used by schools and colleges. A recently signed deal with Belfast-based Wholeschool is set to make the platform available to hundreds of thousands of students and teachers in Ireland.

"Historically, everyone has believed that a college degree is necessary," says Skonnard. "But I think that is quickly starting to change.

"If you just look at the way that most tech companies hire software developers, most of them do not typically look at the college degree as a signal. It's just not that important to them. So the question is what are employers really looking for today in terms of the signals that really convey what a person knows or whether they're going to be a good for their company and have the proper skills."

Pluralsight's courses are fast becoming a credential among the big companies that use them to train up employees, he says. It's a "much more direct path" to a job,

"It's my understanding that there are around 7,000 open tech-related jobs in Ireland," he says. "But the unemployment rate is still around 10pc. That dynamic plays out worldwide. In Utah, we have a very similar situation, thousands of IT jobs that can't be filled today despite the unemployment rate there."

College degrees aren't the answer, he says. At least not in tech.

"The signal that a college degree provides around someone's technology skills has always been very weak, historically. I think as the trends unfold and more companies ship technology as the basis of their future strategies, it becomes more and more difficult to rely on a college degree as the main data point around hiring for the company."

Pluralsight isn't alone. Rivals such as Lynda.com, recently bought by Linkedin for $1.5bn, have flourished. In Ireland, Galway-based Alison.com (see panel) recently announced its six millionth registered user with 750,000 graduates. Although this is a slightly different market to Pluralsight's, its growth shows the strength of the online training market's potential.

The idea of self-learning is hardly a new one.

"Have you heard of Salman Khan?" says Skonnard.

I interviewed him a while ago, I tell him.

"His whole vision of the flipped classroom is very much the direction in which a lot of corporations, in terms of professional skills, will move.

"Some of Khan's vision carries all the way through primary school up to university. And we're a part of that, we're one of the content learning partners that can be used in that vision.

"We're not trying to position Pluralsight as a replacement for college. But we're here to provide a non-traditional learning mechanism to foster filling that tech gap."

The Irish startup that's getting better by degrees

Pluralsight isn't alone when it comes to online training.

Galway-based Alison.com announced last week that it had registered its six millionth learner and passed 750,000 course graduations.

The company, founded by Mike Feerick, now has 5,000 people per day registering on the site to retrain, making it "the largest education provider in the state", according to Feerick.

"The company has experienced phenomenal growth in the past 18 months," said Feerick. "We have only begun to scratch the surface of the potential offered by free online learning."

Alison.com offers 750 courses in areas such as IT skills, business and health. It also recently launched a course aimed at helping former prison inmates prepare for life in the workplace.

WThe site is largely free to use and is proving to be popular in Asia as well as Ireland and the US.

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