Lessons from the first millionaire online teacher

Lessons from the first millionaire online teacher

ON JULY 8, 2013

Software programming? Yeah it’s an okay way to  make a living. But the real money is in teaching.

Or at least that’s the recent experience of Scott Allen, a programmer and teacher the tech-y online education platform Pluralsight.com. Allen has earned more than $1.8 million through fees and royalties from Pluralsight over the last five years. He says each monthly royalty check has increased in size over that period — the smallest increase being 10 percent month-over-month. That far outdid his expectations when he started making educational videos for Pluralsight. “It’s amazing,” he says.

I got pitched this story this morning with the subject line “Online ed’s first millionaire teacher.” I was drawn to it, because I could imagine the same story being pitched about blogging or online journalism several years ago. There are a lot of parallels between what those two industries are going through, and how each are grappling with the Web’s potential for disruption.Just as the experiences of Marco Arment with the Magazine, Michael Arrington with TechCrunch, or Andrew Sullivan with the Dish, can’t be readily replicated to every journalist, so to is the experience of Scott Allen not representative of every educator. Tellingly, he doesn’t really consider himself “an educator” — the same way many of the early bloggers who made the most money didn’t consider themselves “real journalists.” The same way a journeyman reporter can’t just up and quit the New York Times, start blogging and watch the dollars roll in, a professor can’t exactly decide to start putting courses online and suddenly count the Benjamins.

Both higher education and journalism have recently had their economic foundations rocked. The purists in both industries are wary of the democratizing potential of the Internet to replace august institutions of old. Meanwhile, others hope the Web may be an answer for solving some of the innate problems: Whether it’s community colleges working with Udacity to teach larger classes or its the New York Times leveraging the innate potential for programmers to engage in story telling ala “Snow Fall.” In both cases there are upstarts who are jumping in with both feet. And in both cases, there are apparently millions to be made by those embracing the medium first.

Is Allen’s story a salvation for education? Hardly. But it may represent salvation for some in the field and a new way to deliver and monetize vocational education by removing buildings and costs and middlemen.

Allen drew a distinction between his type of education, which is filming a course on his own, in his home that’s distributed over Pluralsight — much like a blogger would do — and what a four year institution would teach in a programming class. Allen’s teaching is more tactical, based on learning what can serve you in the real world on a job, versus a four year institution which is laying out the basics that can underlie learning many programming languages. Both, he says, have their place in the world. Similarly, a Ben Horowitz, Fred Wilson, or Paul Graham can write with a different perspective about funding and startup trends than a journalist who has never built a company ever will. A journalist will have more detachment and less bias if they have not gone through it. Both are valuable perspectives.

And computer programming in particular lends itself to this kind of model, Allen says. It’s a hands-on, visual craft being taught in many cases, and one that frequently has a direct ROI for the learner, as opposed to learning about, say, Shakespeare online. I asked Allen what other disciplines he thought would lend themselves to his approach, and he said he’d love someone to do a video teaching him to replace a busted water heater. “Personally I’ve found writing books on software development to be frustrating because it’s visual,” he says. “Things that are hands-on are great in video format.”

It’s worth noting that even on Pluralsight, Allen is a bit of  an outlier. The way the model works all the users pay monthly or annual fees and consume as much education as they want. The pool of royalties are then distributed to authors based on that consumption. So I would imagine few Pluralsight contributors do as well as Allen. According to the company the average royalty across all teachers is $40,000, the top ten average out to $250,000, and the top five average out to $400,000. Allen is an over performer, but even $40,000 is pretty good money for sharing your knowledge over the Web.

What’s starting to emerge if you get past the hysteria in online education is a valuable tool to augment traditional channels. Similarly, I’ve always felt that the either/or debate over whether old media or new media is better is a flawed one. A tech blog isn’t going to have bureaus all over the world like the New York Times to report on issues of international importance. But by the same token a niche publication will probably be deeper sourced into what it covers than a large general interest publication would. Even within blogs, I’ve never gotten up in arms about sites like Buzzfeed or BusinessInsider that have a more entertainment or tabloid feel. When I’m looking for reading material before a flight, I’ll frequently buy a fashion magazine and a copy of the Economist. Not everything has to serve the same purpose.

Still, all of those caveats aside, Allen’s story is an interesting one because of a new hope that it represents, even if it’s not a universal hope for educators. It’s a new hope that there can be real money in vocational education. It’s a new hope of a “citizen teacher” movement the same way “citizen journalists” have frequently augmented the efforts of trained professional journalists. It’s a new playbook for experts to make money beyond the declining world of book publishing.

Allen, like most journalists who have become “overnight successes” in a new media world, stands out because he has worked very hard at being good at what he does. He spent years teaching as an adjunct professor, writing articles and books about programming– in addition to making a living doing it himself. And since he’s been at Pluralsight, he’s filmed some 20 courses, totaling more than 100 hours in length. In both cases, a new medium isn’t a substitute for hard work, institutional knowledge, and talent. It’s not a shortcut. It’s merely a new way to sell and distribute it.

At the end of the day, one of the things that a contributor to a blog and a teacher like Allen have in common is that they take advantage of new ways to repurpose and redistribute the knowledge they have in ways that can help other people. A lot of people are happy to do that for the satisfaction of it. Allen notes that what he loves about teaching is the emails he gets from students who got a job or a raise because of what they learned from him. The money has been a stunning surprise and certainly an added bonus, but not the primary motivator.

New millions aside, Allen plans on continuing to do both programming for clients and teaching those who’d like to do the same because he loves both. The moral of his story? There will always be a market for people who love to teach and do it well, no matter how screwed the economics of education get — the same way there will always be a market for  those who practice great journalism.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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