I came across this Yahoo! Finance article via a LinkedIn post from Don Jones, and much like him I had a visceral reaction while reading it. The pit of my stomach dropped, my muscles tensed, and I felt vaguely nauseous. The tl;dr? Pluralsight was saddled with unsustainable debt when they were acquired by Vista Equity Partners and now the piper has come a calling. All usual, private equity firms continue to destroy everything they touch and should be heavily regulated if not made outright illegal.
(There’s some adult language in this post. If that’s not your thing, then I guess don’t read it?)
You’re probably aware of Pluralsight even if you haven’t used the platform. They are an EdTech company founded back in 2004 to focus on in-person training. Over time they pivoted to online video instruction and quickly grew due to the quality of their materials, excellent instructors, and first-mover advantage.
Over the next 15 years, Pluralsight continued to grow, building a solid reputation for excellence and attracting talented authors. Investors took notice and started pouring money into the company with funding rounds in 2012, 2014, and 2016 totaling about $200 million.
The natural next step in the process was to make an initial public offering to pay back the VC investors and drum up additional capital to keep the company growing. So in 2018, Pluralsight had their IPO on the NASDAQ, starting at $15 a share and closing the first day at $20, a solid 33% pop.
Unfortunately, the performance of the company didn’t follow the market’s expectations and the stock price suffered. Once you’ve take your company public, you are now at the whims of institutional and activist investors. They are generally not thinking about long-term viability. They need to see growth at all costs, and Pluralsight was no longer showing the same dramatic growth seen in pre-IPO.
In July of 2019, the stock price dropped from a respectable $31 a share, to a low of $15. That perked up the ears of the ravenous private equity firms and soon the wheels were in motion. The stock continued to crater to about $8 in mid-March of 2020, exacerbated by the pandemic and attendant economic turmoil. The share price did recover, as we saw the COVID related bounce of all tech stocks, but that was a temporary effect and in December of 2020, Pluralsight announced that it would be going private again through Vista Equity Partners to the tune of $3.5 Billion.
The thing about private equity is that they really don’t like using their own money to buy companies. What they do is borrow a bunch of money using the equity of the company they are purchasing as collateral. Then they take that loan obligation and associate it with the company they just bought. It’s called a leveraged buyout, and it fucking sucks ass.
The acquiring company- Vista Equity Partners- is making a bet that the company they acquire- Pluralsight- can be restructured in such a way that it can pay off the debt it’s been saddled with, but it’s a pretty low-risk bet for Vista. Best case, Pluralsight takes off, services its debt, and makes the Vista partners a fuck-ton of money. Worst case, Pluralsight fails to service the debt, Vista restructures the company with a massive write down, the debtors take a haircut and Vista partners make a fuck-ton of money.
See, the thing is that the private equity firm pays itself all kinds of bonuses and compensation for the acquisition itself and each subsequent financial machination. Need to restructure the debt? That’s gonna require investment bankers who charge a shitload of money to do the work. Made your quarterly revenue numbers? That’s a bonus for the private equity partners! Decided to carve up the company and sell it off to a bunch of other firms? Lawyers, bankers, and investors all get their due. And the acquired company? They get fucked.
With that little context corner out of the way, what’s happening with Pluralsight? Well, things haven’t been going great. There’s been multiple rounds of layoffs since they went private again. Competition in the EdTech space has continued to mount, and with Pluralsight now living with the shackles of a massive debt load, they haven’t been able to focus on executing a coherent long-term growth strategy. As a direct result, they haven’t kept pace with other EdTech companies in terms of growth, and the revenue coming into Pluralsight is insufficient to service the debt.
In Q1 2023, Vista Equity first started to ask lenders to loosen up their loan covenant, otherwise Pluralsight would be able to honor their commitments. Since then, Vista Equity has been writing down the value of Pluralsight on their books from an initial $3.5B in 2021 to now effectively $0 in May of 2024.
In April of 2024, CEO Aaron Skonnard stepped down and Chris Walters took over. Aaron was one of the founders of Pluralsight, and his departure signals the last of the old guard vestiges leaving the building.
Vista Equity also took the odd step of moving Pluralsight’s intellectual property (IP) to a new subsidiary and then borrowing against it to pay loan obligations. This is a naked admission that Pluralsight retains massive value in terms of intellectual property, and it is the financial manipulations of Vista that have presaged the current collapse of Pluralsight as a company.
Which brings us to the Yahoo! Finance article detailing how Vista is in talks to cede control of Pluralsight to lenders. At best, the lenders will write down some of the debt and give the new CEO time to try and get Pluralsight’s house back in order. At worst, they will layoff 95% of the company’s employees, and shop around the IP bundle to other private equity firms to try and recoup some portion of their investment.
To quote a great philosopher, “That’s fucking bullshit, man.”
If I seem a little emotional, it’s because I am. That’s because I’ve been working with Pluralsight to produce courses since 2016. At this point, I’ve worked for Pluralsight longer than any other employer since I got my first job at 14. Technically I don’t work for them, I work with them, since I am a contract author and not an FTE. Technicalities aside, I’ve been working with the people at Pluralsight for eight years and developed deep and abiding relationships with many of them.
At the same time, Pluralsight has also been my main source of income since the inception of Ned in the Cloud LLC in 2019. I started with a single course in 2017 and over time have built up a stable of high-performing courses that earn me residuals every quarter. The number varies by year, but about 70% of my revenue comes from Pluralsight, and that’s making me very nervous at the moment.
I’ve always recognized that having such a large portion of my revenue come from a single source was a major risk. I also thought that the chance of Pluralsight going out of business was fairly low, and that I would have adequate time to diversify before the axe fell.
I’m not sure if I’m ready to say that the axe is falling, but the headsman is definitely sharpening the blade and doing some stretches. I would be a fool to bank on Pluralsight’s continued existence for the bulk of my income.
Frankly? I’m fucking pissed off. And I want to be clear. I am not angry at the rank and file folks at Pluralsight. Every single person I know who works there or has worked there cares deeply about the learner experience. They want to assist in the creation of high-quality learning materials that help folks progress in their career. The people at Pluralsight are top-notch. If you have a chance to hire one after the next round of layoffs, I highly recommend you do so.
No, I’m pissed off at the Pluralsight leadership for steering the company into such a quagmire. I’m angry at the private equity firms who couldn’t give one flying fuck about the companies they strip mine to line their pockets. I’m livid that the financial regulators are so completely lax that Pluralsight’s fate is not even an uncommon occurrence. The employees, contractors, and customers of Pluralsight were all fucked over by an industry obsessed with growth at all costs and short-term gains. And just thinking about it makes me fucking furious.
It didn’t have to be this way. Pluralsight was started by a group of idealistic people trying to educate others about cool tech. It was self-funded for the first eight years of its existence, and I suspect they could have continued in that vein, taking out traditional loans for growth instead of turning to the VC market. Once you start down that path, I’m not saying your fate is sealed, but your control over the company and its future rapidly diminishes with each funding round you accept.
Once Pluralsight IPO’d, they essentially let go of the reins. The die was cast and the rest was simply going through the motions. I’m not sure if I even believe that entirely, but it really feels that way.
The irony? If you can divide the weird corporate finance bullshit from what Pluralsight actually does as a company, you’d find a legitimate business that provides a valuable service to a large body of customers.
I can say, without a doubt, that the content you find on Pluralsight will generally be of higher quality than any other platform. The standards, consistency, and care put into each course shows, and I’ve heard that echoed by literally hundreds of people.
Like I said, I’ve been making courses on Pluralsight for over eight years now. My courses alone have been viewed by 391k people for a combined 580k hours! If there’s one consistent piece of feedback I receive it’s the level of quality and rigor present in the course materials. And I know I’m not the only one!
All of that high quality content? It’s still there! Pluralsight’s strength has long been the panoply of dedicated contract authors from a range of backgrounds and technologies. The authors are held to a high standard and well compensated for their efforts. As long as Pluralsight maintains a healthy relationship with their authors, the platform will continue to host some of the best training material in the world.
As an author, that relationship isn’t feeling to great right now. My monthly viewership has been dipping for months now. Most of the people I felt close to have left the company, and no one has stepped in to fill that void. About 18 months ago, they cut author compensation by 25% across the board, and I’d be lying if I said I wasn’t concerned that more cuts are coming.
Without the authors, Pluralsight is doomed.
Jumping Jesus Christ on a pogo stick, I have no goddamn idea what Pluralsight should do. I’m not a financial guru or a corporate leader. I’ve never planned the long-term strategy for a multi-million dollar company. If it could be fixed with PowerShell and Terraform, I’d be happy to help. But this? Fixing a company that has been financially ruined by ambivalent owners who turn a profit no matter what happens? I got nothing.
That being said, here’s what I like to see happen.
I would love for an investor to come along and see that Pluralsight’s best days are in front of it, and scoop it up for pennies on the dollar. Then spend time formulating a plan to fix the relationship with existing authors, while actively recruiting new ones to the platform. I’d like to see Pluralsight embrace new learning modalities and even have mixed media courses to meet learners where they are and in the format that matches their current need.
Doing so will require significant upfront capital and a willingness to invest in people, rather than laying them off to try and save up enough money to make the next loan payment. I think on a ten year time horizon, buying Pluralsight could be an excellent investment, but the next few years are going to be rough.
Unfortunately, all the money sloshing around tech at the moment is focused on GenAI. I have it on good authority that Pluralsight’s best performing courses are all GenAI related for the last quarter. No surprise there. I don’t know if there’s another way to capitalize on the GenAI madness, but then again I’m not sure the leadership at Pluralsight has the leeway to do anything besides tread water and ward off the circling sharks with a broken oar.
It’s been an amazing eight years with Pluralsight. I’m not going to stop making courses for them entirely, and I will keep my current crop of courses up-to-date. But I also have to recognize the distinct possibility that my efforts will see diminishing- if not disappearing- returns. For the next few years, I need to focus on differentiating my revenue sources and minimizing the impact of the possible total collapse of Pluralsight.
I sincerely hope that Pluralsight can find a way through this financial morass foisted upon it by callous assholes. I hope that those folks impacted by recent layoffs and probable future ones will end up at awesome companies in well paying positions. Y’all deserve it.
As for Vista Equity Partners? Go fuck yourselves.
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