Coursera shares soared on the online education company’s second quarter results and an analyst upgrade. There have been concerns that AI will upset the company’s business, but Coursera CEO Jeff Maggioncalda says that new technology is going to be a threaten some people’s jobs and businesses, but it also creates opportunities for people and businesses too. Maggioncalda says the demand for courses related to AI is “big” and that “there is a lot of interest,” particularly from people who want to switch careers.
Video Transcript
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– As we head into August, we often start thinking about the looming start to a new school year. According to this year’s Coursera global skills report, of the United States ranked 78th out of 100. Now, this report analyzes how proficient a workforce is in critical job skills. This includes the in-demand digital skills. The education tech company also released its second quarterly earnings yesterday, seeing mixed results. A beat on the top line but a miss on its earnings per share.
So let’s bring in Coursera CEO Jeff Maggioncalda to discuss more about developments in education and the company itself. Thank you for joining us this morning here. So still seeing the Coursera stock rallying this morning. Got the Cantor Fitzgerald upgrade to overweight from neutral on that Q2 report. Really honing in on that ability to scale. So where does Coursera go from here? Because at one point, people thought AI was going to be the killer of all the sort of online learning that was going to end up taking it over.
JEFF MAGGIONCALDA: Well, I think it’s a number of things. I mean, globally, we have to realize that when the world is changing quickly, people have to learn new skills to adapt. And businesses need to adapt as well. And so I think part of what we’re seeing is that technology is accelerating the rate of change. And it’s creating threats to a lot of people’s jobs and a lot of businesses that can’t keep up.
But it’s also creating opportunities for businesses to embrace this new technology, to create better services, and increase productivity. And it’s creating opportunities for individuals to get better job opportunities, if they can learn the skills and get the credentials to get those jobs.
JULIE HYMAN: Hey, Jeff. It’s Julie here. So it’s my understanding that you have sort of three different customer bases in your business. You’ve got consumer, which is just anybody who can sign on and take a course, you’ve got degree courses, and you’ve got enterprise. And the enterprise part sounds like it’s still a little bit challenged. Talk me through the demand for these various segments.
JEFF MAGGIONCALDA: Yeah. Well, so consumers sort of where Coursera started 12 years ago, just going right out to everybody in the world and saying, if you want to get access to high quality learning from top universities and businesses, come to coursera.org. We then launched an institutional division which, basically, sells to enterprises. And these enterprises are actually businesses and campuses. Universities can actually license these courses for their students. And then governments are using this to do a workforce upskilling.
What we’re seeing is in the business segment, especially in Europe and North America, the macro environment is pretty tough, budgets are tight in learning and development. And so we’re seeing some headwinds there. On the government side and the campus side, we see universities buying these types of courses on Coursera for their students in order to keep the curriculum relevant and help their students get jobs when they graduate. And governments are also moving along pretty nicely in buying this for job training programs.
– What type of uptake have you seen in demand for courses surrounding artificial intelligence?
JEFF MAGGIONCALDA: It’s big. You know, I would say that there’s a lot of interest. If you look at search terms on Coursera, there’s definitely a lot of interest in AI, especially ChatGPT. I mean, everybody can kind of tell. And it’s true from our experience, and we’re launching new products and features using this technology. We call it a general purpose technology.
It’s like electricity, it’s like the steam engine. It’s a fundamental new technology that’s going to change society. And so people are interested in that. But what we see really driving consumer segment revenue growth is people actually subscribing to professional certificates to help them get the new skills to switch their career.
A lot of people are saying, I don’t like my job. I want to make more money, I want to have more flexibility. There are better jobs that pay well. And I can get a credential from Google or IBM or now Microsoft. We just announced Microsoft has two professional certificates that really help career switchers. And so that’s really what’s driving the consumer segment.
– And Jeff, I want to dig into the skills report. Because you have the US ranking there at 78th out of 100. What should we take from that in terms of, perhaps, the countries that are, perhaps, gaining in terms of the most in-demand skills and what that means for a future workforce.
JEFF MAGGIONCALDA: Well, one of the things about the skills report is it really ranks countries based on the performance of learners in that country on Coursera. So it does not necessarily reflect the entire country. This reflects people in the US taking courses and taking the quizzes and tests compared to other countries.
And within the US, it’s not all the same. I mean, we see kind of on the coasts, the learners who are on Coursera, typically, are very highly ranked. If they were countries, they would rank very high. But in other parts of the country, we’re coming along. And I think a lot of what this really represents is people in the US in a tight labor market saying, there’s better job opportunities out there. Even though I’m a beginner in IT or a beginner in project management or UX design or Google just launched a cybersecurity certificate if you want to get a new career in cybersecurity, a lot of these learners are just starting out.
And I think that does affect the rankings a bit. So to some degree, it’s not so great, but on the other hand, you know, I think we’re creating a lot of opportunities for people to start a new career. And you know, you start from ground 0.
– And so how far off in your estimation are we from seeing artificial intelligence as an input to productivity in things such as even the employment situation report on a more broad level?
JEFF MAGGIONCALDA: Now, I mean, at certain companies right now, at Coursera, our engineers are using Copilot– VS Code GitHub Copilot X and they’re programming much more quickly. Our marketers using ChatGPT, I am personally, as a CEO, retooling my entire job. I use a version of ChatGPT that’s on Microsoft Azure that’s kind of a little bit more capable as GPT-4 with 32,000 tokens. And that means I can create really long context to help me with decision making.
So it’ll happen over time. But it’s going to happen pretty quickly, because basically, all the software companies like Coursera are building AI into their systems. And then everyone who uses those systems, whether that’s a sales person using Salesforce or a learner using Coursera, you’re going to get the benefits. Everyone’s going to get the benefits of this type of technology relatively quickly because it’s getting– essentially, software is getting electrified with AI.
JULIE HYMAN: Jeff, it’s Julie again, what about the downside of AI in terms of cheating? Which is already looking like it’s becoming an issue, especially, in say, high school and college when people are getting help or more than help to do things like write papers.
JEFF MAGGIONCALDA: It’s a real issue. Students are definitely using ChatGPT to cheat. There’s just no doubt about it. And you can see why. I mean, honestly, the type of language output that ChatGPT-4 can produce is better than almost any high school student. I mean, honestly. So certain companies say, oh, we can detect whether it was written by ChatGPT. I think that’s not going to be a winning strategy, because people can edit and modify the language output a little bit to kind of defeat those types of strategies.
I think that schools are going to have to do a few things. I think number 1, change the way that we assess people’s competence. And by not only saying, show me the essay you wrote, but also like we do with math all the time, show your work. Show me how you wrote the essay. Show me your drafts. Show me your iterations. Show me how you’ve used ChatGPT to write that essay.
And I think also what we see a number of schools doing is actually having more proctored monitoring, not of every assessment, but of the final exams. So I do think that this is not going to be insurmountable. But, you know, schools will have to make some adjustments. And what we’re seeing is that schools are making adjustments to do a little bit more in-class final exams where they can control the environment where the final exam is being taken.
JULIE HYMAN: Yeah. That makes sense. Good to see you, Jeff. Thank you so much. Coursera CEO Jeff Maggioncalda. Appreciate your time this morning.
JEFF MAGGIONCALDA: Thank you very much.
