On Deck, the new online education aggregator, announced raising a $20 Million Series A in March this year, not too long after the San Francisco startup made its way into Europe in 2020. Anyone who’s been in their programs absolutely loved the experience. But let’s roll back a little to better understand why so many people swear by it on their website’s “wall of love”.
Before the pandemic hit, On Deck had identified a crucial need in working people’s lives: “the need for lifelong learning with a blend of community that is more interactive than online education, much less expensive than an MBA, and also fit in the flow of their daily lives.” I had written a quick synthesis on the dispersion of creativity, which I believe On Deck also identified and jumped right on: “The breakdown of continuing higher education into smaller units that act like Russian dolls, each feeding off of each other to create a better experience and lasting value for people.”
They designed a short university programme that also has the appeal of an accelerator and community. It started with On Deck Founders for people in the early stages of building their startup. It has since expanded into programs for VC, angel investing, community management, podcasting, writing, no-code, fintech, health, and climate tech. They even have one for Chiefs of Staff, a role I once worked in and could write volumes about.
On Deck describes its value proposition across these lines: Deep Friendships, Unparalleled Knowledge, Community Diversity, Scaled With Software, Engineered Serendipity, and Spirit of Service. The promise of community can’t be underplayed. Checking out some of the programs for myself, they really do attract world class fellows and instructors, who apparently volunteer with their time (probably the reason why their costs can stay low).
The Business Model in Brief
Growing more than 10x, community and education is scaled profitably at a fraction of the time and cost of other online continuing education programs. They have built the platform in a way that “it can launch new products and integrate acquired ones such that each is a desirable standalone offering that connects to and strengthens at least one other part of their ecosystem. “
That’s possible due to high upfront costs, low marginal costs, low CAC attributable to a referral system, revenue expansion from rolling out programs that feed into one another, high margins even though it’s 1-2% as expensive as an MBA, and a strong network effect that attracts instructors.
“To recruit talented leaders for On Deck’s fellowships, Torenberg (the founder) empowers them to serve as the faces of their respective fellowships and provides ample opportunities to build their public personas.” – Nick DeWilde
Graduating fellows end up working for On Deck itself, or other brands that in turn collaborate with On Deck. What makes the platform robust or responsive to competition is that it doesn’t have one static standalone product that grows in size and makes the organisation susceptible to evaporative cooling (the phenomenon that high value contributors leave a community because they cannot gain something from it, which leads to the decrease of the quality of the community). Instead it works more like an adaptive organism by adding more programs instead of growing the size of each program. To borrow from Nassim Nicholas Taleb’s concept of fragility, a collection of smaller distributed organisms are more robust than large ones (small is beautiful not just in a romantic sense, but there are theoretical scientific underpinnings). These bottom up systems (people, programs, or products) that On Deck offer make a lot of small errors, a prerequisite for probing complex systems. Being nimble, intimate, and fast at iterating these standalone products is a competitive advantage in itself and has thus far allowed On Deck to adapt to many market changes.