How Does Degreed Make Money? Business Model of Degreed


How Does Degreed Make Money

Degreed is a popular workforce upskilling platform that provides career-focused courses and mentorship from thought leaders. It helps people advance their careers by learning new skills based on their interests. There are many platforms for employees to learn new skills, but Degreed is unique in its approach. Degreed’s business model is unique and was born from the founder’s passion for helping people in the world to be better at their jobs.

But how does Degreed make money? What’s their business model? This article will help you gain clarity on Degreed’s business model and what kind of revenue streams do they have.

Degreed operates on a SaaS business model. It makes its money by licensing out its upskilling and reskilling platform to companies and charging on a per-employee basis.

The upskilling platform does not actually create the instructionals but acts both as an LXP and as an LMS.

About Degreed

In 2012, Degreed was founded as an upskilling and reskilling platform for corporate training.

What makes Degreed different from other upskilling platforms is that the employees get to keep their data for life. Therefore, if an employee leaves his or her organization for another company, what rankings they have in whatever skills they acquire, can be exported from the platform to the new company.

Furthermore, the skill rankings are standardized from company to company.

 

Business Model of Degreed

Degreed operates on a SaaS (software-as-a-service) business model. They charge each company a fee based on the number of employees.

The SaaS functions as an upskilling and reskilling platform that functions as both an LXP (Learning Experience Platform) and as an LMS (Learning Management System).

Of course, Degreed is not the only SaaS/LXP/LMS out there. Competitors include:

  • EdCast
  • Udemy
  • Voxy
  • Coursera
  • Codewars

Degreed’s differentiated value proposition is the fact that employees get the ability to keep their data forever. This provides a real value to employees and increases voluntary employee participation in any upskilling or reskilling that the employer conducts.

Degreed has actually “helped establish the LXP as a category”, disrupting the LMS marketplace.

 

How Does Degreed Make Money

Degreed makes money through only one revenue stream. It is a SaaS that charges companies on a per-employee basis.

It is really that simple!

What makes these companies purchase this SaaS, however, are its various features:

Skill Analytics

According to Degreed, the best and most adaptable employees are 64% more likely to seek feedback on the skills they need to advance their careers.

That is why the Skills Analytics feature allows companies to have a skills measurement system that allows them to have a real-time view of the progress of their employees.

One aspect of Skill Analytics, Degreed Skill Certification, allows users to certify a particular skill, such as UX (User Experience) Design, on a scale of 1-8, level 1 being beginner level and level 8 being a leading expert level.

Degreed claims to have a 95% accuracy rate and have more precision than courses, online badges, and records of hours spent studying. (The online badges comment, from their instructional video, might be a jab at LinkedIn’s skills assessment badges.)

Their assessment model includes the following steps:

  • Choose 3 Pieces of Evidence
  • List Endorsers
  • Review Application

Another aspect of the Skills Analytics feature is the portable skills profile.

This enables employees to have a digital record of their skills rankings within the Degreed system throughout their career, not only for their time with their employer but throughout their lifetime. That means that even if the employee should go from job to job, their portable skills profile goes with them.

Therefore, companies that wish to evaluate their skills can use this impartial, digitized record to do so and employees will not be punished for switching jobs or even careers.

Even if an employee switches to an entirely different field, if there is any correlation of old skills from the previous field to the new skills within the current field within which the employee wants to work, the portable skills profile will be a quantifiable asset for this employee and for any employer considering this employee.

 

Learning Experience Platform (LXP)

Degreed states that the best and most adaptable employees are 142% more likely to seek personalized guidance and recommendations from their company’s learning systems.

Due to Degreed’s partnership with LearnUpon, Degreed is both an LXP and an LMS (Learning Management System).

What is an LPX and why should we care?

An LPX (Learning Experience Platform) is an integration system for an entire ecosystem of instructionals into one app:

  • Courses
  • Videos
  • Books
  • Articles
  • Projects
  • Mentors
  • Managers

This platform approach matters because people do not learn at a high rate from a traditional way, hearing someone else talk. Rather, as noted educational theorist John Dewey put it, they learn by doing. They must involve their eyes, ears, and hands.

In fact, Harvard Business Publishing Corporate Learning did a study in partnership with Degreed and has found that traditional learning methods do not result in a high ROI.

Therefore, more than one medium is required. Of course, high-level executives could track all of these mediums for all of these employees on their own, but there might be better uses for the time of a company’s leadership.

By automating the whole process into one platform, every learning tool that the company uses to teach a particular skill set to its employees can be integrated and tracked within one app.

Better yet, the progress of each employee in each skill can be recorded and updated within the Skill Analytics feature.

Furthermore, within the LPX there is an “insights” aspect that will not only allow a company to not only track where an employee is advancing in various skills but will also enable the company to guide the employee in the right direction.

Therefore, if an employee is weak in a particular area, the company can recommend reskilling. If the company, through the insights aspect, foresees a skill that they will need in the future that they think the employee would be perfect for, they can recommend upskilling in that area.

Another aspect of the LPX is that each user account has a personalized feed. This acts as a hub for the other employees, including management, regarding skills acquisition.

Rather than some old, dated model where the boss states, “Learn this, or else…”, the employees and management acquire new skills, together.

If the CEO reads a new article, he or she can post the new article in the feed and the other employees can follow along and share the CEO’s learning experience, not as subordinates, but as part of the team.

 

Career Mobility

Degreed asserts that the best and most adaptable employees are 87% more likely to have access to projects and opportunities to increase their skills at work. The Career Mobility feature allows Degreed to function as a “smart” LMS (Learning Management System).

Because business is dynamic and competitive, the skills an organization needs today, may not be the same skills an organization needs tomorrow.

To adapt to such an environment, such an organization needs to find out what skills it needs before it needs them, and quickly train those employees to the appropriate level.

Moreover, that task would be easier if it could quickly identify which employees were best suited to train which skills by which training method.

Of course, supervisors could manually keep track of their subordinates and make these recommendations to higher management themselves, but would it not be easier if a software feature could do it for them?

Better yet, what if the software had an algorithm that could seek out these employees and recommend the appropriate training through the LPX?

Think of the time supervisors could save if they could let just let the algorithms focus on a host of upskilling and reskilling tasks:

  • Identifying the right employees for the right skills training
  • Seeking out such employees for such skills training
  • Evaluating progress in training

In addition to training, the Career Mobility feature allows the organization to designate tasks, projects, and even jobs.

In short, Career Mobility can function as an AI supervisor, freeing the flesh-and-blood human supervisor for other supervisory tasks that require higher cognitive thought.

 

Extended Enterprise

Degreed’s Extended Enterprise feature allows an organization to reach out beyond its employees.

By extending training and use of skills outside the organization, the company in question use the Extended Enterprise feature to build synergistic relationships with a variety of actors:

  • Contractors
  • Partners
  • Suppliers
  • Customers

Furthermore, the integrated, real-time platform quality of Degreed allows administrators use “centralized controls” to manage the complexity of working with teams outside the organization:

  • Multiple organizations
  • Multiple user bases
  • Multiple technology configurations
  • Multiple content catalogs

 

Degreed Acquisitions, Funding, and Valuation

Funding is not a problem for Degreed in that over the course of four years, Degreed’s funding has done more than “a 20x”.

DateFunding
January 2014$1.8M
January 2016$21M
August 2016$3.5M
March 2018$42M

Valuation has doubled within a one-year period.

YearValuation
2020$0.71B
2021$1.4 B

Degreed has also made at least three acquisitions:

  • European education technology startup, Gibbon in March 2016
  • New York-based online learning provider, Pathgather in June 2018
  • London-based total talent platform, Adepto in December 2019

 

Is Degreed Profitable?

While Degreed has been growing rapidly, it is not yet profitable. The company is spending aggressively on marketing, customer service, and sales as it works to build its business and increase its user base.

Back in 2019, then CEO of Degreed Chris McCarthy claimed that the company had doubled its revenue year after year.

Regardless, he also claimed that Degreed was not profitable at that time. He explained that this was because the company was still in its growth phase.

Maybe the company has left its growth phase and maybe it has not. No public announcements regarding a switch from the growth phase to the profitability phase have been made to date.

 

Conclusion: How Does Degreed Make Money?

So, there you have it — this article gave you a clear idea of how Degreed serves its users and generates revenues.

Degreed provides a platform for users to connect and learn with experts in various fields, e.g., marketing, finance, technology, and so on, and capitalizes on the exploding online education market.

Degreed has really taken off now and is continuing to grow every month. It is an excellent online platform that provides professional certificates for learners at all levels and stages of their careers. 

Thanks for sticking with us and reading this far. By now you should have a good understanding of Degreed’s business model and how the company earns its revenue. 

If you have any questions or feedback, feel free to shoot us an email. We’ll be happy to hear from you.

Have a great day!

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