Startup layoffs, the art of reinvention and a MasterClass in change

Just as one company’s success shouldn’t cast a halo on its vertical’s brethren, one company’s layoffs don’t quite mean that its competitors are equally screwed. Instead, I think that changes within a particular startup can be used as benchmark questions for their larger market; in other words, we can use the micro to better understand the macro.

With that in mind, I want to talk about MasterClass’ decision to lay off 20% of its staff, around 120 people, across all teams. The workforce reduction, per CEO David Rogier on Twitter, was made “to adapt to the worsening macro environment and get to self-sustainability faster.” Put differently, the company — which sells subscriptions to celebrity-taught classes — is in search of operating discipline and needs to cut staff in order to get there.

The layoffs place a spotlight on the premise behind MasterClass. When I first covered the company in March 2020, I got stuck on its pitch of aspirational learning.

[MasterClass] also touches on the public’s innate curiosity about how famous people think and work. MasterClass tugs on that idea a bit by also offering classes that fundamentally do not make sense to be “digitized.” Think high-contact sports, like a tennis lesson from Serena Williams or a basketball lesson from Steph Curry. Or just general pontifications from RuPaul on self expression and Neil deGrasse Tyson on scientific thinking and communication.

Despite its flashy lineup of stars, MasterClass doesn’t sell access but instead sells a window into someone’s work diary. Celebrities are not interacting with students on a day-to-day basis, and sometimes, not at all.

Around a year later, I returned to this idea while trying to extract what MasterClass’ prominence meant for edtech. Fiveable founder Amanda DoAmaral said at the time that MasterClass raises the bar for content quality across all of edtech, while Toucan founder Taylor Nieman pointed out that MasterClass faces the same issues “as so many other consumer products that try to steal time out of people’s very busy days.”

So what is MasterClass? A high bar for edtech quality? Or a more educational Netflix?