How Did MasterClass Start?
The History of MasterClass
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If there’s one thing that we all have in common, it’s that we’ve all probably seen an ad from MasterClass.
Out of nowhere, I just kept seeing these unskippable ads on Facebook, Instagram, and YouTube where there’s this celebrity under soft light in what looks like a high-budget production set with euphoric classical music playing in the background.
I saw the MasterClass ad that featured Gordon Ramsay and it felt like a trailer for a blockbuster Hollywood film. It’s quite captivating, and I guess the rest of the world agrees because that’s the most-watched MasterClass ad on YouTube with over 95 million views.
But it got me thinking how all of this even started? What’s the story behind MasterClass?
How they came up with the idea of MasterClass
MasterClass was founded by David Rogier and Aaron Rasmussen in 2015.
Rogier started his entrepreneurial journey early on. When he was 13, he built and sold a search engine for an undisclosed amount. Rogier went on to hold various executive roles while finishing his Stanford MBA. And this when he ran into Aaron Rasmussen.
They had a couple of mutual friends, and they suggested that the two meet up. Right off the bat, they were diving into various business ideas, and the pair hit it off pretty quickly.
The idea of MasterClass came to Rogier through a story told by his grandmother which he vividly remembers. When his grandmother was still living in Krakow, Poland when she was 16.
She and her mother went away on vacation, and her dad stayed behind for work. But luckily for them, but tragically for her father, while they were away, the Nazis invaded Poland. Her father was killed. She and her mother fled to New York City, where she was able to get a job on the factory floor.
Aiming for a better life, she wanted to go to medical school. Rogier shares that she applied to around 50 schools and was rejected by every single one. She waits for a year and then applies again, and she once again gets rejected by all of them.
Confused as to why they all kept saying no, she calls the Deans of Admissions and asks them why they never accepted her application.
Each of them hung up on her except for one. The dean told her, “You have three strikes against you. You are a woman. You’re a foreigner. And you’re Jewish.”
Unfazed and resilient, she pushed on and kept trying, and eventually got accept into one, eventually becoming a doctor and built a successful practice. Rogier shares that he was in second grade when she shared this story with him. She told him “David, I’m trying to tell you that education is the only thing that someone can’t take away from you.”
Rogier has since kept this close to his heart. Here’s what he said:
“I wanted to build a school that teaches things that people can’t take away from others. I wanted to create a school that made it possible for anybody in the world to learn from some of the best minds and masters of their crafts. I thought, how do we do this affordably, where it’s not thousands of dollars. How do you do it in a way for somebody like me who is curious and wants to learn?”
And so in 2015, along with Aaron Rasmussen, David Rogier founded Masterclass with the motto: “everyone should have access to genius”.
Launching MasterClass
When MasterClass launched in 2015, it wasn’t necessarily the easiest space to enter. It was coming up against more established founders like Udacity which was founded in 2011, with already a $1 billion valuation in 2015, Udacity founded in 2009, at $2 billion, and Coursera, founded in 2012, valued at $1 billion.
MasterClass was up against bigger competitors who’s had a headstart. With the rise of these companies in the education technology space, 2015 was dubbed by the New York Times as the Year of the MOOC, or the massive open online courses.
But MasterClass had with it an edge. It understood that in order to stand out, you needed to do something different. A distinct value proposition with a clear brand positioning can allow it to not compete with the others but instead, create its own category.
Unlike Udemy, Udacity, and Coursera — which allows thousands of instructors, basically anyone to create their own course using the marketplace, MasterClass only enlists the expertise of only the few who are considered the best in their field.
They’re not necessarily the actual best, but they’re the ones who are generally famous enough to be considered as the best. So you’ll find classes by Martin Scorsese teaching Filmmaking, Hans Zimmer, on Film Scoring, Sara Blakely teaching Self-Made Entrepreneurship, and even sports, yeah like there’s actually a class where Serena Williams teaches you Tennis, and where Steph Curry teaches Shooting Ball Handling and Scoring.
Marketing through word-of-mouth
Having a lineup of celebrities did more than make MasterClass stand out, it was also a killer marketing tool. Since celebrities already have a lot of influence and huge social followings, the word-of-mouth for MasterClass is incredibly effective. This greatly accelerated the brand awareness of the company.
Honestly, the first few times I saw the MasterClass ads, I really thought they were an established company that’s been around for years. That’s how influential it is to have very familiar and credible people are to endorse your brand.
Within the first four months, MasterClass sold courses to more than 30,000 people.
But all of this comes at a hefty price tag. Although MasterClass would not disclose its marketing budget, we can base our estimates on what MasterClass has been doing. Just the sheer volume of ads they’re running on Facebook, Instagram and YouTube should definitely cost them a lot but CEO Rogier did say “If you’ve seen more ads, it is because they are working,”
Perhaps a bigger expense than their ads is how much they need to pay celebrities to come in and film a course.
Sources say that these celebrity instructors are paid around $100,000 up front, before they do any work, and receive 30% of the revenue the classes generate.
MasterClass is pretty quiet about the details of their agreements with these instructors, but Rogier did say that many of these celebrities do these classes as more of a legacy thing. It’s their way of giving back. Because clearly, even though $100,000 is big money, celebrities do have much more lucrative options than doing this.
To add to this expense, MasterClass also spends a lot on the production of the course, and it is hands-down by far the best in terms of camerawork, lighting, the sound, everything is just top-notch. All of this comes at a steep price because even though a million people have already signed up for MasterClass, the company is still losing money and is nowhere close to the numbers its competitors are in.
Udacity for instance has over 11 million users. Udemy has 10 million. And Coursera has over 30 million users. So that 1 million user base of MasterClass is minuscule.
MasterClass charges an annual subscription of $180. This is their all-access pass to its library of content. They used to have an option where you could pay $90 for a single class, but they’ve since scrapped this. Sources say that annual subscriptions are responsible for 100% of their revenues.
But are the classes even worth it?
Is a MasterClass course actually worth it?
When you watch classes from MasterClass, it really depends on each course. But Vox.com described it perfectly when they said that the classes are reminiscent of Tony Robbin’s classes where there is very little distinction between practical advice and motivational superlatives.
Some of the classes are actually incredibly insightful and may offer actionable steps. Although some Masterclasses give you proper actionable steps, these courses are more of a way to let you take a dip on how these top performers think. A window into their process. So you don’t come in and watch Serena William’s class on Tennis and expect to be a tennis superstar right after. Rather, you get bits on their approach on their craft.
Perhaps one of the most popular MasterClass is that of Gordon Ramsay, so much so in fact that they had to do a part 2. His class offers a lot of actionable lessons along with recipes that you can try out yourself immediately. He covers basics and recipes to get you started.
Another highly-rated class is that of writer Dan Brown.
His masterclass actually gives the learned the proper roadmap on how to turn ideas into a story. He breaks down the steps on how to build tension, how to create characters, putting the story together, and connecting all of those for a killer finale.
Interesting to know that the most-watched chapter of a class is Chris Voss, former FBI negotiator, and his thoughts on the art of tactical empathy. I actually had a big urge to subscribe to MasterClass after going through the reviews and seeing all the interesting classes.
I think the most valuable thing about these courses is that you can ask the instructors questions. So you can either upload a document or upload a video for yourself asking the instructor a question, and they’ll respond to that question.
Despite this, the feedback hasn’t always been on MasterClass’ side.
People are unhappy with the course, they’re actually entertained and they learned something from it. It’s just that, they can’t help but feel that all that information was something that’s readily available to them on YouTube, for free. And with that, it starts to feel like the course is a bit overpriced.
Others say that its a hit or a miss, with some classes being loaded with a ton of practical advice, while some were all filled with fluffy motivational sayings. But that’s what MasterClass is for. It leans more towards personal development and entertainment. Think of an educational version of Netflix.
If you want hard skills, with step by step technical steps, that’s when you head to Skillshare or Udemy. But personally, if I had the budget for this, I’d go for it. You can read all the negative reviews, but if you have the extra money, go for it. Worst case, you’ll still learn something.
Today
Today, MasterClass is still on a growth trajectory. In May of 2020, it raised another $100 million to capitalize on more celebrity fueled content.
It’s currently valued at $800 million but that’s as much as we know about MasterClass because David Rogier is pretty silent about how much they spend on marketing if they’re doing better since the lockdowns, or how much they pay celebrities.
Maybe he should make a MasterClass about how to keep your mouth shut huh? Seems like a lot of people need to learn that one skill.
Anyway, that’s about it. Now you know about the brand origin story of MasterClass.
Thanks for reading!
I’m glad you made it this far.
You can listen to this episode on our podcast: Brand Origins. I’ve talked about the origin stories of a couple of other brands:
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— Chris
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