Mindflash Zooms Ahead in Online Employee Training, Adds $3.5 Million
In the world of online training and education, personal video instruction sites like Udacity, Coursera, Khan Academy, and Lynda.com have been sucking up a lot of the oxygen. Certainly, that’s where the big venture dollars are going: Udacity raised $12 million last year, Coursera pulled in $22 million, and Lynda.com recently attracted a whopping $103 million.
But many of those companies have yet to prove that their business models will work. Meanwhile, there’s a less sexy part of the online courseware market—corporate training—that’s clearly booming, thanks to an ongoing drive inside most big companies to reduce HR costs.
A case in point is Mindflash, a Palo Alto, CA-based startup I first profiled in late 2011. It gives HR departments online tools for creating video-based courses and quizzes that can help get new or long-time employees up to speed on company policies or products. CEO Donna Wells says that Mindflash tripled its business in 2012 and is poised for major expansion this year, both in the U.S. and abroad.
To fund that growth, Mindflash has raised an additional $3.5 million in venture cash from its original backer, Investment Group of Santa Barbara, CA. The new investment, to be announced formally on Wednesday, brings the startup’s total funding since 2011 to $7.5 million.
Wells joined Mindflash in 2010 after several hugely successful years as chief marketing officer at personal finance startup Mint.com. A big bet that the company made then is now “working out pretty well,” she says.
The bet, as I explained in my 2011 article, was that Mindflash could grow faster if it scrapped its legacy product—an expensive, highly customized, on-premises course authoring platform—in favor of a cheaper, Web-based, subscription-driven system.
It’s precisely the same transition that other parts of the business software market have been through. But usually, the story is about a young, SaaS-based company (think Salesforce.com in the customer relationship management market) that overtakes and displaces an older vendor of shrinkwrap software (think Siebel). Mindflash wanted to disrupt itself and come out the other side with a strong hold on its existing customers inside corporate HR departments.
And that’s roughly what has happened. The company built a new online system for authoring and hosting courses from scratch, and released it in late 2010. The response has exceeded all expectations.
“On all key metrics, we doubled or tripled the size of the business” in 2012, Wells says. Some 30,000 companies use the platform, including Ericsson, Dyson, Hilton Hotels, Airbnb, and Yammer. Their employees have completed over half a million online courses, up from 100,000 when I last checked in.
“It’s much easier to grow a business when you’re working with the latest technology and economic trends rather than against them,” Wells says.
Speaking of the latest technologies, the biggest new-product push for Mindflash in 2012 was to introduce an iPad app. Now employees of Mindflash-enabled companies can complete training courses without having to sit down at a desktop computer.
Roughly 80 percent of Mindflash’s customers use the service to convey orientation information for new hires; sales or technical data around new-production rollouts; and compliance training. User feedback showed that in all of these areas, employees prefer a tablet-based experience to a desktop- or Web-based course, Wells says. So the company took the plunge and decided to convert all of its existing video and quiz content so that it worked on the iPad.
That was a bigger undertaking than you might think. In the new SaaS-based platform that Mindflash released in 2010, all of the interactive and video content used Adobe’s Flex and Flash media formats, which won’t play on iOS devices. In mid-2012, the company’s development team decided to correct that situation by building an HTML5 version of the Mindflash player that could be placed inside a thin iOS wrapper to make it iPad-compatible.
Courses created by trainers inside HR departments—which typically start out life as PowerPoint or Word documents, before they’re uploaded to Mindflash—now get converted to videos that will play with equal fidelity on a Web browser or a tablet. “We’ve really beat the industry on this front,” Wells says. “Your content appears on the Web and the iPad exactly as you built it on the desktop.”
Thanks to all that work, the company is now in a much stronger position to expand to more platforms, Wells says. It’s likely that Mindflash will introduce an Android version of its player this year. Already, 25 percent of Mindflash’s business comes from overseas clients, and Wells thinks getting the app onto Android will lead to more international business, in light of the fact that Android tablets have a big lead over the iPad in most markets outside the United States.
The day isn’t far away, Wells says, when a new hire arriving at the office for the first time will be handed three things: an ID card, a uniform, and a tablet computer holding all the required training courseware. “Clearly, it’s starting to happen now, and it will be the dominant new-hire onboarding experience down the road,” she says. It’s a good bet that Mindflash will be one of the leading companies making that possible.
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