When the average person thinks of Pearson, it conjures 300-page accounting textbooks and college admission test preps. Andy Bird is working to change that. Since becoming Pearson's CEO two years ago, he's focused on refashioning the education company's image as a leading print textbook publisher to that of an online learning company that encompasses career training, reskilling, and lifelong learning.
The former Disney executive insists that the education market will have to undergo the same digital transformation as the retail, gaming, and music industries to see continued growth. Pearson sells about 1 million textbooks yearly, a massive drop from 20 million five years ago.
"Our lives have totally been transformed, and learning is no different," says the 58-year-old Brit, a Pearson board director before coming out of retirement to lead the struggling company. Pearson had issued seven profit warnings in as many years before his arrival as the textbook business cratered and the company flailed about looking for how to reinvent itself.
His digital-first pivot includes the launch of Pearson+ in 2021, an online subscription service that provides users access to 1,500 e-textbooks, videos, audio content, note-taking, and sharing capabilities for $9.99 per month. Bird also wants to establish a bigger stronghold in corporate training for upskilling and reskilling employees, though he faces competition from market leaders like 2U and Coursera.
The skills certification business could be another goldmine for the company. Pearson recently acquired digital accreditation firm Credly and workforce A.I. and analytics company Faethm to support that endeavor. And as the fight for talent continues, Bird is banking on corporations' need to attract workers by offering training and skills credentialing.
"There aren't fewer learners. They're just going to different alternatives," he says. Investors seem to agree, with Pearson shares up 83% in his two years at the helm.
This interview has been edited and condensed for clarity.
Fortune: How does the rising cost of higher education in the U.S. help Pearson?
Bird: The value proposition of hundreds of thousands of dollars for a full year of higher education is increasingly under pressure. We've seen many alternatives rise, so our addressable market has expanded.
Does this mean pricey higher education will get the reset or even comeuppance many say is coming to it?
A formal degree used to offer a prescribed value, and it's still largely true. But now there are alternatives, in certifications specifically, that have value too. The last couple of years have opened people's eyes, so you see a decline in college enrollments and institutions forced to think about their value propositions.
A while back, analysts spoke of Pearson becoming the "Netflix of education," and last year, you launched Pearson+, which now has 4.5 million users. What was the rationale?
When you're a student, a large portion of your life is spent studying. But you're also listening to music, watching television, playing games, and doing other things that influence how you consume content. Those activities are being transformed by tech. And learning is no different.
What's the future of textbooks? It was your core business for many years and is still a big part, albeit in digital form.
We should come up with a new lexicon because learning can come in many forms in a digital world. You can't compare printed textbooks with what's happening in the future, where a publisher can see what content is consumed, the number of subscribers, and the product usage. In the past, you would buy a textbook and be anonymous to us. Now we can see what you're purchasing and studying, and it helps us adapt the product because we can tell the author that no one reads chapter four or that they should double down on animation or graphics in chapter six. This space can't just be digital versions of an analog model, like turning a textbook into a PDF, and that's it.
You're making a big play for the corporate training market. What can you offer an already busy market with strong competitors?
We have over 1,700 corporate clients now, and we're bigger than people think, with $600 million in revenue from enterprise clients last year (about 15% of total sales.) I don't know of a company that doesn't need to help employees reskill or upskill. We are getting the most interest in our diagnostic capability to help a company understand its workforce, its skills, which ones the company will need, and certifications. We now own Credly, the largest certification platform in the world with 30 million users. We've got companies walking up and saying, 'We need to transform our workforce if we are going to remain relevant.'
Your certifications revenue grew 9% last quarter. How can you sustain its growth?
I have called it our crown jewel, and that's well merited. It's now the foundation of the company. We've just started to scratch the surface, and the number of certificates people need is growing exponentially as tech develops, particularly in the IT space, where individuals need to recertify constantly. Within Pearson VUE, our computer-based testing center, we have exams for nurses, EMTs, and paramedics.
What about learning not linked to a specific job—just for interest?
We're already seeing it in language learning, where we saw 22% growth last quarter, driven by the Pearson Test of English. About 1.5 billion people are learning English, so it's a massive market.
How are you preparing for a potential recession in which corporations could pull back on learning and training?
Historically, we've done well in recessionary and inflationary times since more people go back to study. So we are somewhat counter-cyclical. It's also cheaper for corporations to retrain existing staff than to fire them, pay redundancy, then have to rehire them later.
Get to know Bird:
- He is an occasional DJ and says music "dominates" his life. But unlike another DJ'ing CEO, Goldman Sachs's Dave Solomon, Bird has no intention of doing so in public.
- During retirement, he and his wife traveled to places like Copenhagen, Lisbon, Cambodia, and Laos, and lived like locals for weeks at a time.
- His favorite Disney character is Goofy.
