Inside Formation’s Enterprise Pivot: From Direct Consumer Sales to Netflix Partnership

Every startup begins with assumptions about their business model. For Formation, the initial assumption was that direct consumer payments would drive their adaptive learning platform. But in speaking with Sophie Novati on a recent episode of Category Visionaries, a more nuanced story emerges about how successful companies evolve their revenue model based on market feedback.

From the beginning, Formation’s focus was clear. “Fundamentally, we’re here to build a more diverse, a more equitable and more inclusive workforce,” Sophie explains. “We think the highest leverage action that we can take to make a dent on this mission is to really remove the barriers of access in terms of education.”

Initially, this mission translated into a direct-to-consumer approach. As Sophie notes, “We experimented early on when we first launched the company, different pricing or payment and business models.” Their model focused on engineers earning between $80,000 to $100,000 annually who wanted to advance their careers. Formation’s promise? An average compensation increase of $100,000.

The company offered flexible payment options to make their program accessible. “Right now we are primarily, students pay directly for their training, and we offer a number of different payment models that range from, you can pay directly upfront as well as we offer deferred payment options where you start paying once you have been placed into a role.”

But recent market changes have catalyzed an evolution in their business model. “More recently, one of the changes has been that we’re starting to work more directly with some of the companies that are hiring our students,” Sophie reveals. This shift culminated in a significant partnership: “Most recently, we just launched a partnership with Netflix as part of their diversity hiring initiatives. So they are actually paying for the training for people in their diversity hiring pipelines to help them better prepared for the interview process.”

This pivot to enterprise partnerships coincided with broader market changes. “We’re in a market right now where people just need to be a lot more prepared for the interview process,” Sophie observes. “The good news is that the compensation has actually held fairly stable. So once someone gets an offer, it is pretty comparable to what they have gotten in the past, but it takes just more time and more preparation to get to that point now.”

Formation’s enterprise expansion aligns perfectly with their core technological advantage. Their platform doesn’t just offer static training – “every lesson, every class, every assignment that every student does is dynamically computed by our technology based on each person’s performance in the program.” This adaptive approach makes their platform particularly valuable for companies looking to develop diverse talent pipelines.

The transition reflects a broader trend in technical education: the growing recognition that companies need to play a more active role in developing talent. By partnering directly with enterprises, Formation can help companies not just hire diverse talent, but ensure that talent is fully prepared for technical roles.

For founders, Formation’s evolution offers valuable lessons about business model flexibility. Rather than rigidly sticking to their initial direct-to-consumer approach, they recognized that enterprise partnerships could accelerate their mission of building a more diverse tech workforce. The Netflix partnership isn’t just a new revenue stream – it’s a more efficient way to achieve their foundational goal of removing barriers to technical education.

Looking ahead, this hybrid model positions Formation to achieve their ambitious vision: “To have an entirely open platform, free to use to start to absolutely anyone who needs training to be able to get started on the platform right away.” By combining enterprise partnerships with their existing consumer model, they’re building a sustainable path to eventually reaching all 12 million software engineers globally.