Future Proofing Digital Education
How job-tailored digital first academies will disrupt universities, transform the enterprise software sales process and enable greater participation in the passion economy
This week’s Innovation Armory is about the rise of a new and disruptive category of higher education: digital first academies that are highly tailored to particular professions. With ROI compression evident across more traditional degrees, these academies will play an increasingly important role in bridging the gap between education and modern job marketplaces. I am particularly excited about the opportunity for this new class of education to drive further upward mobility, catalyze the passion economy and future proof our educational systems. Thank you to Shaan Hathiramani, CEO of Flockjay, for sharing his perspective for this piece. This is a long post so if your email gets clipped at the bottom make sure to click unclip / visit The Innovation Armory to check out the full read.
My next piece will discuss process innovations in digital grocery including hyper-local fulfillment and food producer integrations. Thanks in advance to Ricardo Weber (CEO of Jüsto) and Alberto Menolascina (CEO of DIJA)
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Over the last couple of years, the education sector has witnessed the rise of a new form of digitally native education that specializes in training, placing and re-skilling workers focused on breaking into particular professional functions. While COVID-19 has driven a boom for digital tools that have helped to transition physical education to an online environment (classroom management, device management, virtual lab technology, etc.), digital first education alternatives are growing in attractiveness. The cost of traditional university education has risen at accelerated rates that are multiples of the average US inflationary annual growth rate of 2-3%. The average tuition at private universities has more than doubled in 15 years:
However, for the bulk of university students, the increases in tuition have dramatically outpaced growth in average starting wages. A NACE study reported that the average starting salary for the 2019 graduate cohort was only 1.4% higher than that of the 2015 graduate cohort. The best private universities have been able to continue to extract higher and higher tuition rates because their brands afford students the best chance at receiving the highest paying jobs after graduating. However, for the average university, despite a flat average dollar return to graduates, students are still financially incentivized to pay higher tuition rates because of the growing gap between average starting salary for any college graduate vs. non-college graduate (51% as of 2017, with inflation-adjusted non-college graduate income actually declining over time). Even as remote university learning has gained prevalence through COVID-19, universities will revert back to in-person learning post-pandemic to justify their hefty and growing tuition bills. Less prestigious universities in the long tail will be forced to raise tuition at even higher rates to survive in order to make up for lower tuition revenue during COVID-19 due to student attendance declines. Increasingly, universities are viewed as the gatekeepers to upward mobility, but in reality continue to deliver lower inflation-adjusted salary returns for their students and crushing student debt loads.
As the attractiveness of a standard college degree declines, I believe a new emerging digital-first educational model has the potential to disintermediate especially the long-tail of under-performing, lower ROI private universities in the US. Digital education is by no means new. The first internet attempt at democratizing education was through massive open online courses (MOOCs), aimed at unlimited participation in courses structured as traditional university lectures in a video format. Many of these course options were free, enabled by the low cost delivery infrastructure of the internet and often through subsidies from private and public universities. MOOCs did greatly expand access to general educational knowledge. However, because they were created to expand educational access as much as possible, MOOCs were not personalized and included limited lecturer / professor engagement. Because of these factors, students struggled to engage with coursework to completion.
Moreover, the sourcing of MOOC content primarily from universities also created a misalignment of incentives with students. Of course, universities would not want to give away their highest quality content for free that could have actually credentialized workers. Doing so would have mitigated the benefits of a traditional university degree and cannibalized their core business. The content was therefore only complementary to university education and not viewed as sufficient to credentialize a worker with many real, tangible skills. Low cost non-university MOOCs could offer certificates but also lacked credentializing authority without either a strong higher education brand backing or proprietary relationships with a broad employer network. Most importantly and relatedly, most MOOCs lacked any true bridge to the job market and therefore did not effectively use digital first education to drive upward mobility in a genuinely meaningful way.
The next generation of digitally native education focused on decoupling MOOCs into more specific technical skills and training courses, e.g. disaggregating a graphic design MOOC into skills focused on typography, Adobe InDesign, Ideation, etc. This emphasis on specific technical skills made these programs more useful when applied to a corporate setting. Moreover, the decoupling enabled greater content granularity and made it easier to personalize skill acquisition programs and drive higher course completion rates / better student engagement. Moreover, skill acquisition / re-skilling platforms also created a link to monetizing through the corporation via existing corporate employees. Some of these initial corporate use cases included coordinating employee training / ramping and upskilling workers through educational-focused corporate benefit programs. For traditional college graduates or casual subscription-paying learners, these re-skilling / training platforms and skill-specific consumer edutainment platforms (e.g. MasterClass) will remain an important part of the digital education landscape. However, while the skill-based content was more useful in a corporate context than MOOCs, these platforms have not yet actively helped build a meaningful upward mobility bridge for a new class of students to break into corporate roles.
The next generation of digitally native educational instruction is here in the form of job-tailored online digital academies. Some of the early players in this space include Lamba Academy (focused on coding skills and jobs), Flockjay (focused on sales skills and jobs) and Nana (focused on technical repair skills and contractor work).
While MOOCs and skill acquisition platforms were largely complementary to the traditional university education system, this new generation of innovation has the potential to replace degrees in the long tail of the private university ecosystem where the ROI to students is substantially lower than today’s best brands in education. These online academies normally possess a couple of key differentiating features:
The primary differentiator of these academies is bridging the gap between students (either unskilled or looking to pivot professions) with higher paying jobs and more reliable work. Versus university or traditional digitally-native education, these academies build a stronger link to corporations that disintermediates the power of traditional university / academic brands through:
Skill Bundling - combining a more granular set of sub-skills into a very precise and technical curriculum to more closely mirror the specific role an employee will have on the job vs. a general education curriculum. This creates differentiation through skill curation, particularly in the “last mile” of learning, namely finer, more granular skills that are critical for on the job performance.
Job Marketplace Integration - these academies do much to go beyond the standard professional activities of universities (career fairs, resume workshops, etc.) by actively helping to place students with employers. This includes taking a data-driven approach to benchmarking historical student performance in similar roles, enabling these companies to charge employers for access to top talent. I expect this approach to begin to displace the external headhunting / recruiting industry as well. External headhunters are traditionally paid on a transactional basis for placing candidates, not necessarily based on the actual long-term performance / fit of that candidate. These external recruiters often arbitrarily serve as gatekeepers to wealth-creating industries, making subjective judgments about what makes a good candidate without similar job experience themselves. Because they are paid on placement count, they are incentivized to place candidates without any real regard for the happiness or preferences of the candidate, which long-term is negative both for the employee’s happiness and for the corporation’s workforce retention.
Digital first academies are better aligned to place students into jobs they are happy with, while delivering better recruiting results to firms by benchmarking student performance with tailored data.
Partnerships - students gain access to best-in-class technical tools for free from corporate partnerships that give them a more precise set of skills to succeed in their roles. For example, learning how to use Gong, Salesforce, etc. for a sales role and having unlimited access to experiment with this software.
Outside of this core professional benefit, these academies tend to monetize through Income Share Agreements (ISAs) where the academy only makes money when they place a student into a high paying job and then earn a percentage of their salary for a fixed period of time. This aligns incentives between the academy, which is financially invested in the success of their students and also de-risks the educational investment for the student, who is not straddled with fixed student debt payments. Thus, these programs improve ROI for students in two ways:
Some readers may hear the term “digital academy” and think about the University of Phoenix and its recent $151M settlement to cancel student debt for deceptive and false advertising about the quality of job opportunities after students attended its online-only program. Job-tailored digital first academies could not be more different than the University of Phoenix model. Job marketplace integrations, corporate partnerships and the professional first approach actually deliver strong job options to graduates. Further, the ISA structure aligns incentives to prevent these academies from ever being incentivized to market using a deceptive approach.
Further, these academies are end-to-end programs that teach how to perform a profession (not just one-off skills), but are much shorter than a standard university degree or associate degree. These programs can be completed at the desired pace of the student, but many last only 2-6 months, accelerating the road to upward mobility. Despite the short-term engagement with students, many of these academies also offer mentorship and continued education / upskilling that maintain a long-term connection with the student. I believe these academies blend the best qualities of numerous business models and can capture share from four sizeable primary markets over the long-term: university education (TAM is at a minimum, every young adult 17-22 in the world), corporate training (TAM is $370B+), upskilling (cost to upskill the US workforce is $34B+) and headhunting / recruiting (TAM is $200B+):
Many of the best technology companies enable a process of technological innovation that not only captures outsized share of existing markets, but helps actively spur a change that dramatically increases the size of its addressable market. The invention of the iPhone enabled the development of an ecosystem of mobile applications that was previously unfathomable but massively expanded the size of the total software market. I believe academies like Flockjay and Lambda have the potential to expand the TAM of all of the markets above:
Upskilling - As more upskilling initiatives occur, they will spur greater income and productivity gains that will drive continued investment into upskilling and re-skilling. A recent WEF report concluded that upskilling has the potential to improve global GDP by up to $6.5 trillion.
Corporate Training - A workforce that is better prepared for the demands of specific functional roles will reduce ramp time, attrition and training costs for employers. Employers will have more profits to invest in greater numbers of new hires to grow their core business and also in more advanced training initiatives to drive productivity gains.
University Education / Recruiting - While these models will reduce tuition rates (price decline), they have the potential to drastically improve educational access both within the West for under-represented groups and also abroad in frontier and emerging markets as these platforms expand internationally (volume increase). As smartphone and internet penetration continue to rise, these types of programs have the potential to reach new students in frontier economies with less developed educational systems. Further, from a recruiting perspective, the rise of distributed and remote work will unlock the opportunity to leverage these global academies to recruit hidden talent across geographic borders and in new markets. Even though aptitude is evenly distributed across borders, historically, professional opportunity has unfortunately not been correspondingly proportionately distributed across the globe. I am hopeful that digital academy integration with job marketplaces plus the rise of remote work will continue to bridge that gap.
While the initial instances of these academies are vertically focused, I believe existing academies will continue to add new verticals to train and place students in other areas like product management, marketing, data analytics, etc. This will enable these platforms to expand horizontally across the educational landscape while preserving a tailored focus that prioritizes technical skills most relevant for workers.
To learn more about this emerging class of online academies, I caught up with Shaan Hathiramani, CEO and Founder of Flockjay, a leading online academy focused on training and placing under-represented and diverse students in high paying technology sales jobs. Please enjoy my conversation with Shaan.
My Conversation with Shaan Hathiramani (CEO and Founder of Flockjay)
SN: Could you discuss the founding story of Flockjay and the key tenets of your mission?
SH: In many ways, Flockjay came out of ten years of teaching in Chicago and New York to foster more financial literacy in younger students. What I learned from that experience plus from moving to San Francisco and observing the sorts of business models / jobs that will power the future is that there is an expansive ocean of last mile skills that aren’t taught in school that companies and industries are looking for in their hiring processes. Fundamentally, the trusted proxies / credentials that are meant to predict success on the job (generally a fancy degree) are not working the way they are meant to. No more apparent is this gap than in sales where there is virtually no predictive power between where you went to school and how you well you perform in the sales job. I could probably predict outcomes in sales based on measuring skills, traits and attributes like curiosity, optimism, verbal communication skills and grit vs. whether you went to Harvard.
Companies filling these roles are firing, re-hiring and ramping new sales folks all of the time. There is a clear ROI in improving this hiring process for technology companies by improving productivity, reducing ramp times and mitigating sales representative attrition. It seemed like there was a lot of economic waste being generated from a problem that was totally solvable if a third party were to take on the risk of identifying, training and placing that top talent with the best technology companies. Fundamentally, Flockjay solves that problem, but we also solve an equally important problem of enabling upward mobility, especially of candidates from non-traditional backgrounds. Sales is the best kept secret in tech towards creating generational wealth and is relatively future proof because it involves connecting with others, which is one of the most human things we can do. Our ambition is to think about the process of training and placing you in a sales role as not just about the initial foray into the industry but a long-term relationship of continuous upskilling, re-skilling and professional upward mobility.
SN: How do you source your educational content and tailor your curriculum to different pockets of technology?
SH: We have taken a scalable approach. We originate all of our content for now from thoughtful advisors on the sales side who have led sales at Stripe, Google, Slack, LinkedIn and other prominent technology companies. Our corporate clients aligned around diversity and inclusion are helpful in providing not only educational content, but also the tools to train the next generation of sales talent. What we do today is like a Bachelor of Sales but I see a world where we have Masters modules eventually that focus on selling into specific verticals like fintech, healthcare, etc. However, we found that there is a fundamental need to de-risk ramp time in sales for that first 3-ish months that cuts across verticals. If you can cut that by 50%, you can dramatically change the unit economics of your business. That is generally applicable across most B2B software companies. Reducing this ramp means teaching: i) how do you become a trusted advisor or a solutions seller, ii) how do you conduct cold calls and mirror / match, iii) how do write emails that are well researched / personalized but also reach a broad audience and iv) how do you get familiar with the modern salesforce tech stack.
SN: Why did you initially choose to work with individuals and then place them vs. partnering first with companies and then customizing curricula to their needs?
SH: Day 1 it is important to get paid on both sides of the ecosystem and also establish product market fit with both stakeholders. In our model, companies pay us for access to talent and students pay us to access our program and membership. We take an individual first approach because of our mission: to create and empower upward mobility for jobseekers. In reality, some of our agreements do work in a more tailored fashion where if a company needs to hire 20 sales representatives, we will go out and create a more customized experience to students so they learn both the core fundamentals and about that company’s philosophy on sales. The overwhelming feedback we have gotten from companies is that our reps are performing so well that they want more access to our content and future candidates.
SN: What kind of benchmarking work have you done on graduates to prove out ROI to your corporate clients?
SH: We track ramp time, productivity, retention and promotion rates. Now we have enough folks in the wild to be able to say that our reps ramp in half the time as someone who would be our peer on the job. Normally it would be about 3.5 months and ours are ramping in 1.5 months. We are also measuring what % of folks are in their top quartile of performance in their first 6 months and that is over 80% of our reps. The stats are still early on this metric given the stage of the company but ~63% of folks are getting promoted in their first year and our corporate clients are seeing ~94-95% retention rates.
SN: Could you speak more about your diversity and inclusion initiatives?
SH: 50% of our graduates have identified as female or non-binary. 50% have identified as Black or Latinx. 30-40% do not have a College degree. There is tremendous identity and cognitive diversity. No matter the background, they are proving to be very successful in their jobs. We believe our approach is and will continue to drive businesses to diversify first their sales teams and then the rest of their business from the ground up. A lot of our value is not just that Alice is pre-trained and great at her job, but also that she has a backstop of community leaders, mentorship and support both through her alumni network and coaches at Flockjay to support her in her role. We are really augmenting what companies are doing on the inclusion front and how companies are serving as managers and mentors particularly to jobseekers of color who are joining primarily homogeneous organizations. These corporations need more help retaining in addition to recruiting diverse talent.
Diversified Barriers to Entry: Data Benchmarking, Student Networks, Curriculum Development
I foresee emerging online job-tailored digital academies like Flockjay developing some pretty interesting self-reinforcing competitive advantages over time as they scale:
First, Data Visibility - longer-term relationships with graduates as they progress into new roles give Flockjay more data to continue to validate and benchmark superior student performance across high intensity sales roles. Continually updated benchmarking data proves ROI for corporations and will beget more corporate clients who want to recruit and also have their own software tools incorporated into the curriculum, which creates a virtuous cycle for Flockjay. Further, validating the ROI to employers on new hires will make them more likely to upsell to leverage online academy tools for continued education / upskilling. The ROI is easier to validate on new employees so I would argue this is a better entry point to eventually upsell later on to reskilling vs. starting with upskilling and then trying to expand up the funnel to new hiring.
Second, Student Networks - as students move beyond their initial job placements post-Flockjay, they will move to new companies that may not currently be clients. This growing student network will present the academy with a growing slate of cost effective sales entry points into new potential corporate clients. Further, the student network serves as a strong word of mouth marketing engine to build greater brand equity for the academy. Lastly, the growing student network directly feeds career mentorship programs that help reinforce a sense of community and belonging to students.
Third, Curriculum Development - close dialogue with a diverse network of corporate partners on evolving functional and skill needs creates a curriculum development advantage where existing and new course materials are better tailored to meet real-time changes in workforce needs. Further, Flockjay currently sources much of its content from sales leaders at various tech companies, but it is simultaneously helping to create the next generation of leaders in sales. Just as traditional alumni at universities give back via donations, this digital first alumni network may give back in the form of free lectures and assisting in content development at low-cost for future curricula. Given Flockjay’s vertical focus, fair pricing and focus on diversity and inclusion, the leaders from its program will likely feel more community loyalty than the average alumnus coming from a more traditional university. This dynamic should give these academies an advantage when it comes to decreasing curriculum development costs over the long-term.
The Newest Pre-Sales Distribution Channel for Enterprise Software?
My interview with Shaan got me thinking about why sales software companies would give out licenses for their tools largely for free to online academies. I am convinced that it is because forward thinking technology companies realize these online academies are fundamentally altering the way software companies will acquire users, build brand loyalty and sell their products as the educational landscape evolves. Software vendors that engage with these academies are seeding the next generation of future sales, coding and other corporate leaders with their brand’s technical tools. This disrupts the traditional software sales cycle by effectively starting it at the educational level. For example, through Flockjay, students using Gong in their sales classes begin to build a heavily skewed technical preference for Gong for their inevitable sales work at future organizations.
This also helps build brand equity for software vendors amongst the next generation of leaders and influencers within a professional category like sales. As these academies continue to validate the stronger performance of their post-graduate students through data benchmarking, it will reinforce the desire for software vendors to form partnerships for these academies to teach with their tools so that high-performing graduates will evangelize the benefits of their brand’s software and become advocates when they practice. In effect, I believe these academies will become critical distribution and pre-sales channels for enterprise software vendors. This is a powerful shift from the skill acquisition / upskilling business model which takes it as given which technical skills are professionally valuable. Digital academies will have a more dynamic relationship with corporate vendors where they will leverage access to the best trained technical workers to actively shape which tools rise to prominence across multiple sectors:
Outside of software vendors viewing these academies as pre-sales distribution, these academies can also function as a product development improvement tool for traditional software vendors. By soliciting feedback on obstacles to teachability and complexities in the student experience, these vendors can gain valuable insights as to how to best improve feature functionality and user experience going forward.
Purpose Built for a World of Artificial Intelligence and Automation
Accelerations in the innovation of and development of artificial intelligence and robotics automation will continue to displace new categories of jobs over the coming decades. Throughout history, the most disruptive innovations have unleashed a process of creative destruction that entailed the active dismantling of traditional production methods to drive greater efficiencies, but also entailed major shifts in the labor market as a result. For example, Ford’s creation of the assembly line displaced some technical jobs that were automated, but in turn created new jobs in quality assurance and system design. The creation of the internet decimated telephonist and telegraph operator jobs, but created significantly more new jobs in coding, product development, data science and countless other roles. The World Economic Forum estimates that today’s emerging technologies will actually create 50M+ more jobs than they displace.
While it is certainly possible that artificial intelligence and sophisticated robotics are different in form than other types of innovation that created net new jobs, I am optimistic they will also create new categories of roles in robotics engineering, algorithmic compliance, data collection, creative professions and more. However, I do think that this new class of technologies will especially accelerate the pace of innovation. As innovative disruption occurs more frequently, the world will need an educational system that is more flexible and allows workers to more easily pivot between jobs as the skills and roles demanded by employers change on a recurring basis. Relative to traditional educational systems, digital first academies will enable workers to more easily move between jobs. They differentiate on the basis of a couple of different factors:
Speed - Their programs are faster and help enable a time effective pivot to a new set of skills that will make a worker more competitive as workforce needs change. As AI and automation more rapidly shift the distribution of jobs to new areas, why would someone want to go back to school for a four year degree for a role that may have fewer jobs than when one entered school? This of course does not apply as powerfully to jobs that i) will be clearly be accelerated by creative destruction (e.g. data science), ii) where there is still a regulatory requirement for a particular degree (e.g. medicine or law) or iii) to sophisticated academic research, which I believe should become unbundled from traditional university programs over the coming decades.
Cost - the ISA structure makes these programs low risk from a financial perspective. Even if your industry of choice is disrupted in negative ways by automation, students can pivot without first having to pay off a large student debt load.
Depth of Industry Connections - by working directly with best-in-class technology companies and partners (both on the vendor side and the recruiting side), these academies stay abreast of changes in technical skill demands so they can alter existing curricula and diversify to offer new programs that meet the needs of a changing job landscape much faster than a university could.
Enabling the Passion Economy
In “The Passion Economy and the Future of Work”, Li Jin, founder of Atelier Ventures, states that “Users can now build audiences at scale and turn their passions into livelihoods, whether that’s playing video games or producing video content.” I believe there have historically been two primary constraints to creators building their careers off of their fundamental creative passions: i) constraints to the monetization opportunity and ii) limited flexibility to shift careers in the event that your passion pursuits fail. New monetization tools are solving the first constraint to make a living in the passion economy and are changing the paradigm from “how do I make money off of my passions?” to “how do I pivot if I am unsuccessful in pursuing my passions?”
I believe these academies will play a critical role in enabling the passion economy by giving more individuals the comfort that they have a more than solid “plan B” if they are unsuccessful creating a sufficient living for their family by pursuing their passions. The rise of these academies significantly streamlines the process of pivoting from both a time and financial perspective, thereby reducing the earnings power opportunity cost to pursuing your passions. A rock solid “plan B” vs. having to pay $200K+ for an MBA or graduate school will drive more creative risk taking in pursuit of individual passions. Meanwhile, MOOCs and upskilling platforms will continue to play an important role in allowing creators to continue to improve their skills in a more informal way to diversify the ways they can further monetize their own passions. These two technologies will work synergistically to drive greater upwards mobility and work satisfaction by increasing participation in the passion economy.
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