Ryan Craig on Putting America Back to Work

You’re listening to the Getting Smart podcast, where we unpack what is new and innovative in education. I’m your host Jessica and today we’re going to listen in on a conversation about putting America back to work. As managing director of University Ventures, Ryan Craig was the most important investor

in higher education, or more specifically, last mile training alternatives to higher education. In his 2018 book, A New You, Faster and Cheaper Alternatives to College, Craig made the case that unless you get a free ride to a top school, you should find a free or affordable sprint to a good first job.

With his new fund, Achieve Partners, Craig becomes the most important investor in a new category of intermediary organizations that take the friction out of hiring for companies as well as for job seekers. Through his initiative, Putting America Back to Work, Craig plans to put 100,000 people back into work by establishing frictionless pathways to good jobs.

Let’s listen in as Ryan talks with Tom. Hey Ryan, Craig, welcome back to the Getting Smart podcast. Tom, it’s been about a year, year and a half. Good to be back. Yeah.

Ryan, what the heck just happened to the U.S. economy? Well, I think it’s hopefully for all of us a once in a lifetime event, but we know we now have 30 million Americans who are out of work, probably more. Right. Well, that may be understated by half in terms of people that couldn’t file or people that

have been furloughed and didn’t file. Right. And all the independent contractors who now are not contracting and not billing and not being paid. Right.

And you know, look, it’s fair to say that somewhere between a third and a half of the economy has stalled at this point, and it’s going to be very difficult to get up and running. And when we do get back up and running, whether that’s in two months or 12 months, God forbid, there are going to be lots of millions of jobs out there that they won’t be able to go back to because their businesses either won’t exist anymore or they just simply will

be gun shy about hiring back and for good reason. Obviously, you can imagine in the travel and hospitality and retail sectors, there are going to be lots of businesses that won’t be able to hire those workers back. So I don’t know whether it’s 2 million or 5 million or 8 million newly unemployed workers who will need pathways back to good jobs that didn’t exist before.

We’ve never seen anything like this because it’s not really an economic crisis. It was a health crisis that precipitated an economic crisis. So the effects have been and will be enormously uneven. So it’s quite confusing. We’ll come back to that.

What’s going to happen at colleges and universities this fall? Well, look, I think the most important distinction is that colleges and universities will be hit differentially. So the elite, the name brand colleges and universities will be fine. Let me just start by saying, I think it’s pretty crystal clear at this point that in

the absence of a resurgence of the virus or scary new research about aerosol transmission, nearly all campuses will reopen this fall with a significant portion of learning still conducted online in order to maintain at least the pretense of social distancing via reduced classroom density. And all colleges and universities will say that they’re doing it similar to what Mitch

Daniel said, I think two weeks ago, which was sort of a highly motivated message were determined not to surrender to this. We’re going to tackle and manage these issues aggressively. But the unstated reason, of course, is that no college or university wants to find out what will happen to enrollment if they announce they’re going to continue with remote learning.

In fact, the first institution to signal that they would do that, Cal State Fullerton, two weeks ago, quickly walked it back and said that that’s not what they meant by that. So but I think, nevertheless, on the heels of a lost spring, when many students learned that remote learning wasn’t what they were paying for, what they wanted, there are lots of students who won’t be buying in in the fall.

First international students who were kicked out of dorms unceremoniously and are mostly back home at most for most colleges, I think relatively few of them are going to return next year and new new enrollments forget forget about it. And then domestic students, all the surveys we’re seeing anywhere from 12 to 20% of new and continuing students likely not to to attend.

And then you add to that adding insult to injury, the likely sort of fiscal shortfall decline in state funding of as much as 20%. You get revenue at some public institutions that could fall as much as 30%, which is never happened before. And schools with with endowments and means will be, you know, chewing through those as

best they can. And others will be in crisis mode and you can’t put a band aid on a 30% revenue decline. But just to be clear that that the impact is going to be differential. So you’re going to you’re going to have a lead in brand name schools and the ones who sort of could afford it, who will not be impacted or barely impacted at all.

And the impact is going to be predominantly on nonselective institutions that enroll students primarily from outside their metropolitan areas or nonselective institutions that operate outside of major metropolitan areas. And these are the ones that are going to have an existential crisis in the next year or two.

We’ve already started to see colleges close and I can imagine several dozen colleges will never reopen. That fair to say? Oh, yeah, I think several several. We’re going to see more colleges close this year than have closed in any probably five

year span in history. There’s no question about that. I think, you know, there are hundreds more that will will limp along and try to try to make ends meet with with with half half measures. My my view is that, you know, this is a crisis that presents an opportunity because

at lots of these nonselective colleges and universities, they are producing, as I’ve written about, poor outcomes with respect to completion, with respect to affordability and especially with respect to employability and the employment outcomes their graduates are obtaining. So this is a and of course, the reason that most colleges and universities have done very

little to address these these crises is that faculty and administrators are captive to their own educational backgrounds and nostalgia. But just because that model still works at our most selective universities or worked 20, 30 or 40 years ago, where where maybe they went to school. I think Michael Michael Sorrell of Paul Quinn was quoted last week as saying we can’t we

can’t sit around to be held hostage to tradition. We have to stop being more in love with our traditions than we are with our with our students. And this is this is an opportunity now for leadership that recognizes that change is needed at these institutions to overcome the the the dozens or hundreds of internal barriers to to change the reason these colleges and universities have not changed today is due

to internal inertia. And nothing breaks through that internal inertia like a like an emergency or crisis like this. So, you know, yes, I’m pessimistic, but I’m also hopeful because I think that institutions that want to change now will have an opportunity to change. And the change is it’s not it’s not about closing campuses.

You know, it’s not about launching online programs. It’s about rethinking or redesigning how we’re achieving student outcomes. So, you know, I pointed Dan Greenstein at the Pennsylvania State System, who has said that he’s now considering moving less popular programs and courses online. So a single campus in the system can achieve scale in delivery or what Paul LeBlanc announced

a couple of weeks ago at Southern New Hampshire, where all freshman year coursework will be completed online and then basically made freshman year free for students. So they come to campus, they have that residential experience, hopefully this fall or future falls, but they’ll complete that academic coursework online a way to sort of rethink the cost the cost structure. So whether it’s sort of rethinking general education or turning degree programs upside

down by starting with industry recognized certifications or at least marketable certificates or, you know, risking cannibalizing your degree programs with new, faster and cheaper pathways to good, good jobs. These are the things that I think college and university leaders who want to change will be able to undertake this year in a way that they haven’t in the past due to all the inertia.

Speaking of faster pathways, I want to back up and talk about your 2018 book. It was called A New U, Faster Plus Cheaper Alternatives to College. On a number of occasions, I’ve called it the best and most provocative book of 2018. It’s one that I continue to think about. It really did update my advice that I’ve been providing in terms of post-secondary.

So we, many of us really appreciate your work there. I guess to try to quickly summarize it, your advice was if you get a free ride to a brand name selective, take it. Otherwise, think hard about a hard sprint to a good first job, particularly free or debt-free sprint to a good first job.

Is that close? Yeah, that’s basically it. I mean, if you can afford to go to college, no one should deny you that opportunity. So whether you’re from a privileged background, great. Go to college.

No one’s going to say no. Or if you’re not from a privileged background, but it’s affordable. And in the book, I talk about the Lumina Foundation’s Rule of 10 test as the right metric for thinking about whether it’s affordable, but a very stringent metric that very few public universities and virtually no private universities would pass at this point.

But whether it’s selective or non-selective, if it’s affordable, great. But the problem is that the vast majority of matriculating students are matriculating into non-selective universities. There are only less than 200 now colleges and universities in the country that are selective in terms of admitting fewer than 50% of applicants.

And a vast majority of those attending non-selective universities, the financial formula, is not affordable for their families. But they’re under the impression that a degree is the sort of sine qua non of the labor market. And it’s really the price of entry to have a shot at getting a good first job. And what most people don’t realize is that increasingly that’s not the case, particularly

in technology. Whether or not you have a degree is a lot less important than what your GitHub account shows in terms of your coding proficiency or perhaps even digital credentials or certainly certifications that you might be able to attain. And no one is suggesting that higher education or the college experience is not a desirable

thing. The question is whether it’s an affordable thing and particularly the way that our culture urges young people to consume all of that in one sitting before the age of 23 or 24. And in our view is we are moving to a world of lifelong learning where your first pathway might be a faster and cheaper pathway focused more on technical or digital skills to that first job.

But you’re going to absolutely need further development of your cognitive skills, executive function skills later on in your career. So that is lifelong learning, getting what you need when you need it. And that’s something that everyone in higher education should be should be for. Unfortunately, it may mean that the degree bundle, which has funded this $500 billion

industry for the last 50 years or so, is a casualty of that. And I think that COVID is just going to accelerate that again at nonselective schools. Hey listeners, it’s your host Jessica. I wanted to just take a quick break to share an important resource with you. Recently, our team launched the Getting Through Micro-Site to support educators,

leaders, and families on the path forward during this unprecedented and uncertain time. There’s something there for everyone, whether you’re just getting started with your transition to distance learning or you’ve had plans in place for a while and now have the opportunity to share your work and guidance with others. We hope this gives you a place for your voice and an opportunity to learn.

We know we will get through this together. Check it out at GettingSmart.com slash Getting Through. Okay, now back to the show. If you wrote a 2020 forward to the second edition of A New You, what would you say? What would you update?

Yeah, well look, I think there’s no question that the need for these new pathways to jobs is greater than it’s ever been. I think the other realization that we’ve come to is when I wrote the book over two years ago now, we kind of profile these different faster and cheaper pathways and present them fairly equally. So you have these coding boot camps that charge tuition and you have programs that leverage

income share agreements and you have these sort of new apprenticeship models. What we’ve seen over the last two years is that the models that grow fastest and scale furthest are the ones that essentially reduce or eliminate the frictions, not only for the candidate, but most importantly for the employer. That’s absolutely critical.

So for the candidate, even a tuition-based coding boot camp, there’s still friction in there. You’re going to pay money up front. You’re going to take financial risk and there’s no guarantee of a job. You’ve got a good shot at a job, but no one’s guaranteeing you a job or offering you a job on day one of that program.

And it doesn’t do anything to address what we call the hiring friction, which is the reduced propensity of employers to hire a candidate for a role where they literally haven’t done that job before. And that’s so important now where you’re going to have hundreds of thousands or millions of employers that are just gun-shy about adding to their payroll in this environment or for the

next year or two even. So that hiring friction is going to be higher than it’s ever been. Contrast that to these sort of new, what we call employer pay models where on the candidate side, you’re making it friction-free because you’re hiring candidates on day one. It truly is an apprenticeship model.

You’re earning while you’re learning. You’re an employee from day one and you’re guaranteed a job. So no financial risk, guaranteed a job. And what these models do on the employer side as well is they eliminate the hiring friction because that what we call intermediary, that staffing or training provider,

acts as the employer of record for up to several years. For the end employer. So they’re literally providing, in many cases, purpose-trained talent to their clients on a try-before-you-buy basis. And we’ve now seen this model scale rapidly across a range of tech areas.

Software development most prominently. Data visualization, data science. We’re looking at medical devices, medical device training now, a range of healthcare areas, healthcare IT, in addition to electronic medical records, implementations. There’s all sorts of areas where we’re seeing these new models a scale to thousands of placements

a year, much faster than you see sort of the traditional education model. So we’ve come up with a framework where we distinguish between what we call education up models, meaning you’re starting with education or employer down models, meaning you’re starting with employers. So education up models are pretty much everything that you and I have ever known

in a space where a bunch of well-meaning individuals, typically educators or education entrepreneurs, sit around the table and ascertain which skills are needed. And then they develop a curriculum and they recruit students and they deliver that program and they graduate students and then they kind of hope and pray that they find work. And that characterizes where I went to college and where you went to school and the workforce

program down the street and even the coding boot camp. In contrast that with these employer down models where what they’re doing is they’re starting with relationships with the end employers. And we’ve recognized now that that’s really the hardest part of the skills gap to bridge, that connection to the end employer, that relationship literally to the hiring manager

with the need for talent, which is something that no university or college or school can really develop and maintain over time. Right? Like yes, your career services office may have a connection with the HR department at a given employer, but you’re not talking or touching the hiring manager directly, not consistently.

And when they think about the fact that they’re going to need to hire 50 Python developers trained in a specific tech stack next year, they’re not going to be thinking about your school specifically. Contrast that to in these employer down models where you already have relationships with those hiring managers because you’re already a service provider to that company, be it some sort of business service or staffing service. You have those relationships, you have

contracts, you have master services agreements with dozens or hundreds of and many cases large Fortune 500 employers. And those companies which essentially have distribution to the end employers now can push a new product through that distribution channel, which is the provision of purpose trained entry level talent at scale. And so those are the models that are winning, those are the ones that are going to win because they have no friction, either on the

on the candidate side or on the employer side. And that’s what we need to do. I mean, I’ve had several conversations in the last week with sort of foundation think tank policy folks thinking about what new programs we need as a nation in order to address the fact that we’re going to have two, three, five, eight million Americans out of work long term here as a result of this COVID-19 induced recession or depression. And my answer is that we should, yes, funding

upskilling programs is not a bad thing. But if we just continue to fund upskilling in the way we’ve always funded upskilling, we’re going to see the same results, which is in five years, we’ll still have eight million people out of out of work. What needs to happen here is not just upskilling, it’s placement, we literally need to fund the placement of the candidate into the job, which means eliminating the friction for the candidate and for the employer who will be able to with

a new publicly funded program, essentially try talent on a discounted or even free basis for a period of time before they have to decide whether or not they’re going to make the investment in hiring that talent. And that’s the kind of, I think, incentive that we’re going to need to put millions of people back to work sooner. And I just want to add time is of the essence here, because the longer millions of people remain out of work, the staler their skills get, the harder

it becomes to go back to work. Who is the federal government going to be the key actor there? It seems like they’re the only ones that can print money and write a check. I think states could launch programs. I mean, I don’t see why a state couldn’t launch a program like that. States have workforce dollars and budgets. Walk us through how it might work. What group of employers might participate? Well, I think the important point is there are

thousands or tens of thousands of employers out there who have the ability to serve as intermediaries, as vectors for talent and placement. And these are the staffing and business services companies that have relationships with the end employer. So really what we need to do is, in our minds, differentiate between the end employers, they the horizons of the world with the accentures of the world. Accenture, I’m sure, is a service provider to Verizon. They’re

probably doing 20 different projects across Verizon today. They have relationships with all these hiring managers at Verizon. Accenture could get into the business of also becoming a talent supplier to Verizon. Accenture, manpower, a whole host of business services, companies across a range of verticals. Again, no one is going to get into the business of providing software developers to Google. Google is going to hire those folks directly, but that’s a minority of Google employees.

Google employees, tens of thousands of workers across all these other business functions. And in each of those areas, they have service providers who could act as vectors for talent. And those are the intermediaries who need to be incentivized to think about themselves as a solution for the workforce challenges that we’re going to face. Ryan, what is University Ventures? So, yeah, UV is our fund. And we’re a private equity firm

focused at the intersection of education and employment. So we’ve been investing now for eight years or so. And we have something like 35 portfolio companies that are primarily doing what I’ve just described, which is trying to develop and scale new pathways to employment. A year ago, you started another fund called Achieve Partners. Why a new fund? Well, University Ventures doesn’t really do a great job of describing what I just described.

It’s neither University nor Ventures, really. And so, yes, we have a new fund, a new firm, a new team at Achieve. And we’re excited to dive in and make bigger investments. What will be different at Achieve? The scale of the deals. We’re buying bigger companies because we recognize that the rate at which we can scale the throughput of talent to clients is a function of the distribution network that we already have in place. And so, the bigger the

company we can buy, the larger the sales force, the more contracts or MSAs they have within clients in a specific vertical, the more successful we can be at pushing this new product through that distribution channel. And more private equity than early stage venture? Oh, yeah. Entirely private equity buyouts, acquisitions of large companies who we feel can add to what they do through entry-level talent provision, putting people in jobs.

And we want to get to up to placing 5,000 people a year at each of these companies. So, at the first Achieve fund, we have a goal of putting 100,000 Americans into good jobs that would not have been able to attain if not for the creation of these new employer down pathways. You have some interesting partners in that fund. And mention a few of your partners.

Yeah. Well, Daniel Pianco is my co-founder. And I’ve worked with Daniel now for 20 years. And he’s one of the most innovative thinkers that I know in the space. We compliment each other really, really well at this point after 20 years. So, Daniel is a terrific resource. And we have a whole host of other folks who are in the fund or consulting to the fund who’ve just done a great job of opening doors across these different sectors, cybersecurity, digital marketing,

healthcare, IT, healthcare services, behavioral health, where we feel that last-mile training can really accelerate the growth of the underlying companies that we’re buying. It sounds like this corporate connected training is going to replace a very large percentage of traditional higher ed. The higher ed accessed by 18 to 24-year-olds. And what remains may end up serving some of the lifelong learning. Is that your sense? Are these faster and cheaper

alternatives going to replace a relatively large chunk of traditional higher education? Well, I’ll tell you, it’s a larger chunk today than I would have told you two months ago. Right. It seems to have jumped by 10 or 15 percentage points. Yeah. I mean, the big problem is I wish that we were sort of five years further down the road in terms of the evolution of these new pathways because the reality is that there just aren’t

nearly enough yet to serve the millions who need these pathways and these opportunities. But look, I mean, I think the value proposition once, my vision is in a decade, let’s choose a market. Let’s choose Tampa. In the Tampa market, I think there’ll be 10 different pathways, at least in that market, into various biotech, FinTech, software development, data visualization, you name it. They’ll have these pathways where some will come from,

they’ll want you to have some college. Some will maybe want you to have a degree. So I wouldn’t say that it’s going to replace all of higher education. For example, data, you’re not going to make a data scientist out of a high school student. You’re going to need to have the relevant STEM coursework. So you can’t last mile train your way into a data scientist. But some will come right out of high school. Digital marketing is a good example. That’s an

area we’re focusing on. And we’d love to buy a digital marketing agency and be the first digital marketing agency to approach clients with a novel value proposition, which is not only will we continue to do great digital marketing work for you and manage your Google AdWords and Facebook spend, but that your account manager or managers or the folks who work on your account after a handful of years, you’re welcome to hire them. You get to know them, they work with you, and

it’s a pathway to bring in talent of your own. And we think that that’s going to be very appealing to lots of employers rather than taking a risk on some unproven talent. You just happen to send the resume and why not work with the talent who you’ve been working with at your service provider. And so we think that that will provide a pathway. And we think in a decade, there are millions of young people who will get their start, their first job will be at

one of these intermediaries effectively. Essentially, what we’re suggesting is that the the labor market is broken in so far as pathways to employment just aren’t aligned with what the employers’ needs are. And when things break and at the enterprise level in corporate America, companies tend to want to outsource that problem to specialists. And so I think we’re going to start seeing the outsourcing of entry-level hiring. And that’s what this

represents. And what we’re committed to is we want these pathways to be to good jobs, meaning full-time employee, 50k or more annualized, and with multiple career pathways from there. And we want them to be clearly to be throughputing candidates to the end employer. We’re not interested in building up body shops and keeping 24, 26-year-olds captive at our companies. We want to progress them to clients so they can launch their the career. So those are the criteria that

we use in determining what we’re going to do next. Closing advice for high school juniors and seniors? Wow. Well, I certainly don’t blame you if you’re nervous about attending college next year. I would say that I think there’s going to be a differential response. I would have more confidence if you’re going into a selective school. They may have the resources to make an on-campus environment work sooner and safer. And so I’d be more encouraging if you’re

attending a non-selective institution. Again, if it’s financially a stretch for you, there’s no question in my mind, you should take a year off, take a pause, take a gap year. They try and find a job, but do something. Create an entrepreneurial with the resources that you have to progress yourself. And you’ll find you probably will make a better decision I think a year later. And I think a lot of young people are likely to do that. If you’re a junior

going into your senior year of high school, I hope you’re able to be back at school in September. I think you will on some modified basis just as the colleges are. And I hope you have a reasonably normal senior year. And I think the admissions process will probably seem more normal than it did this year. Ryan Craig, author of A New You. We appreciate your work and thanks for being on the Getting

Smart podcast. Tom, it’s always a pleasure. Thank you. A big thanks to Ryan for joining us for today’s episode. We appreciate his efforts to expand access to good jobs and create a promising future for more Americans. For more on his book A New You, see episode 160. We’ve got it linked in the show notes and on the blog. And as always, we’d love it if you’d leave us a rating and review. You can tell us what we could be doing

better, who you want to hear from next, or what we should be exploring. That’s all for this week, listeners. Thanks for tuning in. For the Getting Smart podcast, this is Jessica signing off.