How to build Guild for Europe

Brokering relationships between US employers and universities has quickly turned Guild Education into a leading edtech unicorn. We believe in the opportunity for a European version of Guild. Here is how we would approach building one.

What is Guild?

Founded in 2015, Guild transforms education as a work-benefit by offering high-quality low-cost programmes and personalised coaching for employees. Guild has raised $229mn to date, and demonstrated exceptional impact including ROI of $2.84 for ‘every dollar spent on education’. We have written about this model in detail in our definitive guide for founders building companies that scale by partnering with universities.

Why Europe?

With only a small number of players, all of whom are concentrated in the US market, this category calls out for a European leader. This European market opportunity is large and growing, with a frontline worker population that is larger than the US, and corporate training budgets that are expected to grow by >$12bn over the next four years. We also see a number of innovative universities that are likely to play the role of early adopters for this model. For example, Coventry University and the Open University (OU) are likely candidates in the UK, with the OU already partnering with Uber to deliver education as a work-benefit for Uber drivers and their families.

So, where might one start if one wanted to pursue this opportunity? We have put together three suggested steps as a discussion starter — if you’re building something in this category, we’d love to build on these ideas with you:

1. Prioritise market

Whatever a successful approach might look like in Europe, it is likely to be highly localised as government-led funding, employers’ skill requirements and the nature of universities differ starkly across Europe’s major markets. France, Germany and the UK are all candidates. All three share important characteristics with the US market:

• Employers investing significantly into higher education for employees
• Policy environments that encourage this
• Fee-charging universities that are deeply experienced in working with employers and have the potential to scale rapidly

Out of the three, France probably has the most benign policy environment: Since 2019, French employers have to make annual contributions to employees’ personal training accounts (CFP) and to offer training as part of the skills development plan, designed to help maintain employment in the face of increasing automation. Further, France has a burgeoning private higher education sector: private provision grew from 12% of the total student population in 2000 to over 20% today. While French public higher education is near free, private institutions are fee-charging and could support a revenue-share based business model such as Guild’s.

In Germany, it is also common practice for employers to finance or part-finance their employees’ higher education: In 2015, German employers invested €3.3b in tuition fees. Again, most of this investment from employers is tax deductible. Like in France, private higher education provision is growing fast. Today it accounts for >10% of all students and for 25% of all HE growth. However, it is worth noting that by far the largest proportion of this investment — €1.4b — went into undergraduate level “dual studies” designed to attract school leaver talent to these employers — as opposed to continuing education for existing employees. Since their introduction in 2009, almost 50k German employers, including the police, McDonald’s and Axa, have become involved in the provision of dual studies to almost 4% of all higher education students.

In the UK, employers including Barclays, Capgemini and Airbus invested £1.3b into employer sponsored degrees in 2016, with an impressive 10% of all UK students — across both postgraduate and undergraduate degrees — being employer sponsored. In this model, the employer fully funds the cost of education and students gain access to paid summer placements. While popular, this model does not benefit from the funding made available by the apprenticeship levy — although the UK government is currently working to make more funding available to employer-aligned education provision.

2. Secure a lighthouse employer partner

Guild’s early lighthouse customer was Chipotle, InStride’s was Starbucks. The model requires so much upfront investment in processes and partnerships that you want to start with an employer that you can scale with.

To identify early adopters, seek out purpose-driven companies with large workforces and high employee turnover. To give you a sense, Starbucks had 281k US employees in 2019 and, pre-covid, its staff turnover was reported to be 60% per annum. Chipotle had 83k employees in 2019, of which 93% were hourly workers. Its staff turnover was reported to be 145% per annum.

Other industries with high employee turnover and large, low-medium skilled workforces include logistics and fulfilment, retail, supermarkets, hospitality, insurance and healthcare.

Take the NHS, which employs 1.2m people. in 2019, annual staff turnover of this massive machine was as high as 19% in some trusts and specialised labour shortages were significant. One way of addressing this problem could be to provide employer sponsored higher education programmes to NHS workers with unfinished university degrees. For instance, 24% of those who start a nursing degree in the UK don’t finish it. Undoubtedly, many of these individuals end up working for the NHS and could benefit from such a programme.

One other key learning from Guild’s journey here is that within the chosen pool of target employers, the best starting point are partners that already provide a higher education learning benefit to their employees but experience low take up of this benefit. It won’t be necessary to convince them of the upside of providing this to employees, just of your ability to increase uptake.

As per our comments above, we believe the most impactful and financially successful companies in this model will be those that create genuine career pathways for learners by building custom credentials in partnership with their lighthouse employer partners.

3. Focus on a small number of education providers that can scale with you

We believe value is created in this model through aggregating employer demand rather than university supply. Once employer demand is in place, securing university partners will be straight-forward. As a result, our recommendation is to secure a single or small number of education providers that have the potential to scale with you as you grow and worry about growing the education network later.

As an example, InStride’s first education partner (and co-founder) is Arizona State University. Through its partnership with Starbucks ASU enrolled 12,000 employees in 2019, accounting for 30% of its total online enrolment.

Great examples of European universities that have the potential to scale in such a way and who are highly innovative include Coventry University and IUHB, Germany’s largest private university with over 30k online students.

Is this you?

If you are a founder building a business in this space, we want to hear from you. You can get in touch with us here.

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