How “last-mile training” can help close the skills gap
An interview with EdTech investor Daniel Pianko
It’s no secret that the nature of work is changing and it’s becoming more difficult for individuals to find and maintain stable work at a fair wage. At Social Capital Partners, we believe that one way to tackle this changing nature of work is by finding and recognizing innovations around the world that are tackling these issues right now, and helping them scale or be replicated elsewhere.
Investors play a big role in supporting and scaling these innovations. This past week, I had the pleasure to speak with Daniel Pianko, Co-Founder and Managing Director of University Ventures, an investment firm focused on innovations that prepare students for the workforce and help employers think differently about how and where they discover talent.
What are some of the challenges you see individuals facing in finding and maintaining stable employment?
One of the biggest challenges that we’ve seen is in how companies hire entry-level people. More and more, companies are listing jobs that have very specific job requirements that only experienced people up to date with the latest technologies will meet. It used to be that if you were a salesperson, you could just apply, have a good attitude, and be able to write well to get hired and trained.
Nowadays, companies aren’t focused on training these employees, but instead of hiring individuals with significant experience and already familiar with technologies like Salesforce. This makes it very hard for individuals to get entry-level jobs.
On the surface, it makes sense that businesses would want to hire the most qualified candidates. Why do you think this trend creates a broader challenge for the future of work?
As we move up the value chain, this trend results in a huge disconnect between the demand and supply of work. In the US, there are millions of unfilled jobs — we know we need one million more coders and one million more nurses for example. On the other hand, we have ~10 million people who’ve opted out of the workforce and around 30–40 million people who are working part-time or underemployed and struggling to get into the workforce. This means that we have all these unfilled jobs that require some level of skill but the mechanisms for training people aren’t up to the task of getting people ready to work.
Where do you see innovation playing a role in solving this fulfillment gap?
At the end of the day, we actually have a relatively simple problem that is made complicated by various incentive structures. We have a large number of people who want jobs and a large number of unfilled jobs. That delta — the ability to learn Salesforce, to get nursing licenses, to do elementary software development — is for many people, last-mile training. In many cases, the gap can be solved in a two-to-three-month course in Salesforce or a one-year apprenticeship in software design.
The role of innovation is in building these bridges to last-mile training. If you think about it, it costs around $30,000 in the US to hire a software developer but ventures like Galvanize, Revature, General Assembly can fully train a software developer for $15,000. So why does it make sense for large corporates to spend more to recruit qualified people with software development skills when they can train employees for half the cost?
Can you expand on some of these innovations and models that you’ve seen as successfully providing last-mile training?
Successful models are ones that recognize and are capitalizing on the fact that we’re transitioning from a universe of pedigree-based hiring — where people got hired by what school they went to and who they knew — to a system where skills and competencies are becoming much more important.
For example, Revature works with colleges and universities to identify rising seniors who have strong cognitive abilities, then enrolls these individuals into free boot camps where each individual that successfully completes their coding program is guaranteed a full-time job, either at Revature or one of America’s largest employers.
Another great example is Techtonic, the first web development studio to be a licensed apprenticeship provider in the United States, where clients are encouraged to actually hire the web developer who worked on their project after the project is complete.
We’re seeing this rapid evolution around how individuals get a job and get trained for a job. Increasingly, we’ll be moving away from a world where students pay a lot of money for higher education to one where employers are willing to pay to develop the type of talent they need when they need it.
As an investor focused on solving this education-to-employment gap, how do you balance supporting innovations that have the most impact against your need to generate positive market returns?
We’re big believers that by solving the world’s biggest problems, we’ll have the highest returns. We look for companies where the social outcome is closely tied to the economic outcome. So for these models that we just talked about, every time someone gets placed in a job, we make money. This makes us highly encouraged to get people placed in their first jobs and also to reduce friction for hiring and education.
Moving forward, how would you like to see this market develop?
We believe that this sector is going to grow as not just an investible area but increasingly as a policy focus. And we hope that as this sector develops, it will retain the private-sector approach where people will continue to be able to generate market-rate returns by disrupting the staffing-industrial complex, rather than trying to rely on government funding or other non-market forces.
We are really hopeful that there is a market for putting people to work and solving future of work problems, and for the market to develop in a way that provides incentives for employers to change the way they hire, and for students to engage in these markets as new job-seekers.