Ethical Business?
Your business models are your business morals
I love fundamental truths and theories. There are not many better than evolution. A population will optimise for a desired characteristic over time through natural selection.
I think you can take this and apply it to sum up what a company actually is. Let’s view a company as simple organism, or machinery. A company has no morals, no dreams, no vision. The people in it might. But the company itself is a simple organism that cares about survival and will optimise for it. The way companies survive is through generating cash. The way companies generate cash is through their business model. So from a company point of view, your business model dictates what you care about. Culture, morals, vision are all important for your people. But your business is set up solely caring about how to maximise its reward system to have the best chance of survival.
Put simply, who you are as a business is dictated by your business model.
Businesses are amoral — machines that maximise whatever is measured by their reward system. The most fundamental thing that dictates your business behaviour is your business model.
Case Study: Coding Bootcamps
School of Code is set up to get more and different types of people into tech. We want to prove you can produce world class talent from anywhere and help people start rewarding, challenging, fulfilling careers in tech whilst also helping companies grow with talent they would otherwise not have access to. The key for me is that the transformational journey we provide for people should be free — we believe it shouldn’t matter how much money you have when it comes to accessing education or opportunities to better yourself and your future.
These are great aims to have. But how can we bake them into the business DNA?
Traditional Coding Bootcamps
The bootcamp model is a good business model for generating cash with little risk — charge people upfront to access a course that promises to help them learn skills to gain new career opportunities. Let’s look at what that business will truly care about, and project forwards. The business model revolves around people paying upfront (could be £6k, £10k, £20k or more). So, naturally you would optimise your marketing funnel to make sure people were convinced to hand over that money and take the leap. The course becomes secondary. You’re welcome to argue that they still would want to provide a great course experience and great outcomes to get the recommendations, etc. but the fact is that the primary thing to optimise in the model is the marketing and ability to convince customers to pay.
Similar to university, there is no skin in the game for the provider of the course. You get a certificate, a pat on the back, and sent into the world to try and find a job (which hopefully eventually you will). Again, there may even be some support to help find jobs, but it’s a secondary function at best. Furthermore, the incentive would be to take people who are “low hanging fruit” — that is people who are already programmers or close to becoming one. Then you can charge them upfront and with minimal effort produce people ready to be hired. That’s why you’ll see a large list of prerequisites for most bootcamps in terms of prior experience, and 50% of bootcamp attendees are already programmers or in tech positions and are just updating their skill sets. This is optimal for this business model, minimal effort for maximum gains — the evolution will tend towards efficiency. This is where “Predatory Bootcamps” are an inevitability — they care about getting people in to generate cash, and that’s the primary driver.
If we were going to sum up activities that lead to revenue, we’d say this was a Marketing Company.
Income Share Agreements
A popular model that has been around for a while reverses the traditional bootcamp model. Instead of charging people upfront, people pay a share of their income when they land into a job. How would you optimise this? Again, you could take the “low hanging fruit” — people already on their way to becoming developers. But you could also take a “spray and pray” approach — you essentially have unlimited opportunities to “invest” into as many people as possible who will potentially pay back into the business. Similar to VC funding, if you invest in 10, 8 will fail, 1 will survive, and 1 will thrive… So by that measure, the optimum would be to provide a minimal cost route to as many people as possible playing the probabilities that some will make it into jobs eventually and start paying back.
The bigger problem with this model is that the main mechanism of injecting cash into the business is through students paying back after the course. Therefore, what would you optimise? …that collection mechanism: tracking, chasing, and collecting payments from students.
You are a debt collection agency. This means that although it’s a useful financial instrument, you’re likely to sell this debt on (as has already been seen a few times).
School of Code model
I wanted the School of Code to have 3 key focuses:
- to help more and different types of people into tech
- to focus on helping people directly into jobs
- to add value, and be a transformational journey producing talent unlike anywhere else
I wanted these points to be embedded into the DNA of the company. I wanted these to be the natural morals of the company. I wanted them to outlast me — if I disappeared, the company would still stay true to these.
Free for people. Companies pay.
Our mission is to provide a route into tech open to everyone. We believe the amount of money you have shouldn’t dictate whether you can access opportunities for education, to better yourself and your future. So I wanted to make sure that the School of Code was free to everyone. The easiest business model to make money would be to charge people upfront, so I knew I had to build a model around course outcomes. The School of Code ethos is that if you can produce great talent, companies will pay — our employer partners pay to hire from the School of Code if they find the right talent for their company.
This is how the School of Code started — it’s a lot of risk as a business, but if you truly back yourself to get people job ready and companies are in need of the talent you’re producing, they are usually happy to pay. Our partners love our model since it is pay it forward — they are not just paying the course costs of who they hire, but they are also helping to train the next person for free too! They are part of building and proving a new model of education and recruitment!
We take on a broad range of people (50:50 gender split, age range 18–60, ethnicity demographics matching the local population) from a huge range of backgrounds and help them transform into top tech talent. This started as a social experiment, having no barriers and no prerequisites — you never have to have seen a line of code before. We just test for humility, motivation, and a hunger to learn. The diversity of the bootcampers is the magic of the course — learning to work with people different than you is hard, but our belief is if you can understand how to get the best out of a diverse team with a broad range of perspectives then magic will happen. We’ve managed to get an 85% average employment rate even during the COVID pandemic.
However, if we were to just stick with this business model then, as we’ve seen, the evolution would naturally be to choose people who are the easiest to get into jobs. It would still be free for people, but we’d be choosing the low hanging fruit (computer science graduates, programmers retraining, etc) as the people making up the bulk of the course. This makes business sense. The School of Code is there to add value, and help everyone.
Sponsorship upfront
So, a way to cement the diversity of the course was to build a business model which dictated it. That’s why we are aligned to sponsorship upfront. This is from organisations who want to see this type of thing happen, and share our values and mission. We’ve been supported by some great organisations and have also created a relationship with Government since there is a huge social good that we are driving for. This upfront funding/sponsorship dictates that we need to open the course up to everyone and prioritise those who could not otherwise get into technology (our key mission). We are defining the social contract that we will be open to all and strive to add maximum value to people’s lives through their journey with us. So, the two ends of our process have attached to the revenue engines which dictate we need to optimise for both — bringing through a diverse cohort, adding the maximum value through a transformational journey, and landing them into tech careers.
Why am I telling you this?
I hope that, actually, all bootcamps are free. If someone takes this model, great! Let me know how you get on, and I’d be happy to give advice along the way. We’ve certainly learned a lot over the last few years of running this and transforming the lives of hundreds of people. This is something that we’ve taken huge risks to prove over the last few years, and although there will also be risk achieving the mission is at the core – this isn’t just we turn into a free bootcamp because the opportunity is there. It’s a belief that everyone should have access to transformational education and it’s our duty to provide it and make it accessible.
There are flaws, for sure, and we will have to iterate and evolve as we go but keeping the purpose at the centre is key!
On a more general note, I think this applies to all businesses. If there is something key to your business morals, build a business model around it! My belief is that businesses are set up for purpose — if you don’t have a purpose, it’s an empty vessel. Even if your purpose is just to give people a great life working at the company, that’s ace. But just setting something up for solely creating profit seems like a meaningless endeavour. So, if you have a purpose, don’t write it in your mission statement. Don’t paint it on your walls. Build your business model around it, and bake it into your company DNA!
