College for the 21st century

When I was in college, one of the iconic Yale experiences was visiting the Yankee Doodle — a greasy spoon at the corner of York and Elm Streets — and taking the Doodle Challenge. The Doodle Challenge involved eating as many burgers as quickly as possible in a single sitting. At the time, the record was 19 burgers in two-and-a-half hours. For my roommate Chris Douvos, 20 burgers became his white whale.

Twenty burgers meant two things: immortality by way of his name on a plaque above the door and also not having to pay for 20 burgers. While Doodle burgers were small, both the buns and patty were soaked in butter before frying (the Doodle was renowned for its fried donut). Douvos trained for months with loaves of bread. On the day, we all headed to the Doodle, supportive of our hero — but also making side bets.

Douvos was going strong at burger No. 8. At burger No. 10 he began to slow. And at burger No. 12, Douvos coughed and a tiny speck of burger flew out of his mouth. We knew his quest was at an end. We paid the bill and enveloped Douvos like a fallen prizefighter, hustling him out of the Doodle and back to school. That was the last Douvos saw of the Doodle for some time, but not the last he saw of those burgers.

College has changed a great deal in the 25 years since Douvos’ failed attempt. For one, we have an urgent crisis of college affordability. Due to skyrocketing tuition, the average student now graduates with $37,000 in student loans. Simultaneously, college graduates are facing a crisis of employability. Graduates face record underemployment as colleges and universities haven’t come close to keeping up with the increasingly technical skills demanded by employers; only 11 percent of employers think higher education is producing graduates with the skills they need.

 

The result has been financial calamity for millennials: overall, only 57 percent of borrowers are current on their loan payments; one-third of borrowers who graduated between 2006 and 2011 have already defaulted. Home ownership and new business creation by young adults has plummeted. As Gen Zers reach college age, they’re looking at the example of millennials and contemplating whether a traditional four-year accredited college or university is the optimal path for achieving their primary goal: a good first (and probably digital) job in a growing sector of the economy.

This question is something Douvos would have supported that day at the Doodle. Why force young people to eat as much post-secondary education as they can in one sitting in order have a shot at a good first job?

Faster + cheaper pathways to good first jobs are poised to supplant slow, expensive bachelor’s degrees (particularly from non-selective colleges and universities) in Gen Z’s affections. Gen Z has already been prejudiced against large upfront investments. Why buy a car when you can summon one with an app? Why subscribe to a cable bundle when you can stream individual networks and shows? The sharing economy will not leave the $500 billion higher-education sector unscathed.

Gen Z wants to get its foot on the first rung of a career ladder — a good first job quickly, and without incurring any debt — before deciding what secondary or tertiary post-secondary education pathways to follow in order to bolster cognitive skills, become managers, move on and move up.

We’re seeing the emergence of faster + cheaper alternatives to college in the form of bootcamps that provide last-mile training and lead directly to good digital jobs, as well as income share-based college replacement programs like MissionU. But none yet have the scale to accommodate the large number of 18-year-olds who fear joining the 30 percent of college graduates who say they’d sell an organ to get rid of their student loan debt. How are we likely to get the scale to provide a college alternative for the millions that clearly want one?

Before college became the sole viable pathway to a respectable career, apprenticeships were the norm in many professions. In a head-spinning reversal of the sad status quo, apprenticeships not only don’t charge tuition or require students to take on debt, they pay students. Consequently, lots of people are interested in reinvigorating apprenticeships, including President Trump, who wants to multiply the number of apprentices in the U.S. by a factor of 10.

While few U.S. employers are scrambling to launch their own apprenticeship programs — a big hassle — every employer outsources services. A wide range of IT services are commonly outsourced, as are accounting, payroll, legal, insurance, real estate, sales, customer support, human resources, staffing, consulting, marketing, public relations and design. While mid-size and large companies are likely to have employees in these functions, most also contract with providers for these services.

Service providers like accounting firms, staffing companies and call centers have incredible scale. Staffing itself is a $150 billion industry. Advertising is $200 billion. Call centers employ more than 2 million American workers. While many service providers are accustomed to having their talent poached by clients, few have built a business model around it — until now.

We’re now seeing the emergence of service providers that explicitly serve a dual function: (1) provide business services to clients; and (2) serve as a strategic talent supply partner for entry-level talent.

Techtonic Group is a Boulder-based software development shop that is simultaneously a registered apprenticeship program. Techtonic hires and trains apprentices and, by week five or six, apprentices shadow more experienced software developers. After a few months, apprentices are billing meaningful hours on meaningful client projects.

A year later, Techtonic clients are invited to hire the software apprentices they’ve been working with and whose work they’ve seen, which radically reduces the risk of entry-level hiring. As many of the challenges faced by millennials stem from their inability to land good entry-level jobs with employers like Techtonic’s clients, this model provides an appealing and scalable faster + cheaper pathway.

 

Becoming a strategic talent supply partner is possible for many service providers. Think of a call center providing a range of customer support and inside sales functions for your firm. You probably have employees in sales and customer service roles, but with a clear division as to what functions are outsourced. What you’re less clear about is how or who to hire for these internal roles, and how much to rely on (lower-cost) entry-level employees as opposed to (higher-cost) employees with experience.

Enter the strategic talent supply partner. Call centers will continue to charge you for providing customer service and sales, but by becoming a strategic talent supply partner to clients, you now also have a second revenue stream: charging a placement fee for hiring the entry-level talent that’s been working for you for the past year or two — talent that is purpose-trained and proven.

Many service providers already have robust recruitment and training functions. Constituting these into a talent supply business will take time, but the rewards are evident in the rapid growth experienced by talent supply pioneers like Revature, which has demonstrated the ability to fulfill orders for hundreds of purpose-trained, proven entry-level software developers for a single client.

In contemplating the emergence faster + cheaper alternatives to college, I’ve been fearful of losing all the fun. As with Douvos and the Doodle, fun is what we remember best from our college years. But as millions of young Americans launch their careers via dual service providers/strategic talent partners, I get a sense that fun won’t be lost.

Strategic talent partners like Techtonic will scale, and their many cohorts of apprentices will need a place to live; Revature already provides housing. So successful strategic talent partners will find themselves in the business of operating campuses and will take advantage of this immersive environment — even if only for a short period of time — to develop and evaluate the soft skills that clients (and future employers) value as highly as technical skills. It wouldn’t surprise me in the slightest if these future apprentices — these 21^st century college students — not only land great first and second jobs with no debt (or tuition), but that — after hours — they also find themselves at a local greasy spoon, trying to set a new (faster + cheaper) record of their own.

*University Ventures has investments in MissionU and Revature.

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