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You can always tell a system is broken when you change the inputs and the outcomes don’t improve. Any software engineer will tell you that.
Using this metric, it’s clear the United States’ antiquated higher education system is truly broken. Overpriced and underperforming, the system is failing on two key fronts: addressing racial inequalities and closing our country’s growing tech skills gaps.
For all the changes made to the system to welcome people of color into the classroom, the outcomes in terms of wealth, equity distribution and representation are worse than ever.
On average, Black college graduates owe $25,000 more in student debt than their white peers. Worse still, four years after throwing their caps in the air, 48% of Black graduates owe an average of 12.5% more than they borrowed in the first place.
A labor market built on degree requirements has little hope of correcting course.
While colleges and universities do as good a job as they’ve ever done at preparing students with the cognitive and critical thinking skills they’ll need to be successful in the long run, the college system just isn’t providing the right training for jobs in 2021.
Looking past the college experience, the unemployment rate for Black Americans stands at nearly 10%, compared with 5.5% for white Americans, while the typical Black American family has eight times less wealth than a white family. This is coupled with the fact that Black people make up just 4.1% of Russell 3000 board members — compared to 13.4% of the population.
This isn’t just a matter of grave injustice. The racial wealth gap costs the U.S. economy $1 trillion to $1.5 trillion in GDP output each year. There is a financial and moral imperative to do something about it.
Then there’s the skills gaps: For all the belated changes made to academic programs and curricula, and while colleges and universities do as good a job as they’ve ever done at preparing students with the cognitive and critical thinking skills they’ll need to be successful in the long run, the college system just isn’t providing the right training for jobs in 2021. Ten years ago, 56% of CEOs were “extremely” or “somewhat” concerned by the lack of talent for digital roles. By 2019, this had jumped to 79%. This is why well over 50% of new and recent graduates are underemployed in their first jobs out of college (two-thirds of whom will be underemployed five years later, and half a decade later).
There must be a better way. A way that empowers young people to achieve in-demand skills while avoiding the decades-long burden of student loans. A way that doesn’t discriminate based on socioeconomic background while exposing talent-hungry employers to a new pool of qualified, driven individuals.
In the explosion of edtech businesses with new approaches, we are in danger of overlooking an established model that can be adapted to solve these challenges. That model is apprenticeships.
The apprenticeship movement
There’s a lingering perception in America that apprenticeships are the province of construction and building trades, or even medieval guilds like smithing and glass-blowing. Well, not anymore. While we’ve been focused on edtech, or despairing over the widening skills gap, apprenticeships have been rebooted. Modern, tech-driven apprenticeships are emerging as a faster, cheaper and more impactful alternative to higher education.
In Europe, tech companies — and nontech companies increasingly hiring entry-level workers with discrete tech skills — are already leveraging apprenticeships to provide a direct route into the labor market for diverse talent. From software engineers to data analysts, the apprentice of the 21st century is as likely to wield a keyboard as a wrench.
Fully employed from day one, apprentices earn a wage while they learn on a program that is entirely free to the individual. Their training is delivered alongside their role, with this applied learning approach ensuring relevant skills are tested and embedded right away.
Part of the challenge presented by the existing system is that college provides a single shot of learning at the start of a career, with a focus on knowledge rather than skills. Instead of time-consuming traditional education models, we should be encouraging companies to focus on training individuals for highly skilled jobs and adapting training as roles shift through a lifelong learning journey.
Against a college system churning out graduates armed with knowledge of limited applicability in the workplace, apprentices have real-work experience and transferable skill sets in the tech and digital spaces.
As we write this, tech apprenticeships represent less than 1% of American apprenticeships , while 78% of apprentices are white. But change is in the air. In recent weeks, the Biden administration has gone out of its way to highlight tech as a growth area for apprenticeships.
The president also announced his commitment to raising apprenticeship standards, starting with casting off industry-recognized apprenticeship programs lacking in quality and training rigor.
These aren’t just words, either. The apprenticeship reboot will be powered by a new National Apprenticeship Act . This proposed legislation commits $3 billion over the next five years to expanding registered apprenticeship programs across a range of industries. If it’s done right, tech will be front and center.
The benefit to businesses
All this is welcome good news for businesses desperate to close skills gaps. As roles evolve at an ever-faster pace, it’s becoming more and more difficult to know what a college degree actually says about an individual’s ability. Yes, they went to a “good” school. But when half of Americans say their degree is irrelevant to their current role, how does prestige translate to jobs, let alone ability to perform in the workplace?
Increasingly operating in the dark, tech businesses and nontech managers hiring for tech roles are competing with each other to poach experienced talent into senior roles. It’s continuing to fish in a very limited, homogeneous pool and an expensive short-term solution.
Professional apprenticeships allow business leaders to be more strategic and proactive in their hiring practices. They can mold apprentices to the roles they actually need to fill while focusing on their organization’s specific requirements. It beats relying on uniform, outdated education models.
Better still, by training apprentices from the start of their career, companies inspire loyalty and eliminate the tricky transition phase recent grads and external hires usually need. Once converted to full-time employees, apprentices tend to persist for twice as long as traditional direct hires.
While skills gaps are created by the future racing toward us, racial inequalities are rooted in our past. Professional apprenticeships help break down entrenched structural barriers to careers in industries like tech.
Most important, they look beyond the degree requirements that screen out 67% of Black and 79% of Hispanic Americans. Because apprenticeships are paid pathways to economic opportunity, they truly level the playing field and allow companies to make genuine advances toward racial equality — beyond a few neatly crafted Instagram posts. Meanwhile, by tapping into diverse talent pools early, businesses can develop individuals and build real, recognizable routes to the boardroom.
They would be right, too. A 2020 report by McKinsey found companies with the highest diversity earned 35% more than their industry average. Similarly, the share returns of the most diverse companies in the S&P 500 outperformed the least diverse by a staggering 240%.
The time for change is now. According to the National Center for Education Statistics, 41% of grads end up in roles that don’t require a degree. With COVID-19 hitting young workers particularly hard, this figure is set to rise unless we embrace new approaches, including professional apprenticeships. In creating a direct and meaningful career pathway for young adults, they can help businesses close skills gaps and hit their much-vaunted diversity targets.
There’s no single solution to these challenges. But the professional apprenticeship can be education’s biggest contribution.
The pandemic-induced jobs crisis has fallen disproportionately on generation Covid-19, and the effects may be long lasting.
Tech’s coveted internships were some of the first roles to be cut as offices closed and businesses shuttered in response to the coronavirus. A number of companies across the country, including Glassdoor, StubHub, Funding Circle, Yelp, Checkr and even the National Institutes of Health, canceled their internship programs altogether.
For InsideSherpa co-founders Tom Brunskill and Pasha Rayan, the canceled internships were an opportunity. InsideSherpa, a Y Combinator graduate, hosts virtual work experience programs for college students all around the world.
College students, searching for a way to get job-ready, flocked to the platform from Northern Italy to South-East Asia, to all over the United States. Enrollments in InsideSherpa grew more than 86%, up to 1 million students.
The educational service successfully attracted student interest, and now, has landed investor interest. Today, InsideSherpa announced that it raised $9.3 million in Series A funding, led by Lightspeed Venture Partners . The startup has now raised $11.6 million in known venture funding. Other investors include FundersClub, Y Combinator and Arizona State University.
The financing will be used to grow InsideSherpa’s staff, with more engineering, product and sales roles. Along with the financing, InsideSherpa announced that it has rebranded to Forage.
Forage isn’t selling an internship replacement, but instead comes in one degree before the recruitment process. Students can go to the website and take a course from large companies such as Deloittee, Citi, BCG and GE. The course, designed in collaboration with the particular company and Forage, gives students a chance to “explore what a career would look like at their firm before the internship or entry-level application process opens,” Brunskill explains.
Forage is focused on partnering with large companies that employ upwards of 1,000 students per year via internships to help open up new pipelines. The corporate partners pay a subscription fee per year to post courses, and students can access all courses for free.
Popular courses include the KPMG Data Analytics Program, JPMorgan Chase & Co. Software Engineering Program and the Microsoft Engineering Program.
While Forage declined to disclose ARR, it confirmed that it was profitable heading into its fundraise, which formally closed in July.
Within edtech, flocks of companies have tried (and failed) to deliver on the promise of skills-based learning and employment opportunities as an outcome. The strategy of getting cozy with corporate partners isn’t unique to Forage, but the team views it as a competitive advantage. Of course, the effectiveness of that strategy matters more than the fact that it exists in the first place. Forage did not disclose efficacy information, but said that “some” corporate partners hired up to 52% of the cohort from their programs.
When Brunskill and Rayan first started Forage in 2017, they imagined a mentoring marketplace to connect students to young professionals. Three years later, much has changed.
“While students were interested in the product, they weren’t using it the way we intended,” he said. “Students kept saying to us ‘we just want an internship at company X, can you get me one?’ ”
While Brunskill doesn’t believe there’s any silver bullet solution to fixing education or recruitment systems, he remains optimistic in Forage’s future. After all, even if democratizing access to skills is the first step in a bigger race, it’s not an easy one.
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The best founders seek out great mentors and guidance from folks who know best, but during the coronavirus pandemic, asking for help when it’s needed is critical for all entrepreneurs.
Ureeka, a startup founded by Melissa Bradley, David Jakubowski and Rob Gatto, is looking to provide that mentorship and guidance through their platform, which just closed on an $8.6 million funding round from Bullpen Capital, Chicago Ventures and Salesforce Ventures.
“There is an intentionality in our business to go after what we see as the fastest growing, largest and most interesting market opportunity, which is not the Harvard and MIT pedigree, but underrepresented entrepreneurs,” said Bradley. “Small and medium businesses account for 99 percent of all business in this country and there has been a real missed opportunity around serving them.”
The company says that female led venture-backed business performance is 63 percent higher than investments in all male teams, while the same businesses have 12 percent higher revenue and use 33 percent less capital, with a 15-25 percent lower failure rate. Since the recent recessions, businesses owned by people of color are the fastest growing segment, with 38 percent growth between 2008 and 2012, according to Ureeka. Meanwhile, Hispanic-owned businesses have seen 46 percent growth from 2007 to 2012, with $700 billion in sales globally, creating 8 million jobs with a total payroll of $254 billion, the startup says.
Ureeka pairs these entrepreneurs with mentors and coaches to get answers to their most pressing questions. The idea for the startup came when the cofounders were judging a pitch competition in Michigan and got to talking about the challenges associated with starting a company, particularly for underrepresented founders.
The Ureeka founders noted that black, hispanic and women founders begin businesses with approximately half of the capital that white men do, on average, and that loan rejection is three times higher for minority entrepreneurs than their white counterparts.
“In talking with Melissa, I realized that there are some basic things I was taking for granted,” said Jakubowski, formerly Head of Data & Analytics, Emerging Business & Partnerships at Facebook . “For example, I could pick up the phone and have an answer to my question in 30 minutes.”
After testing for months, Jakubowski and Bradley (Managing Director of Project 500, adjunct professor at Georgetown’s Business school and presidential appointee under both President Clinton and President Obama) launched Ureeka to give access to mentorship to underrepresented small and medium business owners, agnostic of sector or region.
These entrepreneurs can hop on the platform with a question and get an answer from a mentor or coach in under two hours. Mentors, experts from just about any sector of business, give their time to the platform for free. Coaches, on the other hand, are paid contractors (many of whom have their own business or operational position at a large company). Ureeka members can also start up conversations with other members, and access on-demand webinar-style content on topics that are common to the whole community, such as adapting to the coronavirus pandemic.
Ureeka has more than 200 mentors on the platform, many of whom hail from companies like Facebook, Snap, Salesforce, Google, and Adobe, among others. Ureeka members can also pay a premium ($3,000/year) to have access to a dedicated coach, who can then follow along with the various questions and issues that arise and ultimately skip over the exposition and context-gathering part of the conversation. Those that opt for a dedicated coach get two hours each month of one-to-one video chat with their coach.
Alongside the funding announcement, Ureeka is also announcing that it will be facilitating the SMB grant programs from Facebook and Salesforce. Facebook’s grant program will provide $100 million to SMBs in the United States, and Salesforce’s Small Business Grants will provide $10,000 individually to SMBs.
According to the company, Ureeka members see 2x revenue growth once they’re connected to mentors and coaches, and the founders noted that many Ureeka members graduate to mentors or coaches and pay it forward to new members.
The for-profit business charges $200/year for members to join, and the company takes less than 15 percent margin. Ureeka is also waiving its fee for all businesses impacted by coronavirus through 2020.
The company also has a vendor partnership program, helping members find the right vendor for their need without being overwhelmed by thousands of Google search results. In fact, many vendors are Ureeka members themselves, creating a virtuous circle within the Ureeka community. Big corporations that would like to be included in the Ureeka vendor program must provide a dedicated line of communication for the Ureeka community.
With lockdowns in place for a while longer, thousands of graduates are fretting about the future of sought-after programs on Wall Street and beyond.