S1:E17 Ryan Craig: Deliver what students and employers need

Tyler Jacobson  0:01 

Welcome to LabChats, a podcast from the team at LabStats. I’m Tyler Jacobson, your host for today’s episode. Each week we’ll sit down with technology leaders in higher education to get the latest buzz and insights while we discuss current events, trends, problems and solutions. Now let’s get into it. Today we are joined by Ryan Craig. He’s the author of “College Disrupted” and “A New U: Faster + Cheaper Alternatives to College”. Ryan, give us a little bit more background on your experience, as well as introduce yourself and your mission. 

Ryan Craig  0:35 

Sure, I am a[n] investor. That’s my day job. I run one of the largest private equity firms in the education space and increasingly at the intersection of education and workforce, helping make the connection between people and jobs. My background is in higher education. I started my career working at Columbia University and went from there to investing full time at Warburg Pincus. [I] founded some companies and have had my own investment firm now for about a decade. So we invest in companies that are: tech companies, coding boot camps, new and different pathways to employment opportunities that involve education and training apprenticeship programs. So that’s where we’re focused.

Tyler Jacobson  1:23

With that focus on education investment, that means you’re pretty passionate about making sure that education is as good as quality of product as possible. And one of the articles that we read that you have written was about romanticizing failing colleges. So I wanted to have you kind of give an overview there, what are you using as your basis to indicate that a college is failing? As well as just give me your general premise.

Ryan Craig  1:51

Yeah, so that was an article I wrote a few months ago. The idea here is that when a company fails, then oftentimes the coverage of it is: “Oh, they had a bad product, you know, good riddance,” and the hubris of the investors who thought that they could do this. But when a college fails, and there are lots of them out there that are seeing declining enrollments, the whole attitude is really one more veiled in style, Jeff, and because you know, that college probably looks a lot like the college that you went to. And how sad is it that the college is failing? But let me tell you, the college is failing because they’re offering a bad product. They’re offering a product that they’re either charging too much for, or that isn’t graduating enough students, and that probably isn’t helping them find good jobs as a result. So that’s why students don’t want to enroll in that college. You know, it’s true when colleges go out of business that their faculty and staff lose jobs. But that’s true with companies too, when they fail, and that’s the sort of market capitalism that we have. And so we shouldn’t be nostalgic about romanticizing failing colleges. Failing colleges are failing for a reason and they should fail. And we should build better post secondary pathways and new alternatives, new pathways to employment on top of them and make those available to students. Last thing you want to do for a young person or an older worker who is seeking upskilling, or retraining is to send them to a failing column.

Tyler Jacobson  3:29

Is that primarily the metric that you’re basing the word failure on is the ability to get a job? And is that the primary endpoint that you think we should be [focusing on]?

Ryan Craig  3:38

Yeah, that is the single biggest change in American higher education. When I went to college, if you’d surveyed those of us who were entering college in 1990, probably about half of us would have said, “Well, we’re enrolling in college, and the main reason is to get a job or get a good job or get a better job.” The other half would say the whole wide range of reasons why you were doing it. [Then] 30 years later: huge tuition increases, student loan debt, the Great Recession, the digital transformation of the economy, and the fact that colleges have not come close to keeping up with the digital transformation of the economy. Today, if you survey young people who are matriculating into a college or university or older workers who are going to try to go back to school and you ask them why they’re doing it, north of 90% say, “It’s about the job. I’m literally trying to do this for the job.” And so that’s the challenge. If you talk to colleges and universities, though, most of them don’t recognize that. You talk to the department chairs and faculty who decide what courses and programs to run. That’s not what they’re focused on there. They want to continue to teach what they’re interested in and where their area of research is, which is nice, but it’s hard to do that and continue to charge $40,000, $50,000, $60,000 in tuition a year and ask students to take on in some cases six figures of student loan debt in order to get a degree. The job that you’re going to get with that degree just is not going to support that level of debt. And that means that students are not going to enroll in that school and the schools will fail. So, yeah, it is about the job. And then let me add one thing, colleges and universities will say, “Well, we prepare students for their fifth job, not their first job,” right? Meaning that if you prepare them with the cognitive skills and critical thinking skills, they’re going to need to be successful in the long run. But we know now, this is from research that you know, two years ago from Strada Education Network and Burning Glass [Technologies], we know now if you don’t get a good first job, you’re underemployed in your first job. Two-thirds of the time, you’ll be underemployed five years later, half the time you’ll be underemployed a decade later. Which makes sense, right? Because careers are path dependent. Your second, your third employer, they’re gonna care a lot about what your first job was, probably more about that than where you went to college, or what you studied, or even whether you went to college, in many cases. So that’s sort of what we’re dealing with; colleges and universities haven’t caught up with what I call the ’employment imperative’, which now governs American higher education. At all but, you know, again, you can exempt the top 50 schools, which is 5% of the all students, right, if you’re going to a brand name school, that Ivy League school, or UCLA, or Berkeley, or University of Chicago or Northwestern, this doesn’t apply. But that’s 5% of the market. So I’m talking about the other 95% you’re enrolling in the schools because they want to get a good job, or they want to get a better job.

Tyler Jacobson

So how do we hold them accountable to making that more of a focus of preparing them for the workforce, and there’s accountability? And the second part is what do they need to change to adjust? 

Ryan Craig

Well, they’re not going to be accountable until they see their enrollment declining, and enrollments not going to decline, in my view, until we have a large supply of faster and cheaper pathways to good jobs. Which is what our firm is trying to build; we’re trying to launch apprenticeship programs across the economy, in areas like cybersecurity and software development, and Salesforce and healthcare IT and so forth, where, you can imagine as a high school graduate, presented with the option of taking on six figures of student loan debt for a shot of getting a degree and a shot at getting a job versus a paid apprenticeship pathway from day one, where in six months, you’ll be actually doing real work for a real company and being paid. At the same time recognizing that that’s not all she wrote, in terms of your post secondary education, you are going to need to develop those critical thinking skills, cognitive skills, communication skills, but you’ll have your first foot on the first rung of a career ladder [with] no student loan debt. And after a couple years, we’ll be able to look around and ascertain what secondary or tertiary pathway you’ll want to pursue in order to gain those skills. That’s a much better place to be. And if you think about it, that’s sort of the way we do things now across the broader economy, right? For example, companies don’t buy huge enterprise software licenses to install them. We kind of buy what we need when we need it, using SaaS platforms. And the same is gonna happen in post secondary education. We’re gonna get what we need when we need it. And given that most good jobs now are digital jobs. And most digital jobs, your entry level jobs, ask for platform skills like Salesforce, for example. The right first step for millions of young people is not taking one whole kind of student loan debt for a shot at getting a degree and a shot at getting a good job. Rather it’s to take faster and cheaper pathways to that good first job, and then look around, after having worked for years and ascertain what the next step is is going to be. You’re going to have many fewer bad outcomes, I look at it now I’d say of the 10s of millions of people, of Americans who are enrolled in a college or university program over the last decade since the Great Recession. You know, maybe 40% had positive outcomes from it? It’s probably closer to 30%. If you take into it, if you add up, the percentage of those who enrolled didn’t complete their degrees and then add to that those who completed or were underemployed in their first job, you kind of get sort of 60-70% of this. So it’s not working and it won’t work until colleges and universities change and they’re not going to change until they see their enrollment bleeding away to new alternatives that are being built.

Tyler Jacobson  9:42  

Are some of those new alternatives…is that going to come in the form of like technical colleges [and] trade schools? Are those a threat to the universities at this point, or is that a down the road? thing?

Ryan Craig  9:55

Yeah, no, the best pathway is there. You know, I’d like to say that if you’re seeking to be up-skilled in an area where there’s truly a skills gap, where employers can’t find talent. And if someone’s asking you to pay tuition or take any financial risk for that upskilling, you either got a bad business model, or at least an unimaginative one, because there’s a very willing payor for that upskilling. And that’s the end employer. We need better models of secondary education. So that’s where we’re focused, we’re focused on building apprenticeship models, where it’s not a Technical College, you’re being paid. You’re hired as an employee from day one, with benefits, and you’re being trained from day one. That is a big change in the American economy. 10-20 years ago, a lot more American employers had entry-level training programs. Today, the attitude of the typical American employer is: “I’m not going to hire someone until they’re a perfect fit and I know they can be productive on day one.” And when most of these jobs require mastering one or more different, very complex software platforms and those platforms aren’t being taught in colleges and universities…That’s why we get what we have now. Which essentially is blocked pathways to economic opportunity. You have more sectors like cybersecurity, for example, where your so-called entry-level jobs, you actually break them down into the skills and certifications they’re asking for. They’re asking for three years of work experience. It’s basically turning entry-level jobs into an oxymoron. If you ask millennials what they have experienced over the last decade and are trying to launch their careers, a lot of them would probably agree with that. Like, “Yeah, where did these entry level jobs go?” The entry-level jobs are specifying technical skills and digital skills and platform skills that, “How could I ever have learned?”, without having actually done a job, because no one’s training. For example, Epic is the leading electronic medical records platform. Two-thirds of American hospitals keep your patient records on the Epic platform. There’s not a college or university in America that has a training program on Epic. You can’t go to work in sort of a hospital tech role without knowing Epic. How are you going to learn it? So that’s the problem we’re trying to solve.

Tyler Jacobson  12:16

Historically, when we think about technical college, trade colleges, these types of programs, we’re thinking more of your plumbing and electrical and things like that. And it sounds like you’re saying that that same thing would apply a whole lot more on the technical side. So for instance, having a class on Epic, would be something that would help people advance their career. Does that take the form of a series of certificates? Is there a specific program that they complete at the end of it? Is that changing the entire model so that it’s collecting the resources that you need in order to be “job ready”? What does that kind of look like? 

Ryan Craig  13:00

Yeah, I mean, it’s a great question. And let me just be clear, I’m not saying apprenticeships are going to somehow replace our current four year colleges and two year colleges. There are 20 million seats in those institutions. And there are only 500,000 apprenticeships in the US, basically. Even if we triple or quadruple them in the next five years. So a lot of people are going to be going through a tuition-based model. And even if it’s a free community college program, like President Biden has proposed, that’s still…it’s not free, because you’ll be paying your cost of living. And then the opportunity cost of not working while you’re studying. You’re not going to be paid. No one’s proposing community college students get paid a wage while they’re in community college. There’s a lot that traditional institutions can do to try to close the gap. One idea that I’ve written about is turning your degree programs upside down, and making sure that you start not with a general education program. The large lectures generate so much surplus for colleges and universities because you have 100 or 200 students in one professor, but rather industry recognized certifications. To start your program with a short 6 to 12 month industry recognized certification that will have labor market value. And make sure that [the] 30%, 40%, 50% of students who aren’t going to make it beyond that year, at least have that when they complete the program. So before they drop out. So that’s one. A second one is digital credentials. So these institutions can be doing more to unbundle the skills that they’re imparting into programs and recognizing them with digital credentials that can be shared across LinkedIn, Facebook, and so forth. Platforms like Credly, [is an] example of the digital professional platform, and [they] could be doing more to integrate real work from your employers into their programs. So, not everyone can do what Northeastern has done or Waterloo in Canada [has done] and build these massive co-op programs where every student gets multiple stints embedded into their educational program, with real employers doing real work. But there are these new platforms like Riipen. R-I-I-P-E-N, which are effectively marketplaces where they have tens of thousands of employers posting real projects and faculty can then incorporate as capstone projects into their courses. So students have real work experiences with real employers as part of their program. And that needs to expand, as well. So there’s a lot of work to do without sort of tearing down the whole thing.

Tyler Jacobson  15:43

And that actually, I had a question in mind that you largely potentially answered with what you just said. It seems to me like there needs to be more coordination between the employers and the schools so that they are aligning [to ensure that] what the graduates are receiving is job ready? Is that something that we’re seeing more of? Or is that still a desperate need?

Ryan Craig  16:10

It’s still a desperate need, and it’s a structural problem, because if you’re an employer, how high priority is it for you to build close relationships with 10, or 20, post secondary institutions that you may or may not choose to hire talent from? It probably doesn’t make your top 10 list or even your top 100 list in terms of priority, so it doesn’t happen. It doesn’t happen. Which is one reason why we think these apprenticeship models that we’re building tend to work better, because if you can build an apprenticeship program into an established business services company that already has relationships with these employers who already have their attention, who already have the relationships in a way that is very difficult for a school or a training program to develop. So I think that these colleges, universities have a structural handicap. And, look, a generation ago, that wasn’t a problem. Because a generation ago, a degree was a macro credential. And it was a general sign that this candidate, this individual, had certain competencies and had worked for a number of years to complete something hard, namely the degree and could learn. And that’s what employers look for. And they may even have a lot of training programs, and they would hire them and not expect them to be productive from day one. That’s not the economy we’re living in now. We’re living in an economy where expectations for entry level hires are much higher, and then you couple that with increased churn at the entry levels. With 50% of college grads going into a new job churn out of those jobs within two years. So are you really going to take 6 months, 12 months to train someone when they’re gone, within a year or two? That’s the challenge facing American employers. And so there’s lots of folks in the education workforce space that say, “Well there is no skills gap. And it’s the fact that employers have unreasonable demands,” and so forth. And that may be. There’s some truth to that, but what are we going to do? Are we going to give up? Or are we going to…because, you know, thinking that employers are…trying to change employer behavior, I think is very hard. I think you need to meet employers where they are, and where they are, if they want effectively purpose trained entry-level talent, and hopefully, talent that they can try before they’re being asked to hire. So those are the apprenticeship-type models that we’re building. But there are ways in which traditional schools and colleges [can do] more than try to approximate that. And there are some that are doing that. I just wrote about Dallas colleges and the community college system in Dallas, where they’re trying to integrate. They have a chancellor there, Joe May, who has what he calls his “certificate first” program. So he’s integrated a Google IT support certificate into an existing IT program. He’s built a Salesforce Super Badge into an established degree program down there. That’s exactly what these colleges need to do and recognize that it’s…there’s a lot of talk about stackable credentials, we want to try to make sure that as you’re as you’re going along, to stack these things. For too many colleges, the way they interpret that is, “Oh, we’ll just sort of make up these certificates. And we’ll put them all together and then those will have market value,” but those don’t have market value. What has market value is industry-recognized certifications, right? It’s not a college making up a certificate an employer is not going to understand. They need to be industry recognized certifications that are already being awarded in the sector and colleges and universities need to do the work to figure out how to incorporate those industry recognized certifications into their existing programs. And if they don’t, they’ll see the result, which is in all likelihood, outside of the top 50 branded institutions, declining enrollment.

Tyler Jacobson  20:13

Yeah, I think that’s a good insight that even if schools attempt to address the issue, if it’s not recognized as valuable, it’s not going to be something that is helpful for the students to gain that employment. One of the other things we saw on your Achieve Partners website, you have a note that two out of three schools’ software licenses go unused. That’s kind of in the core of what we do at LabStats is help schools understand what’s being used, what’s being wasted, and things like that. Do you think that this is a school over purchasing or a student under utilizing issues are a little bit of both?

Ryan Craig  20:57  

I think it’s probably both. You know, I think that schools, across from K through college, could be much better informed in terms of their sort of IT decisions. And I think as teachers and faculty, they may not understand exactly what licenses, what software is available to them. And then even if they are, student adoption is a problem. So you have a sort of 3-tier problem. Everyone kind of needs to be on the same page in order to have the same utilization that you typically have in any kind of software sale. You know, if you’re selling to a company, and if you’re selling to a school, particularly if it’s a learning product that students need to use, you need to have buy-in by all three groups. So it’s challenging for sure.

Tyler Jacobson  21:54

And we also see that a lot of schools, there’s competing objectives, they’ve got the budget objective, but then they have the student experience objective. And so their urge is to make everything available to everybody everywhere. But that’s very difficult to manage from a budget standpoint. And so how important is it for schools to understand how certain software packages are being utilized? Is it just a financial issue? Or is it part of assuring that the students are familiar with these products when they attempt to join the workforce?

Ryan Craig  22:32

Yeah, no, look, I mean, I think the software platforms that you’re talking about are educational platforms, they’re not industry platforms, right? You don’t have colleges and universities buying Epic and Salesforce. But in terms of the education learning platforms, yeah, it’s challenging. And there’s lots of good ones that don’t get purchased and adopted and there are lots of less good ones that are in common usage, and not producing the kind of outcomes that you would want to see in terms of completion and then ultimately employment.

Tyler Jacobson  23:04

From the comments that you’ve said, my inclination is to feel that schools are not implementing this because it has not yet become real to them. Is there anything else that is preventing them from making some of these changes, and really, functionally changing what value students can get out of the product of their education?

Ryan Craig  23:26

Yeah, I mean, I’ve written a lot about this as well, there’s a certain isomorphism in higher education, which means like, there’s one way of doing things. And the stats across higher education, I don’t care whether we’re talking about a community college, or we’re talking about a large public university, or a small, private liberal arts college… Everyone sort of knows what excellence is. And they point to Harvard and Yale. Right? Let’s say your goal is to try and get as close to that as possible. And that isomorphism just kills us. Because you’re not going to be able to approximate what Harvard does on a small university campus in East Texas. You’re not going to do it. So we need to rethink how to deliver the kind of post secondary education your students need and what they want is a pathway to socio-economic mobility, to a good first job, a better job, and so forth. And are you delivering that? Or are you delivering kind of a poor simulacrum of what your idea of excellence was. And part of the problem is that a lot of leaders of these institutions and faculty were educated at the schools they’re trying to emulate so they kind of know what excellence is, and they go and they become higher education leaders. And they’re at a small public university in east Texas, and they say, “Well, we’re going to build this into the Harvard of East Texas.” Well, that’s a problem. That’s a problem. We’re going to fail at that. We need new and different models, we need multiple pathways to socio-economic mobility. Not all, in fact, I would say, a small minority of them probably warrant four years of undergraduate education before going to work.

Tyler Jacobson  25:19

One of the things that you mentioned is that isomorphism is, if there were a school that was going to rise up and try something different, their head is sticking above the crowd, it’s gonna get chopped off. So how do we protect…

Ryan Craig  25:33

Yeah, they’re gonna fall in the rankings, too? That’s a big issue for the four year institutions, for sure.

Tyler Jacobson  25:39

So how do we protect somebody that’s trying to do something different? Is this a grassroots effort? Or is this going to need to come from the top down?

Ryan Craig  25:47  

Yeah, look, I mean, I think it’s the market. The market is going to have to work and…I mean, we’re seeing it. These new programs, these new faster and cheaper alternatives to college are producing better employment outcomes. with superior value propositions from the outside, in many cases, not asking for tuition. [Some] not asking students to take any financial risk, and in some cases hiring them and paying them from day one. And I can’t wait for the day when a very talented, motivated young person turns down the offer to attend a good university, because they have a offer to be a paid apprentice in a pathway that’s going to lead them to a great job within a year or two. Again I’m not advocating that less secondary education is a good thing. Certainly, it’s not sustainable in this global economy, this global knowledge economy. But we do need to rethink how we stage consumption of post secondary education. It doesn’t have to be all you can eat in one sitting. It should really be…for many people, it’s going to be more productive, if it’s kind of what you need when you need it. What you need when you need it for you to get your first job is increasingly going to be a faster and cheaper pathway. The focus is on these skills. The term we coined is last mile training. Last mile training skills, digital skills and business skills that employers are demanding in these entry-level jobs.

Tyler Jacobson  27:16

To bring this full circle. What do you see as a realistic change that we’re gonna see over the next two, five or ten years?

Ryan Craig  27:29

Hah…It’s a big question. In two years, I do think we’re going to see a free community college initiative. I think there are lots of people who are going to go back to school and otherwise go and very few are going to complete [a program] and see positive employment outcomes. So I think there will be…the scales will fall from the eyes of [decision makers and they’ll move away from] “access is the problem”. And access is not the problem. The problem is we have too few institutions that are aligned to employer needs. Five years from now, we’re going to have hundreds of these new faster and cheaper pathways in every city in America. And increasingly, it won’t be just a question of where you go to college but whether you go to college because there’s going to be lots of alternatives that seemingly offer a superior or less risky value proposition for the student. 10 years from now, I think the number of students in those pathways will number in the millions. And we will achieve the goal. I just think of, you know, college for all… [the idea that] college is the only pathway to economic mobility in America really only became a thing in the 60s and 70s. So it’s really only about 60 years old. So just probably three generations at this point. Before that, there were lots of different pathways to economic mobility, many more than we have today. We need to get back to that while recognizing that we live in a tech-dominated economy. Virtually every job is a tech job. Every good job is a tech job in some form or fashion. And so we need new pathways that lead to these good jobs. The good news is that the market is working and we’re seeing innovation in the private sector and nonprofit for profit sector. We just need the public sector, the government to catch up. But they will.

Tyler Jacobson  29:35

Excellent. Well, we appreciate having you on. I think that it’s been a great conversation about being ready for the workforce as well as looking at different alternatives. I think that it will enrich education as we start looking at the endpoint of what’s our objective a lot more. I appreciate you joining. And do you have any final thoughts?

Ryan Craig  29:58

No look, I hope your listeners will take a look. I do a bi-weekly newsletter called “The Gap Letter” you can sign up at gapletter.com. You can follow me on twitter at @RyanCraigAP. We welcome any direct contact or feedback on our work.

Tyler Jacobson  30:20

We’ll definitely add those links into the description in the summary of the episode. And we appreciate you joining. 

Ryan Craig  30:29

Thank you so much. 

Tyler Jacobson  30:31

That’s all for today’s episode of LabChats, be sure to subscribe so you’ll be notified when a new LabChats episode is posted each week. We’ll see you next time.