If you’re wondering why there are ten million unfilled jobs in the U.S. despite having an unemployment rate above pre-pandemic levels, Ryan Craig has part of the answer: traditional higher education is too expensive and can’t keep up with changes in the labor market leaving millions of Americans in need of other ways to obtain the skills that will lead to good jobs. Craig, a prominent investor and thought leader, captures the frictions impeding learners and employers — and offers solutions for them — in both his book A New U: Faster + Cheaper Alternatives to College, and in regular columns for Forbes and other leading publications. But he’s not just writing about these issues. Through his firm Achieve Partners, Craig is working to create modern apprenticeships facilitated by intermediaries between the education and employment sectors. “If you can fast forward a decade and imagine dozens of new apprenticeship pathways emerging in tech and healthcare, I believe we’ll have a very different view of socioeconomic mobility and the American dream.” Join Craig and Futuro Health CEO Van Ton-Quinlivan for a provocative discussion about learning and earning that touches on last mile solutions for students, a GPS for human capital development, “talent as a service” and innovative companies on which to keep an eye.
Van Ton-Quinlivan: Welcome to Workforce RX with Futuro Health, where future-focused leaders in education, workforce development and healthcare explore new innovations and approaches. I’m your host Van Ton-Quinlivan, CEO of Futuro Health. I just returned from the ASU + GSV summit, where my guest today, Ryan Craig, has been a regular fixture with attendees lining up to meet with him. Ryan is an investor and thought leader who for many years has been shaking up the educational establishment and cultivating last mile solutions for students to successfully transition from education to work. In addition to being a managing director at Achieve Partners and University Ventures, Ryan has broad influence as a regular columnist in Forbes, TechCrunch, Inside Higher Education, and Fortune, amongst many other publications. He’s also the author of several books, including A New U: Faster + Cheaper Alternatives to College, which was named by the Wall Street Journal as one of the books of the year for 2018. Thanks so much for joining us today, Ryan.
Ryan Craig: And thank you for giving me a blurb for my last book.
Van Ton-Quinlivan: Absolutely. You know I’m a big fan of your writings. Some of your positions are extremely provocative and predictably cause a stir within the higher education world. Which article got the biggest response, and what did you write about?
Ryan Craig: Oh, you’re gonna laugh. So actually, the one that got the biggest response was a curmudgeonly piece that I wrote maybe three years ago about eSports. I was questioning whether eSports should or could be fairly treated as sports and then really attacking colleges and universities that were launching eSports certificate and degree programs as a transparent marketing enrollment ploy to enroll and attract students who wanted to come to college to play video games. Be careful who you attack. Actually, I like to think I don’t attack higher ed. I love higher ed. All my first jobs were in traditional higher education, and sometimes you criticize or find fault in the ones you love and that’s certainly my view with regard to higher ed. But if you’re going after a very specific interest group with a lot of passion and fervor, beware, because to this day, I’m still haunted by eSports aficionados who find that article and come at me as only a gamer would.
Van Ton-Quinlivan: That’s a great story. How would listeners subscribe to your newsletters, Ryan?
Ryan Craig: I write a weekly newsletter called the Gap Letter, which is at gapletter.com. You can sign up there, and most of them are reprinted in Forbes or Inside Higher Education.
Van Ton-Quinlivan: Well, it’s a great reason to wake up and get one of your newsletters in your inbox.
Ryan Craig: Yeah, we try and keep it fun. I mean, look, the area that you and I work in and are passionate about is just so broad-based and affects so many aspects of our country. So, it’s important, but I try and make it fun as well and always start with some moment of levity before we dive into the subject at hand.
Van Ton-Quinlivan: Absolutely. So, Ryan, you’re a venture capitalist who is trying to solve higher education problems. Help our audience understand why private investors are entering this education-to-work space. Is that a good thing for students?
Ryan Craig: Yeah, I think it really is. We have a lot of challenges in trying to bridge this education to employment gap, and if you’re listening to this podcast, you probably agree with me that our current education ecosystem isn’t doing as good a job as it as it could be of addressing the needs of employers and employees. This is evidenced by the fact that this week, for the first time in American history, we now have over 10 million unfilled jobs in the U.S. and while millions of those jobs are certainly service jobs that employers just simply aren’t paying enough for and that’s why they’re unfilled, millions of them are high paid, high skill positions where employers just simply can’t find the skilled talent they need to fill those roles. So, we have this gap.
In our view, this is really a “many-to-many” problem, meaning there are thousands of schools or institutions trying to prepare individuals for the workforce, and we have millions of employers reaching out and trying to find this talent. We think that this problem screams for intermediaries to stand between the current education ecosystem and the world of employers because no single higher education institution is capable of reaching out to dozens, let alone hundreds, of employers in a deep and systematic way, and no employer is really interested in doing that and they frankly have better things to do with their time, like run their business.
In other parts of the world, we’ve seen the emergence of intermediaries in terms of really establishing a true alternative pathway. That’s how apprenticeships have thrived in Germany, Switzerland, Austria, Sweden and now the UK, as well — you have these intermediaries that stand between the education world and employment. In most cases, those apprenticeships are run by trade association groups that are a century-old, or chambers of commerce, or unions. If you look in the U.S. at where apprenticeships have thrived — we have about a half million apprentices currently in the U.S. — it’s all been in the building and industrial trades where unions have served as the organizing principle for it.
If we look and see where these alternative pathways and intermediaries are needed the most, it’s in the fastest growing sectors of the economy where the unfilled jobs are, and that’s primarily tech and healthcare. As we look and see what intermediaries are available to organize these pathways or apprenticeships in the same way as they’ve been organized in the building and construction trades in the U.S. or in central European countries, they don’t exist. Those intermediaries are not obvious. And so, we think that the role that private capital can play is to try and build these apprenticeships out of the entities that are best positioned to serve in those roles.
That’s exactly what we’re doing at Achieve Partners. We’re acquiring business services solutions providers that operate in skill gap sectors that have dozens or hundreds of clients and for whom access to trained talent is a huge impediment to growth — and it’s also an issue for their clients — and where we can essentially use the idea of being an intermediary in the labor market or an apprenticeship program as a way to accelerate the growth of this company. It’s not simply a cost area — the idea of entry-level employee training — it’s actually a significant revenue opportunity or enhancement for these companies.
It’s a great example of how private capital and the private market can solve a major social problem. If you can fast forward a decade and imagine dozens of these new apprenticeship pathways emerging in tech and healthcare in every major metropolitan area of the country, I believe we’ll have, as a nation, a very different view of socioeconomic mobility and the American dream which could forestall some of the same social and even political problems that we’ve had as a country over the last decade. I think that a lot of the issues we’ve had are due to the fact that there are tens of millions of Americans who feel stuck and for whom the only answer is multiple years of college or university that’s going to cost them tens of thousands of dollars a year with no guarantee that they’ll complete, and no guarantee of an employment outcome out of that. We need to find a better alternative for those tens of millions of people.
Van Ton-Quinlivan: Ryan, your discussion of intermediaries and apprenticeships is a great segue into my next question, which is about a round of money you recently raised in a new fund called the Putting America Back to Work fund. How will you invest those dollars? Give us some examples of worthy investments and what your firm will do to magnify the impact of those investments, beyond the obvious of putting in capital.
Ryan Craig: Exactly right. We’re not just making passive investments here. This is a buyout fund, so we’re actually acquiring control of companies that we feel are well-suited to serve as these labor market intermediaries. The first investment we made, and we just announced it, was in a company called Optimum Healthcare IT which is a healthcare IT solutions business. They basically deliver IT services to hospitals and health care systems across the country.
When you go to the doctor or nurse, in all likelihood they’re typing information from your conversation into Epic, the leading electronic health records system in the U.S. About 70% of large U.S. hospital systems deploy Epic as their core patient record system. Everyone in the healthcare system or hospital needs to learn to use Epic and they hate it — almost universally — because it is very hard to learn and not intuitive, but it’s crucial because that’s where all the patient data is stored. In order to configure Epic to be useful and productive for the system — and critically, in order to integrate it with the hundreds of other systems and platforms that a hospital will use — you need an Epic Certified Analyst to do it. That means they’ve actually been trained on the Epic platform. It takes hundreds and hundreds of hours of training to learn to do that kind of integration.
You won’t be surprised to find that there’s not a single college or university in America that offers training on the Epic platform. In fact, if you become an Epic Certified Analyst, it’s almost happening by accident. You’ve probably worked for Epic, or you’ve worked for a company like Optimum that delivers Epic-related services. But until now, there’s never been an Epic apprenticeship program despite the fact that there are 50,000 unfilled Epic Certified Analyst jobs in the country.
When we met Optimum, their biggest impediment to growth was access to Epic Certified Analysts. They couldn’t find enough, and when they could find them, they had to pay them a lot of money to do that work. Their hospital clients also can’t find Epic Certified Analysts. In fact, one reason why our healthcare system hasn’t reaped the full benefits of the digital revolution is that we just don’t have enough tech talent working in hospital systems to do the sort of configurations and integrations to make everything work as it could.
So, we bought the company and we launched what’s called Optimum Career Path which is an apprenticeship program where we hire, train and place new Epic Certified Analysts and other healthcare IT verticals that Optimum works in. We are deploying these newly trained analysts on projects that a given hospital system might hire Optimum to do with the understanding that at the end of the project, the hospital has the opportunity to essentially take that talent and onboard them as their own employees.
We call that “talent as a service.” So, we’re trying to take these solutions or services businesses and transform them into “talent as a service” companies. The benefit for the employer is obvious. The hospitals now get access to trained and less expensive talent than they could find otherwise. But from the perspective of the individual and our country, we’re providing a frictionless new pathway to employment in a space where there was no pathway previously. So, this Putting America Back to Work fund…we actually have a goal which is over the life of the fund, we hope to put 100,000 Americans into good jobs they would not have been able to attain if not for the creation of these new apprenticeship pathways that we’re building. Healthcare IT is the first. I’m pleased to say that by the end of this year, we’ll have 100 newly-trained Optimum Career Path consultants, active and billing at clients, and we think that number could scale tenfold in as little as 12 months.
Van Ton-Quinlivan: Ah, congratulations! And I love that phrase “talent as a service.” What a wonderful new model for workforce development.
Ryan Craig: Yeah, I mean, if you think about it, it has all of the elements of a traditional apprenticeship program. The beauty of apprenticeship is that you remove the friction for the candidate. Optimum Career Path eliminates the cost because students aren’t paying. In fact, they’re being paid and they’re being hired, so it eliminates employment uncertainty as well. It’s a no-brainer, and we just need many, many more of these.
Obviously, for the end employer — the hospital — it eliminates the friction on their side, too, because hospitals aren’t hiring unproven talent. In this case, the talent is able to prove themselves before the employer needs to make a hiring decision. Those are really the key elements of a traditional apprenticeship program. The only difference between what Optimum Career Path is doing and a Department of Labor registered apprenticeship program is just that we haven’t filled out all the forms with the Department of Labor yet, and we’re not taking any WIOA (Workforce Innovation and Opportunity Act) money to do what we’re doing. And we can do it that way because the demand is just so great that at the end of the day, the hospitals are willing to foot the bill for this.
But our goal here is to sort of lay the tracks and demonstrate that in the highest-need skill gap areas — like Epic, for example, like cybersecurity, like Salesforce — a purely private model can work. Once we’ve demonstrated and laid those tracks we can begin talking about how to use philanthropic dollars or even public spending to try and build these on-ramps to these pathways or build pathways to truly middle-skill jobs that may not pay as much at the outset, but still provide that upward mobility that we’re looking for.
Van Ton-Quinlivan: You saw this education friction even back in 2018 when you wrote your book, A New U — which, by the way, congratulations on your Wall Street Journal recognition. I’m particularly proud because I wrote a quote for you for the back cover! (laughs) Tell the listeners more about the student issues you observed back then, and I’m curious whether you’ve seen any progress in the country since you’ve written the book.
Ryan Craig: Oh, that’s a great question. Look, I didn’t come at this from the standpoint of workforce or even the labor market. My background is in higher education. I started my career 20 years ago at Columbia University. I’ve worked for universities, I’ve helped build universities and I’ve invested in higher education-related businesses. It was really only seven or eight years ago, kind of out of the Great Recession, that we were seeing the crisis of college affordability super clearly, where the average student was graduating with north of $30,000 of student loan debt. We also had tens of millions of students who weren’t even completing a credential who were graduating with $5,000 to $10,000 of student loan debt. It’s just killer. But if everyone who matriculates into college graduated and then got a $60,000 a year job, that level of student loan debt would be easily affordable. So, the two sides of the coin are affordability and then employability.
What we were seeing was a sea change in the labor market, a digital transformation, that was not being met by higher education. There is a transformation of entry-level jobs from ‘you can learn how to do this job because you have a college degree’ — which is how the labor market worked when you and I graduated from college — to ‘this is a very specific job where you’re using these series of tech or SAS platforms to manage these various business functions and if you don’t have experience with these specific platforms and you’ve never worked in our industry before, we’re not going to hire you’. We have example after example of industries and companies that, pre-Great Recession, used to engage in and invest in entry-level training — whether formally or informally — and in 2012 or 2013 that just disappeared. I mean, employers just have gotten a lot less patient around entry-level talent.
There are a couple of good reasons for it. One is the increased cost of a bad hire. Today, if you make a mistake with a hire, it can cost you big time, sometimes six figures. A second reason is increased churn at the entry-level where today about 50% of new college grads going into an entry-level job churn out of that job within two years. So, why would you bother investing in training that talent? You sort of have a free-rider problem, right? If you make that investment, maybe they jump to your competitor and your competitor benefits from the investment you’ve made. So, the approach of the vast majority of employers in America today is ‘I want the perfect candidate who’s ready to be productive on day one in this job, and if they’re not, then I’m not going to hire them’ which helps explain 10 million unfilled jobs in the country.
You have “entry-level jobs” in a lot of industries now that if you actually look at the job descriptions, they’re not entry-level jobs. They’re effectively asking you for years of experience in that field. So where are the pathways to these jobs? It was that sort of thinking from which we coined this “last-mile” training concept and began investing in these new apprenticeship pathways. Now, we don’t know whether 10 years from now — when we have thousands of new intermediaries and apprenticeship pathways — the majority of them are going to be for-profit or private sector. What we’ve seen in the UK is they’ve begun to evolve their apprenticeship model. Something like two thirds to three-quarters of these apprenticeship service providers are for-profit and taking government funding and taking those incentives. But they don’t have to be.
We think there is plenty of room for nonprofit intermediaries, even public intermediaries, to step in, but they’re going to all have to do the same thing, which is essentially reduce or eliminate the friction for the candidate on one side and for the employer on the other side in the same way that all successful apprenticeship programs do.
Van Ton-Quinlivan: We’ve had some guests on the podcast who explain that part of the reason for the 10 million job openings is that there’s a bias in the hiring process…that there’s too much of a focus on degrees versus skills-based hiring. What’s your assessment of where that stands and where do you see it going?
Ryan Craig: Look, I think that the emphasis on degrees is just a symptom of a bigger problem which is that employer job descriptions are kind of broken, and are really reacting to the way in which we currently hire where we put a job online and within days, we get hundreds and hundreds of resumes for that job because it’s so easy to apply for a job. You probably could have applied for 10 jobs in the time that you and I have been talking already. No human hiring manager is looking at hundreds of applicants for a given position. They’re all using applicant tracking systems at the top of the hiring funnel which are crude keyword-based matches that literally look at how many of the terms in the job description appear in your resume. If you meet a certain threshold, you get passed through to a human who will actually look at your resume. If you don’t, you’re going to be invisible to that human hiring manager.
What that has prompted on the part of hiring managers and HR managers is sort of an arms race where they’re trying to throw as many terms into the job descriptions as possible. Those terms could be education or degree-related. They could be experience-related. They’re certainly skills-related. On the skills side — and I’ve written about this extensively — there are only so many ways you can say, ‘critical thinking, problem-solving, communication skills’ but you can always find another tech skill to add to these job descriptions.
So, job descriptions have become overly indexed towards technical or digital skills and that’s another reason why we’re having this misalignment we are in the market. If you look at what our colleges and universities are producing, have they dramatically shifted to producing candidates with a wide range of specific tech and platform skills in the way that job descriptions have? They have not. They are certainly offering more in the way of tech training and integrated tech technology into their coursework, but not nearly enough to compensate for the dramatic shift in the labor market and the job descriptions that are essentially determining the top of the funnel and who gets seen. So that’s the primary challenge that we’re dealing with. Degree inflation and degree inclusion is part of it, but the bigger problem is how employers are handling and writing job descriptions given the current crude filtering function that we have at the top of the hiring funnel.
Van Ton-Quinlivan: It’s occurred to me that this skills-based hiring phenomenon is really a cure
for the algorithm bias of applicant tracking systems. That leads me to think about AI and what biases will come about in the 10-year time frame and so I’m going to invite you now, Ryan, to put yourself into the 10-year future. How about giving us a peek at the emerging business models and digital technologies that you think will shift how people will experience the future of learning?
Ryan Craig: I’ve written about the emerging “competency marketplace,” which is a vision. I thought we’d be there by now because I thought LinkedIn would have done more in this direction. But, imagine a souped-up LinkedIn where your profile is not simply a recitation of your experience and education, but rather a long, long, long almost unintelligible laundry list of your skills and competencies that won’t be particularly intelligible to a human but will be very meaningful to the algorithms and software on the employer side that’s going to be, not only evaluating you as an active candidate, but constantly evaluating you as a passive candidate for certain roles.
With that, you’ll have the ability to essentially have a GPS for your own human capital development. So, you’ll be able to say, “Here’s where I’d like to go. Here’s a job that I might want to target. Where do I fall short in terms of skills and competencies, and then what’s the best path to remediating that shortfall and filling that gap?” Odds are, it’s not going to be a four-year or even a two-year master’s degree program, but probably a series of short upskilling experiences, certificates, industry-recognized certifications and so forth that you’ll be directed to.
In that case, the technology behind the competency marketplace will be extraordinarily powerful, because it will be directing you to employment and education opportunities. Colleges and universities — which today certainly play the central role in this ecosystem — could be reduced to the level of the driver on the Uber app being asked to pick up a candidate at one place and drop that candidate off at another place with very little control, including over pricing of that service.
I think that despite those deleterious impacts on traditional higher education, something like that is inevitable and will be very good for both candidates and the labor market in general. I could probably count 20 or 30 companies that are trying to get at that marketplace model, trying to fill that gap between the education and employment ecosystem. But no one has solved it yet because it really requires solving this marketplace flywheel issue of how do we get hundreds of millions of candidates on the platform, and then how do we get employers. So, it is challenging. LinkedIn almost uniquely has the ability to do it, but they haven’t executed on that opportunity yet.
Van Ton-Quinlivan: I agree with you. I had high hopes for LinkedIn as well because of the hundreds of millions of profiles that are on there. We as individuals continue to keep it fresh, so it’s a lot of good data for the algorithm to churn on. You mentioned LinkedIn and that there’s a whole group of companies that are playing in this competency-based marketplace. Which innovation leaders should we keep an eye on now?
Ryan Craig: It’s a good question. We have a company, Credly, in our portfolio that we’re super excited about. They’re the digital credentialing leaders so that’s the direction they come at it from. They’re connecting learners, or as Credly calls them “earners, with employment opportunities based on newly recognized certifications in specific skills. They’ve just launched Credly Recruit, which is essentially their marketplace product for doing that. I would also say AstrumU is a company that you should watch out for, as well. But like I say, there are just so many of them trying to come at this problem from different directions.
Van Ton-Quinlivan: I can’t help but insert this question: with all the changes that you’re helping to create, what do you see as the role of so-called legacy education institutions?
Ryan Craig: On the whole, I would say I am quite bearish on the associate’s and bachelor’s degree markets. I think that with the shift in entry-level employment, as I’ve described, millions of younger people and older workers who are seeking that first firm footing on a career ladder would be better served via a faster and cheaper pathway than a multi-year degree program. As you look at how the labor market continues to evolve quickly, it just strikes me as unlikely that an institution run by academics will be able to keep pace with those changes. The intermediaries that will increasingly gain significant share, at the expense of traditional higher education, will be these much more employer-oriented, employer-connected intermediaries who not only are more likely to be able to put forward friction-reducing models, like the one I’ve mentioned with Optimum, but also to keep pace with the skills needed.
That’s a real problem for traditional higher ed where the one point of interface with the labor market is the Career Services Office which is located in one corner of the campus, and career services is viewed as the province of that office and not the responsibility of any of the academic program staff for the most part. I think that is unsustainable.
I do believe that in a decade you’re going to have millions of students, who today would enroll in a traditional postsecondary institution, instead pursue these alternative faster and cheaper pathways via more employment-oriented intermediaries. But the opportunity for higher ed is that those millions of new workers who go more quickly into a job are still absolutely going to need the same or an increased level of cognitive skills, critical thinking skills, problem-solving skills and executive function skills that are today ostensibly being developed over the course of a bachelor’s degree — although at some institutions it’s more questionable than at others.
Those capabilities and skills aren’t going to be developed by these new intermediaries. That will remain the province and responsibility of traditional higher education. So, while I’m bearish on bachelor’s and associate’s degrees, I’m quite bullish on master’s programs and post-bac certificate programs. But my view is that we’ll need to change the way we think about those from being an “and” — bachelor’s and master’s or bachelor’s and post-bac certificate — to being an “or” — where you go from a faster, cheaper pathway to the first job, but then you have an unbundled master’s program or an unbundled post-bac certificate program which is specific to the job you’re coming out of and the industry you’re in and the job you hope to get while focusing on building those cognitive skills, critical thinking skills, problem-solving skills and communication skills. Maybe it’s still a multi-year program, maybe it’s full-time, or probably it’s a part-time program.
My views are often misunderstood as somehow attacking higher ed or saying in the future we won’t need as much post-secondary education as we currently have. That couldn’t be more wrong. All I’m suggesting is that we’re going to need to restage how we consume that post-secondary education from an “all you can eat in one sitting” to “what we need when we need it.” And what we need is going to increasingly be a faster and cheaper pathway to a good first job, work for a few years, then ascertain what secondary or tertiary pathway you’re going to pursue to build those problem-solving, communication skills, etc, that you’re going to need to move up in your career.
I think that second phase — the secondary and tertiary pathways — will have to be the province of colleges and universities. So again, bearish on bachelor’s and associate’s but very bullish on those master’s and post-bac certificate programs, recognizing that they’ll need to incorporate some of what currently occurs at the bachelors or undergraduate level today.
Van Ton-Quinlivan: Let me remind our listeners this is why I love getting Ryan Craig’s newsletter in my inbox. He’s such a provocateur. Let’s close with this: what will Ryan Craig’s next book be about?
Ryan Craig: (laughs) I don’t have time to write a book because I’m too busy building these pathways. In this current fund, we’re going to do it 10 times. We’re going to do it in healthcare IT, Salesforce, cybersecurity, instructional design, data science, digital marketing, healthcare services, behavioral health, and cloud quality assurance. Once we’ve done it, we’re gonna know a lot more about what makes for an effective pathway to employment and socio-economic mobility.
So, if I write another book in the next five years it’s going to be about what we’ve learned from all of these new pathways we’ve built…sort of the new American apprenticeship. Maybe that’s the title of the book. But the apprenticeship is not going to be defined by whether or not we’ve jumped through the requisite hoops at the Department of Labor, or whether we’re taking WIOA money for these programs. It will be based on the key characteristics of apprenticeships, which is you’re reducing the friction for the candidate, you’re allowing them to learn while they earn, and you’re reducing the friction for the employer — namely allowing them to try the new unproven talent before they’re being asked to make a hiring decision.
Van Ton-Quinlivan: I certainly like the title that you propose. I want to be first in line to get a signed copy, Ryan.
Ryan Craig: Well, I’m gonna ask you for another blurb.
Van Ton-Quinlivan: (laughs) Definitely. Well, thank you very much, Ryan, for being with us today.
Ryan Craig: It was great. Really. Always great to talk to you.
Van Ton-Quinlivan: I’m Van Ton-Quinlivan with Futuro Health. Thanks for checking out this episode of WorkforceRx. I hope you’ll join us again as we continue to explore how to create a future-focused workforce in America.