Hello!
This week we covered a couple of sensitive, but important topics - layoffs and diversity in the workforce. Please call me out where I’m wrong! I also hope you will assume positive intent on my part. I would like to talk about topics like these in concrete terms, but it may take more than one try for me to get right.
Lambda lays off 65
Layoffs stink. That is the headline and main takeaway here. I’ll update the online version of this post when Lambda posts their (opt-in) list of affected folks on Monday.
That said, I want to go a level deeper, speculating why they made these layoffs at this moment. It is unlikely that it was a cash crunch - Lambda raised $75M just last August.1 Instead, Lambda chose this path to be fiscally disciplined.
The key line in the announcement is “[Lambda] is pausing new enrollment in part time programs.” Lambda’s full-time program is 9 months, 3X longer than the bootcamp industry average of 3 months. Their part-time program is 18 months…
I suspect that this decision boiled down to 2 things:
Time-to-complete: A lot happens over the course of 18 months, making it harder to ensure students finish the program. Traditional Higher Ed folks will be familiar with this story, though Lambda is having to navigate without federal funding.
Unit economics: Related to, but distinct from the above, the prolonged timeframe and lower probability of completion leads to a lower expected payback per student on part-time enrolls than full-time enrolls. Moving to full-time-only allows the team to focus on the customer cohort with the best unit economics.
Lambda chose the hard path here. It might have been easier for their team to let the part-time program languish, letting students and employees leave of their own accord. They probably would have received less | press | attention | that | way.
However, any outcome that includes the word “languishing” is not a good one, for either the company or their customers. I respect the Lambda team’s willingness to make the hard call.
Let’s get those who were laid off hired! (5/3 update: it looks like the list will not be 100% public, but you can submit a request for it here)
Keypath considers IPO
Melbourne-based Keypath is one of the largest international OPM players, bringing in ~$100M in revenue last year. In the US, many know them for their partnership with 2U, but their US client roster also includes, among others, Florida State, Marymount, Baylor, and Emerson.2
The main reason I’m excited about this is that they will bring additional data points to the OPM industry. 2U is the only publicly traded company that meaningfully breaks out their OPM business performance today.
Because it is fun, here is a list of my quibbles with the other public companies that have an OPM business:
Coursera: claims their degree business is 100% margin. By accounting rules this may be true, but is a silly number to use to assess that business
Pearson: doesn’t break out the number of students their business serves. OPMs are big! In their 2020 10K, 2U had 198,143 enrollments in their degree program segment. That is the largest number of degree-seeking students served by a single entity this side of Laureate. At least, as far as I can tell. Because no one else breaks out this number!
Wiley: no cohort analysis of customers. A customer signed this year is not the same as one signed 10 years ago. This also applies to Pearson, though Coursera half-heartedly attempts it in their S1.
There may be justifiable reasons this data isn’t being published or is framed the way it is. My hope is that Keypath and those that join it in the public ranks will drive investor support for additional disclosures.
Gen Z talks about HED/Jobs
Handshake surveyed 1000+ 18-25 year-olds to “gauge the factors that most compel them to apply for certain jobs.”
TLDR for folks who are hiring - Gen Z is doing research on your company before they apply to your jobs. If they do not see their own values in your people and culture, they will look elsewhere.
This isn’t an earth-shattering revelation, but it’s worth calling out how much information is available to a Gen Zer doing their homework. In addition to Glassdoor, they can (and do) see your entire executive team on Linkedin. The Information now collates the org charts of big tech companies (paywall). Funded by Sequoia and Founders Fund, The Org is doing this bottoms-up for companies of all sizes.
Now, what are the two things we can work on to attract Gen Z talent to the EdTech industry?
Hire and promote diverse and female talent: 53% of respondents would not apply to (let alone work at) a company that lacks diversity. 65% of females check for women in leadership roles before applying to a job. Given there are 2.1 million fewer women in the workforce today than prior to the pandemic, having female and non-caucasian leaders is both the right thing to do and a strategic advantage in recruiting.
Post your salary bands: 62% of respondents were more likely to apply to jobs that posted salary ranges. Growing up with the internet accustomed Gen Zers to a level of transparency that might make older folks uncomfortable. However, we should know the stats on pay inequality and transparent pay bands seem like a concrete and achievable method to work on this problem.
While Gen Z is the focus of this survey, I posit that these 2 suggestions would have a positive impact across generations.
Yes, the majority of that money likely came prior to August, but stick with me here.
If anyone can explain the parameters of the 2U < > Keypath deal, I’m all ears. I don’t understand who does what and how the money flows.