Make School, Meet Crossfit

Beginning this fall, higher education startup Make School, will begin offering a fully accredited bachelor’s degree in Computer Science. But will accreditation unlock new opportunities, or merely slow Make School down?

Y Combinator, or YC for short, is one of the most successful startup incubators in the world, with famous graduates such as Airbnb, Dropbox, and Instacart. However, YC has graduated only a handful of companies offering education and training in higher education, including: Lambda School, NexGenT, Fullstack Academy, and Make School.

As with Lambda School, which I’ve written about here, Make School is at the vanguard of Transparent Education, a trend where schools provide complete transparency around tuition cost and employment prospects after graduation. However, while its YC peers have largely pursued technology training programs that last between 6 to 9 months, Make School has decided to offer full fledged bachelor’s degrees, which take its students 2 to 3 years to complete. Their vision is to combine top-tier computer science training with a broad-based education that includes courses in writing, design, personal finance, and economics, to produce a bachelor’s degree that is “the future of higher education”.

A Cheaper, Faster, 100% Certified College Degree

Make School is pursuing innovation of the traditional bachelor’s degree along three vectors: cost, time, and accreditation. Make School has a lower cost structure than traditional colleges because its faculty aren’t tenured and may not have a PhD. From a time perspective, they are attempting to have students complete their college degree in 2 years, including summers. (Students will take the same number of credit hours as traditional college students, but those credit hours will be condensed into 2 calendar years vs. 4 academic years with summer breaks.) The final innovation, if they can pull it off, will be to have their accelerated degree accredited, providing legitimacy to a program that might otherwise be derided as “just another coding bootcamp”.

Earlier this month, Make School announced that they think they can pull off the accreditation feat, and from the same governing body that accredits Stanford University, no less. Accomplishing this task has been extremely time intensive. Make School has been pursuing accreditation for the last three years, will submit their formal application this fall, and expects to complete the process within 2 years. Even this “short” time span of 5 years was only enabled by pursuing a new “incubation model” in partnership with Dominican University of California.

Degrees vs. Jobs

Choosing to endure the painful process of becoming accredited is one of the factors that separates Make School from other higher ed startups. This is because Make School has a different notion of what the goal of higher education should be. Make School is focused on producing the highest quality, lowest cost, degree for their students. Their peers are focused on the least expensive, most direct way to produce jobs for their students.

We already know that employers, from IBM to small startups, will hire programmers without college degrees. For proof, look no further than Lambda School’s list of hiring partners. On the other hand, as I’ve written about before, companies seeking and hiring applicants without college degrees are still the exception, not the rule. By choosing to pursue innovation around the college degree itself, Make School has essentially made a bet that college degrees will be important for the long-term.

But, important to who? Employers, or student?

When you take a closer look at Make School’s decision, they had feedback “from prospective students and parents — especially those with backgrounds underrepresented in tech — that a bachelor’s degree still held weight for them, their families, and their communities, even if employers no longer demanded it.” (My emphasis). What’s fascinating here is that Make School’s bet is more specific: they are betting on students and parents continuing to choose a college degree, even if employers no longer require it for computer science job applicants.

The Return of Signal-to-Skills Theory

Last week, I wrote about an idea called Signal-to-Skills theory, which predicts that the more technical skill required in an industry, the more important knowledge, skills, and tools will be to employers, compared to whether or not you can “signal” that you have a degree. The theory looks like this:

s2sedu

What Make School’s announcement indicates is that the demand for bachelor’s degrees is really composed of two parts: employers and students. Employers, at least in computer science, are clearly trending against credentials and in favor of skills. On the other hand, prospective students and their parents, still find value in the credential itself.

The question for Make School then is whether the different demand preferences of employers and students is something fundamental, or whether one group is just further up the “Value of Skills” curve compared to the other? 

My hypothesis is that the preferences of students and parents are lagging indicators, especially parents. What this means is that students and parents are placing value on a college degree that no longer matches the value of the degree in the job market. If this hypothesis is true, then at some point in the future, students and parents will update their preferences, and will place a much lower emphasis on the degree itself, versus the outcome of the degree: a job.

Crossfit

Which brings me to Crossfit. Yes, Crossfit. As in, the workout gyms and fitness competitions that have seen radical growth in the personal health space over the last 10 years. The Crossfit Games, a fitness competition organized by the founders of Crossfit, is famous for putting its contestants through grueling workouts throughout the course of the competition. In one such workout, called The Murph, contestants have to do a huge number of push ups, pull ups, and squats, while running a mile both before and after the workout.

Oh, and they have to wear a 20 pound vest the entire time.

Murph Workout.JPG

Make School’s Murph

The unknown for everyone is higher education is how long the college credential will be a “thing”…an idea and concept that you can bet on for the long-term. In the end, every startup, Community College, and University is long or short the “degree”, depending on the choices they make about their educational offering to students. Make School has clearly signaled that they are “long” the bachelor’s degree, and that is fine. The degree may very well last another 10 or 20 years, which is plenty long enough for Make School to have some type of financial exit for its investors.

On the other hand, if you want to go “long” the bachelor’s degree, why do it in Computer Science, an industry that is clearly “short” the college degree, with more and more employers using skills-based hiring to source job candidates? Furthermore, why slow down your product iteration cycle, even a little bit, to conform to the standards and process of the credentialing agencies? It seems in some ways that Make School is at the intersection of a team that is awesome at teaching Computer Science, and students with outdated educational preferences. The result is a product that seems innovative for traditional higher ed, but somehow outdated in Computer Science.

Ultimately, I am hugely supportive of every startup in higher ed, Make School included. We need more experiments for improving higher ed, and this is one of them. If Make School accomplished nothing more than getting some colleges to accelerate their coursework from 4 years to 2 years, that would be a huge, positive change.

On the other hand, in the competition to grow, scale, and achieve a Silicon Valley level of success, it’s possible that Make School has just put on a 20 pound vest.

My Interview on the Education Trends Podcast

I recently spoke with the team at the Education Trends podcast about my book, Rethink the MBA, as well as the topics I’ve written about at Meritmark, including: higher education’s competitive moat, the achilles heel of higher education, and the dawn of transparent education.

I encourage you to download the latest episode and give it a listen. You can find the Education Trends podcast on iTunes, Stitcher, or Spotify. I hope you enjoy the conversation as much as I did.

Thanks for listening (and reading), and I’ll be back next week with more articles on the future of work and higher education.

Screenshot 2018-10-18 21.40.10

Why is a College Degree Valuable?

I examine the usual answers to this question in light of the rapid changes in technology and formulate a new theory as to why college is valuable: the Signal-to-Skills theory.

Dueling Theories

One of the major debates in higher education is: “Why is a college degree valuable?” This debate has largely boiled down to one of two arguments. The first, popularized by economist Bryan Caplan in his book “The Case Against Education”, is that graduating from college sends a signal to employers that you are intelligent and employable. Furthermore, this signal is more important than the specific courses you took in school. This is called the “signaling theory” of higher education. This theory predicts that where you attend college is more important than what courses you take, and that graduating is more important for your career than completing individual courses.

The second argument, called the “human capital theory”, is that the knowledge, skills, and tools you acquire in school are what makes a college degree valuable. Human capital theory predicts that each additional course you take makes you more and more valuable to employers. This theory assumes that employers can accurately assess the knowledge, skills, and tools you have, and use this information to determine whether or not to hire you. This theory predicts that taking more courses is better than fewer courses, and some college is better than no college.

One argument in favor of the signaling theory of education is that salaries of students who only completed say, 50% of their college credits, do not get a pay increase that is 50% of what a college graduate makes. This implies that the value of a college degree is based on crossing the finish line, rather than completing any one course. A second argument would be the collective shrug that employers have shown towards students that have “completion certificates” from online education programs, like EdX or Coursera. The “human capital” theory would predict that these courses would have more value in the job market.

On the other hand, the human capital theory is supported by the fact that there is a growing “skills gap” in the world of work. My recent article on the Manpower Group, one of the world’s largest staffing agencies, noted that 45% of employers have difficulty filling roles. Employers cite both the “skills gap” (27%) (a lack of hard and soft skill abilities), and inexperience (20%) as driving factors. Clearly, employers are monitoring the skills that graduates are lacking, and improving these skills through education would increase the value of a student in the job market.

How do we resolve the contradiction between these two theories of college value?

Hiring Managers

My hypothesis is that companies screen job candidates based primarily on either credentials OR skills. Hence, whether “signaling” the possession of a credential is more important than learning individual skills, depends on the way companies have hired historically.

For example, imagine an industry like investment banking, where banks only hire from the Top 20 colleges. In this industry, you won’t be hired without a college degree from a top school, let alone without a college degree altogether. This is a credential-based hiring process. Yes, the bank may give candidates a skills assessment during the interview, such as having them build a financial model. However, since every job applicant has a college degree, the “signal” variable will dominate the analysis: employees who have completed college will have higher wages than non-college graduates.

On the other hand, imagine an industry like photography. In this industry, the hiring process is not geared around where you went to school, or even, if you went to school at all! The hiring managers look at online portfolios of the candidates actual photography. This is a skills-based hiring process. In this industry, whether you went to college or not is largely irrelevant. Hence, the “human capital” variable will dominate in this industry: employees who have the most “skill” at photography will have higher wages than those with less skill, regardless of whether or not they have a degree.

In Caplan’s book, he shows concrete analysis that the “signal” of having a college degree has been more important historically than the “skills” acquired by taking specific classes. This tells us that on average, the job market in the U.S. has been historically dominated by employers that use credential-based hiring.

Signal-to-Skills Theory of Education

But, what if the hiring process was shifting, from a credential-based hiring process to a skills-based process? The implication would be that both the signaling theory and the human capital theory have validity, but their importance is changing over time. Indeed, I have argued that the signaling theory of higher education has more validity today. However, I also see evidence that employers are shifting from valuing credentials to valuing skills. The reason for this change is technology.

I call this idea the Signal-to-Skills theory of education: the higher the level of technical skill required in a specific industry or career, the more important the specific knowledge, skills, and tools, you have will be compared to whether or not you have a degree.

This theory predicts the following dynamic:

s2sedu.png

As technological change increases over time, the value of education will be driven more and more by skills, and less and less by signaling to employers that you have a credential, degree, or certificate.

Signal-to-Skills Theory of Hiring

Interestingly, when we consider the Signal-to-Skills theory at the level of an individual company, we get a different chart:

s2shiring.png

The Signal-to-Skills theory of hiring predicts that as a job becomes more technical, employers will be forced to switch from a credential-based hiring system to a skills-based hiring system. This switch is not gradual. Instead, it happens suddenly as the company changes the way they evaluate job candidates from credentials (e.g. resumes) to skills (e.g. work samples) over a short period of time.

Predictive Power

The reason the ideas above are “theories” is that we can use them to make predictions, and then test the predictions against what actually happens in the future. I will be using this framework to make predictions and testing my own performance over time. On Friday, I will be looking at recent news from Make School, a higher education startup in Silicon Valley navigating these changes, and exploring what the Signal-to-Skills theory predicts about their future performance.

Until then, enjoy your new mental model, and let me know whether it rings true in your school or industry.