We’re excited to announce another guest post for next week, from James Mattiace. James is a veteran educator, teacher, principal, and author of several articles on assessment reform. He has been featured on podcasts and webinars as well as in Ken O’Connor’s Repair Kit for Grading, 3rd Edition, and is a consultant for Big Questions Institute. He is currently authoring a book on what to do once you have adopted Standards Based Grading.
What’s Happening in the Market
Governor Murphy is proposing a $1.25B increase in funding for Newark Public Schools. This would represent an 8.8% increase YoY. This is newsworthy, at a time when NYC is cutting $550M, Texas’ student funding has been stagnant since 2019, and budget cuts generally strike schools across the country
The Texas Permanent State Fund, an endowment fund formed in1845, just withdrew their $8.5B investment in BlackRock over the asset management firm’s ESG policies. This rift represents the politicization occurring over ESG, which should be a no-brainer.
What We’re Talking About
On Friday, the Federal Student Aid office announced that they had failed to include all of the FAFSA data fields when calculating financial aid, requiring applications to be reprocessed and resent (source: CNBC). The errors affect nearly 15% of all FAFSA applications that have been processed so far (about 200,000 of the 1.5M processed). This is crazy and such a failure on the part of the government, and adds another bump to the horrible rollout of well-intentioned changes to FAFSA.
A budget fight in the Mississippi state congress over education funding could lead to some strange changes. The House wants to rewrite the Mississippi Adequate Education, the funding formula that governs how much money schools receive, to include more funding–but also to remove the formula and disburse money based on the recommendations of a committee (source: The74).
One Big Idea
I’ve been thinking a lot about Accenture’s acquisition of Udacity this past month. The deal is meant to supercharge Accenture’s enterprise upskilling platform, LearnVantage.
“Executives estimate that 40% of their workforce will need to reskill as a result of implementing AI and automation over the next three years.”
The stats sort of bear that purchasing motivation out. At least, the stats that you read on HR blogs and in slide decks by IBM and Accenture. In 2018, McKinsey wrote that 82% of workers will need to be reskilled because of automation. Just a reminder: Everyone has to reskill or upskill always and forever.
I’m not sure how big LearnVantage’s book of business is, but Accenture has more than 9,000 partners around the world. I assume that, with AI’s imminent / ongoing disruption of knowledge economy jobs, that Accenture will be able to convert some percentage of those clients to LearnVantage.
Above: Microsoft Copilot at work. The prompt was “Make an image showing an Accenture consultant giving a presentation on why their client needs to upskill. It should be a bit funny.” [So while IBM might claim graphic designers need reskilling, you’ll still need one of those designers to make sure “Ethtnically amabixquas” doesn’t appear in sales collateral. I’m puzzled why Copilot felt the need to even include that, honestly.]
Too Many Cooks
Almost every direct to consumer upskilling company has diversified into B2B / enterprise upskilling. As we’ve written about before, the D2C market is brutal because of how commoditized the offering can be. 2U has edX for Business. Udacity *had* Udacity for Business. There’s Udemy for Business. Coursera. Grow with Google. The LinkedIn Learning Hub.
Source: L&D Landscape, The Training Institute (source). LOOK AT ALL OF THOSE B2B L&D PLAYERS HOLY SMOKES
The result is a similarly competitive and crowded landscape. There is no dearth to upskilling resources (although there is a dearth of companies that can effectively connect upskilling to a holistic talent strategy).
When I first joined Guild in 2021, there was tremendous product-market fit as frontline employees churned and the labor market contracted following the pandemic peak. The company’s competitors at the time were pretty much limited to BrightHorizon’s EdAssist and EdCor. I’m biased, because I love Guild and have a deep respect for how the company puts employee outcomes at the forefront, but EdCor wasn’t quite dangerous competition that kept us up at night.
But times have changed. The Accenture acquisition of Udacity is just the biggest symbol of how times have changed. I’m sure it’s keeping some folks up at night, too.
Top of Funnel Cakes and Customer Acquisition
The profitable but narrow market that Guild had fenced in was around unlocking IRS tax deductions for companies to leverage for upskilling. But now you have Accenture, which has deeper (or at least, broader) connections to companies globally. Accenture and LinkedIn have incredibly robust opportunities in upskilling because they have the top-of-funnel advantage. On the other side of the B2B market, Multiverse has scaled back their US footprint, which had accounted for 15% of their revenue (the UK the other 85%). Multiverse’s inability to crack the market can at least partially be attributed to the fact that the market is now oversubscribed (even if not effectively–I’m sure Multiverse’s matriculation and placement rates knock Udacity out of the water).
Customer acquisition in a D2C market was / is the killer for so many companies. It’s what drove Udacity to sale and led to the collapse of 2U. Marketing costs go up as you compete like wild to pack students into commoditized classes; at the same time, prices go down. But what if you have a rolodex of 9,000 customers, and an army of consultants to upsell those customers?
Now you solve the top of funnel dilemma. And so I worry for the companies that don’t have that rolodex. Sure, Multiverse and Guild have consultants who can craft incredible upskilling strategies for companies. But they don’t have slide decks in front of 9,000 companies who have pre-qualified themselves by already being customers hoping to fix some severe issue (so much so that they rolled out the consulting firms).
Will LearnVantage take off? A 1% conversion rate still nets them 90 enterprise clients. If just 10% of that 1% are large enterprise deals, that could put LearnVantage at about the same size as Guild.
I don’t think an Accenture + Udacity combination will necessarily outperform Guild or Multiverse in terms of learner outcomes. But I do think they’ll be able to acquire enterprise clients more easily. Whether those clients retain has yet to be seen, but it’s a sign that the market is reaching maturity.