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This interview has been edited for length and clarity.

Nick Beadle: Tell us about Achieve, y’all’s interest in this space, and how this got started.

Ryan Craig: I started my career investing in postsecondary/K-12 education over 20 years ago at a big New York private equity firm called Warburg Pincus where I helped lead and really organize their education investing. From there I had a number of successful investments and ultimately was able to raise my own fund in 2011 along with my partner Daniel Pianko. That firm was called University Ventures and, as the name sounds, was very much focused on higher ed and early stage but also later-stage deals. We did a lot of different things. We bought a medical school, for example.

Over a three to five year period we began focusing our investing on the education-to-employment gap. We began investing in boot camps and income-share agreements. I coined the term last-mile training to reflect what I thought was the divide between what higher education was providing in the way of cognitive skills and durable skills and what we were seeing from the labor market in terms of digital skills, platform skills that graduates weren't displaying. We began investing in those kinds of businesses and did not see the impact and growth we had hoped for. One reason for that, I believe, was that those programs ultimately are still another version of what I would call “train-and-pray” programs where there's no defined employer on the other end. There's no job waiting for these newly trained candidates, these job seekers.
 
That's when I met a staffing company that proved to be a seminal investment for us. They staffed software developers to clients, and for every 10 orders they had, they maybe could fill two or three of them because they just couldn't find the talent. So I said, "Well, what if we built a boot camp into your staffing company?" And that business, we ended up investing, renamed it Revature. Over a three-year period, we added $100 million of incremental revenue to the company with this model. It was revolutionary.

It was a very successful investment for us and put thousands of young people to work where they wouldn't have had those pathways or opportunities before. We didn’t call it apprenticeship at the start, but that’s what it was. It wasn’t a registered program, but Revature would hire candidates based on their cognitive skills, durable skills, interest, and aptitude to learn the technical skills through a three-to-four month immersive, intensive training program, then deploy them to clients. With the success of Revature, we changed our name—because University Ventures didn’t describe the strategy. So we renamed ourselves “Achieve Partners” and launched our first workforce fund where the goal was to continue executing on the same strategy.

Doing that with a staffing company is an elementary application of the strategy. Because that's what a staffing company does, right? They're looking for talent. They're trying to find talent that they can deploy to clients. They're really a clearing house for talent. If you build your own talent, that gives you more talent to deploy.

A more-sophisticated application is with a services business delivering a range of project-based services, [where] access to trained certified talent is a bottleneck to growth. They simply don't have the talent to meet the demand of their clients. So why not apply the strategy to businesses like that? While there are hundreds of staffing companies, there are tens of thousands of services, businesses, and sectors where there are talent shortages and the strategy could be an accelerant to their growth. So that was the strategy for the workforce fund, and over a five-year period we acquired eight companies and it's been incredibly successful.

The strategy has accelerated the growth of our companies. We've sold three of them already. We have put thousands of young people to work where they wouldn’t [have gotten jobs.] We've created new pathways in industries that hadn't had apprenticeship pathways like this previously. We've generated terrific returns for our investors and just last month we announced Achieve Workforce II, which, at $450 million, is two-and-a-half times the size of Workforce I and we had demand well in excess of that. It demonstrates that there are lots of sectors with talent shortages where a talent-first strategy can be an accelerant to growth.

We hear consistently from clients that they have never seen the level of talent we're providing here. The reason for that is that while these apprentices don't have the requisite skills or experience to do this work off the bat, they do have the cognitive skills, durable skills, interest and aptitude. And they're being hired and being paid $50k or $60k plus benefits from day one and being trained for three to six months before they're deployed on a project to clients. When you do this, you get in a much higher level of talent. Every time we open up an apprenticeship cohort, we have between 200 and 300 applicants for every seat. And that’s very different from a train-and-pray, tuition-based model where you spend money trying to market and convince students to pay. It's the opposite here. We pay you. In fact, most of our companies the training is the equivalent of a master's degree in terms of seat time, but instead of having them pay $50,000 for it, they're being paid $50,000 to $60,000 a year to gain that credential.

But this only works in sectors where the shortage is so great, and the demand so high, that clients are willing to pay a relatively high bill rate for new talent. If we’re interested in executing on this strategy more broadly—if we want intermediaries to build new apprenticeship programs across the economy—there will need to be some kind of public subsidy that will lower the effective bill rate that you'll need to achieve at the end of the training program.

That's why I wrote Apprentice Nation and helped co-found Apprenticeships for America. AFA has been very active in terms of trying to change apprenticeship funding from grants and picking winners to predictable formula-based funding. This administration looks like they're on the path to making that transition. Our hope is that once we see success in terms of new apprenticeship creation and new apprentices hired, that will then help galvanize shifting more funding within workforce and the Department of Labor from train and pray to apprenticeship.

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Nick: Something I did want to zoom in on—because I think my readers will at least expect me to—is you have two things here that I think aren't things that people love in this space. One is private equity, which has the same positivity rating as mosquitoes and sunburn. You also have staffing agencies, where there are concerns about a deteriorating effect on workers’ rights and the question of who is the employer.

This throws up alarm bells for people who I think are pretty practical on workforce issues, but still care a lot about the worker and may not see the benefits of your approach.

Ryan: Honestly, we haven't really encountered that. We're not interacting with the workforce ecosystem really. We're outside of it. We're building these pathways independent of the workforce ecosystem.

I understand everything you said and agree with it. I have written pieces about interest groups and think tanks that advocate for more “consumer protection” on apprenticeship. To that I would say, when there's an engaged employer who's actually paying an untrained, unproductive worker to become trained and productive, you have inherently built-in safeguards that you don't have in postsecondary education, which we’re funding, depending on how you look at it, either 50 times or a 1,000 times more per capita than we’re funding apprenticeship and work-based learning.

I think those concerns are largely misplaced when it comes to a Registered Apprenticeship. For our programs, really the proof is in the pudding. We have consistently north of 90 percent completion of the apprentices when they get placed with clients. The majority of them end up transitioning over to clients. That’s the model.

We talk to our companies, talk to prospective apprentices, [that] this is a four-to-five-year pathway for career launch in a sector that [apprentices] otherwise would not have access to because these pathways don’t exist.

We have no doubt that the impact of what we're doing is terrific for the apprentices. There’s a film about their experiences on our home page. In time, assuming funding continues to shift, probably most of our programs will register to partake of funding and we'll have to meet whatever rules and regulations are set for those programs. We look forward to that because that will allow us to again widen the aperture of industries where we can buy companies and build apprenticeship programs into them.

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Nick Beadle: I am definitely not a fan of the current process of approving apprenticeship programs, but in terms of someone who has had to sell these programs as products to consumers, I do like the idea that there's a floor for quality.

What could the halfway point be between the consumer protection concerns and where you’re at? Because I think there's also just some reluctance by employers just to kind of step into this space and do something that has this sort of level of government scrutiny.

Ryan: In my view, the workers that aren't being protected are the college students who are paying tens of thousands of dollars in tuition, taking on debt, and either not completing or graduating into underemployment. We should be focused on them.

On apprenticeships, I think we need simplicity. The key is encouraging employer and intermediary demand to build these programs because we’re missing it as a country. We’ve dramatically overinvested in classroom-based, tuition-based, debt-based career-launch infrastructure and dramatically underinvested in earn-and-learn career-launch infrastructure.

I wrote a piece a few years ago trying to summarize the dilemma we pose [to] high school graduates and called it “College or Chipotle?” That’s really what we have in America. We don’t have a third way where you can get a job with career pathway to economic mobility. You do in Europe. You do in many companies in Asia. But not here because we’ve had two generations of “college for all” as the policy. Like I said, we dramatically overfund college at the expense of earn and learn.

I’m hopeful that the changes we’re seeing from this administration—while perhaps meager—signal that a change in approach will allow us to begin to see results and shift meaningful funding.