20VC Guild Education's Rachel Carlson on The Benefits of Scaling Startups Outside of Silicon Valley, Why Mission and Margin Are So Tightly Integrated & Why Mums Are The Most UnderUtilised Asset In The Economy

Summary Notes


In this episode of "20 Minutes VC," Harry Stebbings interviews Rachel Carlson, the co-founder and CEO of Guild Education, a company revolutionizing workforce education by partnering with Fortune 1000 companies to offer education benefits to their employees. Carlson, who has raised over $71 million in venture capital, shares her journey from political campaigns to startup success, highlighting the importance of intertwining mission and margin for sustainable business growth. The conversation also delves into the challenges and strategies of hiring top talent, the benefits of relocating from San Francisco to Denver, and the critical role companies play in supporting ambitious parents. Carlson's approach to customer acquisition cost in higher education, her insights on alternative educational facilities, and her commitment to addressing the skills gap for America's workforce shine through as key themes of the discussion.

Summary Notes

Introduction to Founders Friday and Guest Rachel Carlson

  • Founders Friday on the 20 Minutes VC is hosted by Harry Stebbings.
  • Rachel Carlson, co-founder and CEO of Guild Education, is the guest.
  • Guild Education is recognized as a leader in education benefits.
  • Rachel has raised over $71 million in funding from top venture capitalists.
  • Rachel's previous venture was Student Blueprint, providing academic and career planning tools.
  • Michael Dearing provided the introduction for the episode.

"I'm thrilled to welcome Rachel Carlson, co-founder and CEO at Guild Education, the leader in education benefits, offering the single most scalable solution for preparing the workforce of today for the jobs of tomorrow."

The quote introduces Rachel Carlson and highlights Guild Education's role in workforce preparation. It underscores the scalability of their solution in addressing future job market needs.

ActiveCampaign's Customer Experience Automation

  • ActiveCampaign offers customer experience automation.
  • It allows for personalized and optimized customer experiences.
  • Over 80,000 companies use ActiveCampaign for sales targets.
  • It features intelligent automations and compatibility with other sales and marketing tools.
  • ActiveCampaign is positioned as the first platform of its kind.

"ActiveCampaign is the first customer experience automation platform, helping you provide personalized and optimized customer experiences."

This quote describes ActiveCampaign's unique position as a pioneer in customer experience automation, emphasizing its focus on personalization and optimization.

Intercom's Customer Engagement Tools

  • Intercom provides engagement tools for websites.
  • The service includes chat bubbles, conversational bots, and guided tools.
  • Unity's success story with Intercom led to a 45% increase in customers.
  • Intercom aims to provide a simple, quick, and friendly customer experience.

"Intercom makes that little chat bubble in the corner of a website, opening your business up to customers in quick and friendly ways."

The quote explains Intercom's core feature, the chat bubble, and its purpose in facilitating accessible and friendly customer interactions.

Ezra's Full Body MRI Scans for Cancer Detection

  • Ezra offers radiation-free full body MRI scans.
  • The scans can detect cancer, precursors to cancer, and other health issues.
  • Early detection increases the chance of survival.
  • Ezra is expanding to San Francisco and Los Angeles.
  • The service is available at a cost, with installment plans and a discount for listeners.

"People who detect cancer early are four times more likely to survive."

This quote emphasizes the critical importance of early cancer detection in improving survival rates, highlighting Ezra's value proposition.

Rachel Carlson's Background and Journey to Startups

  • Rachel started her career in democratic politics and campaigns.
  • She worked on the Obama 2008 campaign, transition team, and in the White House.
  • Rachel realized her passion for startups through the dynamic environment of political campaigns.
  • She was advised to work in startups, attend business school, and eventually found her own company.
  • Rachel's interest in higher education and the problems within the community college system led to the founding of Guild Education.

"Rachel, that's because you're a startup person. You need to go work in startups. This is the bureaucracy."

Don Gips' advice to Rachel Carlson highlights her entrepreneurial spirit and suitability for the fast-paced startup environment, as opposed to the bureaucratic setting of government work.

The Problem with Higher Education and Community Colleges

  • Rachel identified issues with the community college system, including low graduation rates.
  • The average community college in the US has a 5% graduation rate.
  • High customer acquisition costs in higher education are problematic.
  • A significant portion of student debt is attributed to marketing expenses on platforms like Google and Facebook.
  • Rachel sought to address these issues by connecting the workforce with quality educational opportunities.

"The average community college in the US has a graduation rate of 5%."

This quote reveals a startling statistic about community colleges, which contrasts with their public perception, and sets the stage for the need for solutions like Guild Education.

Customer Acquisition Costs in Higher Education

  • Customer acquisition costs for higher education are rising.
  • Traditional educational facilities struggle with increasing marketing expenses.
  • The duopoly of Google and Facebook exacerbates the issue.
  • Rachel advocates for alternative distribution channels and regulatory changes.
  • The conversation includes the impact on coding boot camps and newer educational models.

"Our data shows that schools that are trying to acquire students in a b to c format today are struggling across the board."

Rachel Carlson discusses the challenges faced by educational institutions in acquiring students directly to consumer (B2C) due to high marketing costs, which is a growing concern in the sector.

Access to Quality Education and Return on Investment

  • Many Americans lack understanding of which schools offer high-quality outcomes and a good return on investment for their education.
  • The problem is particularly acute for the 64 million Americans trying to figure out how to go back to school.

"And so the 64 million Americans who are trying to figure out how to go back to school don't have a lot of access to understand what are the schools with high quality outcomes and where will I actually get a return on investment in my education?"

This quote emphasizes the challenge faced by a large segment of the American population seeking to further their education but lacking the necessary information to make informed decisions about which institutions will provide the best value for their investment.

Trust in Employers Over Government and Higher Ed for Future Work Skills

  • Employees trust their CEOs and companies more than the government or higher ed sector regarding the future of work and necessary skills.
  • The economy's dynamism means that CEOs are perceived as having a better grasp of the rapidly changing skills landscape.
  • There is a belief in the potential of the U.S. government for labor forecasting and predictive analytics, but current performance is lacking.
  • A multi-pronged approach involving public, private, and nonprofit sectors is suggested for addressing the issue.

"They trust their companies more about the future of work and the skills they need to acquire than they trust either the government or the higher ed sector."

This quote reflects the current trend where workers have more confidence in their employers to guide them on the skills needed for future work opportunities than other institutions.

Ambitious Mothers as an Underutilized Asset

  • Ambitious mothers are considered a significant yet underutilized workforce asset.
  • Companies often make it difficult for employees to pursue both ambitious career paths and family life.
  • Guild is creating conditions that allow employees to choose both a career and family without compromise, including role models and support systems.
  • The focus is on not forcing employees to choose between career advancement and family ambitions.

"Ambitious mums are the best underutilized asset."

Rachel Carlson highlights the value of ambitious mothers in the workforce and the need for companies to support their dual goals of career and family.

Creating Supportive Conditions for Working Parents

  • Traditional maternity and paternity leave are insufficient for the long-term support of parents.
  • Companies should consider the full journey of parenthood, including flexible work arrangements, on-site daycare, and non-discriminatory hiring practices.
  • Support for working parents should extend beyond initial leave and address the challenges of balancing work and family commitments over the long term.

"How are you supporting parents for that full journey that they're signing up for and hopefully a longer journey with you and the company, with them working for you?"

This quote advocates for a comprehensive approach to supporting working parents throughout their careers, beyond the initial parental leave period.

Addressing Misconceptions About Working Mothers

  • There is a misconception that women are fragile during pregnancy and postpartum periods.
  • Openness and transparency about the challenges of motherhood in the workplace are encouraged at Guild.
  • Leaders discussing these issues openly can empower the entire team to do the same.

"I think there's this sense that women are quite fragile during pregnancy, postpartum, breastfeeding, you name it."

Rachel Carlson challenges the misconception about women's fragility during and after pregnancy and promotes open discussion about these topics in the workplace.

Hiring the Best Candidates

  • Building relationships with potential hires long before they are needed is key.
  • Flexibility in roles and titles can help attract the best talent.
  • Highlighting the importance of nurturing relationships and not being dogmatic about job specifics when recruiting top executives.

"I think it all starts with building relationships, and often those relationships happen well before it's time to hire the person."

This quote underscores the strategy of building and maintaining relationships with talented individuals as a precursor to successful recruitment.

Mission and Margin Integration

  • The belief that mission and margin are closely intertwined is a counterpoint to the idea that focusing on margin negatively impacts the mission.
  • A false truism in startup culture suggests focusing on user acquisition before monetization, which is seen as problematic.
  • A focus on how a company gets paid from the start can align mission and margin.

"I believe that if you start with how do you get paid? You can make sure that your mission and margin are aligned."

Rachel Carlson argues for a business approach that integrates the company's mission with its revenue model from the outset, ensuring alignment between purpose and profit.

Revenue Model and Incentive Alignment

  • Guild Education aligns its revenue with student success, only getting paid when students succeed in school and at work.
  • Payment comes from employers who fund their employees' education, but Guild Education receives it term over term from the universities.
  • This model contrasts with lead generation companies and for-profit higher ed institutions that may encourage enrollment regardless of outcome.
  • Aligning incentives allows Guild Education to focus on enrolling students who are likely to graduate and find employment, thereby aligning their mission and margin.

"And so we've actually put all of our revenue at risk and said we only want to get paid when the student is succeeding in school and they're retaining and when they're retaining at work."

The quote emphasizes Guild Education's commitment to a performance-based revenue model where their financial success is directly tied to the success of the students they enroll.

Investor Relations and Long-term Strategy

  • Guild Education faced skepticism from investors due to their non-traditional revenue model.
  • The company prioritizes long-term sustainability over short-term cash flow by building a predictable, recurring revenue stream.
  • Demonstrating lower churn rates and a sustainable long-term business model was key to gaining investor support.

"We are obviously taking a short term hit on cash flow, but we are building a more recurring and predictable business."

Rachel Carlson explains the trade-off between immediate cash flow and the benefits of a recurring and predictable business model that aligns with the company's long-term vision.

Acquiring Major Clients: The Walmart Case

  • Guild Education's understanding of the average American's needs aligned with Walmart's expertise, leading to their partnership.
  • Walmart's extensive workforce and deep understanding of the American educational and skills gap made them an ideal first major client for Guild Education.
  • The partnership with Walmart allowed Guild Education to learn about different communities across America.

"85% of Americans shop at Walmart, and 10% of American households work at Walmart. And so they understood at such a deep level what we were setting out to do and how different and audacious our mission was."

Rachel Carlson highlights the alignment between Guild Education's mission and Walmart's deep understanding of the American populace, which facilitated the partnership despite Guild Education's smaller size.

Managing Client Relationships

  • The partnership with Walmart provided numerous benefits, including growth and insights into various American communities.
  • Guild Education maintained independence by not allowing Walmart to dictate their product roadmap, ensuring their services remained applicable to a broader client base.
  • Open communication about Guild Education's mission helped manage expectations with Walmart.

"They've understood when we've said we can't just do everything you want. We have to make sure that it serves all of our companies."

Rachel Carlson discusses the importance of maintaining product roadmap independence and ensuring that their services are not exclusively tailored to one client, even if that client is as significant as Walmart.

Advice for Early Stage Founders

  • Founders should consider both go-to-market and product strategies when deciding whether to target large clients or smaller ones.
  • It's crucial to evaluate whether the company is prepared for the sales rhythm required for key account strategies or if a grassroots approach is more suitable.
  • The decision impacts the product development direction, and founders must deliberate on the implications of targeting different customer segments.

"And so I think sitting down and really thinking about what will it mean if this is our go to market strategy, do we have the sales rhythm or the ambition to do that key account go to market motion?"

Rachel Carlson advises founders to carefully consider the implications of their go-to-market strategy on their product development and overall business strategy.

Location Strategy and Hiring

  • Guild Education chose Denver over San Francisco for their expansion due to the need for close collaboration between product teams and coaches.
  • The decision was data-driven, with the best candidate for a key position emerging from Denver, convincing investors of the move's validity.
  • The move to Denver is considered one of the best decisions for the company, fostering team unity and effective growth.

"And when I put the resumes in front of the investors, it was so clear to them that if we could find a director like that, imagine the team she could bring."

Rachel Carlson shares the pivotal moment when the decision to move to Denver was solidified by the quality of candidates available there, which reassured investors about the potential for building a strong team.

Talent Acquisition Outside Tech Hubs

  • Hiring in Denver versus San Francisco presents a different dynamic; while the talent pool may be narrower, Guild Education often wins the competition for talent at the end of the hiring process.
  • The misconception that the best talent is only in tech hubs is challenged by Guild Education's success in hiring in Denver.
  • Denver's attractiveness as a city has also enabled the company to recruit people willing to relocate there.

"So I think in San Francisco. The funnel is very, very wide, but your chance at winning at the bottom of the funnel when you're an early stage company is incredibly hard when you're competing with Google and Facebook salary packages."

Rachel Carlson contrasts the hiring challenges in San Francisco with those in Denver, explaining how Guild Education has successfully attracted top talent outside of traditional tech hubs.

Geographic Distribution of Teams

  • Rachel Carlson believes proximity to employees and customers is more important than being close to capital.
  • Guild's success is attributed to maintaining good relationships with investors despite not being in the same neighborhood.
  • The split tactic of leadership in one place and other teams elsewhere is not favored by Rachel.

So I think that that's not a great idea. I think there are, and I'll be controversial about it, I guess I think there are three groups of people you can live near. You can live near your employees, you can live near your customers, or you can live near your capital. And my argument would be that it is far more important that you live near your employees and you live near your customers than living near your capital.

Rachel Carlson argues against the common split tactic and emphasizes the importance of being geographically close to employees and customers over investors.

Investor Relationships and Selection

  • Rachel Carlson values building relationships with investors before they invest, citing personal connections with investors like Michael Dearing and Wes Chan.
  • Investors are chosen based on their excitement about a business that aligns with Guild's mission and margin.
  • The relationship with investors is deemed crucial for the company's growth and alignment with long-term goals.

So Michael Dearing was my favorite professor at Stanford Business School, and so we had nurtured a relationship far before he led our seed round.

Rachel Carlson highlights the significance of pre-existing relationships with investors, using Michael Dearing as an example of a relationship that existed prior to his investment in Guild.

Investor Value Add

  • Investors add value as thought partners to the CEO and in talent recruiting.
  • The danger of treating the board like a boss can be mitigated by hiring an executive coach early on.
  • Different investors provide different areas of expertise and should be approached for advice accordingly.

I think investors add the most value by being a thought partner to the CEO. And so I think about it in terms of having them on my speed dial, but having them on my speed dial for different reasons.

Rachel Carlson explains that investors are most valuable when they serve as thought partners and advisors on various issues, rather than just financiers.

Reading Recommendations

  • Rachel Carlson is passionate about reading and recommends "To the End of June" for nonfiction and "Where the Crawdads Sing" or "The Testaments" for fiction.
  • These books are suggested for their deep dives into societal issues and engaging storytelling.

So if you want a nonfiction book, you should read my favorite, which is to the end of June, which is a deep dive in the american foster care system.

Rachel Carlson recommends a nonfiction book that offers an in-depth look at the American foster care system, reflecting her interest in social issues.

Advice to First-Time Founders

  • Hiring an executive coach and spending time with investors outside of boardrooms are key pieces of advice for new founders.
  • Building a personal rapport with investors is emphasized for successful board management.

Hire an executive coach. Get to know your investors. Spend time with them, not just in boardrooms, but over meals.

Rachel Carlson advises first-time founders on the importance of professional guidance and developing strong relationships with their investors.

Personal Strengths and Weaknesses

  • Rachel Carlson sees her biggest strength as being effective at the intersection of the public and private sector.
  • Impatience is identified as her biggest weakness.

Biggest strength would be the intersection of the public and private sector and being effective at that intersection. I think America's future depends on that. And my biggest weakness is I'm really impatient.

Rachel Carlson discusses her ability to navigate the public and private sectors effectively as a strength and acknowledges impatience as a personal weakness.

Challenges in Current Role

  • Balancing the need to be on the road with customers and in the office to oversee a rapidly growing team is challenging.
  • The desire to be in two places at once is noted as a particular difficulty.

The desire to be in two places at once. I love being on the road and with our customers, and we're growing like weeds. And so I need to be in the office a lot, too, to help steward the many, many new people we're hiring every week.

Rachel Carlson expresses the challenge of managing her time between customer interactions and internal company growth.

Guild's First Investor

  • Michael Dearing was Guild's first investor, and he persuaded Rachel Carlson to start Guild as a venture-backed business rather than a nonprofit.

Michael Dearing was our first investor. And there's a long story, but the short story is he convinced me not to work for any other company and not to start Guild as a nonprofit, but instead that it should be a venture backed business.

Rachel Carlson credits Michael Dearing with influencing the decision to establish Guild as a venture-backed company.

Beliefs About Talent and Opportunity

  • Rachel Carlson believes that talent is distributed equally worldwide, but opportunity is not.

Is equally distributed throughout the world and opportunity is not?

Rachel Carlson expresses her belief that while talent is ubiquitous, opportunities are unevenly distributed.

Guild's Five-Year Plan

  • Guild aims to address the need for reskilling or upskilling 64 million Americans to become middle-class earners.
  • The company plans to continue its growth trajectory and focus on its mission over the next five years.

Well, we're talking to hundreds of thousands of students right now, but there's 64 million Americans who need to reskill or upskill in order to have a chance at being a middle class earner in the economy.

Rachel Carlson outlines Guild's ambitious goal to help a significant portion of the American workforce improve their skills and earning potential.

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