Guild Education Hits $4.4 Billion Value as Labor Market Demands Continue and Threat of Downturn Rises
guild Education co-founder and CEO Rachel Romer Carlson is no stranger to stardom: She worked in the Obama White House, comes from a family famous in Colorado politics, and just months after that his edtech unicorn was named one of Timeit is most influential companiesis set to announce a $175 million Series F funding round on Thursday led by Wellington Management – news first reported by Forbes.
Yet Carlson, who Forbes named one of America’s richest self-made women, can’t help but have a fangirl moment about another investor who’s in the round: Oprah Winfrey.
“I feel like I learned leadership and empathy by watching the Oprah show every day at 4 p.m. when I was a kid,” says Carlson, whose company acts as a matchmaker between higher education programs and less-skilled workers at its business partners — companies like Walmart, Chipotle and Disney. A fellow entrepreneur made the connection, she says, and “it’s kind of like manifesting in life. You talk about it enough and finally someone said, “Oh, I know she’s making investments and she might introduce you.”
Guild does not disclose the size of Winfrey’s investment, as well as that of other players such as Citi Impact Fund, an impact investing unit of major bank Citigroup, and healthcare group Bon Secours Mercy Health. based in Cincinnati. But as part of the $175m funding round led by Wellington, which also includes existing backers, the investments help lift Guild’s valuation to $4.4bn from $3.75bn. previously, in a context of continuous demand from employers to requalify and retain their workforce. Forbes estimates that Carlson’s net worth, previously estimated at $500 million, will increase to $570 million, based on Carlson’s estimated 14% stake.
The latest funding round — which would rank among the 10 largest in the edtech space over the past year, according to data from PitchBook — comes as clouds gather over the state of the economy, with inflation spurring recession talk, tech companies and startups announcing hiring freezes or layoffs, and a falling stock market hitting investors’ wallets. Department of Labor data Wednesday showed that job openings slipped by around half a million in April from a revised record of 11.9 million vacancies the previous month, but demand for hiring remained strong.
Slowdowns have always meant bad news for investments in employee training and benefits. But Carlson and at least some of his investors see an opportunity, bolstered by structural changes in the workforce, a shift in how employers view talent, and Guild’s plans to invest its latest round of funding. which involves expanding into in-demand markets like healthcare and exploring ways to offer platform users access to tools like loan repayment programs, childcare solutions and career reviews.
“We just hit this massive inflection point where the market – not just innovative companies, all companies – is now saying we have to do this.”
“We’ve just reached this massive inflection point where the market – not just innovative companies, all companies – is now saying we have to do this,” says Carlson, referring to investing in retraining workers and education benefits. Given “the acceleration we’ve seen in COVID, coupled with labor market dynamics that are quite structurally collapsing,” she says, citing the country’s current immigration policies, the number of retirees and the skills gap, “for the next two decades, America does not have enough skilled workers.
Ken Chenault, president of a venture capital firm General Catalyst and Guild board member, has been a contributor since 2019. He says that in past recessions, some CEOs “cut almost all discretionary items”, but he thinks CEOs “understand a lot better now the costs of the loss of qualified people”. …because they fully understand the cost of acquisition and hiring,” especially in the midst of one of the tightest labor markets in decades.
He also thinks Guild’s business model has an advantage: employers pay tuition directly to higher education partners, who typically pay Guild as students progress, rather than students paying in full at advance and get reimbursed. “As a leader, if I don’t know what the outcome will be, there’s so much risk I can take,” says Chenault, who served as CEO of American Express from 2001 to 2017. “But [when] I know where the results are and I know what the returns are, so that can give me the confidence to make some of the trade-offs I would have to make in the event of a downturn.
Carlson says the new round will help Guild – which has around 1,500 employees, up from 400 in March 2020 – continue to meet current demand, as well as expand its reach into other markets. Guild does not disclose its earnings, but Carlson has confirmed that it has reached an investor’s revenue forecast of $100 million for 2020. The total number of employees who now have access to Guild’s platform is has grown to nearly 5 million, the company reports, and the number of working adults using the platform has grown 140% since June 2021.
End of 2021 Bloomberg Article raised issues related to the Guild or its growth, such as staff diversity and student graduation rates. Carlson says Guild disagreed with some of the issues raised in the article, but acknowledges that Guild wasn’t as diverse as it wanted and has “significantly” increased diversity in part by focusing on its recruitment and sourcing strategies.
One of the sectors where Carlson hopes to expand further is healthcare, where she says she has seen an “explosion of interest” as that industry faces a workforce crisis as a result of the pandemic. She notes that health care should be better protected than other industries against a downturn. “The rate at which people get sick is unrelated to how the stock market trades,” she says. “And for the labor crisis to be ever-present, no matter what happens in the environment in which we walk.”
One such healthcare client, Bon Secours Mercy Health, started working with Guild last year, knowing it wanted to do more to retain and “upskill” workers in job categories. high demand such as nursing. Like nearly all hospital systems amid the pandemic, Bon Secours has struggled with labor shortages; it had to increase its hiring by 40% over the past year.
Today, its revenue has stagnated, says Allan Calogne, director of human resources for core operations at Bon Secours Mercy Health, and Bon Secours is even investing in Guild. Calogne says turnover is about 4.2 times lower among the cohort of workers who opened a Guild account than those who didn’t, and 52% of new hires cited the perk as a reason for taking the job. “It really recalibrated the notion of internal mobility,” he says.
“Everything a worker would need to know to enter the middle class and thrive there is what we think.”
Carlson says the funding round will also help expand Guild’s “ecosystem” to address issues beyond education. “Just like Vanguard in the ’80s allowed an employer to make a 401(k), we allowed companies to fund their employee training through a payment layer, a data layer,” she says. Guild’s “payment model,” suggests Carlson, can be applied to issues beyond education, such as helping workers settle student loan repayments or conduct professional assessments about career prospects.
Ultimately, she says, “the products that surround education — everything a worker would need to know to enter the middle class and thrive there — are what we’re thinking about.”
Joe Fullerprofessor who co-leads Harvard Business School’s Managing the Future of Work initiative and was one of the founders of consultancy firm Monitor Group, says such a strategy would make sense for a company that has had a “very significant impact on removing an obstacle to companies offering a plausible [tuition] advantage”, although it is still “first innings” on the impact Guild will ultimately have on economic mobility.
Guild, he says, “has developed a very good benefits management capability” that it could use to connect employees to other fractured markets through its portal. “Why wouldn’t that apply to child care?” Why wouldn’t this apply to relocation? This is a really interesting question for Guild in the future.