
General Assembly sells to Adecco for $413M - sethbannon
https://techcrunch.com/2018/04/15/new-yorks-programming-ed-tech-startup-general-assembly-sells-to-adecco-for-413-million/
======
luckydata
I witnessed the quality of education provided in the areas of design and
product management and I wasn't impressed. To me GA felt like a predatory
business that provided a very superficial veneer of legitimacy to extremely
unqualified candidates. The good ones going in would be well served by the
networking but people that didn't know anything about the field would crash
and burn at their first contact with the reality of the industry.

I'm not one of those people hung up on traditional college education, I got my
degree mostly studying by myself and always found most of what my college
offered useless, so I'm not coming from the angle of "you need an x year
college degree for this...".

I realize this is an harsh opinion but it's not cool to get north of $10k from
people that need a job and tell them "we'll make you a designer in 3 months",
that just doesn't happen.

~~~
kitotik
Predatory indeed. I know of many people who were previously working service
industry jobs, saved up the $10k for a GA course with the promise that they’ll
be making $150k/yr in ~12 weeks.

I’ve personally interviewed around 25 GA grads, and the result was pretty much
the same with all of them - “great, you now know what you don’t know, and have
about a year of self-directed learning followed by a year of on the job
experience before being employable in a role above an internship.

It’s actually pretty heartbreaking when you talk them and get a sense for how
much they were oversold.

~~~
madenine
Disclaimer - taught GA part-time courses (data science)

My heart goes out to those people, and I'm guessing Web Development Immersive
students?

I always described GA's programs as a multiplier in that your outcome is going
to be weighted by your experience going in. And for the most part I felt GA
managed that expectation fairly well for most of its immersive programs -
except Web Development.

In WDI I would see students who had no background in CS, design, etc. hoping
to go from no experience to a full-stack developer position in 12 weeks. With
a broad curriculum that iirc was starting with html/css fundamentals and
working through Rails/Node/... maybe Angular? I felt it was giving them a base
to start learning on their own, but not enough to immediately start working
except for the very-top students (who likely had some sort of helpful
background coming in).

I do believe GA is at its core a good organization that wants to see its
students succeed (can't say enough good things about the career coaching /
placement staff aka "outcomes"). But I can see how with a lot of competition
in that space, the sell may have gotten stronger than what the product
supports - and that's 100% on GA to address.

~~~
kitotik
I saw this equally across the UX, WebDev, and product management immersive
graduates.

I don’t doubt that GA started with good intentions, but it seems clear that
they got caught in the typical startup trap where they get ‘forced’ to
prioritize investors over users as their target audience.

~~~
luckydata
Now I'm genuinely curious to know who you are :) You can contact me via my
profile.

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noelwelsh
"Over time, General Assembly became less of a consumer facing business and
transitioned into one that was serving primarily business clients — which
means access to Adecco Group’s over 100,000 businesses is a big boon to the
company’s continued expansion plans."

I thought this was interesting. Anyone know more about the services General
Assembly was offering to businesses? I guess there is more money and less risk
associated with this market. Going after the public / the bootcamp model means
you run into accreditation laws surrounding educational institutions and you
have to do more work (e.g. tracking placement rates).

~~~
snakeboy
I know Booz Allen Hamilton launched a company-wide initiative with General
Assembly for a data science course [1]. From my limited understanding of the
content, I believe it is aimed at providing a very rudimentary introduction to
the field for the more businessy/consultant types. And to demonstrate that BAH
is "data-driven".

[1] [https://www.boozallen.com/s/insight/thought-
leadership/accel...](https://www.boozallen.com/s/insight/thought-
leadership/accelerating-data-science.html)

~~~
madengr
BAH is a leech on the federal government. I’m not even sure what they do,
other than sucking $M in project management costs while providing nothing.

~~~
geofft
I support this - it's money that's not going to the military. Every government
contract signed, every middle manager given a raise, signifies, in a final
sense, a theft from those who would bomb and are not armed, those who would
kill and have no weapons.

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jacquesm
4 times revenues is pretty good for a company like that. Lots of physical
presence required, a ton of handholding so it doesn't scale nearly as well as
your typical 'SaaS' or other software company. Well executed and well
negotiated.

~~~
wslh
I don't think it is that good taking into account that $ 120 million were
invested in GA. Investors look for bigger multipliers.

~~~
jacquesm
Investors are usually pretty savvy of what they invest in and I'm fairly sure
they knew that they weren't going to see much more than 3 x revenues on this
deal. And depending on how early they entered their multiples may have been a
lot higher (with correspondingly longer times before their payday came).

The last round in 2015 was 70 million, that's a pretty good pay-off for 3
years, the one before that was 35 million in 2014, still a very good ROI.

Investors look for bigger multipliers when the risks are higher, a company
like this is as start-up investments come reasonably low risk, it is
essentially a middle ground between a consultancy business and a scalable
proposition and as a result of that the returns are also in the middle.

Investors looking for bigger multipliers would have to be content with taking
bigger risks as well.

~~~
alehul
The $70m round in 2015 was likely for 10-20% equity, meaning a valuation
between 350m and 700m. With that in mind, it's virtually no gain or possibly a
loss.

The article actually mentioned a latest valuation iirc that said the last
round investors had ~no positive return.

I agree with the evaluation of risk, though.

~~~
nl
The Axios article[1] is better because it notes that later investors had
preferential terms ("preference stack"). It's also says the post-money
valuation was around $440m.

It's hard to know what they got back, but since the preference stack is noted
I'd guess they made between 120% and 150%. There's no real way to know though
- but we can tell they made their money back because the sale went though.

Also, A D round isn't looking for huge returns. They probably would have been
outstandingly happy with 3x, so 1.2x is fine for them.

[1] [https://www.axios.com/general-
assembly-1523667905-ce940016-1...](https://www.axios.com/general-
assembly-1523667905-ce940016-11d9-4380-bdd3-d46ef18898f7.html)

~~~
jacquesm
Exactly. It's very hard to make any definitive statements about this without
knowing all the deal terms and those will most likely never become public.

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acjohnson55
Is it safe to say the bootcamp boom is over? For a while, it seemed like
everyone and their cousin was starting a bootcamp, trying to cash in on the
gold rush. Now, most of the biggest ones I know of (GA, Flatiron, Dev Bootcamp
(RIP)) have been gobbled up.

~~~
jacobwal
Seems like it. But you have some new models - like Lambda School - that are
showing a lot of promise

~~~
austenallred
Co-founder of Lambda School here.

The problem with the bootcamp gold rush is and has always been the business
model. You have a few major variables:

1\. How much can a person pay you?

2\. How many people can you fit in a classroom?

3\. How long can the classes be while still maintaining a profit margin?

Based on those constraints bootcamps try to teach as much as possible. Within
those constraints bootcamps found one model that worked and cloned it hundreds
of times: A bunch of people in a classroom for 12 weeks paying $10-15k each.
Some will try to chop off a couple weeks, some charge $18k instead of $10k,
but it's fundamentally the same.

 _Every single bootcamp_ recognizes that this is not a great way to train
engineers. 12 weeks simply isn't enough. But there's enough of a shortage or
engineering talent that bootcamps could get away with it for a while.

Sure, in an ideal world you would actually train the students based on what
they need to make hiring companies happy, but change any of the variables in
the above equation and the whole business model falls apart. If you want to
make the classes 2x the length you'd have to charge 2x the price, and can you
get large numbers of people to pay $25-40k out of pocket? Not a chance.

We had to really start from first principles, and start with a new business
model, which changes everything else.

The main thing we wanted was incentives aligned with our students; so we
started from, "What if we didn't get paid unless students get a job?" That
forced us to change everything else. I actually thought it might not be
possible for a while.

I don't consider Lambda School to be a code bootcamp. We're six or seven
months long full-time, which is 2.5x the length of a code bootcamp, plus a
month of pre-course work. A few graduates have applied to Lambda School after
having paid another school $15k and haven't even been able to pass our prep
work.

I think we're on the _short_ end of what a solid engineering education should
be. But we have enough time to teach true fundamentals, our students don't
just write JavaScript, but also Python and C, they have an apprenticeship
where they ship real projects that make real money on real teams, and they
actually learn to think and write real code, not just pump out quick apps then
struggle when confronted with anything new.

We can be flexible on class size so long as we keep a good teacher:student
ratios because we're entirely online (which, by the way, is actually a
superior learning experience to offline). We can pick the best students
regardless of financial ability because our pool of potential students isn't
limited to people with 20k in their pockets that can move to San Francisco. We
actually have _more_ support for students, because our instructors scale
across classes when they're not teaching, and we can do some tricky financial
stuff on the backend to make sure students are guaranteed a job before they
pay.

All of that combined lets us open up a promise, which is what really matters
for students at the end of the day - attend for free until you get hired.

I think we'll see massive consolidation in the bootcamp space in coming
months, and it's already started (Dev Bootcamp, Iron Yard, Bloc, Viking Code
School, and more have either been acquired or closed). That's very healthy,
and frankly there are some sleazy bootcamps that only exist because of
marketing. You could wipe the bottom 80% of bootcamps off the face of the
earth and it would probably be a net positive for everyone. I think we'll get
there in the next 3-4 years.

~~~
shawndrost
Cofounder of Hack Reactor here.

Austen is hella right about his thesis: bootcamps are not getting enough
students across the finish line right now. They need higher admissions bars,
more classroom hours, and/or other good ideas. Hack Reactor is (imo) one of
the high-water marks of this line of thinking. Lambda and Holberton are
others.

I think he's miscast the three variables though -- partly because he's got a
bit of a dog in the race. (As I do -- "we're not a bootcamp" is something many
bootcamp founders, yours truly included, have said.) Anyway here's another
perspective on the matter:

#1 is mostly right -- bootcamps are limited in price, and this is a huge
constraint. It's wrong in an important way: it should be "How much can I
charge before a student picks another bootcamp". This problem gets easier, but
doesn't go away, if a bootcamp uses a deferred-tuition model. Evidence for my
formulation here: App Academy and Hack Reactor have the same kinds of student
outcomes problems, because we're both facing the same demon, which is the low-
cost bootcamp that prevents us from charging more and spending more on product
quality.

Austen's #2 and #3 are both about specific ways to tweak the bootcamp's
expense : quality ratio. This is an interesting topic that goes really deep,
and I think Austen's reduction is (honestly) pretty heavy on the marketing
content. If I were to boil it into two bullets it'd go like this.

#2 "Can you run a good program, online or offline, that isn't classroom-
based." Here, by "classroom" I mean "15-40 students and teachers that know
each other personally", and it can and does happen online. (Viking Code
School, and Hack Reactor Remote, do online/classroom-based programs.)
Classroom programs are very challenging to operate: they introduce discrete
start dates, fill rate problems, etc. But it's hard to reproduce the quality
of a classroom-based program in eg a mentor-driven or community-driven
program. I think the answer here will be "kind of", and hybrid classroom-like
programs will win.

#3 "Can you get students to pay $10k+ for an online program". Online can be
better than offline -- Hack Reactor Remote is our top-performing campus right
now. However, few people want to buy it, despite the fact that it doesn't
involve moving to SF. Perhaps Lambda has figured something out here -- I don't
know about their growth numbers. I hear Thinkful has. Generally, I think the
bootcamp space will mostly become hybrid online/offline. I bet half of
Lambda's students are in SF, they meet up in person already, and Lambda does
or will facilitate/market this.

My #2 and #3 are also poor formulations of the fundamental challenge here --
the quality : cost ratio. For instance, my favorite recent innovation in the
bootcamp space (evidenced by Holberton, and maybe Lambda?) is to offset
tuition costs and increase grad expertise by bundling an internship and taking
a bite of internship income. This doesn't pertain to my #2 or #3 (or Austen's)
but it's a way to solve the top-line problem Austen mentioned.

Anyway, TLDR: another bootcamp founder agrees with Austen's thesis; quibbles
on details in ways you might find interesting.

~~~
austenallred
You're wrong about many things but I don't want to correct you because then
that would give away some aspects of why Lambda is working so well :)

Much respect!

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knuththetruth
I hope this doesn’t result in some form of debt peonage temp work, but having
worked some Adecco jobs when I was younger, I wouldn’t put it past them. In my
experience, they were mostly recruiting for jobs in really toxic workplaces
that couldn’t otherwise attract talent, and that were described as “temp-to-
hire,” but that never worked out that way. They would get rid of people once
they had pushed them to the limit of contracting laws or if you in anyway
complained about/reported anything at your job site.

I could easily see this devolving into some kind of debt-based H1B system,
where they drastically overprice a bootcamp education that they give for
“free” to desperate jobseekers, and then use to lock them into underpaid roles
at bad workplaces that can’t recruit technical talent without this kind of
predatory leverage.

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liminal
After watching someone go through their training, I'm not very impressed. They
also enormously inflate their job placement statistics by giving graduates a
difficult set of hoops to continually keep jumping through in order to be
counted at all. For example, miss posting a blog one week, poof!, you're no
longer counted in their placement statistics.

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Bobbleoxs
It seems cheap to me. I did some digital marketing course there. The classes
are more on the basic side but certainly a good intro for some basics in
programming and digital business.

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nl
Note that this isn't cheap because training doesn't scale like software
businesses. That means the revenue multiple is lower than for a software
company.

~~~
bertil
I feel like we have not cracked the code on how to use software to automate
teaching yet. Not sure why: NLP, complex representation of understanding,
dynamic edition of video content, monitoring someone’s attention… All those
are there and have been for a while.

~~~
acjohnson55
As a former teacher, I find this very amusing. There's a lot more to it than
uploading raw info into receptive brains. As a current software engineer, I
think it's probably a lot more likely we'll automate parts of my current
career.

~~~
trowawee
Also a teacher-turned-dev, and I completely agree. Teaching is such a labor-
intensive, poorly-understood process that the idea of effectively automating
it anytime soon is ridiculous. We still don't really have any consistent
metric that measures what a "good" teacher is - if you can't even _kinda_
measure performance in an accurate and consistent way, how on earth is the
process going to be automated effectively?

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realmike33
Is it just me or did they sell for pretty cheap? Congrats either way!

~~~
noelwelsh
The article said they had revenue of 100M. Training generally doesn't lead to
recurring revenue, so a huge multiplier is not justified. Doesn't seem too
cheap to me.

~~~
moorhosj
B2B training should be recurring, large companies hire new classes of entry-
level workers every year.

~~~
mbesto
But that's not as "sticky" as software. If you decide to cut costs next year
on training because its non-essential, the revenue gets slashed. If I still
need to procure stuff, I'm not going to shut off my procurement software to
cut costs.

~~~
moorhosj
On the flip-side, if cost-cutting becomes important, a company may decide to
invest in current employees skills in lieu of hiring new external employees.
Any software that isn't mission-critical faces high risk in a cost-cutting
environment.

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dawhizkid
Surprised it wasn't WeWork

