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Launch HN: Pathrise (YC W18) – Career accelerator for students, free until hired
89 points by kevintxwu 9 months ago | hide | past | web | favorite | 74 comments
Hi HN,

I'm Kevin, co-founder of Pathrise (https://www.pathrise.com). Pathrise is an online replacement for career services that helps students get better jobs and make more money. If and only if they get hired during our program, students pay us back a tuition fee of 7% of their income for 1 year.

For more context, you can read about us here: https://venturebeat.com/2018/03/09/pathrise-wants-to-be-the-....

The problem: universities aren't directly incentivized to get students good jobs since they make all their money in upfront tuition. As a result, college career services centers aren't results-driven and can't properly support their students. Most students are essentially left to figure things out on their own, and they think to themselves, career services are useless. The easiest way to verify this is to ask your average student how many times they've visited their career services center in the last year.

In reality, career services (that actually work) are probably one of the highest value things a student can receive. You can take any step of the job search (e.g. online applications), train students on one technique (e.g. lead gen and cold emailing), and produce significant and measurable returns (e.g. we've measured that this technique in particular can 4X response rate from under 5% to over 20%). Pathrise does this with every step of the job-hunting process, from training students from a 2/6 to a 5/6 in technical interviewing scores based on real company rubrics to helping students get a 10%+ higher salary through negotiation.

In this sense, we're kind of like YC for students instead of startups. Founders give 7% equity to YC because they know YC will increase their company's prospects by more than 7%. Students give us 7% of their first year's income, and our program is designed to increase their job prospects by more than 7%. They know we'll do everything in our power to provide them that value because we have aligned incentives - we only make money if they do.

What this ends up looking like is an online accelerator for students that takes place in 12 monthly batches a year, followed by an average of 3-4 months of support until a student is placed. Instead of focusing on a technical education (like our friends at Lambda School), Pathrise is entirely about optimizing your job search. This involves services like resume review, prospecting, referrals, interview preparation, and negotiation advice. Again, unlike career services today, we track every data point so we can hold ourselves accountable to actually produce significant and measurable value for our students.

Thanks for reading! I'd be happy to answer any of your questions and would greatly appreciate your feedback.

> because we have aligned incentives [with our students] - we only make money if they do.

If you sign up all students and do nothing further, you still get your 7%. That is not aligned.

To align incentives you would have to align the students payments with how much you improved their outcomes - much harder to do of course.

I think your model has the same risks as real estate commissions where the selling agent is highly motivated to sell quickly and they have little motivation to get a higher price.

Agreed, a "progressive" pricing based on salary would be a good way to address this, e.g. >50k -> 1%, >80k -> 3%, >100k -> 5%, >120k -> 7%.

Percentages in and of themselves are progressive pricing! If we believe we can get the student a 100k+ job, we'll definitely be incentivized to help them get there instead of telling them to settle for a 50k job.

The progressive^2 pricing model is interesting though. It's a little legally complex unfortunately so we have to look into it, but I also like the aspect of the idea where the less you make as a student, the more a lower percentage could help you live more comfortably.

Right, but your revenues are also dependent on the cost or time it takes you to do. Let’s say it costs you $1000 of time to get someone a $100K job and $1500 of time to get them a $120K job. You are going to encourage them to take the $100K job to maximize your company’s revenues.

This is potentially a real effect, but in this case, the exact unit economics will determine exactly how much it matters.

Thanks to a focus on software and automation where we can afford it without hurting the experience, it's been good enough so far where we haven't noticed this affecting our decision making yet.

"Potentially a real effect" meaning almost the definition of a principal-agent problem and a well-known problem in real estate. If you want to prevent it from happening (and I'm not saying that you do) you will have to try very hard, not just assume that it will happen.

You're right - my language was too dismissive. The general idea of what I said above is still valid though.

Another point: the cost per student does not increase linearly with time. Instead, advising becomes significantly more efficient after we've already taught the student our core insights. This means we're much more willing to spend additional time on students the more time we've already spent.

In contrast, houses can't "learn" how to sell themselves like a student can, so real estate agent costs are linear with time spent.

Hmm, so would a flat tax rate actually be progressive? ;)

This is a loaded question since a flat tax is a proportional tax (assuming we are excluding deductions/credits etc.)

Good point. It would certainly not be progressive in a political sense haha

Great point! Glad to see other skeptics already arrived.

I'd love to see a concept like this work but it is very difficult to truly align the incentives between recruiters and candidates or companies. Like you said it's just like real estate, a turnover game where the broker doesn't really care about optimal outcomes for the transacting parties.

That said this could still add a lot of value for students - I certainly had no clue about career paths when I was in school. So I hope they figure out a way to make it work for everyone.

It is only good for students that struggle with finding work. Maybe foreign students or students that are very smart intellectually but are weak in social/interviewing skills.

For most people (that tech companies/professional companies want to hire), they already have the skills needed to market themselves.

I said this a little earlier in the thread, but I would definitely say plenty of students we work with already have some of the skills needed to market themselves and they'll do fine on their own, but job seeking is rarely a binary of you're either fine or you're not.

Outcomes from job seeking fall on a spectrum from underemployed to dream job and our goal is to help get you an outcome that's at least 7% better than what you would've got on your own.

I think that you have some good points here that we've actually debated internally quite a bit. First, I would say the program is designed so that we commit a specific amount of time and resources per student, so we're motivated to work on their behalf to recover that investment that we make for free.

As for the risk of trying to sell quickly rather than looking for quality, I think the most effective way we can tackle it is by also measuring the student's satisfaction with their final offer.

One of the most important things to protect a student here as well is they don't have to accept any offer they're not happy with. They can reject an offer to look for more and we don't have any say to stop them.

Whenever we do run into a situation like this where our advice may be affected by a conflict of interest, we also do our best to inform the student first. Something like, "Pathrise will make money if you accept this offer, so please take what I say with a grain of salt, but..." and then we'll just have an honest conversation about what they're looking for and if the offer is a fit.

Committing a specific amount of time gives you an incentive to better screen your applicants. It still doesn't give you an incentive to find them the highest offer. Let's say that someone could get 110k with a significant effort by your company and 100k without you.

You guys doing very little gets you 7k.

You guys putting forth significant effort gets you 7.7k.

That's not much difference and it makes a lot more sense for you to put that extra effort into finding another customer to get another 7k.

Hmmmm, this is a really interesting line of logic.

With this logic, I think you can look at the income share agreement more as us taking on the risk rather than aligned incentives.

The problem with some potentially good career coaching services out there is that charging students thousands of dollars upfront without actually having placed them yet just feels unfair.

On the other hand, with income sharing, students know we have a similar risk of getting nothing out of the experience as they do, which motivates us to make their experience as impactful as possible.

Even if we continue at an extremely high rate of placements, let's say 95%+, for the other 5% of students where the worst case happens, the income share agreement model is much better than upfront payment because the cost of these invested advising hours and resources is on us rather than on the student.

Outside of that, I think from a purely revenue perspective you're basically right that the incentive to invest a lot of time for a little salary is not incentivized.

Part of the reason why we are still incentivized to put effort into our students (especially if we can track measurable results) is that those results will ultimately lead to much better user acquisition anyways, especially since we expect natural referrals for Pathrise to be one of our main sources of growth moving forward.

I do have to admit though, that though this is a very real incentive core to our business, it isn't an incentive that's actually integrated into the revenue model itself.

Students are generally informed in writing about the impacts of student loans, but they sometimes regard loan providers as predatory once the loans come due.

There is a chance here for both the student and Pathrise to benefit from working together, but the social interaction (and understanding that students sometimes make life-choices that they later regret) must be navigated with a deft touch.

An up-front payment for Pathrise's services, assuming that they work, would appear to avoid any future sadness; the student could finance the interaction with an outside financier. Coupling the financing directly to the service may cast an unwarranted shadow upon an effective job-placement service.

Yea, we definitely have to be sensitive about offering financing options directly to students.

One of the ways we handle this now is we actually ask the students to consult their family before signing anything. We also allow the students to still drop out of the program at no liability within the first two weeks.

The problem with upfront payment is that we are no longer held accountable by aligned incentives. The most predatory thing about student loans is that you still owe the same amount of money regardless of your outcome. I think our income share agreement is designed to be much safer since in almost every case where you pay anything you are also capable of paying it.

For students in exceptional situations, we'll even waive their dues or retro-actively offer financial aid since we didn't design the program to be a future burden. The way we see it, helping out a student in need in any way pays back tenfold in terms of reputation later.

As an aside, I don't think "the most predatory thing" about student loans is the fixed cost regardless of profit. The same could be said of any business or real estate loan. The most predatory thing about student loans is that there's barely any rational qualification of the loan recipient.

Yea, you're right. I would say it's in part the disparity between the scale of the fixed cost and the amount of qualification that is predatory.

As in, if it was a loan for only $1000, it's certainly more ok to do less qualification. Versus if you were saddling a student with a loan of $40,000, you should probably be very careful.

I would advise them to not cold-email students about 'Engineering fellowships' which upon further inspection are just resumed workshops and interview prep. If you want students to take your company and service seriously, don't send out disingenuous emails about 'impressive backgrounds'. It makes your company look like one of those pay-to-join academic honor societies whose emails everybody[1] ignores.

[1] Obvious not everybody or there wouldn't be a business.

That's a good point that the word fellowship is potentially misleading.

Although...I do want to clarify we actually offer advice on project development, the interview prep goes to a reasonable technical depth, and you are connected with other engineers at top companies. So in many ways, it is still a fellowship.

We struggle a little with how to describe ourselves because we're not quite just career coaching but calling ourselves an accelerator is too nebulous.

We try our best not to be intrusive - if you don't mind, could you actually email me on the things you disliked the most about our cold email? We definitely want to make the changes we can to be more well-mannered here. I'm at kevin@pathrise.com.

If anybody else has any questions as well, feel free to use the contact information above.

I replied to the original email you sent me with some thoughts. I want to note here that I like the idea of Pathrise but was just a bit put off by the initial email.

Cool idea, my university has a stellar co-op program for Engineering and Computer Science students, and other universities in Canada do as well (Waterloo, UBC, etc.) and I am curious as to what differs you from universities that have these co-op programs because co-op is mandatory at UVic and Waterloo and has helped fund my way alongside many other engineering students ways through their degree.

Also 7% of first year salary seems steep, considering co-op costs are around 8k at my university (don't know about others off the top of my head). Which are covered pretty easily with mandatory 16 months of work experience.

> Also 7% of first year salary seems steep

The real long term benefit is if using the service results in a better entry level position. A person starting a career developing on Win32 will have a significantly different career than someone starting a career in React Native. If Pathrise leads to an increase in job offers (quantity of offers) and an increase in the type of job offers (diversity of projects types) than they can be worth the 7% even if the initial pay is equal because it will give the recent grad more options in choosing their path.

There is a lack of job hunting skills among recent CS and CE students, and there is a potential customer base. If I were looking to invest in Pathrise I would specifically be interested in how they plan on targeting students that have tried and failed in the job market and filtering which students failed because of a lack of job hunting skills and which failed because of a lack of technical skills. Graduates they have tried and failed in the job market are the ones that should see the most benefit from this service.

Recuiters will take around this 7% amount, so it doesn't seem absurd through that lens.

Recruiters do it on top of your salary, not as part of your salary, and the pain is felt by the company, not the employee.

Right, but as a result, they don't care as much if an individual candidate gets placed - they're more so looking to fill a specific position.

Recruiters solve the problem of hiring whereas we solve the problem of job seeking.

Well my uni in Canada has less than stellar co-op program. Definitely would have helped me back when i was a student or a recent graduate.

To make sure I answer your question well...I'm not quite sure I understand this sentence, could you clarify for me?

considering co-op costs are around 8k at my university (don't know about others off the top of my head). Which are covered pretty easily with mandatory 16 months of work experience.

Do you mean a co-op costs you 8k or that you are paid 8k, and is the 16 months of work experience referring to the co-ops or to the full-time job search afterward?

Apologies; just checked my account summary and I was way off. It is not 8k it is $2,592.

Apologies for the unclear sentence, the engineering degree is 5 years, during which there is 16 months of mandatory work experience. The $2,592 is paid in increments across the 5 year degree. Which is in $324 payments each semester of work until the total of $2,592 is paid.

So if I understand correctly, you're asking: "if I already have 16 months of experience, isn't 7% a bit steep to help me find a job?"

The way we see it, no matter your experience level, especially if you still haven't actually been at a real full-time position yet, it's probably true that you can make your job prospects at least 7%+ better.

I would definitely say plenty of students we work with are fine and plenty capable on their own, but job seeking is rarely a binary of you're either fine or you're not. It's a spectrum from underemployed to dream job.

We try to get students the job that's the best possible fit for them, which is at least 7%+ better of a fit than they would've found alone.

TL;DR - It's not steep in the case that you believe we can provide you more in return in value.

Same with RIT(Rochester Institute of Technology), the cooperative education program is a huge boost for placement. Most of us end up getting hired before we even graduate at the same company. You go into the workforce with real experience, school credit, AND you get paid(requirement).

Love the idea and I definitely see the problem and need. If you are able to answer, I have a few questions:

1) You say that you will track every data point to hold yourselves accountable. What metrics do you intend on tracking to prove the value of your service to potential customers?

2) Do you screen the customers prior to accepting them into your program? If so, what kind of characteristics are you looking for in an applicant?

3) What experience/skills/connections, etc does the company bring to the table for the customers?

1) Some of the metrics we are currently already tracking:

Response and follow up rates from cold emails

Response and follow up rates from referrals to hiring partners

Technical interview score over time (measured by internal rubrics we design to be very close to what is actually used at companies)

Success rate per interview over time (hard to see trends for an individual, but kind of starting to see trends for a batch)

The classic feedback form, 1 to 5 in how much did you learn after every session

Average gain from negotiation compared to the base offer and to industry standards

Pretty basic stuff for now, but still able to prove value. For example, like I mentioned we're seeing a response rate from under 5% to over 20% after applying cold emailing techniques. This is theoretically already a 4x difference in the number of opportunities you receive. Another example is average raise as a result of negotiation through the program can be thought of as literally money we get you.

2) Yes. We mainly look for a fundamental conceptual understanding of your field (since we don't do technical training besides interview prep) and a high level of motivation.

Surprisingly, we haven't found the need to look for anything else. This lets us ignore something that might increase implicit bias like trying to evaluate culture fit. We can focus on finding each individual candidate the company that's the right culture fit for them instead of the other way around.

3) We have about 10 hiring partners right now as well as an advisor and alumni network we use to make referrals on behalf of students to top companies like Facebook, Google, etc.

In terms of experience: my co-founder and I are unique in that while we have past founding experience and have worked at top companies like Facebook, Salesforce, and Yelp, but we are also young enough that we are not decades separated from the problem of figuring out your early career.

There aren't many people working on career services that understand both sides of the table when it comes to what it feels like to be a university student looking for a job and what it feels like to be a hiring manager evaluating a university student. This would describe us though.

We like to think we understand what a student is going through and how to help them better than anyone else because of this.

I know working as a consultant(salaried full-time for 5 years) helped me get experience to get another job. Seems like a temp agency for only college students would be interesting for companies to bite on. So, they can minimize legal risk from hiring(and firing quickly)

Awesome, thanks!

You said you are measuring gain from negotiation as one of your metrics. Will you be teaching the customers about negotiation techniques or actually negotiating on their behalf?

Both! We oftentimes tell students what to say and how to say it behind the scenes, but they will always do the actual communication themselves.

I once visited a career office at a community college that I wanted to hire out of. What I saw was crushing - a small office run by a student volunteer with nothing but a few binders of reading materials.

I'm excited for private companies like this to help students who want to put in the work.

During high school, I strongly remember what seemed like the entirety of career advice provided just before we selected the key subjects that would dictate which university/college courses we could apply for. There was a bland jobs guide book. We laughed at "crane chaser" and "cheese maker". Then we all stumbled forwards with no idea what we were doing.

Austen Allred had a tweet recently about how dangerous it is to get career advice purely from your parents. My parents are fantastically supportive, but I've ended up in a tech/software industry that they would've been oblivious to during their lives/careers. I could've definitely received far better and stronger advice during pivotal years. I made a misguided university choice, quit after six months, then stuffed around for a few years before starting the business that I still run 20 years later.

May be a silly question but I didn't see it in your FAQ -

Is this only open to currently enrolled students?

Would be very interested in applying as a self-teaching job seeker.

It's open to recent grads as well!

Edit: Sorry I totally misunderstood the question. Yes, it is available to self-teaching job seekers!

We say students for simplicity because the program is designed for your early career and university/new grad recruiting.

Thanks for the response. Glad to hear it's open.

Yes. I got an email from them a few weeks ago. They were calling it an 'Engineering fellowship' which felt dishonest. They also said the email was based on 'an impressive background at [University]' which led me to ignore it based on the fact that they had no way of knowing my academic performance.

We actually use LinkedIn and other sources to evaluate a student's background if we send out a cold invitation. You are right that we have no way of knowing your academic performance.

I'd recommend saying so in your emails. I think your service does have value but I was turned off by the cold email. Our .edu emails get tons of messages from companies saying they are impressed by our skills when in reality they sent the email to the entire listserv. If you really are personally evaluating candidates, say so. Honestly, that would be a big plus in my eyes and I'm sure many others. Little things like that make all the difference.

You should tier this by industry or career goal more closely. For example, many students want to do high-profile consulting or banking gigs after undergrad. These have relatively similar starting salaries so you don’t need to worry about adverse incentives as mentioned below. Basically get the student to say “I will give you 7% of my salary if I get a job at McKinsey Bain or BCG”. That will be a lot of value for many students (7% is probably low pricing frankly). You’ll probably need to do more work on screening and the addressable market is probably much smaller. But the value prop for that market I think is way big vs. just “I want any job thanks”. Those interviews and prep are trainable and there is a pretty robust set of providers there already. Could also add investment banks, larger tech cos, etc. just get specific on goals.

This reminds me of Holberton school (https://holbertonschool.com) which has the same "free until hired" business model. I'm very interested to see how both of these pan out.

Very cool!

Some questions:

1. How do you know the student's income?

2. How do you know if they're hired or not?

3. What if a student is hired and then is laid off?

4. What if a student is hired and promoted within the first year? Do they give you 7% of the income per their original job or 7% of total income received?

1. In the contract, students agree to something called a Tax Information Authorization (https://www.irs.gov/forms-pubs/about-form-8821-tax-informati...) to allow us to view their tax information to verify payments if necessary. This is fairly standard practice for income share agreements.

2. Same answer as question 1. Also, just to add to this, most students are pretty honest since we're likely to be friends at the end of the program anyways.

3. They normally pay through a share of their monthly income. If they are laid off, and therefore don't make any income that month, they don't pay us anything. However, the payment is then deferred until they can pay again, for a maximum of 2 years, after which everything left is absolved. The goal is to never have anyone have to pay money they don't have.

4. 7% of the total income received. They still pay through a share of their monthly income.

1. In the contract, students agree to something called a Tax Information Authorization (https://www.irs.gov/forms-pubs/about-form-8821-tax-informati...) to allow us to view their tax information to verify payments if necessary. This is fairly standard practice for income share agreements.

2. Same answer as question 1. Also, just to add to this, most students are pretty honest since we're likely to be friends at the end of the program anyways.

3. They normally pay through a share of their monthly income. If they are laid off, and therefore don't make any income that month, they don't pay us anything. However, the payment is then deferred until they can pay again, for a maximum of 2 years, after which everything left is absolved. The goal is to never have anyone have to pay money they don't have.

4. 7% of the total income received. They still pay through a share of their monthly income.


Thanks for the prompt reply! I didn't know such an agreement per (1) existed. In the unlikely event a student refused to pay you, how would you collect? Sue them?

Though an income share agreement is not a loan. It will still affect a student's credit adversely if they default on it.

We're actually transferring the management of the income share agreements to a third party company that's built a software platform for this that directly uses ACH.

So with that combination, hopefully we never have to sue anybody ever about anything! Seems like a terrible experience.

> We're actually transferring the management of the income share agreements to a third party company that's built a software platform for this that directly uses ACH.

Care to share the third party?

Here ya go: https://leif.org/

Vemo is another popular vendor in the income share agreement space

For #4, are you taking 7% of the students total income, or total income received from the job you got them hired to?

If they have side income, we currently write them some custom terms to exclude it so it's only for the actual job.

I really like this concept for college tuition or for funding people who haven't already gotten a degree. However if just focusing on soon-to-be/recent graduates, I don't get why a student would be motivated enough to use your service with a non-trivial fee over going to a university provided one that they have already essentially paid for.

Even going to a state college, the schools are still quite driven to have very high job placement statistics, and the career services offered were quite helpful if you took the effort to go.

By aligned incentives, we mean aligned incentives that are integrated into the business model.

Any business has a good reason to treat their customers well because that results in future business, but you wouldn't necessarily call something like a restaurant an aligned incentives business.

We've seen from our perspective that the lack of aligned incentives in the business model itself leads to ineffective solutions. A good portion of our students come to us after already having gone to their career services centers and realizing they want more help.

To be clear, I still think career services centers and the counselors that help run them are doing good work. However, one counselor using intuition and anecdotal evidence to advise hundreds of students just doesn't work very well.

> I really like this concept for college tuition or for funding people who haven't already gotten a degree

Something like https://lambdaschool.com? (YC S17)

You say you're able to achieve 12k over the industry average, and take 7% of the first year salary. It's hard to assess how much of that 12k is due to selection, and how much is due to your work. In other word, what value you actually deliver.

Let's say the industry average is 120k (in California). If you deliver 12k extra, and take 7% of the total, you're actually taking more than 9k out of this extra 12k.

You would need to consider more than just the first year. In reality, the difference it makes in terms of your career as a whole is significantly higher than that initial 12k because it compounds.

Starting off with an additional 12k in your salary means you'll get an additional 12k next year and every year thereafter, if not more.

Also, though we really need to do more work to figure out how to measure this effectively, the quality of the position goes beyond the salary itself.

I am curious as to how narrow your scope of industries/requirements will be in the future.

I have a friend with a BA in Photography and a MA in Collaborative Design. She is very talented and intelligent, but has trouble explaining exactly what it is that she excels at. (I've known her for years and I still only get the gist of it. Think creative work mixed with formalized systems thinking.)

Is this a possible customer down the line?

Yup! Although we're not there yet, we believe the program is generalizable to every young professional who wants to work in the US, since the core insights themselves are not industry-specific.

Ideally the further we expand the more we're capable of supporting interdisciplinary job seekers like your friend. There's potentially something here where the more industries we cover, the more we know about everything in between those industries, and the more effective guidance we can provide to candidates who are stuck in between.

Thanks! I'll pass that along.

Can you clarify the percentages for internships? Equivalent annual salary as in, if a student is making $20/hr at a 3-month internship, then their equivalent annual salary would be $20/hr * 40 hr/ week * 52 weeks = $41600, and your payment would be $2912? Or is it just 7% of what they earned over the summer ($9600, and payment would be $672?)

It's the $2912 one. Unfortunately, we can't offer the same services without basing it off of equivalent annual salary.

For the students that look for internships with us, the service is a reduction in short-term capital gain for career trajectory.

Point of clarity: are all of your services rendered remotely? No need to move to a big city (until a job requires it, at least)?

Yup, everything is online.

What you guys are doing is really awesome! Definitely in the same spirit of Holberton School, a two-year coding program I'm currently attending that's an alternative to a traditional CS degree. Tuition is also deferred

Whats the difference between Launch HN and Show HN?

Launch HN is for YC companies, although AFAIK it's just convention that keeps other people from using that phrasing.

Nice. Get students to keep paying tuition even after they leave the Uni.

The goal is to make them more money than they would pay in the first place (and it compounds in later years), but I understand how you feel.

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