Poets&Quants: So is this the perfect time, or the worst possible time, to launch a B-school alternative?
Tom Adams: I think the appeal is through the roof. When we look at our own internal metrics, it seems that a lot of the benefit is coming from the changes that we’ve made, changing the name and changing to an accredited status. But certainly, I think the reality that people will have to spend more time sort of locked away means that they’re thinking, “How do I develop myself?” We just got results from a survey of about 430 of our students and alumni; we asked them, “How are you doing?” Before the crisis, 95% were employed. Now it’s 90%. Half of the ones who are not employed were furloughed and the others were let go. So about 2.1% or so were let go.
And the follow up question is, “How do you feel about your employment prospects right now?” And our students are very confident. Something like 85% of our students are confident about their employment prospects. And I think that’s part of what makes this program compelling at this time: it’s accessible. Because it’s mobile first, it’s got this interactive format. It delivers on ROI because it’s a selective program that is of quality. And so when people get in, they’re able to sample our learning before they’re admitted. So they do the business foundation, of course, and they know what they’re getting themselves into — and they love it.
Do you have data on employment outcomes for the MBA program?
We have over 5,000 students enrolled and thousands of alumni, and then obviously because of the interactivity and because of the caliber of the cohorts, we have extremely high graduation rates: 90%-plus in the Executive MBA and 85% in the MBA. And so it’s a dramatically higher engagement than you find with the traditional online learning platforms.
In fact, of the people who join us, a very small percentage of them are actively looking for a job. Many are open to another job, but we actually get more than are open to a job or active at all within 18 months of enrolling. In the Executive MBA, which goes to later career —and the sort of incoming comp is higher than you’d find in a traditional MBA — they’re getting something to the order of like 35% or 40% pay increases over the course of the 18 months in the program. We also have twice as many people starting companies as are intending to before they enroll in the program. We have a whole deck of outcomes that we’ve sort of collected now from our students.
How are you able to make this free for the MBA student? Is it just purely because you can offset it with what you take in from the executive students?
Yes and no. Obviously, we get a lot of applications to that program. It’s very high, strong word of mouth related to that. And so we have hardly any sort of recruitment costs there, but what we do is, we partner with employers. We have a partnership with ZipRecruiter where effectively we’re getting jobs in front of the students, and that’s part of how we fund that program. At the same time, we see the MBA program as an opportunity for us to break the traditional mold of graduate education, where the selective programs, the quality programs are all sort of typical and require re-location and cost an arm and a leg. And so for us long-term strategy-wise, it also makes sense to sort of tap into that mix because we’re able to literally build a network of students over time. And so we’re investing our capital in supporting these types of programs.
Can you tell us more about your application volume?
Last year we had 50,000 applications and if you take the top 10 business schools combined, they had 53,000. So we’re kind of at the same level as them. And then this year, we’re obviously seeing a step up in interest in our program because now we’re accredited. So 2020 applications will be in excess of a 100,000 just for our programs.
Who is doing the gatekeeping for all this? You mentioned a 5% acceptance rate for the MBA.
We systemized things as best as we can. Algorithms obviously evaluate applications and then give a recommendation. But we do two things. We read every single application we get, so there’s human eyes over it. And then the second aspect is, we interview every single student that is admitted to the program, and that’s more rigorous than some schools do it. And the reason for that is because we want the peer-to-peer learning component to be very high-quality. So we have folks who had like a hundred managers or more at Google. We have folks who are on the senior team at some of the leading companies in Silicon Valley. And so when we get applications from folks like that, it’s very obvious to us that we need to follow through on that and make sure that they have a cohort that lines up with who they might find interesting to collaborate with.
And obviously like any online business school or any business school for that matter, we do all sorts of projects which are peer-based. And so that’s one of the key things about our approach to admissions: we really build those cohorts to be phenomenal.
Someone might look at your name and think that you must have a quant-heavy curriculum.
We’re thinking of ourselves as the quantum leap in online learning, so we’ve done all sorts of studies where we show the efficacy, but our students outperform students from the top business schools in the world in standardized tests on things like accounting or finance or quantitative subjects like that. And we had staffs of Ph.D.s conduct those types of statistically significant studies.
And then at the same time we’ve done studies where we’ve measured efficacy gains at the traditional online learning platforms out there. And it’s not within the strict domain of business, but we did want to get edX and Khan Academy, where we put statistics where you would think Khan would be very strong and our platform outperforms them, and it does it pretty significantly in a third of the time. So students would spend eight hours in a video professor format like Khan Academy, and in our interactive format, that’s brought down to like two and a half hours. And so that’s something that’s dramatic because when you’re learning and you have the profile of our students, you’ve got to get a very high payoff on your time investment, and they feel that.