What the closure of 2 bootcamps means for the industry’s future


Aug 3, 2017

After the announcements in the past couple weeks by DevBootcamp and Iron Yard that they would be shutting their doors in the next few months, I caught up with Jake Schwartz, CEO and co-founder of General Assembly, one of the world’s leading bootcamps, to ask him what this means for bootcamps more generally and what’s in the cards for General Assembly.

Michael Horn: With the announced closure of a prominent early leader in the bootcamp space in DevBootcamp, as well as the closure of another bootcamp, Iron Yard, many are wondering about the viability of the bootcamp model. As one of my friends in the education space said, is the sub-degree model a viable one? Can it be profitable given the cost of acquisition of students compared to the lifetime value from something short of a degree?

Jake Schwartz: That’s a fair question, but it assumes a degree of similarity across the business models that isn’t there. The truth is that what people tend to refer to as a “bootcamp industry” really involves a massive amount of variability, both in terms of the visions and strategies of different providers. Some players in the space look more like test prep centers; financing models vary; some get the majority of their revenue from coworking spaces. Our model has always involved a broad range of disciplines and modalities way beyond in-person coding classes, and we’re seeing that mix continue to evolve and expand over time.

The ratios of lifetime value to the cost of customer acquisition for short-term or accelerated programs creates an interesting dynamic. So much of the education sector–both for-profit and nonprofit–relies on affiliates and paid marketing to acquire customers. As competition increases and the market becomes more saturated, those costs skyrocket. I imagine that that sort of dependence likely accounts for some of the challenges faced by bootcamps that offer just one, or a very limited number of courses. You simply can’t advertise your way to success.

From a General Assembly standpoint, because of our scale–geographically, and in terms of the diversity of our offerings–we think differently about the relationships and long-term value that we can bring to students. We also believe we are in the very early innings of the era of renewable learning. There is much more innovation ahead.

Horn: Is General Assembly on a path to profitability?

Schwartz: We are. Our core business is already profitable. That was hard earned and took years of work on operations and scale. But because we are venture-funded, and because we have a big vision for the future, we continue to make big investments in new products, categories and software for both our consumer and enterprise businesses.

Horn: Given the explosion in coding bootcamps, it seems as though the industry was ripe for consolidation. Do you expect to see consolidation in the industry?

Schwartz: I think consolidation is what we’re seeing now. You’ve written a lot about the fact that businesses that fail to innovate or differentiate will not be sustainable. The barrier to entry for basic coding bootcamps wasn’t very high–and as it turns out, education, at any level, is not the easy-money scheme many thought it was.

A lot of these companies were capitalizing on a short-term market opportunity without a broader vision. They underestimated the complexity of achieving outcomes over time and at scale. My guess is that they likely optimized for short-term revenue and weren’t resourced to address the sort of really fundamental shifts we’re now seeing in human capital development and talent acquisition.

Horn: Is the pace of growth in the industry slowing?

Schwartz: If you define the “industry” as “coding bootcamps,” then yes, the explosive growth in demand for that specific program has definitely slowed. I’m always surprised that commentators view that as new news. It’s been a sort of obvious trend for some time.

We continue to see significant growth in areas like data science, digital marketing, and design. The success of those programs stems from employer relationships that we built years ago, and we’re now seeing the benefits and traction of those early investments.

All that said, we tend to take a much more expansive view of the industry. The business of bridging the gap between education and employment is exploding. Bridging that gap is one of the greatest challenges facing the developed world today, and the adoption of AI and machine learning will only compound that challenge. We’re investing ahead of a massive opportunity that we are just beginning to address.

Horn: What do you see as the two or three biggest trends in the sector?

Schwartz: One of the big trends we’re seeing is demand for a better set of answers to the question of “who pays” and “how.” When we started General Assembly, we never expected consumers to be the primary payer. We’ve had a successful enterprise business since 2011, and one of the reasons we’re somewhat insulated from the volatility education businesses often experience is because a significant portion of our revenue comes from employers.

There will be many alternatives to the standard tuition model, and we’re experimenting with a lot of them right now. Of course, they require meaningful scale to be able to execute in a useful way.

Horn: General Assembly of course isn’t “just” a coding bootcamp. You offer other programs as well—such as in product management. What are the factors that determine if it makes sense to open a program in another vertical? Where can we expect to see General Assembly and the industry move in the years ahead?

Schwartz: We are constantly collaborating with employers to understand their needs and explore new courses and programs that will help solve painful talent gaps in tech and tech-adjacent fields. Figuring out whether new courses work is about understanding the complex and dynamic relationships between employer demand, student demand, and feasibility.

The starting point is always employer demand. From there, we investigate the feasibility of attracting the teaching talent needed to meet that demand. At the same time, we explore the consumer demand—do people actually want the jobs these employers are offering? If those three factors align, we evaluate how and whether we can develop really high quality courses and curriculum.

Horn: Many have speculated that online learning could be a powerful factor in helping scale bootcamp programs and lowering costs. But a significant part of the instructional model inside many in-person bootcamps doesn’t look all that different from traditional pedagogy. What are onlookers missing and where do you expect online learning and pedagogy to move in the years ahead in the bootcamp segment?

Schwartz: We use online learning as an element of almost everything we do, and we see a blended model as the future of all our programs. In fact, most of our programs are either already blended or on their way to becoming so. But we also have a belief that we can’t let the modality drive the business model. We have to balance scale and quality or the whole thing falls apart.

Pedagogy is a term that always drives me crazy. It’s a word that, of course, refers to the teaching of children–hence the prefix of “ped.” We focus on adults and so prefer to use the term “andragogy.” We’ve found that adults have their own specific challenges in the learning journey, and we’ve specifically set up to address them.

Either way, it’s an interesting question because we’ve invested a lot in our courses over the years and continue to do so. Instructional design is something that our team spends a ton of time thinking about. We’re always learning from what goes on in our classrooms around the world. We are constantly tweaking and adjusting. We think a lot about the role of coaches in support of learners and the development of the sort of noncognitive skills that we know employers value.

Michael B. Horn

Michael is a co-founder and distinguished fellow at the Clayton Christensen Institute. He currently works as a principal consultant for Entangled Solutions.

  • notagain2

    were bootcamps a disruption, an innovation or something that missed the mark?

    • Michael Horn

      Potentially disruptive but let’s see how they develop still. Not all are disruptive certainly. Keep in mind the majority are also in existence as well.