CNBC Disruptor 50

Why Google is partnering with these start-ups to close America's skills gap

Closing the skills gap with new training tools

There's no question America has a skills gap. According to a January study by the Career Advisory Board in which 501 U.S. hiring managers were polled, only 11 percent of employers say they believe higher education is "very effective" in preparing college graduates to meet the skills that organizations require. Sixty-two percent said students were underprepared.

Now a range of start-ups are trying to help train the next generation of workers, transforming education from a onetime event into a lifelong process. Two Disruptor 50 companies are leading the charge: Coursera and Udacity.

"Many jobs requiring middle- or high-level skills go vacant, even while many people are unemployed or underemployed," says Rick Levin, CEO of online education company Coursera, which has raised $146 million from venture backers. "We think there's a real opportunity [for Coursera] by giving people the opportunity to acquire new and better skills in computer-related fields, in data science and across the range of business skills and even soft skills."

Udacity educational support specialists Rachel Meltzer and Paul Montgomery provide online university-level tutoring at the Udacity office in Mountain View, California.
Ann Hermes | The Christian Science Monitor | Getty Images

Coursera is partnered with 150 universities around the world, bringing a broad range of 2,000 classes to 25 million students on its platform right now, offering professional certificates to mid-career adults looking for better jobs. Levin says most of its "learners" are college graduates. "Think about all the people who take a liberal arts major who then find, Oh, if I only knew how to do a little bit more coding, I'd be a more attractive candidate, or if I knew something about data analytics then I could actually get this job in a finance department of an organization."

Levin says Coursera is also looking to help companies — and employees — adapt to the fast-changing demands of the workplace. It's partnered with companies such as Google, IBM and PwC to offer courses to train people to work for them. And around the world, Coursera offers unemployed or underemployed workers education opportunities through government-sponsored workforce development programs.

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"In Pakistan, Egypt, Mongolia, Malaysia, Kazakhstan and Singapore we have relationships with the governments, where we're actually using our courses to help them develop their workforce and 'upskill,'" says Levin. "We have one such example in the state of Maine. There's a tremendous opportunity in the United States through state workforce development programs … and there should be some opportunities in the upcoming tax-reform bill, should it happen."

Driven by industry

While Coursera offers a wide range of classes, rival Udacity, which has raised $160 million, is focused on the tech sector. It has 25,000 students enrolled in one of its 'Nanodegree' programs on topics including robotics, digital marketing, and self-driving cars. These programs are tailored specifically to Udacity's 50-plus hiring partners, which include Amazon, Google, Facebook and Salesforce. Udacity's target demographic are people between the ages of 25 and 35 looking to make a change in their career.

"From the very beginning, when we first started building Nanodegrees just a few years ago … we would work with an industry to identify, for instance, the skills needed to be a data scientist or an Android developer," says Udacity CEO Vishal Makhijani. "In the case of Android, we work with Google specifically to come up with a curriculum. So industry kind of drives the skills we teach, and that's the way we get validation for our credential. And that's kind of proving itself out now after a couple of years. We just reached 50 hiring partners."

We know people have to revisit their education many times in their career; that has to be both compact in time and reasonable in cost from an accessibility point of view.
Vishal Makhijani
Udacity CEO

Udacity leverages technology across the entire process of taking a class: When students submit a project, a software platform accesses talent from all over the world to grade the project and provide detailed feedback, typically within 90 minutes.

"We know people have to revisit their education many times in their career; that has to be both compact in time and reasonable in cost from an accessibility point of view," says Makhijani. "Our cost model where we are able to build our curriculum and potentially scale it to millions of people allows us to deliver the product at a very reasonable cost."

"There's a worldwide movement to focus on employability and getting really clear on what people need to know and need to be able to do to get jobs," says Tom Vander Ark, a founding partner at VC Learn Capital, and a partner at an education advisory form. "That creates two big opportunities, on the learning side companies like Udacity and Coursera are getting really active, engaging content, and then on the credentialing side, there are ways for people to demonstrate what they know and be able to share that with employers."