New Start-Ups Tackle "Signaling"

In previous posts, we spoke about the emerging category of higher education & start-ups, and also recruiting & start-ups.

Sitting in between these two are an emerging group: signaling start-ups.

What's the thesis? Two big aspects of college are about:

• Learning
• Signalling how smart you are/how much you've learned.

As we have discussed previously, the "learning part" is being attacked in every which way: through cheap online schools, awesome adaptive learning technologies and other tools and software to mimic (or improve) the college learning experience.

So what about signalling? This is a much harder and bigger beast, given the higher education system is embedded in our psyches on how we rank and rate candidates.

Some start-ups in the news lately that are trying to tackle this through reputation based systems:

1) Smarterer.com just raised $1.25 million to "prove what you know in 60 seconds"

2) One of the Thiel Fellows named Dale Stephans is starting RadMatter to "Help people develop and demonstrate talent."

3) Jon Bischke is starting RG Labs, whose tagline is: "RG Labs was started with a simple premise: The most important decisions we make are decisions about people. And the Web is revolutionizing how we're making those decisions. We're building products that will change how people hire, form teams and start companies."

Obviously, we include ourselves in this category - but through a different approach - a standardized exam vs. an awesome reputation-based system where everyone is ranking each other on different criteria. Should be really interesting to see what emerges from this group and how it plays out in the recruiting world.

NYT: "A Decade Makes All the Difference"

The Economix blog in the NYT recently covered one of the overlooked metrics out there: the “under-employment rate” – the percentage of job-holders that get a job that do not require a college degree. In 2000, 81% of graduating seniors had jobs lined up, and 60% of those jobs required a college degree. Today (October 2010-March 2011), only 74.4% of college graduates have jobs and 45.9% have jobs that require a college degree.

On the wages front, the few who have gained “college labor” employment (28%) have had their pay increase, while “not college labor” pay has decreased – increasing the gap between the haves and the have nots dramatically, and consequently making “catching up” more difficult.

Stats are great, but what’s the lesson here?

We need to start re-evaluating schools in terms of how well they teach and place graduates via hard data – not surveys, brand or general experience of the degree. It is not fair to ask an 18 year old student to take on an inextinguishable debt load and not give him the data he needs to back up the investment.

Many have argued that there is an unquantifiable experience to going to college and experiencing the four years with your peers. No intelligent person would argue against that, but at the same time, we treat the product with kid gloves. We need to have hard data on what matters to our society and graduates.

In other words, as any economist will tell you – information is key to a functioning market. When someone buys a $200,000 Ferrari, it’s not just to get from point a to point b, they are paying for the lifestyle, experience, etc…BUT we give them all the data on the car and they can tell it’s not 10X better at its core function (driving from point A to point B) than a Dodge Neon. Why can’t we do the same for higher education?