Bill Kerr: The economic crisis stemming from the Covid 19 pandemic is speeding job automation and hastening other employment trends. This puts a premium on efficiently delivering in-demand skills to a workforce reeling from the scope and pace of change. Can a U.S. system, which is traditionally oriented toward increasingly expensive four-year college degrees, pivot to meet the need? How will employers retrain their existing workers? And where will they find the additional talent they need to keep pace? Amid widespread unemployment and underemployment, more and more individuals are taking the initiative to upskill.

Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host Bill Kerr. I’m joined today by Gabe Dalporto, CEO of Udacity, which provides online training in technical and business skills. The company is very active globally, reaching students individually through their employers, colleges, and national governments. Gabe’s here today to talk with us about recent changes in the demand for, and acquisition of, skills. We’re going to discuss Nanodegrees, experiential training, government policy, and lifelong learning.

Welcome to the podcast, Gabe.

Gabe Dalporto: Well, thank you for having me.

Kerr: Gabe, why don’t you start by telling us a little bit about yourself and what led you to Udacity?

Dalporto: When I was growing up in West Virginia in the ’80s, it was a pretty vibrant economy. People had good middle-class lifestyles. There were nice downtowns and country clubs and things like that. I go back today and I see a lot of boarded up downtowns, country clubs shut down, and people really struggling to make ends meet at minimum-wage service-industry jobs. Really, what happened there was, an economy changed, jobs automated, and people didn’t upskill. There was no concerted effort to retrain, re-skill, and upskill the population. And what really upsets me about this is that the population density of geniuses in West Virginia—my home state—is the same as Silicon Valley, but the economic opportunity is vastly different. And that’s mainly driven by education, skills, training. So I was thinking about this a lot, and what do you do? What do you do to kind of reboot an economy like West Virginia? Udacity reached out to me, and Sebastian Thrun, the founder of Udacity said, “Yeah, that’s true, but it’s not a West Virginia problem. It’s a global problem.” It’s not just Appalachia. It’s not just the Rust Belt. Over the next 10 years something like a billion people are going to lose their jobs due to AI, machine learning, and automation. And it’s going to touch every facet of society, not just blue-collar workers, but also white-collar workers. You see everything from accounting to legal to medicine being disrupted through AI and automation. To me, it’s really just a mission of how do you help the world make that transition—from the jobs of the past and into the jobs of the future—and not go through the pain that West Virginia went through and really to help welfare?

Kerr: Most of our listeners, Gabe, I bet have heard of Udacity, but they may not be as familiar with your specific products. Can you tell us a little bit more about what the company’s offering—and particularly these careers for the future that are your central focus?

Dalporto: Absolutely. So let’s start with careers of the future. The careers of the past, like it or not, are gone. I remember working with an accounting team at my prior employer, and we literally had, every month, someone sitting in front of a terminal with two windows open—one from one system that didn’t talk to another system—and literally keying in numbers from one monitor to the next. That’s really a miserable job for an individual employee. It’s super inefficient, it’s expensive. Those types of things are being automated left and right—like, those tasks are gone. And there’s a lot of other kind of manual, repeatable tasks that are gone. And tasks become jobs, and jobs will be eliminated. So really, the interesting thing is that, as enterprises are laying off by the truckload people with the skills of the past, they literally cannot hire enough people with the skills of the future. There’s just not enough people trained in the world on data analytics, machine learning, software development, cloud computing, cybersecurity, autonomous systems, things like that. Udacity built something called a “Nanodegree,” and a Nanodegree is the fastest, most-effective way to get employable job skills in those careers of the future in the four- to six-month time frame, part time.

Kerr: So on your website, you have things like robotic process automation and self-driving cars. How have you decided what to curate as a Nanodegree? And then, where does the content come from? What are the roles of instructors for this?

Dalporto: We work with 100 Fortune 500, Global 2000 companies around the world, so we have a really unique view into what their hiring demands are. It starts there. Where are the jobs? Then we kind of work from the job demand into curating and crafting schools and Nanodegrees. Really importantly, we partner with industry to create this content. So instead of going into academia and partnering with a professor like yourself, we actually take a different approach, which is, we’ll go to an Amazon, a Google, an Intel—the people who are creating these technologies and who are at the forefront of innovation—and we co-create the curriculum with them so that it is, number one, state-of-the-art, and number two, designed to deliver employable job skills—the actual skills the employers want.

Kerr: There’s a technical side to how the job of the future needs to look, and you also highlight the careers of the future. Along the way, are you offering any coaching or soft-skills-type training as part of these Nanodegrees?

Dalporto: One of the things that we have found is the most effective way we can help students complete these programs successfully is to provide access to a network of experts of humans. It’s delivered online, it’s delivered asynchronously. So you can go through these courses at 2:00 AM or 4:00 PM, it doesn’t really matter. But importantly, when you’re going through the programs, if you get stuck, you need a way to get unstuck. And so we have a network of 1,500 experts around the world available 24/7. So if you’re working through a coding project, and you don’t know how to get to the next step, you can ask one of our—we call them “mentors” —you can ask a mentor a question, and they’ll literally get back to you within under an hour—and on the weekends, the middle of the night, it doesn’t matter. Part of what you’re doing in these programs is, you’re getting your hands dirty coding day one, and you’re building real projects and real skills. And you submit those projects to prove your competency. And we give you line-by-line code reviews of those projects in under three hours. So we find that the ability to match students with humans at the exact time that they need them is a very high predictor of graduation rate and success rate.

Kerr: So the content is, in part, self-paced. People can decide when and where and how quickly they can accomplish it. But you’re also mirroring them using this global sort of network that you have of mentors to jump in.

Dalporto: Exactly.

Kerr: Gabe, everyone’s very familiar with the university environment, and I think we all also have had an experience with Zoom-based learning. Tell us a little bit about the student experience at Udacity. How is it different from other forms of possible online education?

Dalporto: Right. It’s actually quite different from your typical university experience, which is a 50-minute lecture with students taking notes. Think of Udacity as, first, it’s on-demand, so you can do it anytime of the day. Second, it’s a series of five-minute video lectures online, followed immediately in the same classroom experience with hands-on-keys reinforcement learning. So you learn a concept, and then you code it. You learn a concept, and you implement it. And you repeat this throughout the course of the month. And then at the end of the month, you do a deep, immersive project. So think of this as you developing an app or some machine-learning algorithm that is really equivalent to what an enterprise would have an employee build. It’s much more dynamic, it’s much more hands-on, it’s much more experiential learning, as opposed to sitting and taking notes and occasionally asking a question.

Kerr: In some cases, people are taking courses directly from Udacity, but partners have been a really central part of what you’re doing. Can you walk us through a few of your corporate partners and also the governments that you’ve been working with?

Dalporto: What we see is that 83 percent of Fortune 500 companies admit to having a significant skills gap. And 70 percent of them say that skills gap is preventing innovation. And 52 percent of them say that upskilling on the careers of the future is their top priority. So there’s huge demand on the enterprise side. And the reason is, they’re all going through digital transformation. They’re getting disrupted, themselves. And to effectively compete with the next generation of companies, they need to disrupt themselves and to innovate, and they just don’t have the people to do that. We typically partner with these large enterprises to help them go through digital transformation. And to be successful, you need people, process, and technology. Well, they have the process, they have the technology. They don’t have the people. So we work with these enterprises to create custom learning paths, assessments of their existing employees who can actually be successful, and implement these programs hand in hand with them. And we typically get pretty stunning results—something on the order of 80 percent success rates. Now on the government side, governments have slightly different objectives. And so we’re working with six governments around the world today—people like Egypt and Saudi Arabia and UAE—who have come to us and said, “Look, we have a large population of young, ambitious people, but we have no tech sector to speak of, and we need to create opportunities. We need to upskill our populations.” So we’ve been working with Egypt, as an example, since 2017. We’ve already gone through three successful programs with them where we’ve seen, again, 80 percent-type graduation rates and 73 percent positive career change for our students. Then they came to us again this year and said, “Look, this worked so well, we want you to upskill 25,000 people in our country.” And we’re working with them to do that.

Kerr: As you think about the differences between one of your corporate clients and the government, in the corporate case, they already have the employees. And it’s been a theme that we’ve heard from executives on this podcast series about, “We can only transform the organization as quickly as we can get the skill base of our employees to move toward that future.” But in the Egypt case, it seems like they’re needing to place these workers with work that’s contracted out from maybe a foreign country, maybe it’s with a local employer. How do you help in not only transferring the skills, but also making those matches so that the career impact is positive to the numbers that you gave?

Dalporto: We were totally aligned with the government of Egypt that success isn’t getting people into the program, success isn’t getting graduates. Success was getting them placed and increasing their standard of living. So we’re actually tracking that as the primary success metric. The other thing is, because we are tracking that as our primary success metric, we partner with our students, not just to get them upskilled, but to give them the skills they need to interview for jobs and to enter the contracting and outsourcing ecosystem. There’s many platforms around the world where people can go on and bid on tech-oriented jobs, and so we’re introducing them to those platforms, we’re giving them the skills to put together proposals and to actually land those jobs, and we’re tracking the salary outcomes of those efforts.

Kerr: That’s great. Let’s also go back to the corporate example—and a lot of companies and listeners to this podcast are trying to, frankly, find their way in this digital transformation that we’re all undergoing. And there can be some false starts or some trails that you go down that just aren’t right. Is there something that you frequently hear a company come to you and say, “Gabe, I need Udacity to do this for me.” And you kind of know at that point to say, “Wait a minute, we’ve been down that road before. It’s not one that is likely to be as successful as you think it is.”

Dalporto: I would say that the primary learning that we have is, we are most successful when we’re aligning to business outcomes. So if someone wants to go through, for example, a $2 billion Microsoft Azure migration, and they can’t get there because they don’t have the talent, then our success metric is getting people skilled up in Microsoft Azure, and getting them enabled to complete that migration. That’s very different than, for example, partnering solely with an HR organization. An HR organization has a really important role to play in terms of execution. But if you’re only offered as, for example, learning as a benefit—a general benefit made available to all employees—we tend to see, and we’ve learned, that you get pretty low uptake, you get pretty low engagement, and no one’s really happy with the outcome. For us, success is partnering with not just HR, but also the business and tying ourselves to business outcomes. And that’s a huge element of what we do.

Kerr: So we’ve talked about businesses, we also talked about the government side. You have yet another sector that you’re working with, which is your education partners. Talk us through about how Udacity courses fit into the school and university curriculum.

Dalporto: We’ve worked with several universities. We worked with Georgia Tech to co-create their online Master’s of Engineering program, which I think is the largest in the country, if not the world at this point. We also work with Western Governors University, and they have included our Nanodegrees in their data science degrees. We think of Udacity as a way to bring really state-of-the-art training and techniques that we can plug into existing degree programs in a way that might take a university five-plus years to really recruit the right people, come up with a curriculum, get it all approved. And we can just kind of plug in and accelerate those efforts. That’s where we really find the most success on the university side.

Kerr: That’s great, and I’ll use this opportunity to put in a plug for one of our previous podcasts with Scott Pulsipher, who’s leading up WGU. It’s a great conversation.

Dalporto: He’s a fantastic partner of ours.

Kerr: Yeah. The two of you are so well aligned and being so impactful in this space. I want to use this as an opportunity to think further about just not only how you’re currently interfacing with the university system, but just with universities and community colleges and all of the massive change that we’re seeing in the skills landscape and the hiring for skills versus degrees and so forth. How do you talk with the universities and community colleges about what they need to do to adapt to these structural shifts? Where are they, and what needs to happen next?

Dalporto: The university system plays a very important role in our society, and that role, really, is to train and mold the whole individual. I think they’ve done a really good job there. I think where the university system breaks down is delivering state-of-the-art job skills. And it’s great, for example—and I hate to pick on journalism departments—but it’s great that we are graduating a lot of journalism students. There’s not a whole lot of journalism jobs out there. And so, unfortunately, a lot of students graduate from college a great, whole person because of the university experience, but without really specific, tangible job skills where there’s actual job demand. I think universities are a lagging indicator of where the world is moving. My suggestion to the university system is, number one, we need to really serve the student—the student needs to find a way to get a job coming out of the system and be more forward-thinking about where we’re skilling people—and number two, much more profoundly in a way, the world is moving to skills-based hiring over degrees-based hiring. And I think universities—for sure, Udacity’s already focused here—and others need to focus on how do we get people skills—things that employers really want and value. I just don’t think that the traditional bachelor’s degree is necessarily set up to do that. Then, on an ongoing basis, the university system is not set up to serve lifelong learning, which really is the future of work.

Kerr: Yeah. And if you bring into this one other workforce trend that is on many people’s minds, gig-based work, contingent contract work, how do you fit into that kind of blended workforce model?

Dalporto: Yeah, look, I think what’s really interesting with Covid is that everybody has been forced to go through a massive experiment, which is, can we work remotely, and can we be effective and productive remotely? Many companies thought that was not possible, and it turns out, hey, it is. There are pros and cons, but by and large, the world is going on, and people are getting stuff done. And I think that’s really opened enterprise’s eyes to the fact that you don’t have to have 1,000 people sitting in a corporate skyscraper. You can employ people where they live and want to be. So I think, first, you’re going to see probably a sustained and TBD-how-profound shift to people working offsite. And I think that really opens up also the ability to bring on more gig workers, more contractors, and kind of meet the employee base where they are.

Kerr: If I went back to some of your existing corporate customers in those transformation projects, is there already a way that you’re engaging with some of their contract labor versus full-time employees?

Dalporto: We’re mostly working with their full-time employees on the enterprise side. We do work with a lot of professional services firms that are serving enterprises to upskill the professional services employees on these high-demand skills—things like cloud computing and cybersecurity and data analytics and things like that. So I guess indirectly we are. These large employers all have relationships with Big Five consulting firms. And those consulting firms, most of them, have relationships with Udacity to upskill their employees.

Kerr: Gabe, can you also talk a little bit about any interesting trends that you’re seeing?

Dalporto: Yeah. Something that’s really interesting is something called “robotic process automation” or RPA. And this is a technology that allows you to take manual repetitive tasks and automate them. It’s a lot of tasks that you might be doing in an operation center. A lot of tasks you might be doing administratively or scheduling or something like that can be automated, and you don’t need a human to do it. Now on the one hand, that eliminates maybe a role for a human. On the other hand, it frees that person up to do new and better and, frankly, more interesting things. So we’ve partnered with a company called UiPath, who really is the leader in RPA. And we co-created this content using their state-of-the-art platform and our learning and teaching methodology. It’s a pretty interesting and exciting new trend.

Kerr: So, Gabe, it’s late October of 2020 as we’re recording this, and we’ve been with the coronavirus for about eight months now, and, unfortunately, it’s not going to go away anytime in the immediate future. As CEO of Udacity, I want you to talk with us both about how’s the company responded to this crisis? And just from a leadership perspective, even beyond the company’s sort of top-line actions, what are some things that you have been experiencing and needed to accomplish as the crisis has unfolded and also as it has kind of persisted with us?

Dalporto: This has been a doozy of a year. It’s been really hard. It’s been hard on us, it’s been hard on people worldwide, because we had not just a Covid health crisis, we had a racial crisis. In California, where I live, we’ve had fires and natural disasters. It’s been a pretty hard year. We’ve had to learn how to work remotely. February and March, as we kind of realized what was going to happen with Covid and the magnitude of it, it was really unclear how that would benefit or hurt us. In a way, it forced us to get way better, way faster. Because we didn’t know if it was going to kick us in the teeth or give us a tailwind, we hoped for the best, but planned for the worst. And we were super transparent with our employees that we didn’t know how this would affect us. We started doing weekly meetings, all hands. We were totally transparent with our results, our revenue. We put together some really significant initiatives, so we could manage through this and manage well. We adopted OKRs, literally, in seven days—that’s objectives and key results—as a way to focus the organization. And we said to everybody like, “Look, we don’t know what’s going to happen, but if we can achieve these OKRs, our guarantee is we are not going to lay anybody off.” We all hunkered down, and we executed, and we blew it out of the water in Q2 and Q3. And it continues. So it really forced us to focus, to over-communicate, to be transparent, to adapt to digital work. And at the same time, like there was horrible racial strife in our country, in the United States. And we had to adapt to that and really take a hard look at our diversity and inclusion policies internally, figure out what we can do to help the cause. We rolled out scholarships pretty broadly. We took some actions internally to make sure we’re a more diverse and inclusive workforce. So it was a really, really tough year this year, but I feel like it’s forced us to be a much better organization.

Kerr: Gabe, thanks for that. As you look ahead, let me give you a lot of just superpowers here for a second and ask, if you had a chance to really reshape how governments are approaching the rescaling efforts, what’s top of mind for you? What can we do, beyond the work of your organization and beyond trying to instill some greater awareness in both businesses and universities, what could we do to really move the needle on supporting re-skilling?

Dalporto: I think the U.S. government is missing a massive opportunity at this second, and what we saw with Covid is huge waves of unemployment, huge waves of disruption. You see enterprises accelerating digital transformation and elimination of repetitive jobs and tasks. The pain is deep, it’s pervasive. And the U.S. government had an opportunity and a window and continues to have a window to say, “Well, if we have all these people out of work, why don’t we re-skill them? Why don’t we invest our dollars in building that workforce of the future?” This isn’t just an employment issue, this is a national security issue. You have Russia and China and others out there investing much more heavily in AI and machine learning and accelerating not just their economies, but their intelligence infrastructure beyond us. So I think we are missing a huge opportunity to not just re-skill people and help them get jobs, but also help our industrial sector, our economy, our national security. And what we have on the government side is just complete failure to seize the challenge. Almost all of our federal dollars go into the university system, which takes four years to graduate somebody, and they may not have a skill set. And again, that’s really an important investment. The university system is fantastic and the best in the world, but we are not putting extra dollars into re-skilling. The existing infrastructure is called WIOA [the Workforce Innovation and Opportunity Act]. This gets a little wonky: All those dollars go out to the state level, and then they get allocated down into local workforce level, and some of them are leaning in, but for the most part, they don’t know how to employ the dollars where they matter. They don’t know necessarily where the jobs are. And we just have a broken system. So my challenge to the U.S. government is step up, innovate, get over the politics, and find a way to get dollars aligned to students and get them into these jobs of the future, because today we’re failing.

Kerr: Gabe Dalporto is the CEO of Udacity. Gabe, thanks so much for joining us today to talk about what Udacity is doing for the careers of the future and how we can all think about making the re-skilling effort more promising. Thanks.

Dalporto: Thank you for having me.

Kerr:We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website, hbs.edu/managing-the-future-of-work/. While you’re there, sign up for our newsletter.