Citing Regulatory Uncertainty, Origin Code Academy to Close

Xconomy San Diego — 

Origin Code Academy, one of San Diego’s few coding schools—for-profit companies that offer short-term vocational training in computer programming—said this month it will shutter on Nov. 16 after about three years in business.

The company opened in late 2015, offering a 12-week course for $13,500 and promising graduates a software job within 90 days of graduation. Since then, more than 100 of its students have been hired as full-time developers, according to CEO Jeff Winkler, who started the program with an emphasis on career services after he had an underwhelming experience at a code school in Florida.

Dozens of such institutions, also called coding camps or bootcamps, have popped up in recent years in response to growing interest in well-paid developer jobs, especially in tech hubs such as San Francisco and New York City. The programs, which typically offer instruction in various programming languages for about three months and cost upwards of $10,000, position themselves as a quicker, lower-cost alternative to a four-year degree in computer science. Course Report, which tracks such programs, says 108 full-time code camps are operating in the U.S. and Canada, from which 20,000 students are expected to graduate this year.

But some coding school operators are having trouble navigating what they view as an uncertain regulatory environment in California, one of the coding school industry’s most active states. The situation presents an additional challenge for a young sector still attempting to be seen widely as a reliable alternative to traditional higher education.

Origin Code was recently licensed by the California Bureau for Private Postsecondary Education (BPPE), a division of the California Department of Consumer Affairs. But Winkler said the process was a lengthy and confusing one that required the school to shut down for a time as its paperwork was processed—and directed it to refund all students who had attended the school since its launch.

Origin Code received the approval to operate from the BPPE in July, more than a year after submitting its application. Learn Academy, another San Diego-based coding school, received approval last month—nearly two years after sending its application.

It’s unclear how long processing such schools’ paperwork typically takes. A BPPE spokesman, in response to a question about the average processing time for coding school applications, said the bureau doesn’t categorize applications by type of programs so it doesn’t have that information. Processing time depends on the “submission of a complete and compliant application,” and can vary, he said.

The bureau says it encourages schools to apply for approval to operate. The fine for operating without approval is as much as $100,000.

California has had a reputation for private colleges with bad business practices. In 2015, Santa Ana, CA-based Corinthian Colleges, which had more than 120 campuses at its largest, shut down its schools and declared bankruptcy after a government investigation found the company misrepresented its job-placement rates. Thousands of students who were enrolled there are still fighting for debt relief.

Launched in 2010, the BPPE was tasked with protecting students from this kind of fraud and other predatory practices by some for-profit educational institutions.

The bureau put the coding school industry on alert in January of 2014, when it warned a number to get licensed or face closure. At the time, a BPPE spokesman said the intent was to get the schools within compliance, rather than to punish or close them.

In 2015, the bureau formed a task force to review its standards for such programs. Citing the disparity between the number of skilled employees and the number of available jobs in areas such as software development, the group recommended the bureau expedite the approval process for high-tech programs. That’s not the case today, but a spokesman said the bureau is in the process of implementing the report’s recommendations.

One recommendation—that the bureau prioritize compliance inspections and investigations into complaints about such programs—has already been implemented, he said.

Origin Code and Learn were each fined $100,000 in the months after each school applied for approval, although the fines were later reduced to $25,000. Origin Code repaid some students that asked for their tuition back, but the BPPE later modified the directive so that the school was required to pay back only those who requested refunds before the school was approved to operate, essentially protecting it from any new requests.

When Origin Code launched, Winkler said, regulators told him the school didn’t need to apply for approval from the BPPE yet. Learn co-founder and CEO Chelsea Kaufman said she was told coding schools might get to operate under a different set of rules than other for-profit educational institutions. As of August 2016, state regulators had approved five in California; Course Report said that June that there were 28 operating in the state.

On Sept. 27, 2016, the bureau said, it received an “anonymous tip” that Origin Code and Learn were operating without approval. Both received cease and desist letters later in the year, but continued to operate. Learn applied for approval in November of that year. Winkler said he tried to visit the bureau to talk about applying in late 2016, but wasn’t able to schedule a meeting. He applied in May 2017.

In response to an e-mailed request to characterize the consistency of enforcement of regulations in connection with code schools in recent years, the BPPE responded: “The bureau encourages schools to apply for approval to operate to ensure they are operating in compliance of the law.”

Learn, which made its debut nine months prior to Origin Code, offers a 12-week program plus a guaranteed four-week internship, for $12,500.

The uncertain regulatory atmosphere convinced Origin Code’s primary investor that it was too risky to continue running the business in California, Winkler said.

“We didn’t stop getting customers, [and] it’s not that the business model is broken,” Winkler said.

Of the 116 students who went through the program in 2016 and 2017, 107 graduated. Of those, 83 percent were subsequently hired in the field, according to Origin Code.

Winkler said he may reestablish the school in another state, but that he is personally loath to leave San Diego, where he has spent three years building the startup’s brand and integrating the company into the region’s growing tech community.

In the meantime, Winkler said Origin Code will retain an instructor to work with the handful of currently enrolled students until they have completed the program. But that work will take place at another location, as the firm’s office in downtown San Diego has closed.

Erik Birkfeld said he hired three Origin Code graduates while at San Diego-based software company MindTouch. He said they remain at the company today. Birkfeld said he has found coding schools a useful pipeline of potential hires.

“You don’t have to go get a four-year degree to be viable and useful in this industry,” he said. “You can hunker down and do things with the people around you and the information and technology around you, and it’s a great jump-start to do something like a 12-week bootcamp to at least get you to the 10-foot level, where you can start to see a little bit more and choose which way you want to continue your education.”

Neal Bloom, chairman of local nonprofit tech advocacy organization Startup San Diego, said Origin Code had become an “integral” part of the city’s tech ecosystem. He appreciates how the company partnered its students with local companies on projects to give them real-world experience—and introduce them to potential employers.

Origin Code is far from the first coding school to struggle to stay afloat, although others that have closed have said finding a sustainable business model proved elusive.

Dev Bootcamp, founded in 2012 in San Francisco, closed last year. The company was one of the earliest coding schools to open. It expanded to locations in five other cities, including San Diego.

Dev Bootcamp was acquired by Kaplan in 2014, and said in a Twitter post when it closed that the acquisition had bought it some time, but that it still had been unable to find financial viability. Dev Bootcamp founder Shereef Bishay (who left the company in 2014) later founded another coding school, Learners Guild, which shut down this past June. And Greenville, SC-based The Iron Yard, which at one time had campuses in 20 cities, closed in 2017.

As in other industries, of course, there are bad actors in the coding academy sector. The BPPE closed one Bay Area-based company, Coding House, in 2016 after determining it misled prospective customers with its advertising, among other issues.

Notwithstanding such failures, the industry continues to attract students.

Two locally based coding schools remain in San Diego: Learn and a program offered through UC San Diego Extension, the university’s continuing education arm, by Trilogy Education, a firm that partners with universities to offer coding boot camps. Two coding schools that are headquartered in New York—Thinkful, which raised $9.6 million in venture capital in January, and General Assembly—also have a local presence.

The regulations under which the schools operate are the same as those that govern traditional for-profit colleges. For bootcamps, which pride themselves on being more lean and nimble, Learn’s Kaufman said it can be difficult to keep up with the requirements, such as having new courses approved before adding them to the curriculum. (Of course, regulators and other types of educational institutions might counter that those requirements are there for a reason.)

“It’s very unfortunate because I see the big picture of what [the BPPE] is trying to do—they don’t want bad seeds, they want people who are doing good work,” Kaufman said. “It’s important for schools to be regulated. I want people to be caring for students, but I think [the BPPE] just hasn’t caught up with the times yet, and they don’t quite know what to do with bootcamps.”

She said Learn will hold some events focused on career services in the coming months, and welcomes Origin Code students and alumni looking for job help to attend.