Degreed, CodeFights Ready Alternative Credentials To Rival Diplomas

Two San Francisco educational technology startups that don’t offer classes, MOOCs, or other online coursework are nevertheless preparing to issue credentials that, like a college degree, may help learners land a job.

Degreed and CodeFights are among the companies adding new twists to the ecosystem of alternative credentials, which are proliferating as the edtech sector challenges the dominance of colleges and universities in certifying workers as worthy job applicants.

Online education companies such as Mountain View, CA-based Udacity already confer nanodegrees, badges, or certificates on completion of their course offerings. Degreed and CodeFights plan to issue credentials based on their independent evaluations of the actual knowledge and skills gained by individuals—no matter whether they learned it from a Harvard course or a YouTube video about computer programming.

The two startups already offer users a way to display the knowledge they’ve gained, so that employers can recognize it.

CodeFights stages online software programming tournaments, and helps tech employers recruit new talent from among the competitors who demonstrate superior coding chops. Degreed helps its business clients encourage their staff members to keep learning; the startup provides a searchable menu of online courses, videos, articles, and other options. Users record their educational progress on a personal Degreed profile, which they can keep and share as they move from job to job.

Both of the edtech startups have also been developing precise ways to measure the skill levels of subscribers to their sites, and both plan to unveil their own branded, portable credentials this year, their CEOs say.

Degreed, founded in 2012, raised $25 million in a Series B fundraising round in 2016, bringing its total fundraising to about $33 million. CodeFights, launched in 2014, announced in November that it had completed a $10 million Series A fundraising round led by e.ventures. That followed a $2.4 million seed round.

Credentials evolving from employer needs

Tigran Sloyan

CodeFights CEO Tigran Sloyan revealed that his company has already created a form of credential to use as it recommends outstanding contest participants to tech recruiters from companies such as Uber, Quora, and Dropbox.

“It’s kind of a secret right now,” Sloyan says. He would say only that the credential is a numeric description of a skill set, broken into different specializations. “Our secret sauce is going to come out in the next few months.”

CodeFights enlists tech companies—-including Uber, Quora, and Dropbox—- to help design its contests. Some of the competitions pit human programmers against company bots.

Like Sloyan, Degreed CEO David Blake considers alternative credentials a key part of his company’s future.

“Our ultimate ambition is around credentials,” Blake (pictured at top) says. “Our name was always a nod to that ambition.”

Blake muses that the company’s credential might look something like, “You are Degreed in Edtech, Level 5.” The company’s task, he says, is to devise certifications of an individual’s workplace capabilities that are less broad and (possibly) dated than a college degree, but also less granular than a detailed list of learning units completed—-and more current.

Blake says Degreed’s close working relationships with employers, its awareness of their needs, and its observation of the learning patterns of millions of workers, is laying a foundation for its move into credentials.

At this point, Degreed is helping employers to create continuous learning cultures, to organize staff participation in company training modules, and to avoid the expense of creating in-house instruction if similar courses are available online at a lower cost. Through the employee profiles on Degreed’s site, its business clients may become aware of previously undiscovered staff capabilities.

And, due to the explosion of online educational options for studying throughout a career, Blake says, people are learning vastly more through these means than through formal education or on-the-job training. A Degreed profile displays the topics a user concentrates most on, and assigns “points” to each, depending on how many books or other sources the user has absorbed. The company’s next step is to channel and recognize all that learning from ever-diversifying sources, by granting a certification that is something like a college degree—-standardized and verifiable.

Degreed is cataloguing all the skills needed for specific posts, such as a product manager’s job; it is also mapping “the world’s best content” that teaches those skills, Blake says.

Employers have already identified sequences of courses and other learning experiences featured on Degreed’s platform that they prefer their staffers to complete in order to meet company goals for expertise in important areas, Blake says. But he says learners will also be able to earn a Degreed credential of their choice by pursuing the courses and other options that are most affordable, most accessible in their regions, or simply the most interesting or personalized.

Though Degreed won’t be doing the teaching, it will be issuing “grades,” in a procedure to check the learner’s mastery of a topic. Blake predicts that these independent assessments will become a growing feature of the edtech industry.

“Just like content is proliferating, there’s going to be more and more assessments,” Blake says.

The scope of Degreed’s plan for credentials is broad, Blake says. The company will eventually confer credentials for a wide range of different jobs and professions, he says—“from forklift driver to CEO of an organization.”

Blake says the startup’s current work with employers should give its credentials some weight with them, and help boost its credibility.

“If we become the lens by which they evaluate learning today, that puts us in a position to launch our actual certifications,” Blake says.

Employers as the primary customers, educated workers as the product

It’s interesting to look at the ways these two San Francisco startups diverge from the big Utah-based edtech company Pluralsight, which offers 5,000 courses in high-end programming skills to consumers. Pluralsight also acquired a skills-testing unit when it acquired the Boston startup Smarterer in late 2014. Users can tap into Pluralsight’s resources for $29 a month, and they can earn course completion certificates.

By contrast, the sole paying customers for both Degreed and CodeFights are business enterprises; individual learners can tap into their services for free. The two startups leave it to other companies and schools to create much of the educational content people need to master before they can qualify for skilled positions. (Although CodeFights doesn’t teach people to code, Sloyan says its tournaments and challenges offer programmers opportunities to practice their skills.)

Meanwhile, Pluralsight is seeking to serve both kinds of customers: consumers and businesses. Companies can buy licenses to train in-house teams of developers and other professionals, and to track the employees’ movement though the Pluralsight coursework.

Alternative credentials and the transformation of higher education

The business plans of Pluralsights, Degreed, and Codefights align with a movement that comprises several threads: credentialing innovations as well as “competency-based education” often oriented toward workplace skills; skill-testing services independent of university grades; and support for an increasing parity between credits earned from traditional academic institutions and unaccredited edtech providers or other sources.

For example, the Lumina Foundation, a well-funded Indianapolis non-profit, is supporting venture firms and investing in startups such as New York-based electronic badge service company Credly. Lumina’s mission is to increase the percentage of people with post-secondary education—-whether that means college study or not.

How the alternative education movement may fare under new White House leadership

The Obama administration gave a boost to this movement in August, by creating a pilot program that opens the door to federal student aid for a selected group of degree or certificate programs run jointly by traditional higher education institutions and alternative providers such as code schools and edtech companies.

That program, called EQUIP (Educational Quality through Innovation Partnerships) is one of the few pieces of the Obama legacy that may be advanced by the Trump administration, observers of the education scene have predicted.

Blake says EQUIP may dovetail with the views of Betsy DeVos, Trump’s nominee to be secretary of education. DeVos is a billionaire philanthropist who has supported charter schools as alternatives to existing public schools, and voucher programs that would help parents pay for tuition at private schools.

“DeVos has a bias toward choice at the K-12 level,” Blake says. “It may be that that translates into choice in the higher education world,” Blake says.

A key question is whether policies like EQUIP would ever open federal student aid to programs run entirely by providers who don’t seek and receive approval from the accreditation agencies that oversee quality at colleges and universities.

Meanwhile, Sloyan says the Trump administration could take steps on his own wish list by relaxing immigration controls, but he’s not holding his breath. Because CodeFights helps U.S. employers recruit engineers from all over the world, his company’s revenues would increase “100 times” if talented new international hires could get a green card overnight, he says.

“With a new administration that is very conservative about visas, that might not happen for about 10 years,” Sloyan says.

Both CodeFights and Degreed are working with about a hundred companies and organizations, according to the startups’ CEOs. CodeFights is taking in “significant revenue,” Sloyan says.

Blake says Degreed has sold two million licenses for use by its clients’ employees. Outside of its contracts with employers, anyone can use the app for free. Degreed doesn’t receive payment from the companies whose learning resources are listed in its menu. Blake says the startup doesn’t want to have a financial incentive to serve one learning opportunity over another.

Edtech, credentialing innovation, and disruption in academia

Both Degreed and CodeFights operate in an arena of post-secondary education that is not necessarily subject to the government regulations and vetting systems that rule over colleges and universities. For example, Degreed is free to support a middle manager’s informal efforts to learn Spanish via the Duolingo app to advance a career in international commerce.

But despite their independence from academia, both Sloyan and Blake are crusaders of a kind against what they see as the disproportionate clout that college degrees and university hierarchies have over the career fates of individuals.

Blake is more the firebrand of the two. Degreed’s stated intent is disruption of the higher education establishment. “Jailbreak the Degree,” is the startup’s motto. Blake is part of a movement to “unbundle” learning by allowing people to gain mastery of a subject by assembling their own units of credit from a range of providers, including courses from different universities as well as sources such as webinars, edtech offerings, books, and articles.

Blake says his passion for alternative educational pathways began in his teens, when he was a diligent, successful student engrossed in the drive toward admission to a top college. Like many bright teenagers, he also felt that his creativity was being snuffed out by the lockstep game of cramming for tests, spitting out answers, and immediately forgetting what he’d learned. At 17, he and his classmates faced the high-stakes ACT exam that would help dictate his college destination, his early career destiny, and maybe his whole work life.

“It just felt crazy,” Blake says. “I was a really good student, but actually I was a really bad learner.”

At that point, Blake embarked on a self-designed independent study that moved from the history of standardized testing to models of education; to the “skills gap” noted by employers even among college graduates; to climbing college tuition costs and a U.S. student debt burden that now exceeds $1 trillion; and the emergence of online learning options.

About a year after graduating from Brigham Young University with a bachelor’s degree in economics, Blake was part of the team that founded Zinch, a social network linking students with educational opportunities. Zinch was acquired by Chegg in 2011. The following year, Degreed was launched to provide the means for workers to keep up with the fast-changing skill requirements of the current job marketplace, Blake says.

Sloyan, who says he was also an excellent student, feels that his talent would never have been recognized if he had relied only on the routes established within school and university hierarchies. He grew up “in the middle of nowhere” in Armenia, he says. It was only due to his success in the International Mathematical Olympiad—-an annual math competition for high school students—-that he “got on the map as someone who deserved a shot.”

Sloyan landed at MIT, where he conceived the idea for CodeFights in his senior year. CodeFights was designed as a more scaleable—-and much more frequent—version of the gamified, yearly math Olympiad that got him addicted to math as a youngster.

“The IQ you’re born with doesn’t depend on the location where you’re born,” Sloyan says. Yet place of birth still determines the fates of people with potential, he says. “We can turn that on its head.”

Sloyan doesn’t deny the value of a college degree in computer science. On average, college graduates do better than others in CodeFights challenges, he says. But that result is at least partially due to the fact that college students have four years to learn math fundamentals and practice their programming skills, while a code school student studies for only a few months, he says. In addition, top universities admit only the students who are already very accomplished in math, he says. So their skills as graduates may only be partially due to their studies on campus.

With the expansion of online courses in coding, Sloyan says, CodeFights now identifies top job prospects who don’t have degrees. One was an immigrant from Ukraine who, as a housewife in North Dakota, learned to love programming via MOOCs (massive open online courses), he says. Then she entered CodeFights competitions. She’s now a software engineer with an algorithmic trading firm in Chicago, he says.

“Her results were mind-blowing,” Sloyan says. “It took two or three weeks to get her a job.”

Among CodeFights’ tools are an automated catalogue of the skill requirements of various tech positions, and automated matching to those positions from the company’s contestant pool.

Sloyan says he can establish the credibility of a CodeFights credential the same way Ivy League schools ensure that employers will prefer their graduates.

“By providing companies with great candidates that blow their minds, we build that reputation and trust,” Sloyan says.

Photo of David Blake courtesy of Degreed; photo of Tigran Sloyan courtesy of CodeFights.

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