In late 2019, Guild Education CEO Rachel Carlson appeared on the cover of Forbes amidst a very different labor market with a razor-thin 3.5% unemployment rate. The high-flying edtech unicorn had found success supplying education benefits to some of the nation’s largest employers, but she was already plotting what her company would do if and when the economy took a turn.
“Last fall, enough of our clients were starting to think about what a 2020 or 2021 recession might look like. So I started thinking about how education might be a useful tool in a recession,” says 31-year-old Carlson, an alumna of the 2017 Forbes 30 Under 30 list. “We had no idea that it would be instigated by a pandemic, but we were fortunate we started that work early.”
Today the company announced it has completed a partial acquisition of edtech venture consultancy Entangled Group. The nontraditional acquisition is an all-stock deal valued upwards of $80 million, according to Entangled cofounder Nick Hammerschlag. All 90 Entangled Group employees will join Guild, but Guild will not acquire Entangled’s previous investments in startups like Course Hero and Andela. Instead, Hammerschlag says Entangled Ventures will become a separate holding company valued at nearly $200 million.
Carlson, who lives in Denver, cofounded Guild in 2015 to help companies offer education benefits that employees would actually use. Many big employers will pay for their workers to go to school (it’s a tax break), but hardly any workers take advantage of the opportunity. So she cut deals with universities that often spend more than $3,000 in marketing to attract each new student and eliminated barriers to entry like out-of-pocket costs for workers. Last year alone, Guild channeled more than $100 million in tuition benefits to employees at companies like Walmart, Disney and Chipotle.
In a tight labor market, Guild’s model made sense as companies competed to attract and retain talent. But Carlson knew that employers’ needs would drastically change if they faced layoffs and furloughs. So she entered talks with Entangled’s Paul Freedman, an early investor in Guild, to create a platform that would enable laid off workers to access jobs, as well as connect them with additional education necessary to move to different areas of the workforce.
“Rather than pivot, we just built a wholly different product with Entangled,” explains Carlson. “We were both building the components on our own, but Guild was approaching it from a ‘what do you do if the person needs educational training’ perspective and Entangled was approaching it from a ‘what you do if they need a job’ perspective.”
The resulting platform Next Chapter connects laid-off and furloughed workers with education opportunities, career services and a job marketplace. With unemployment approaching nearly 40 million Americans, the company has says it has seen early success with large employers like Walmart and Unity Technologies
According to the latest labor reports, workers without any college education are losing their jobs at about four times the rate of their college-graduate peers. Freedman explained that Guild’s clients similarly have seen declines in areas often populated with non-college graduates and growth in other more technical areas. As with Guild’s core business before the pandemic, Guild’s career services will primarily focus on upskilling employees so they can move around within the same company.
“One surprise for me was the depth of interest on the hiring partner side from places like Walmart and PepsiCo. There’s over a million jobs,” says Freedman, who will join Guild to oversee new product offerings. “You read the depressing narrative that there aren’t areas for increased employment; it’s doom and gloom. But what we’ve found is that there actually are; there are employers who are desperately looking to hire based on the different pushes that are happening in the economy right now.”