Interview with Gunnar Counselman, Founder and CEO of Fidelis Inc.

Both non-profit and for-profit post-secondary institutions are plagued today by an inability to train students to meet workforce needs. Schools need to help students figure out what career options are best for them, adequately prepare students for those careers and then place students into top employers. My first interview is with my friend Gunnar Counselman, the founder and CEO of Fidelis Inc., a company partnering with schools like UCLA and Arizona State to solve this problem for members of the military looking to transition to civilian life. Gunnar is one of the most thoughtful execs in higher education today and our conversation ranged from philosophical debate on the merits of a vocational vs. a liberal education to discussing the billions wasted on military education today to talking about how Fidelis plans to supercharge the educational and career outcomes of its students.

Interview with Gunnar Counselman, CEO of Fidelis

QUESTION:  Can you tell people a little bit about your background and what brought you to start an education company?

ANSWER:      Sure. I came out of the Marine Corp in 2003 and went to Harvard Business School with no real idea of what I wanted to do. A speaker told us you should find something people spend a lot of money on and are unhappy with the results of and see if you can’t do a better job. So, I started thinking about the things that I knew well, which at that point was just national security from my time in the Marine Corp and education from my time in education.

Then I read Clay Christensen’s book, The Innovator’s Dilemma, and it was an epiphany. I thought that if you applied this framework and the structure to education you’d have a much more coherent system. So I wandered down to his office and asked “have you thought about education?” We decided to do some research together and that kind of laid the groundwork for the book Disrupting Class.

QUESTION:  What were the insights that came out of the research for the book?

ANSWER:      It was about modularizing the system and breaking it down into component pieces-  the whole idea that you don’t buy a drill, or you don’t buy a drill bit, you hire the ability to put a hole in the wall. It occurred to me that the job that the system of education is doing for students is often very different than the job that students want done in their lives.

QUESTION:  You’re talking about a very vocational and career outcome-focused  model of education versus a traditional model where the focus is on giving students a well-rounded liberal education.

ANSWER:      I think that a liberal education serves a really important purpose which is to create a common framework for discourse, a common kind of knowledge set that allows people to connect with one another, but if it’s divorced from purpose it disenfranchises the student. If you’re studying Shakespeare and don’t understand that the reason you’re studying Shakespeare is in order to be able to connect with other people for whom that’s important, then it suddenly gets divorced from a reason for you to be there.

QUESTION:  Essentially it feels like you’re saying that studying for studying’s sake is a liberty that’s available to a few, but not something that is wanted by everyone?

ANSWER:      I definitely think that’s true. To me if the people that I want to impress need to know that I’m generally educated in the liberal arts, great. I just need to understand that that’s what I’m doing there. If you believe in the Malcolm Gladwell thing of you have 10,000 hours to become an expert at something, the question before each student should be what is it that you’re going to spend your 10,000 hours on? If you’re intentional about spending that 10,000 hours to develop in the way that you sets you up for what you want to do, that’s great.

QUESTION:  There are a lot of GI benefits for Marines, and it’s been a huge focus for colleges to try to enroll those students. Can you talk about that process of Marine reentry into the work force?

ANSWER:      The problem of military to civilian career transition has been challenging since the first Spartans first came back from Thermopylae.  Every year you have 200,000 folks getting out of the military. Any time you have people leaving an industry and moving to another it’s a really difficult transition – whether that’s leaving Detroit to try to move to another industrial cluster, or leaving aerospace  defense and trying moving to Silicon Valley. Each of these different work communities has very different rules, very different ways of operating. Your network is no longer valuable to you, your reputation is left where you had it, and it just exacerbated within the military because the military industry is so incredibly distinct from everything else.

The way I always put it is that the military does a really tremendous job preparing people, workers, for its workforce and its needs, but its needs are really far removed from the needs of most industries. So the idea of translating your skills is really popular in the press, but it’s not really about translation, it’s about repurposing, and it’s about rebuilding. A lot of stuff you build in the military, if you took somebody like a Steve Jobs or a Reed Hastings and you took them out of their organizations and their clusters where they work and put them into a military unit, that person could be a liability on a submarine or on an aircraft carrier. They wouldn’t know where to begin.

QUESTION:          Hundreds of millions of dollars have been spent by the military at traditional schools and schools like University of Phoenix.

ANSWER:      Billions.

QUESTION:  Have any of these programs been effective? What has worked?

ANSWER:    I think that in pockets you find really good education that service members can go take advantage of. I think for me going to HBS was great. I think that there are a lot of really good trade programs that solders can take advantage of. The problem is that no schools have their incentives aligned with solving the military problem.

If less than 1% of your student population is former solders, then you don’t have enough scale there in order to build the kind of things that are necessary for that population versus the rest of the population you’re serving. I think that’s okay, but I think the opportunity is to take that stuff that’s out there that does work and then pull it together in a way that’s uniquely a good fit for this population because they are very homogenous kinds of needs. They’ve had a very similar set of experiences that’s prepared them in similar ways. It’s again about repurposing their experiences and their capabilities for new outcomes.

QUESTION:   You’ve done a lot of this at Fidelis through a technology platform that connects former Marines with the resources they need. Can you talk about as you were thinking about what type of technology platform to develop how you made the decisions you made and what that platform looks like today?

ANSWER:      I’d say the foundational observation is that clarifying objectives is really critical especially for solders and our platform is built around that. You begin every morning with a mission. Specifically, the platform that we built has 4 different major elements.

  1. First is a capabilities portfolio which combines your talents, your personality type, your interests, your knowledge sets, your skill sets, and scores around your network to allow companies to reach into the student population and find the kind of people that they think they are going to make them more competitive.
  2. The advisory network pulls together mentors for that student that help them engage in their path.
  3. The learning application platform allows us to customize learning experiences that kind of fill in the gaps around the core content.
  4. Then finally the objective discovery and objective setting piece. Make sure that everybody is on the same sheet of music in terms of why the students are there. What are they trying to get out of it? That way the whole thing can be personalized to them.

QUESTION:  I think the hardest thing about mentor programs is figuring out a way to have a bond between the mentor and the mentee that is genuine and doesn’t feel forced. Can you talk a little bit about where the mentors are coming from? Are they new to the student, or are they people from their prior lives?

ANSWER:      I think it’s critical that it be a combination of people you’ve known for a long time along with people who are out there working in the areas that you want to work in. Let me address why. I think that your point is right that fit is really difficult because when you set up mentoring programs they are for a very specific purpose, and people who engage in them have different kinds of interests. We recognize that there’s a certain identity that exists between folks in the military, who serve in the military. If you were a counter intelligence officer 5 years ahead of me and now you’re working in the technology cluster, chances are you’d be willing to help me out and vice versa. That’s a piece of how we solve it.

QUESTION:  We haven’t yet spoken to the academic environment itself. Can you talk about school partners you put together and what programs of focus you’re going to launch out of the gate?

ANSWER:      Up until now Fidelis has said the academics are the purview of the school itself. How the class is taught, who the professor is. We’ll do all of the nonacademic pieces from getting the students, to placing the students in the backend, delivering the support infrastructure that the students need to be successful.

The first program we came out of the gait with was a pre-MBA boot camp. It was with UCLA. The intent of the program was to give students preparation prior to starting their MBA program to get them the basics of accounting, the basics of finance, the basics of quantitative analysis, the basics of Excel programming, all kinds of stuff that if you don’t spend 3 or 4 years at McKinsey and Goldman Sachs, and you come in having spent 3 or 4 years in charge of an infantry platoon or driving ships, you just don’t have that foundation.

QUESTION:  And Arizona State is next?

ANSWER:      Yes it is a degree completion program with Arizona State and that’s really the one that we think of as the core Fidelis program. Students take their first 2 years online through us but from the partner university to build general education credits before transferring to the traditional campus. We coach them through to graduation and back into placement with companies.

The thing that we try to do with all of our programs is to create an end-to-end solution where we slot in the appropriate kinds of learning experiences that help the student get ready for the requirements that they’re going to face in the backend.

QUESTION:  It’s an interesting world where big traditional universities are willing to lay out their academic reputation for young startups like Fidelis. Can you talk about the challenges of how you found your partners, and also what were the factors you weighed in terms of choosing the right partners for your Fidelis students?

ANSWER:      It is actually a really interesting world. I didn’t expect to be able to work with colleges of that kind of caliber. It was really surprising that UCs, the University of Texas, The University of Florida, the ASUs of the world would want to work with us given our kind of stage of development and the fact that we are startup. Really for me it all comes down to the people and it all comes down to reputation.

The schools that we’ve chosen to work with we think have great people who are aligned with the mission and have really strong reputations for delivering great educational experiences.

QUESTION:  Can you talk about business now?

ANSWER:      Sure. First, we share tuition with the teaching partner, and I kind of discovered that that was possible by watching what John Katzman had done at 2tor. Prior to seeing 2tor it had never occurred to me that you could build a business where the company does a lot of the heavy lifting, the school does some of the heavy lifting, and you put them together and you have a 2 + 2 = 5 kind of scenario, so the tuition sharing is one aspect of it.

But, because of the end-to-end nature of what we do in order to keep our incentives aligned with the student’s incentives we also have back-end partners and colleges and companies who pay us a transition coaching services fee. That’s the part of the business that time will tell how important that becomes. My theory is that over time that kind of a business model where the organization that you’ve prepared students for pays you for it becomes a bigger and bigger portion of the business.

QUESTION:   What you are talking about has been the holy grail for many students – entering a program and being prepared for a career right out of school?

ANSWER:      Think about this, the unemployment rate of college graduates six months after graduation is somewhere on the order of 50%. It’s mindboggling. It’s a statement about the product market fit between graduates. Over time value migrates the backend as companies become increasingly insistent on people showing up with the skills that they need, and showing up with the capabilities that they need to hit the ground running.

QUESTION:   Flash-forward 10 years. Is the big vision that Fidelis becomes the de facto transition platform for everyone in the military from officers down to enlisted?

ANSWER:      I think so. If you have a brand that faces the students that the students trust, and you have a brand that faces the employers that the employers trust, then you can organize the instruction in the middle to make sure that the students are being prepared in exactly the right ways for the backend.

When you get the framework right, it’s simply… it’s not simple, but it is a matter of bringing in the right instruction at the right time for the right students which is of course like anything easier said than done. Note that what we’ve built is great for the military, but it’s also great for other populations. We’re not worried about those other populations right now, but we do think that there’s a lot of the approach that we’ve used to build what we built that could be applied to a number of other populations.

QUESTION:  How do you think about standing out from the noise? I mean, tens of millions of dollars are spent by schools going out to bases trying to get students to sign up for their programs. As a small startup, how do you differentiate yourself, and what’s your marketing strategy to reach those potential students?

ANSWER:      It’s a great question because there’s a ton of noise. It’s hard to overstate how much noise there is around this population, and frankly how much noise there is around education with 4600 colleges in the country.

I spent a lot of time in the last year building trusted relationships with the chain of command, and I think something that surprises a lot of folks is how little trust the military has and the military establishment has for schools. They have been burned a lot, and so by being kind of very transparent and keeping the kimono completely open and showing them exactly how we do what we do and what end we are going after, we build trust with the machinery of the military, and that machinery from the military refers students.

It’s really going directly after the chain of command within the operating forces. It’s direct like the Marine Corps, “Hey Diddle Diddle, straight up the middle.” The Sergeant Major in charge of the base and the General in charge of the base are two people who are responsible for their men, and they’re the ones who care about their men and their women, so we go straight to them. Show them who we are and what we’re doing, and get referrals because anybody who has ever worked in higher education knows that a referral is worth… if you can get referrals and you can build your business based on referrals you’re going to get better students, you’re going to get more longevity from those students, and you’re going to get better outcomes from those students.

QUESTION:  You’re playing in a highly regulated industry, one that venture capitalists have often until recently been a little loath to play in. Can you talk broadly about the fundraising environment for education startups, especially those that are within the confines of a highly regulated Department of Education environment?

ANSWER:      The funding environment. It has changed tremendously in the last year. I would say that for the last 7 years that I’ve been in this space, it’s been meager and paltry. A few VCs, yourself being one of them, knew the space well enough to know how to recognize good from bad, and how to recognize who could do it and who couldn’t, but for the most part it was just people were like eh, I don’t really… people have been burned in the late 90s. There was a lot of kind of hangover.

In the last year we’ve just seen a lot of renewed interest in this space and a lot of VCs who are like okay, maybe the time is now. Maybe the context has gotten to the point where there are venture scale businesses to be built here, and I think that folks like 2tor, folks like Altius, folks like Gene Wade over at University Now, folks like Burck Smith over at Straighterline have kind of paved the way for renewed interest in this space.

QUESTION:  Finally, stepping away from Fidelis, what’s the single other education-related startup that’s most compelling to you today?

ANSWER:      I really dig what Coursera is doing. I think that they’re a great team. They’ve done something that I didn’t think was possible which was to get the elite universities of the world to engage in educating the masses.

What’s exciting about Coursera is that they have figured out how to break the mold and say okay, one of the best professors in the world is willing to teach Psych 101 and offer his entire course in an online environment. It allows the person on campus or the person who wants to go into that course online in an accredited format to take advantage of that high quality course and fill in the gaps to make sure that it’s an awesome experience for students.

I think things like that, and I think there are a number of others that are talking about finally doing online classes and trying to make those online classes better than what you can get in a traditional university environment, I think that’s really exciting.

QUESTION:  Well, thank you for your time today Gunnar. It was a pleasure speaking with you about Fidelis.

ANSWER:      Thank you sir.