Maximizing the Potential of Human Capital
Editor’s Note: This article is based on a conversation with Ariel Camus, CEO of Microverse, an online school for software engineers with students in 129 countries. They focus on training students in traditionally overlooked geographies on how to be software engineers and best function within remote teams so they can access the global job market.
Every great business becomes great through maximizing the potential of its human capital. In other words, it is the teams of people that make a company great.
The pandemic forced both CEOs and rank-and-file employees to re-evaluate their work and assess if it is giving them fulfillment.
In our recent conversation with Ariel, we touched on how Microverse’s business model prioritizes human capital at both ends. We also discussed the role of things like delegation and the pursuit of fulfillment in business success.
Income Sharing Agreements and Peer-to-Peer Learning
Income sharing agreements and peer-to-peer learning are not unique, but Ariel's combination of them procures an exceptional result.
His approach to online education revolves around accessibility and affordability, so Microverse could not rely on a standard tuition model. It also meant they could not have a traditional university staffing structure.
They couldn’t charge upfront but still wanted to provide a world-class education.
In his research, Ariel stumbled upon income sharing agreements and peer-to-peer learning, which became his solution to the above-mentioned problem.
What is an Income Sharing Agreement?
The income sharing agreement is an alternative method of educational funding designed to help people who could not secure a traditional student loan.
The institution covering the costs for the student is the school itself rather than the bank. The school makes money from a percentage of the student’s salary once they secure employment.
This model ensures the school is wholly invested in the success of its students.
What is unique about Microverse is they offer this funding option at a global scale to people in countries that are often overlooked when it comes to tech talent.
What is Peer-to-Peer Learning?
Peer-to-peer learning is collaborative education. There are no teachers and classes. Instead, it revolves around teams building projects in work scenarios that mimic a global remote team.
Students learn with and from each other, with 100% of the learning happening in this collaborative environment. Not only does this teach the students' software engineering skills, but it teaches them remote working skills like:
Synchronous communication
Writing
Asynchronous communication
Working across timezones, cultures, and languages
The mission is to provide education to people tied directly to outcomes so that where they are born is not what determines their opportunities.
It makes the concept more scaleable and also lowers the cost of education.
Education should be seen as an investment rather than a cost. The student should ask, “What am I going to get from this education in exchange for my investment?”
There is no risk for the student because they don’t pay anything upfront. Ariel can charge more than a local bootcamp because of their income-sharing model. The combination of low costs and high margins allows Microverse to take business risks, such as globalizing the concept of paying for education through income share agreements.
Similarly, small businesses can learn a lot of what they need to know about financial performance by working with third party experts, like the team at Flight Financial, in the real world of their business, rather than in a classroom setting.
Balancing Social Impact with the Quest for Profit
At the end of the day, a mission-driven company is still a business. You need capital to operate, and that comes from investors who believe in your concept enough to think they will get a return on their investment someday.
Ariel outlined a couple of essential things to consider.
Know Who You Can Help the Most
The first was to know exactly who you can help. It is the mission-driven organization’s version of knowing your customer.
If you try to help everybody, you end up not helping anybody. Your business depends on your ability to successfully and predictably help people.
Ariel mentioned how their selection rate is less than 1 percent. They have 20 to 30 thousand applications in any given application period and can only accept between 150 and 200 students.
You have limited time, energy, and resources as a small business. This means you have to be laser-focused on who you can actually help. Flight Financial can help by implementing robust monthly financial reporting, complete with budgeting and forecasting.
This allows us to give you visibility into your resource allocation and helps you realize the return your current allocation is providing you. It also enables you to think through whether it makes sense to shift things as part of an initiative to optimize the value of your business.
Build a System that Allows You to Track if You Are Helping Those People
Ariel’s team built an automated internal CRM-style system that tracks the engagement levels of all their current cohort participants. It makes sure everyone is at “full commitment,” which is spending 8 hours a day working within the program.
If someone falls below this, they are asked to leave but always can return.
This highly systemized level of disqualifying all but the most likely to benefit most from the program is what lets the income-sharing revenue model succeed.
Reaching KPI Predictability Opens up Forecasting Capabilities
Another thing Ariel mentioned as necessary is getting to the point of reliable KPI predictability. This was reached for them, for example, when they were able to meaningfully forecast a predictable timeframe for the following:
Start date
Completion date
Employment date
Estimated value of the first payment
This allowed them to think much further with more accuracy in their financial forecasting. A key reason they could pull this off is Ariel understands the importance of cash flow management.
A recent study by US Bank stated that up to 82% of small business failures result from poor working capital and cash flow management practices.
Flight Financial can help by implementing strong budgeting and forecasting practices, which will give you visibility into your working capital and cash flow trends. This allows you to see into the future and plan accordingly for any potential issues, allowing you to keep your business from veering off track.
Also important to consider is how the attitudes towards work have changed.
How the Pandemic Changed Our Attitude Towards Work
The pandemic has sparked the great reshuffling. The mission of the place where one works is being considered at a rate never seen before. It has made people ask two key questions:
What do I want out of life?
Is my profession aligned with my answer?
This has forced CEOs to take a blunt look at their company culture and see if they are doing everything necessary to retain their talent and attract talent looking for something more meaningful.
Ariel facilitates a culture that stimulates the heart and mind in equal parts. This shows up in hiring team members driven by the same mission and even influences the type of mindset they look for in students they accept.
The pandemic has also sparked an explosion of remote work, which has provided a unique opportunity for a company like Microverse.
So many companies did not have plans to incorporate a remote workforce before the pandemic. This forced shift has caused such companies to rethink their hiring processes. Innovative companies took advantage of this opportunity and altered their operations to accommodate a remote and global talent pool.
Driving Growth Without Burning Out
Ariel mentioned an interesting downside to the mission-driven company, though. People within mission-driven career paths tend to burn out at a higher rate. They care so much that they can get disheartened and lose motivation if things aren’t happening fast enough.
We discussed how he pushes through burnout to keep Microverse on a steady growth path without sacrificing mental health.
His secret is that he values his present joy more than his future joy. Most entrepreneurs operate the opposite way. They justify sacrificing the time doing things they enjoy for a potential future in which they will have exponentially more leisure time.
Because Ariel believes so much in the mission of his work, he can extract a tremendous amount of present joy from his work. He doesn’t do things “today” just for the sake of some potential outcome, but because he derives satisfaction from them in the present.
The sentiment here is that it is crucial to define what success looks like for yourself in all aspects of your life, rather than letting society define it for you.
That means incorporating all parts of your life into that definition. Your relationships with family, partners, and yourself are all a part of that definition.
Entrepreneurs who get addicted to the dopamine hit of business achievements are prone to burnout because their definition of success is too narrow.
Successful Delegation Involves Learning to Let Go
This type of entrepreneur often struggles with delegation because they get their dopamine rush from executing on everything themselves.
Ariel just grew his team from 20 to 50 in the last three months, which means that delegation has become a more critical part of his strategy.
He has learned that successful delegation requires the CEO to learn how to let go and accept that, even with the perfect system and competent execution, things will not be done precisely as you would do them.
There is a massive opportunity cost to not delegating. A business cannot scale without proper delegation.
One way you can solve this challenge is to delegate the most important tasks to your core, most trusted employees. You can also hire new people to train to complete the tasks you need done.
This can be tricky, though, because the time it takes to find raw talent and mold them into highly efficient employees is often too long for the pace at which the business aims to scale.
This is an area we can also help. Flight Financial has 15 years of experience executing on our robust processes to help companies take care of their financial challenges, so they have the bandwidth to focus more on the tasks that add value to their business and their people, and can reduce the amount of time spent looking for and training new hires.
Ariel’s Most Important Takeaway: The Time-Value of Time
Just like cash today is more valuable than cash tomorrow, Ariel states that time today is more valuable than time tomorrow.
It is true. None of us know if tomorrow is guaranteed.
Life is short, and the value of our fulfillment today is more than the promise of its value tomorrow.
We can be your business’s valued CFO partner and take on your essential financial tasks to give you peace of mind that competent experts are getting these things done.
This frees up your time and mental energy to apply to the things in life that give you true fulfillment.
Start your journey towards a new life for your business with a free 25-minute discovery call.