- The largest market for education is not programmers and designers, but skilled workers and laborers, of which there are tens of times more! Accordingly, deciding to enter this unexpected market can also earn tens of times more 😉
- However, there are a couple of fundamental points here without which this won’t work. Firstly, it is necessary to organize a flow of candidates for training. And secondly, they need to be taught not only professions but also the right patterns of work behavior.
- It’s good that the methods for solving these tasks don’t need to be invented from scratch. Because there is such a startup where you can see how it should be done:
Project Essence
UpSmith promises to help service business owners who employ skilled workers for repair, installation, and setup to grow.
The main offer that the startup pitches to owners of such businesses is “earn more money with the same number of employees.”
The main tool helping owners earn more is additional monetary motivation for workers for timely and quality performance of their duties, as well as for selling additional services while interacting with clients.
To do this, the business owner must define the rules for awarding such rewards and integrate their business management system like ServiceTitan with UpSmith. Now, whenever there is information about a new action by a worker in the system, they will automatically receive a reward if such a rule is set in UpSmith.
UpSmith was created in 2022, and now it has raised an additional $5 million in investments, increasing the total investment in the project to $8.3 million.
What’s interesting
At first glance, UpSmith seems to be just another platform for rewarding blue-collar workers, whose popularity has been on the rise lately.
I’ve already written about several startups with similar platforms:
Applause – rewards workers for encouraging customers to leave positive reviews about their companies online. The startup raised $7 million in investments in its first round. Edge– a similar platform for employees of service businesses and franchises. The startup raised $5.9 million.
Grata – a platform for rewarding employees in the service industry (salespeople, waiters, etc.) for good reviews of their establishments. The startup raised $6.3 million.
Onaroll – a platform for rewarding shift workers (couriers, workers in logistics centers, etc.) for timely and quality performance of their duties. The startup raised $20 million. Trunk Tools – a similar platform, but for rewarding construction workers. The startup raised $9.9 million.
However, UpSmith sets itself a more ambitious and comprehensive task – to “solve the crisis of skilled workers in the United States.”
The problem is that by 2030, American companies will not be able to fill 2.1 million job positions due to a lack of candidates with the necessary qualifications. The consulting company Deloitte estimated the size of this problem at $1 trillion!
According to UpSmith, there will be fewer than 1 skilled worker for every 6 young people. In other words, the organic influx of new workers into the industry will be very low.
On the other hand, there are between 11 and 15 million partially unemployed people in the United States – those who have left the army, immigrants, young high school graduates, and other adults “stuck” in an undefined career position.
It is these people that UpSmith has decided to train as skilled workers so that they can finally get permanent jobs – to earn a living for themselves and help service companies struggling with a labor shortage.
Moreover, UpSmith claims that their training program is 4 times faster and more effective than traditional programs for training workers in specific fields.
The essence of the UpSmith training system is the conduct of 8-week accelerators. These accelerators combine theoretical training and practical work as apprentices in service companies, for which students receive real money.
Moreover, they receive not only a salary but also those same rewards for successful actions. Thus, UpSmith not only trains workers but also instills in students the right conditional reflexes – from which correct behavioral patterns are formed, benefiting both the employee and the hiring company.
Here are the numbers from one of the real cases:
The company began issuing an additional 10% rewards to apprentices during training, which led to a 7.8% increase in company profits. This brought the company a 2x return on UpSmith services payment within 15 months. Students who started working as electricians through UpSmith, on average, began to earn 30% more than beginner electricians typically do. Thus, $1 spent on their training will bring them $8 in income over the same 15 months.
Hence, it follows that UpSmith earns simultaneously from the companies they place students with and from the students themselves, who pay for their education.
So, the fundamental difference between UpSmith and ordinary reward platforms is that they offer companies a comprehensive solution:
Supply of candidates for working as skilled workers. Testing platform to help companies select candidates they would like to interview. Joint training program, where UpSmith takes care of the theoretical part, and the company – the practical part of the training. Platform for motivating students and company employees through rewards and performance analysis.
Where to head
Platforms for training employees in blue-collar professions have recently been gaining popularity and raising investments.
Among them, the following can be noted:
Squint (my review) – raised $19 million in investments. DeepHow (my review) – raised $37.1 million. Zaptic (my review) – raised $16 million. how.fm (my review) – raised $8.1 million. BuildWitt (my review) – raised $12.3 million (new investments were made after my review). However, all these startups focus exclusively on the professional aspect of training, that is, on the transfer of professional knowledge. This is undoubtedly necessary – but not sufficient! Because employees also need to be motivated to effectively apply this knowledge.
At the same time, platforms for motivating employees, mentioned in the previous section, focus exclusively on motivation, leaving out of their scope the problem of where companies can get these employees from in order to motivate them later.
Against this background, the UpSmith model looks more effective and efficient:
Firstly, they help companies recruit new employees by defining a clear segment from which they recruit these employees. Roughly speaking, they can offer couriers, taxi drivers, waiters, and immigrants to retrain as skilled workers – to earn more money. Secondly, they immediately organize training for candidates together with future employers – which should lead to a higher employment rate. Thirdly, they teach candidates not only professional skills but also the right patterns of work behavior, using the most effective method for this – “positive reinforcement,” rewarding them for every correct step they take.
The problem of a shortage of qualified workers is indeed significant. Usually, there is talk of a shortage of programmers, but even in the USA, there are “only” 4.4 million programmers, while there are 34.7 million skilled workers of various kinds!
So, a possible direction to pursue is the creation of platforms to solve this problem based on the UpSmith concept, which has clear advantages compared to other more “one-sided” solutions.
About the company
UpSmith
Website: upsmith.com
Last round: $5M, 22.01.2024
Total investments: $8.3M, rounds: 3