This is a post in our anniversary series 500 in 5. Check out our other posts in this series.
There are a lot of threads to the story of the first five years at NSS. One of those threads is our start-up story. It’s an aspect of the NSS story that I often get asked about during our information sessions and during interviews with applicants: why did we decide to start the school and why did we decide to do it the way we did. Our fifth anniversary feels like a good time to go back and review some of those key decisions and see how they worked out in practice.
Probably the single biggest decision that we made when we considered the business model for NSS, and the one that still seems to most shape how applicants, employers, and the community view NSS, was the decision to establish NSS as a non-profit. Deciding to launch as a non-profit was not an obvious decision or an easy one. I’ve done several other start-ups, all of them for-profit (or at least intended to be, whether they became so or not is a story for another day). I knew next to nothing about non-profit corporations. I’d had almost no involvement with any non-profit except as a donor. And five years later, it’s obvious that almost every other bootcamp program in the country made a contrary decision and organized as for-profit businesses. So what were the factors that led to the decision to become a non-profit - how and why did we make that decision?
For-profit higher education has developed a huge negative reputation over the past ten or fifteen years. For-profit college chains were taking regular hits in the press at the time we were making our decisions about launching NSS. While I don’t believe that for-profit schools are inherently flawed, I do think that education is a tricky business for for-profit operators.
There’s an inherent tension built into the business model of for-profit education. That tension can pull the whole venture out of shape if you are trying to satisfy the pressure of being a public for-profit school or if you are trying to give investors a satisfactory return on their investment in a for-profit school - and those are exactly the pressures that led so many for-profit schools astray. They became more about putting tuition-paying butts in seats than about successful student outcomes.
We decided that being a for-profit would send too many negative messages to too many NSS stakeholders. So, even though we knew that a successful school like NSS could generate very good margins and nice profits, we voted to engage with stakeholders on a different level by becoming a non-profit. Given that “coding bootcamps” were a new concept in 2012 and would likely be not well understood at the start, we wanted to send as few negative messages as possible as we launched.
First and foremost, being a non-profit would signal something to prospective students about the purpose of NSS. We felt it would signal to students that their interests were more central to NSS. That we were more about student outcomes than making a buck.
Second, we wanted to signal something to employers as well. We knew that as a vocational program, we had negative perceptions to overcome relative to being a good place to source software developer talent. Those for-profit colleges that had been operating in Nashville and purporting to train programmers had, at best, spotty reputations for the knowledge level and readiness to work of their graduates. We wanted to signal that NSS was something different, something more grounded in the tech community in Nashville. We wanted employers to feel that we were focused on doing what was necessary to train good junior talent for them to hire.
Finally, we wanted to signal something to the local developer community. We wanted it to be clear that we weren’t just out to make money off our students, that this wasn’t just a ploy for fatten my retirement account and/or make money for some investors. We believed that it was important to make mentoring connections between our students and working software developers in Nashville. I knew from being around the local open source community and local tech meetups that there was a meaningful portion of the local developer community that felt that there had been history in Nashville of entrepreneurs and investors trying to take advantage of local developers. We didn’t want our business model to create barriers to success for our students by lessening the chances that existing developers would welcome them to the community and be willing to invest time in mentoring.
It’s far too easy for a for-profit training vendor, particularly when things are rolling and growing, to lose focus on the bigger picture and only focus on the bottom-line. There are lots of signals and forces in our culture that makes this true. And as a died-in-the-wool for-profit guy, normally I’d view that as a good thing. But, I was not willing to take the risk of creating confusion about our goals or risk the potential loss on students that had so clearly become a problem for so many for-profit training companies. I wasn’t really worried about that confusion in the short-term. It was more a concern that with success, with the passage of time, possibly with changes in leadership that it would become very easy to start to measure our success not in terms of student outcomes/success but in financial terms. Being a non-profit would be a powerful brake on any such drift.
Being a non-profit opened up the possibility of tapping into grant dollars from government and/or foundations to help create up new programs, target under-represented groups, etc. While we had no plans in the short-term to tap these sources, it was good to know that the option would be there should it become important once we had a track record of success. Of course, being a for-profit would open up the possibility of investment funding instead of grant and donation funding. But as discussed above, taking investment brings investors and sets the table for confusion over goals. Also, some of the types of programs we were anticipating were much more likely to be attractive to non-profit or government funders rather than for-profit investors. We didn’t want constraints on the programs we could pursue based on profit and/or growth concerns. We haven’t actually pursued any grants or other government funding but that option still exists as we move forward.
One of the best things about being an entrepreneur is that you get to decide whether and how a prospective new venture matches up with your own goals and whether you’re willing to invest the time and energy that it is going to take to launch that venture. Without getting too deeply into this, a non-profit venture felt like a much better match with where I was in my own career and life. It felt like a way to give back to the community in a way that I had never taken the time to do in my past when I was too busy chasing my own ambitions and self-centered goals. It felt like it was past time to pay it forward and honor all of the people who had helped me in my own career and life, often with little or no thanks or appreciation at the time. And Nashville felt like a community worth making such a commitment to, which hadn’t been my feeling about some other places I have lived.
Nothing above should suggest that there were no negatives associated with being a non-profit. Quite the contrary. Non-profits are highly regulated. Non-profits must find a business model that moves them to sustainability - you can’t survive today off of a donor-dependent model. Being a non-profit would create some constraints on compensation that might become a challenge. It would also create some constraints in the way in which we engaged with the employer community.
But despite the possible negatives or constraints we felt that being a non-profit was the right choice for NSS. Five years later, it still feels like the right decision.