Gerald Chertavian: My name's Gerald Chertavian, and I'm the founder and CEO of Year Up.

Question: Will business and charity become more linked in the coming years?

Gerald Chertavian: Absolutely. In fact, I think the whole movement of social entrepreneurship, which is about applying business principles to the nonprofit sector, it's solving social challenges in innovative ways and perhaps ways that weren't solved before. It's about what we call a tripartite partnership between the nonprofit sector, the private sector and the public sector, which is a new way -- it's a new social contract -- in terms of how we're going to solve social challenges in this country. And that is very different from the '60s and '70s, when government would scale up a nonprofit organization and have the resources to do that. So I think we're really in a paradigm shift as to how we collectively are going to solve social challenges in this country and who has skin in that game. And it's not just the government, it's not just the nonprofit sector and it's not just the private sector. Those three sectors have to work together differently than they have in the past. And I think many of the social entrepreneurs that I know and respect think about solving challenges in ways that really reflect that need to partner with those three legs of that stool.

Question: How do partnerships distinguish your organization from others?

Gerald Chertavian: There's a few ways I think we're very different from other organizations, the first of which is, we focus incessantly on what I call ABC -- attitude, behavior and communication skills. And that we know that employers -- that you hire for skills and you fire for behavior, right, when you think about how the labor force works? So we spend at least half of our time focused very, very clearly on making sure our young adults have the attitudinal, behavioral and communication skills they need to be professionals in the knowledge-based economy. Many training programs and often schools focus on just a skill or a kind of work competency. That's only half the equation. So yes, half of our time will be focused on a technical skill or a financial skill, something that will be kind of bought by the private sector. But half of our time is on ABC -- attitude, behavior and communications. So that's one big difference between ourselves and others.

A second difference is, we are so driven by the needs of our corporate and organizational partners, where -- and if you think about our economic model, you know, we receive contributions from those organizations. If we don't do well, we do not get paid. If we don't get paid, we go out of business. So our economic incentives are wholly aligned with success for our students. If students do well, we stay in business. And let me ask you: how many nonprofits is the payor the same person who's the recipient of the service? And I think that disconnect often means that the person you're providing the service to, you don't have to be beholden to them because they're not the payer. Whereas in our case we have clients; they're called companies. And if they're not happy, we're not in business.

So I think having aligned economic incentives as a general principle -- if one wants think about it in the nonprofit sector as to how do I better align those incentives to make sure that the work we're doing is -- we are rewarded for results, we are rewarded for outcomes, and we're not rewarded for efforts, which many, many organizations are rewarded for trying. Oh, in the private sector it would have been great if someone paid me to try to build software. But we got paid when we actually -- they flicked the switch and the software worked. In the nonprofit sector I think equally we should be held accountable to those standards, where we are paid, remunerated or given money when we actually generate results for those we serve, have proven outcomes, and are not paid just to try to do something. So I think those are kind of two very fundamental things different to us in terms of the ways in which we serve our students and the ways in which we work with our corporate partners and the way we serve them.

Question: What is the most significant barrier to success for low-income youth?

Gerald Chertavian: Well, unfortunately, many of our young adults were born on the wrong side of the opportunity divide. And that's unfortunate, and it's wrong, and it limits their potential. So right now we live in a country where if you were born in the wrong ZIP code, if you had the wrong education system, if your parents had the wrong bank balance, and if you're a person of color, you were born on the wrong side of the opportunity divide in this country. Now you and I both know that those are not good reasons to prevent a young person from being successful. But I can absolutely guarantee, having worked in this for a decade and worked with several thousand young people, is, given the appropriate opportunity, setting very challenging standards, and then supporting people to achieve those standards, that the young adults we serve can literally achieve anything they set their minds to. And I've seen that time and time again. So the barriers are as much about context as they are about anything inherently wrong or challenging in the individual themselves.

So, you know, if you say go a little bit deeper, you know, our young adults don't grow up in neighborhoods where they have role models, so other adults working in our knowledge-based economy, that they can look to. Remember, 20 years ago you could look to someone in an urban community who had a blue collar job who was solidly in the middle class. The number of those jobs has dwindled, as we all know, as our manufacturing sector has shrunk, so that -- do I have the role models of the technician, the technical administrator? Do I have the role models of someone working in a professional services firm or professional firm? So you have a lack of role models. You have, unfortunately, a K-12 educational system where the requirements to graduate are not the requirements to be college and career-ready. So if you want young adults who are college and career-ready, our K-12 system right now does not have that as its standard. So often our young adults are going to public schools whereby even when they graduate they're not prepared to go to college or to earn more than minimum wage. So I think that's one challenge as well.

And I think the third -- if you think of why is this happening -- is our businesses today don't look at the young adults that we serve -- who tend to be low-income, eighteen to twenty-four, ninety-eight percent of color -- they're not looking at those young adults as talent. So when you think about who's talented in this country, and where talent resides in this country, many of our businesses are not looking right within their own communities to those young adults as a source of talent. In fact, on the reverse, many of those organizations and/or individuals may see our young adults as deficits, as liabilities, rather than assets. So you also have some perception changes that really need to go on to enable those young adults to realize the God-given potential that they have.

Question: What lessons can public schools learn from your organization?

Gerald Chertavian: All right, see, I would argue that you can find proxies for those incentives. I ask every one of our students: how would you change high school? You know, you're now in Year Up, you've seen a different way, you've seen a kind of professional learning environment. How would you change high school? And clearly, three things come out time and time and time again. One is relevance -- I need what I'm learning to be relevant to my future. And if you look at some of our great vocational technical schools, students are doing exceptionally well there because the learning is very relevant to them. They're learning something they know how that will apply. So relevance is critical. Relationships are deeply critical. Many of our students say, we wish we had a mentor in high school. We wish we had someone we could spend more time with, who paid more attention to us, who I could sit down with and talk to when I had a problem. So relationships are critical.

And last is being rigorous. So our students say, I wish they had higher standards for us in high school; I wish they expected more from us. I wish we had a dress code so we didn't have to worry about what each other wore every day. So I think our young adults know what they need to be successful and are willing to be held accountable. I often think our adults are failing our children in certain parts of our public education system. But if you go to a well-run public school, a well-run charter school or a well-run program like Year Up, I will guarantee you, you will find relevance, rigor and relationships at the core of the culture of that organization and how they serve young people. So we -- look, we know what works in education. What is hard is replicating that systemically across millions of children, tens of thousand of schools and millions of teachers. So we do know what works, but it's been very hard in education to find a way to replicate that system across a wide swathe of schools.

Gerald Chertavian: College today is an expensive option without a lot of economies of scale, right, when you go and live at a college. So you have a system that's increasing its cost base by probably five percent a year. So when you go to college, if you go to an Ivy League college, it's going to cost you forty-five thousand a year, plus let's not forget the endowment maybe kicks off another fifteen thousand to twenty thousand dollars. So you're going to spend sixty-five thousand dollars to educate someone, for four years, right, so now we're talking a lot more than that, sixty-five thousand times four. That's not a tenable cost structure. You will not educate millions and millions and millions of Americans -- to the extent we need an educated workforce and a skilled labor force, that system will not have the capacity to educate people to the extent this country needs them. So we can want college graduates, but I can guarantee you we're going to have at least a ten to fifteen-million-person shortage of college graduates in this country over the next ten to fifteen years, whether we like it or not.

So if we're going to remain competitive as a country, if we're going to have a knowledge-based workforce, we have to think about what are the other strategies, pathways, policies that encourage young people to get the skills and the credentials they need to be a good source of supply for our companies in this country, and to be good workers in this country. This -- and companies -- my prediction is companies will lead this revolution. So if we think our educational establishments and our colleges are going to respond quickly enough, your companies ultimately will say, we need to take matters into our own hands. We will do more work training because we can't trust the public education system to do what we need to do. So you will see the rise of large companies saying, we are now getting greater into the business of education because the system is not producing the number of skilled workers we need.

Question: Does this approach contradict the value of a classical liberal arts education?

Gerald Chertavian: When you think about what you said, a classical liberal arts education, what we need today is -- clearly you have to have core content, right? You've got to know how to write, how to read, how to do mathematics. And you need core subject areas, where there's history, geography, science. So that's never going to change, and anything I'm about to say is predicated upon the fact that you must have that to start. But if you look at what is demanded in this economy and our society, there's an increasing premium being placed on critical thinking skills, problem-solving skills, complex communications -- so how I sell something, persuade you, influence you -- so complex communications. And then what's called expert thinking, which is solving a problem for which there isn't a rule-based outcome. So those skills are paid probably twice what they were today than just twenty years ago.

Now, I would argue, if you said classical liberal arts, what you are describing to me is someone who has a pretty broad base of knowledge, clearly has all the core areas covered, they've gone deep one place, but you're really saying, I believe they can think, they can learn, they can solve problems, and they can think critically, and they can communicate with me. That's, I would argue, your concept of a classical liberal arts education. What I'm saying is, if we don't find smarter, faster, better ways to help people learn those skills, don't think a forty-five-thousand dollar-a-year college is going to do it for the rest of America, because it's not. There's got to be a better way to do it, and we need to come to grips with that as quickly as possible, recognize that those skills can be learned in different settings, if we are to remain competitive in this country.

Question: Is the importance of an undergraduate degree declining?

Gerald Chertavian: Well, for many, many years we bifurcated society at a certain age. You go to college, you go to the workforce. And that was really a split in how we conceived of who was educated and even what the role of a four-year college degree meant and was for, for hundreds and hundreds of years. Now if you go to one hundred adults in America today and you say, raise your hand if you have a college degree, about twenty-nine will raise their hand. If you then say, keep your hand up if you got that degree between the ages of eighteen and twenty-two, about eight hands will be up. So when you think of one hundred Americans -- anywhere in the country, choose One hundred Americans – ninety-two either don't have a college degree, or even if they did they didn't get it between the ages of eighteen and twenty-two. So when we think about the role of post-secondary education in America today, we really have to ask our politicians and our policy-makers, are we designing policies in the image of how we perhaps consumed higher education? Right? Which is eighteen to twenty-two, fixed time, you know, school with buildings. That is eight percent of the adults in America today. So maybe if we work real hard, we're going to get from eight to twelve percent, or eight to ten percent, a twenty percent growth in that.

But I reckon there's a lot more gain to be made by saying the other 92 percent of adult Americans need to get post-secondary credentials, need to consume higher education, but doing it in a fixed-term four-year degree is not necessarily the way that Americans will consume higher education in the future. In fact, it was -- I was listening, before he passed away, to Peter Drucker, and he had said, don't take four-year college for granted. And what he was saying back then is what we're seeing play out today, is the fact that an average age of a Bachelor of Arts in America is about twenty-seven and a half years old. So the person getting a B.A. in America today is on average twenty and a half. The average student in a public university works twenty-five hours a week.

So we have to design policies and support systems for Americans who will work while they get educated, who will be older when they get educated, and who will not necessarily do this in one chunk of time between the ages of eighteen and twenty-two. It is imperative -- if we're going to have a society of skilled workers, of knowledge-based workers, which we know we need to have to be competitive globally -- it is imperative that we design our educational systems to reflect the changing needs of Americans in the way they are consuming higher education today

Question: Are corporations ready to stop focusing on graduates of four-year universities?

Gerald Chertavian: The answer is, yes they are, but they need to see proof. So we've had several of our largest corporate partners, who would be in your Fortune 100 of this country, change their hiring practices such that they can hire someone who is getting a college degree but doesn't yet have one into their workforce. So we -- you know, all of our students are dual-enrolled in college. So we're not at all neglecting the fact that you have to earn a post-secondary credential, at least one year of post-secondary at minimum, and hopefully continue on from that.

But we're seeing now large corporations who have seen our young adults in action saying, actually, we want to hire these young adults, and therefore we need to change the policy of the company in order to allow us to do that. So we're seeing that movement. I've also seen companies say, you now, Gerald, we really only hire people with college degrees. And what I often ask is, specifically can you help me to understand what are you looking for when you say that? What skills, competencies, attitudes and behaviors are you looking for when you made that statement? And then I say, if I could prove to you that our students have that, would you not give them a chance? Because then I'm asking, if you said you need X and we provide X, then you're using a proxy for something -- a college degree -- when I can give you demonstrable proof our students have the things. So would you want a proxy that you may or may not know whether they studied or not? You may or may not know the quality of the institution they went to. You may or may not know whether they actually partied twenty-three hours out of twenty-four or actually got an education. Or I can show you demonstrably what they have from skills. Which would you rather have?

Question: Is the sense of social responsibility increasing among your colleagues?

Gerald Chertavian: When I was at Harvard Business School back in 1990, there were probably eight people in the non-profit club. And I think we were looked at slightly askance by the folks because it wasn't the venture capital club or the finance club. Now today on campus, the largest single club at Harvard Business School is the social enterprise club. So in 20 years, or less than that, you have had a shift in something pretty fundamental in this country around, I think, young people wanting to take more responsibility for those around them, seeing the responsibility slightly more broadly defined than just motivated self-interest, and getting involved. So we have so many more young folks in our colleges, in our grad schools today, mentoring our students, volunteering, getting involved in service movements like AmeriCorps and Vista.

So I think the pendulum is certainly swinging to a direction where many young people are taking more responsibility for those around them and realizing that's not at odds with, you know, good old motivated self-interest and free-market capitalism. And in fact, you know, we all remember that Adam Smith wrote a book called The Wealth of Nations and talked about free markets and capitalism and why they were good ultimately for our society. He also wrote another book. He was talking about the theory of moral essentials. And what he said is, you can have a free market, and it's going to work best, but at the same time, at some point you have to realize that just getting more and more and more is actually not in society's best interest. So even Adam Smith, as our free-market economist would say, there's a concept of being responsible for others and wrote a book about that equally. I think we don't remember. He actually wrote a few books. One of them talked about moral essentials and the dangers of just seeing an accretive process without any sense of what's enough, or any sense of distribution that I have the opportunity how to help others. You know, that's equally part of keeping a very strong and well-functioning capitalist society in check.

Question: Is the rise in people heading into non-profits sustainable?

Gerald Chertavian: Certainly many, many more grad schools are offering loan forgiveness or a loan reduction for those going into the nonprofit sector, and I do think with the rise of social entrepreneurship, the rise of non-profits, hiring better and better people, growing more quickly, we are attracting incredible talent into this sector. And the reality is, people are getting paid more and more, so the gap between the nonprofit and private sector is shrinking. And certainly in the last ten years it's shrinking from when I started back in 2000. The other way I think about the pendulum is, I'm not a huge proponent of handouts, so I have not seen, with people who are able-bodied and able-minded, where handouts are producing good outcomes. And a sense of entitlement is a very destructive sentiment. And if you ever want to play the victim, you're not going to get ahead.

So when I think about that pendulum, there's a lot of personal accountability that has to be invested in any nonprofit organization, I think, that is serving someone who is able-bodied and able-minded. I mean, there are needs for charitable acts, or needs for handouts for someone who really cannot provide for themselves or has slipped to a place where they literally cannot take care of themselves. But that's not a majority, I think, of what we're trying to do here, especially at Year Up. We believe you've got to combine deep personal accountability -- taking charge of yourself, not saying woe is me, but saying I want a chance; I want an opportunity. I mean, America needs to be an opportunity society. And so the young adults we serve want an opportunity. They do not want a handout; they want a hand up. And so my belief is that pendulum, in terms of maybe reaching out and supporting others, also has to be balanced by a healthy dose of personal accountability for those being helped. And without which I don't think the system will ever work well.

Question: What challenges did you face in raising funds for your company?

Gerald Chertavian: I had lived for ten years abroad, in London, where my private company was. We sold that and moved back to America. So I left America when I was twenty-five and came back when I was thirty-five. I didn't have a heck of a network when I came back, and so had to, from scratch, find people who believed in the business plan I wrote and believed in the conviction in my voice, to say I will walk you around to meet the right people. So I remember back to when I was just myself and a phone, the people who said, we'll take a chance on this; we'll introduce you to the right people; we'll get you in front of the CEOs -- so those early champions -- I think of people like Craig Underwood, Tim Dibble -- they actually believed in us when there was nothing. And they had no right to believe in us per se. I mean, it was just me. So the challenge was -- you know, it's also an inspiration to me -- yes, it's a challenge to find those people, but it's inspiring to me to think that those people out there exist. Both of those gentlemen worked in the private sector and said, we'll actually give you a hand to try to do this.

 So I think establishing a network took a lot of effort early on. Asking people for money is all about how you think about it. You know, I don't -- I think I'm -- I'm providing people with an opportunity to invest in something which works really well. You know, I'm providing people an opportunity to release the trapped energy in their money. I mean, money's only trapped energy, and you can untrap it a lot of different ways. But we're going to give you a way to invest in something that works. And you can see the results; you can see someone get a job, someone do well, someone get a college education. That's a great opportunity. If you are blessed enough to have capital that you can give away, you want to give it to the highest return, where it does the most good. Well, I'm fortunate in that Year Up is a great return on investment that is very demonstrable. So I think raising money can be hard if you think about it the wrong way. I think you have to think about it and what it is: is you're providing people with a beautiful opportunity, and you're brokering their desire to help and their desire to create change, with something that actually creates positive change and is very outcomes-driven and verifiable. So I think that, in terms of raising money, is not so hard.

I'll be honest with you: the only thing that I've found hard in the last ten years -- and I mean this sincerely, because no other part of Year Up I've found difficult in terms of what keeps me up at night. You know, these are little -- you know, how to grow a business is a problem; you manage around it. How to hire people -- well, you work hard and you find great people. They're business problems. If there weren't problems, you wouldn't have managers, right? What's hard for me -- the only thing that's hard for me -- is when one of our students gets hurt, or, God forbid, killed. Those are the only days when I feel like someone really hit me hard in the stomach, is when one of our students is physically or deeply emotionally damaged by the kind of wanton acts of others. So that's the one thing I find hard; nothing else, you know -- if you find those things hard you shouldn't be in business; that's just part of being in business, is you solve problems, and that's just the way it is.

Question: How does working for a non-profit differ from working in the corporate world?

Gerald Chertavian: The way in which we're treated, it's different in some respects in terms of who we're speaking with. So in the for-profit sector we tend to talk to the chief executive officer of an organization. So we'll work really hard to get that thirty minutes with someone like Jamie Dimon or Ken Chenault, someone who's really significant. And what I've found is, many of those leaders have a deep understanding of the social responsibility that they carry being leaders of large organizations. So for us, if we can get to the right individual, I've been very, very impressed with, one, the amount of time they've taken, the care and the thought they've put into thinking about can we pilot something like a Year Up in our companies, and also their willingness to champion it when it's the first time through the organization. So I think they also sense a genuineness in the work we do and a lot of demonstrated success from many of the corporations around America.

Whereas in the private sector, when I was working in technology -- it was the early days of technology -- and so there was a lot of stumbling, learning. There was motivated buying from, I'd say, fear -- where if I don't do this thing called the Internet, that might hurt my company, or by greed -- if I do it I'm going to get rich. But it was very early days when we were first getting into the Internet, and there was a lot more confusion, a lot less clarity. And certainly I don't think we ever had a proven model that we could offer to someone that we now have in Year Up, where it is a proven model. It's worked for thousands of young people, and we know we can look a senior executive in the eye and say, we can provide you with a long-term successful pipeline of talent to help fuel your need for skilled workers, and to know that we've done that for thousands of young people across hundreds of organizations.

Question: Why do you think your company has thrived?

Gerald Chertavian: So Year Up is successful largely because we're able to provide value to a business. And the way in which our model works is, our corporations contribute quite a lot of money to us for the benefit of having access to this talent pool, to develop that talent pool, to find sources of talent out into the future. It's priced in such a way that no one would do it for charitable purposes alone. And that was very conscious. So it's -- I would say 80 to 85 percent of what we do is down to providing businesses with valuable employees for our pipeline of talent, and I think they would pay a premium to do this of probably fifteen to twenty percent more than they may work with a company that wasn't serving this population because it has good value for the community, it has value for the sense of responsibility for the organization itself, and really we've measured the satisfaction level of employees who work with our students, and it's been demonstrably higher. So I think there's an internal motivation that this creates happy employees, it gives opportunity to young people in our community, and ultimately we as business people know that you cannot have a healthy economy without a healthy community.

Question: If you could sit down with anybody, who would it be?

Gerald Chertavian: Yeah. I would like to sit down with Martin Luther King and try to understand the thoughts he was having at that point around grassroots movements around civil rights, kind of seeing how he thought about galvanizing people, how he saw that movement. So I think to sit down to see how someone thought about and helped to lead a movement, because of -- and not that I would try to emulate that; I think our students will be the people to lead Year Up to the future; our graduates are the ones who are my heroes and the ones who will run this organization. I happen to be a steward for a very short period of time. But I'm not that person.

But if I can understand how do these movements form, because what we do is about economic and social justice. It is the next step in civil rights. Having an opportunity nation is deeply important to maintain your democracy and your civilized society in this country. So when you think about the continuation of civil rights, it is about opportunity; it is about economic justice; it is about social justice. And Year Up is one element of that. We kneel on the shoulders of those before us, who risked much, much more to accomplish what they accomplished. And so I'd be deeply interested to learn from them, to sit down and understand what they saw -- how they saw this go forward -- and perhaps what we could learn to help this next step in civil rights move forward in this country.

 Recorded on: October 29, 2009