Year Up: Measuring and Scaling Impact Custom Case Solution & Analysis

1. Evidence Brief: Case Data Extraction

Source: HBS Case 823004. Note: Data points are extracted from the case narrative and exhibits covering the period 2000–2022.

Financial Metrics

• Cost per Student: Approximately $28,000 to $30,000 per year for the direct service model (Exhibit 4).
• Revenue Structure: Corporate partners pay a fee for interns, covering roughly 60% of operating costs; the remaining 40% is funded via philanthropy (Case Text, Section: The Business Model).
• Earnings Impact: RCT data from the PACE study showed Year Up participants earned 30% to 40% more than the control group in the years following the program (Exhibit 7).
• Philanthropic Requirement: To scale to 100,000 students annually under the current model, the organization would require approximately $1.2 billion in annual philanthropic support (Researcher calculation based on $12,000 gap per student).

Operational Facts

• Program Duration: 12 months total; 6 months of classroom training followed by 6 months of corporate internship (Case Text, Section: The Year Up Model).
• Geography: Operating in 25+ U.S. cities including Boston, New York, San Francisco, and Chicago.
• Retention Rate: Historically maintained at approximately 75% from enrollment to completion (Exhibit 5).
• Placement Rate: 90% of graduates are employed or enrolled in school full-time within four months of graduation (Exhibit 5).
• Staffing: High-touch model requiring a 1:15 staff-to-student ratio for effective coaching and support services.

Stakeholder Positions

• Gerald Chertavian (Founder/CEO): Committed to closing the Opportunity Divide but recognizes that direct service alone cannot reach the 5 million disconnected youth in the U.S.
• Corporate Partners (e.g., State Street, JPMorgan Chase): View Year Up as a reliable pipeline for diverse, entry-level talent but sensitive to intern fee increases.
• Community College Partners: Provide facilities and dual-enrollment credits but often struggle with the intensive support requirements of the Year Up model.
• Board of Directors: Divided between maintaining the high-fidelity direct service model and pivoting toward systems change and policy influence.

Information Gaps

• Marginal Cost of Digital Delivery: The case lacks specific data on the cost-per-student for fully remote or hybrid versions of the curriculum.
• Corporate Partner Churn: Long-term retention rates of specific corporate partners over a 10-year horizon are not explicitly detailed.
• Competitor Benchmarking: Limited financial data on lower-cost competitors (e.g., General Assembly, Per Scholas) in the middle-skill training space.

2. Strategic Analysis

Core Strategic Question

How can Year Up scale its impact by a factor of 10 while decoupling organizational growth from a linear increase in philanthropic dependency?

Structural Analysis (Ansoff Matrix & Value Chain)

• Value Chain Friction: The primary bottleneck is the 6-month classroom phase. It is capital-intensive and relies on physical sites. The internship phase, conversely, is a revenue generator.
• Market Penetration vs. Development: Year Up has reached saturation in the high-donor, high-corporate-density tier 1 cities. Further growth in these areas yields diminishing returns due to high real estate and labor costs.
• The Opportunity Divide: The structural problem is not a lack of talent but a signaling failure in the labor market where degrees act as proxies for skills.

Strategic Options

Preliminary Recommendation

Year Up should pivot to a Platform-as-a-Service (PaaS) model. The organization must stop acting as a school and start acting as an intermediary that licenses its curriculum and support methodology to Community Colleges while retaining control over the corporate internship placement engine. This allows for rapid scaling while maintaining the high-value link to employers.

3. Implementation Roadmap

Critical Path

• Months 1–3: Curriculum Modularization. Deconstruct the 6-month training into digital modules that can be integrated into Community College LMS systems.
• Months 4–6: Internship Engine Decoupling. Build a standalone placement platform that can accept students from both Year Up sites and partner colleges.
• Months 6–12: Pilot Site Conversion. Transition two existing high-cost physical sites into regional hubs that support multiple community college partners rather than hosting students directly.

Key Constraints

• Quality Control: The secret to Year Up success is the high-touch coaching. Community Colleges are historically under-resourced in this area.
• Employer Trust: Corporate partners pay for the Year Up brand. If the quality of interns from college-integrated programs drops, the fee revenue disappears.

Risk-Adjusted Implementation Strategy

To mitigate quality degradation, Year Up must retain the Coaching and Placement functions in-house while outsourcing the Instruction and Facilities to colleges. This ensures the behavioral and professional standards—which employers value most—remain under Year Up control. A contingency fund of 15% of the expansion budget should be reserved for remedial training of college faculty.

4. Executive Review and BLUF

BLUF

Year Up must exit the direct-delivery business. The current model is a financial dead-end that scales linearly with philanthropic demand, making the goal of reaching 100,000 students annually impossible. The organization should pivot to a licensing and certification model. By embedding the Year Up curriculum into the Community College system and focusing exclusively on the high-margin internship placement and professional coaching, Year Up can reduce its cost-per-student by 60% while maintaining the quality of the talent pipeline. This is a shift from being a service provider to becoming the national standard for middle-skill credentialing.

Dangerous Assumption

The most dangerous assumption is that the Community College infrastructure can absorb the Year Up methodology without the high-intensity culture that Chertavian built. Community Colleges often prioritize enrollment over completion; Year Up prioritizes outcomes over all else. This cultural misalignment could lead to a catastrophic drop in intern performance, destroying the brand's credibility with corporate partners.

Unaddressed Risks

• Disintermediation Risk: As skills-based hiring becomes mainstream, large employers (e.g., Google, Amazon) may build their own internal training programs, bypassing Year Up entirely. (Probability: High; Consequence: Severe).
• Regulatory Shift: Changes in federal Pell Grant eligibility for short-term vocational programs could either provide a massive tailwind or a sudden funding vacuum. (Probability: Moderate; Consequence: High).

Unconsidered Alternative

The team failed to consider a Pure-Play Employer Consulting model. Instead of training students, Year Up could consult for Fortune 500 companies to re-engineer their entry-level jobs and hiring filters. This would address the Opportunity Divide at the source—the employer—rather than trying to fix the candidates to fit a broken system. This path has the lowest capital requirement and the highest potential for systemic impact.

Verdict

APPROVED FOR LEADERSHIP REVIEW