Making Training Reactive to the Market

Our primary value for our users is increased transparency, and our customers gain a competitive advantage in finding great employees, but for this post I want to discuss our secondary value, education. While our review system allows employees to avoid terrible conditions, it doesn’t directly help them improve their own earning potential. The key to doing so is it provide them with the skills that companies need. This makes the employee’s work more valuable and a company more willing to pay for it. Companies also win out. They gain skilled employees who increase the company’s productivity, profitability, and eventually their reinvestment back into the business. 

So why does this lack of coordination exist? Information about local events and educational opportunities are hard to come by in industrial hubs like Tijuana. This is especially true for new migrants to the area. They may be able to get tips from their friends about how to progress in the labor market, such as a short-term training program in accounting, but this information is just as inaccurate and inconsistent as information about working conditions. Not only does this make it challenging for workers to progress in the labor market, but companies can’t find workers with the skill set they need. So how can we begin to match the skillset needed by the employer to the education provided to employees? How do we make education reactive to the market’s needs?

The first step, which is available in our MVP, is to allow employees to post about opportunities and tips on employee resources. The community will build a more accurate and holistic source of information that is constantly being updated given the current labor market. The second step will be to provide that training directly on our site. Fortunately, due to the incredible work of groups like Khan Academy and others, there are ample free educational resources online. We plan to host this content, and in partnership with our customers (employers), decide which courses are most relevant to the current needs of the market, and highlight them for our users (employees). As Bryan Caplan and many others have pointed out, the signaling effect of education is a large proportion of the increase in earning potential of education. For this reason, we hope to work with the employers in the community to improve the credibility of our certification. It is possible that we may be able to partner with the local Tijuana universities to create affordable online certification programs for employees as well.

Imagine you had just moved to Tijuana from Oaxaca to find a job. You only knew a cousin that had moved there three months prior, so you log onto Vize, find the best factories near you and start working at a decent factory down the street. After a couple months of working there, you get a notification that companies in your industry really need people with financial accounting skills. The app then redirects you to an online accounting course. You spend the next few months finishing the course and you find a new job that pays nearly double your last income. By acting as a coordination tool and a feedback loop between the market and education providers, we may be able to make training reactive to the market and thus give employees a greater opportunity for upward mobility.

The Fatal Flaw of Donor-Driven Development

I’ve worked in nonprofits, government agencies, and companies for five years, all with the goal of improving the opportunities for people like those I met in China. While I understand there are people with far more experience, I continually run into one fatal flaw: those organizations were not dependent on the people they were serving.

Nonprofits are funded by U.S. donors. Convincing those donors that they are successfully implementing change does not require input from the people they’re trying to help. This is why ineffective and redundant nonprofits can exist for years without reform. It doesn’t matter if they are successful, it matters if they can convince their donors they are. Government agencies are dependent on the U.S. Congress for funding, and therefore the U.S. citizens. This reliance is not necessarily a problem, but when that agency’s influence is abroad, then the aid recipients are once again not part of the feedback loop. The agency is not dependent on the people it’s trying to help.

In contrast, businesses have a fantastic natural feedback loop. If people like their product, they show that value by paying for it. If the company makes a product the consumer doesn’t like, they go out of business (ideally, of course). Yet few companies create products for the aid recipients mentioned above. Most companies see this market as too poor to make a reasonable profit.

In some cases, such as active war zones, they’re right but in most cases their doubt reflects their inexperience in these emerging markets. As an example, today nearly 70% of people in Tijuana have a smartphone. In many target markets that number is more like 95%. This misconception isn’t their fault. The “developing world” has truly transformed over the last thirty years. There are far fewer people in extreme poverty, with some estimates at 74% and others at 58% reduction. There are more democracies and free markets than ever before. In short, the market for products that help people in developing countries exists nearly everywhere. We just need to build them. Using this business model sustains and expands  social impact and, most importantly, allows beneficiaries to say no. The model doesn’t work for all situations -- but it can work for far more than it currently does.

I’m very proud to say that our team is building one of those markets. Our incentives are aligned with our beneficiaries and, when successful, its social impact can spread to enormous markets all over the world such as India, China, Vietnam, and many more. In every single meeting, our entire focus is on what value we’re bringing to our users. We are forced to create value for our users because if employees don’t use our site, we don’t have a business. Not all nonprofits succumb to the incentives I’ve outlined above, and many do phenomenal work to improve lives, but few use this principle as the cornerstone of every decision. We are excited to start changing this paradigm by launching Vize in May, and I hope you will join us! We’ll continually update this blog with our progress and further thoughts and reflections on our work.

- Bryce Watson

Why Start Vize?

About five years ago I lived in Beijing. I was in college at the time with a major I had chosen on the flimsy logic that it required a study abroad and I wanted to travel. It turns out that logic paid off and I stayed in Beijing for nearly eight months. The trip, as many students studying abroad will tell you, was world expanding. Not just in that I met people from a different culture, but also that I learned to think through systems. I learned that issues were created by rational people all with their own incentives and all with the belief that they were acting morally. I rigorously applied this to each new challenge I encountered including Beijing’s pollution, political repression, and yes, working conditions in Beijing’s factories.

Among the people affected by these systems were the families who had come to Beijing to find factory work. They were generous enough to let me into their homes and told me about their jobs. Some had amazing experiences of growth and opportunity, but many told stories of abuse: working 70 hours a week without overtime, living in unsanitary dorms, or losing their sight due to on-the-job accidents. I found that without sufficient labor laws or unions these workers turned to each other. A friend would tell them which factories to avoid and which showed promise. Yet the information was often inaccurate or incomplete because their friends moved every few months. All of that invaluable information was lost with time.

This is why my team and I are creating Vize, an app where factory workers can build that invaluable information with their entire community. Employees can anonymously share ratings and reviews of their working conditions, so all other employees can avoid terrible conditions. The other key player in this system is the factory, which struggles to recruit and retain appropriately skilled employees. As factories face pressure from international buyers to cut costs and increase productivity, many want to improve conditions but can’t rationalize the investment. Employees end up paying the price. Consequently, their turnover rate is 7 – 8% of the workforce every month, increasing the costs of recruiting and retraining. In reaction, factories pay labor agencies to find them employees which are expensive and inefficient because they’re pulling from a limited number of employees. This skill gap is becoming an increasing problem as more complex manufacturing such as pharmaceuticals and aerospace products are moving overseas. We want to lower these recruitment and retraining costs while finding better matches between employees and employers. With thousands of potential employees on our platform, we’ll be able to do just that, creating a more equitable and efficient labor market.

With our team of amazing developers at Texas A&M and our partners in Mexico, we are excited to announce that we’ll be launching in July and August in Tijuana. If you're interested in getting involved, you can help us and thousands of factory workers around the world, through our Indiegogo campaign that will be live until September 6th (button below). Or you can contribute by contacting us directly at incentivizinggood@gmail.com. You can also follow our progress on Facebook and Twitter.

- Bryce Watson