Upskilling is an important component to a human capital management strategy, but isn’t enough to fill today’s AI talent gap. Daniel Pianko, cofounder and managing director at private equity firm Achieve Partners, offers a look into the firm’s apprenticeship program that begins filling that gap for porticos at the very top of the talent acquisition funnel—with demonstrable impact on EBITDA growth.

Middle Market Growth: Welcome to ACGs Middle Market Growth Podcast. I’m your host, Carolyn Vallejo. It seems we can’t have any conversation about middle market m and a these days without mentioning AI and the disruption it’s causing to the labor market. The risk that many are focused on is, of course, AI replacing jobs, but Achieve Partners is a private equity firm whose investment strategy aims to wield AI as a way to promote job creation. Here to tell us how they do it is founder and managing director Daniel Bianco. Daniel, thank you so much for being here today.

Daniel Pianko: Great to be on the podcast, Carolyn. Thanks for having me.

MMG: Absolutely. Of course. We want to get to know you a little bit better before we jump in. So tell me about yourself and your role at Achieve Partners.

DP: Sure. I co-founded chief Partners with my partner Ryan Craig. And funny enough for this conversation, I was his summer intern in 2003 between my first and second years at Stanford Business School. And I started my career as a Goldman Sachs banker, realized pretty quickly that’s not what I wanted to do with the rest of my life. And ended up in education and training and have invested in education and training ever since. And started working with Ryan shortly after interning for him in 2003. So a great 20 year partnership investing at this intersection of education, training, and workforce, which we’re excited to talk about today.

MMG: And just for a bit of fun, if you could choose any walk-on song, what would it be?

DP: Oh, God. I am a girl dad and used to be really into musical theater, so I would 100% choose some version of, I’m not going to throw away my shot from Hamilton, or “Do You Hear the People Sing?” from Les Mis, because I love how these songs, these musicals and songs kind of inspire people to build great societies going forward. And in the Hamilton version, we were successful, the Laima version clearly failed, but in both cases, I love that musical incitement to building things that are great and durable.

MMG: Great choices and, and very on theme for our conversation today. So let’s jump right in. Achieve Partners announced back in April that you closed your second fund. Congratulations on that, by the way. And the fund is continuing  your so-called earn-and-learn model. Can you tell me what that model is and why Achieve is focused on this investment strategy?

DP: Yeah, so we have a unique approach to investing. We look at the world and say, where are the areas of the economy where we don’t have enough trained talent? In effect, we’re looking for founders and CEOs who say, I would grow faster or have higher margins if I had more trained talent. And what we do is we invest in those businesses, buy those businesses across tech and healthcare services, and then we add this earn-and-learn model or training model. And it’s important to note, first of all, that like 60, 70, 80% of our value creation is specific traditional private equity stuff like tuck-in and M&A, adding CFOs, you know, building out KPIs, et cetera. But what we do that’s unique and special is we effectively build apprenticeship programs. And for people who are listening to this podcast, you may have done what I did when I was 22 which was join an investment banking or consulting type analyst program. And you know, I look back and I think, why would Goldman Sachs have hired me as a history major 23-year-old to become an investment banker? The reason why was they put me in a room with 20, with about 200 other 23-year-olds, and taught us accounting finance, M&A, all this other stuff that you need to become an investment banker. And the end of that period, they handed me a business card saying, you’re now a certified investment banker. Well, who certified me? Goldman Sachs. Who taught me? Associates, VPs, MDs, partners who’ve been at Goldman for years. What we do is we bring that to the lower-middle market. So we’re actually building what are effectively investment banking-style analyst programs into tech services and healthcare services firms where they have this kind of real talent need. And this is really to address the fundamental chasm that has grown up between education like our university system and employers who frequently only will hire people with like three years of experience in a perfect skillset.

MMG: Tell me a little bit more about how this works in practice. How do you find workers to join this apprenticeship program? How do you find businesses to hire those apprentices? And then kind of how does that process fit into the broader context of the m and a process?

DP: Yeah, so first of all, we will only buy a business where we feel we have a unique reason to win, where we have found a business that has this fundamental talent problem. Most people will, you know, will talk to a banker and they’ll say, what is a sector that you’re most interested in? And we’ll say, I mean, we are a little bit more intelligent than this, but we basically say, Hey, look, show us your founders who will talk about their talent problems. And, and that’s very, very common. And then once we do that, we identify, well, what are the skills? What is the job to be done? What are the skills that are needed? I’ll give you one simple example. You know, we, we were looking at a healthcare staffing business that staffed nurses and schools. And this company had been extremely successful staffing people who, nurses who treated physical issues in schools. So think a kid has a feeding tube, right? That’s a physical problem. But, you know, a very small percentage of their revenue was behavioral revenue. Think about like autism services. Well, you may have heard that there are a lot more kids who require autism services, and that’s a growing market. And so we talked to the founder and say, well, why aren’t you growing in that area? And the founder would say something like, well, I can’t find enough trained, certified, registered behavioral technicians or RBTs. And so what we’d do is we’d invest in that business, we would start an RBT training program, and then we would grow that, and that would help us grow dramatically. And in the case of that healthcare staffing business, you know, at exit, the behavioral side of the business was almost as big as the traditional physical ailment side of the business. So we, we do this early. When we’re meeting with founders and, and with sellers we are literally saying, okay, who are the businesses for whom this fits? And then before we buy the business, part of our investment memo is actually detailing how we’re going to build out this strategy. So it’s, it’s totally integrated into what we do in terms of how we find workers for this, we look for talent arbitrage. One of the biggest talent arbitrages is that universities, when I don’t know if you know this, but this is a bit of a scary thought front of you parents out there, or aunts, uncles, nieces, cousins, et cetera. 50% of college graduates do not use their college degree in their first job. I’ll say that again. 50% of college graduates will end up working retail or a barista at Starbucks, not jobs that require a college degree. Then we go to those colleges and we say, Hey, look, college costs a lot of money. We will help you we will help your graduates find jobs. So we partner with those universities. We have a newsletter that goes out to about 20,000 people interested in workforce every week that my partner Ryan writes. And we go and we talk to provost, deans, et cetera, and say, Hey, this is the jobs we’ve done. This is what we need to fill out. We partner with those generally colleges and universities. We also partner with the military, high schools, other organizations, workforce investment boards to identify high quality talent that’s been overlooked. We generally get 50, 100+ applicants for every program we start. So finding the people that actually isn’t the problem. The problem is, you know, really identifying the companies where we can build these types of programs into them.

MMG: Now, this is something that of course, helps multiple parties involved here. So tell me about what this looks like, what the strategy looks like when implemented successfully, what it looks like for the employees, for the business, and then of course for you the investor.

DP: Yeah, so we do this because it drives substantially more revenue growth and, and EBITDA expansion for our businesses. But it also has a lot of non-market benefits, right? People like training the next generation, it’s actually people feel really good sellers, founders of businesses, right? We’re not just giving you money. We’re going to partner with you to build a legacy for you in the industry. So I’ll, I’ll give you one example about kind of how, you know, soup to nuts, how it worked. We invested in a, a business called Optum Healthcare it which, which implements IT platforms in hospitals. So if you’ve ever been to a hospital or a doctor’s office and they’re typing onto a computer, they’re probably typing onto Epic, which is the largest software company in and around you know, electronic medical records. So Optimum actually implements Epic at hospitals and, and updates it and, and things like that in addition to doing other things. And Optimum had a fundamental problem, right? How do you attract people into healthcare? It, I don’t know if you know this, but there are over a hundred thousand unfilled healthcare IT jobs around Epic and a couple other platforms in America, hundred thousand jobs that pay hundreds of thousands of dollars per year. So these are really good jobs that are just left unfilled because we don’t have enough certified people. So what we did is we partnered, the company was based in Jacksonville, Florida, so we helped Optimum partner with the University of North Florida, 20, 30, 40,000 student university based in Jacksonville, Florida, part of the University of Florida system. And that’s similar to a lot of the universities we partner with, right? It’s the good state schools. They helped us identify their recent graduates who, you know, maybe were bio majors or stats majors. And then we partnered with Chime, which is the association of healthcare IT CTOs like that, and buyer of Optimum services. And we built sort of pipelines into, into healthcare technology because again, you know, no 23-year-old wakes up on Saturday morning and says, oh my God, I really want to be in healthcare IT <laugh>. So we create that. And so we’ve got, you know, lot we at, at a, at exit, we were training well over a hundred analysts or, or, or programmers every year. And you know, I’d actually strongly encourage you, if you’re interested in our model to go to our website, we’ve got a video called the Transformative Power of Apprenticeships, and we actually tell the stories of four of these apprentices, including one who worked at Optum.

MMG: So this is not your first rodeo. You have proven the value and the success of this investment strategy. And with Workforce two, the second fund, you are kind of continuing on from that existing strategy from Workforce one. But I’m, I’m curious if there are any changes since closing your first fund to now closing your second. I’m particularly interested in how AI is holding a stronger influence around some of the, the labor challenges that you are seeing today.

DP: AI is very transformative. Overall, there will be very few changes from front one to fund two in the sense of like the core thesis and development of that thesis. But we, we like to joke that our apprenticeship programs are driven by over 10,000 learnings. So it’s hard to focus on one or the other. But just in light of sort of the broader AI question, what is clear is what we’re training is changing. We started doing this teaching primarily to teach people how to code. So the very first time we did this, we were training basically coders. We spend much less time teaching people code right now. We are much more focused on sort of like industry dynamics. This is, if you think about it, you know, the menial jobs that first year analysts did in investment banks and, and services firms around the world, AI is really pretty good at them. And so what we need employees to do is to be able to be industry experts, to be able to think just one step beyond the ai. We’re really training people much more on sort of industry specs on how to present, how to think about business problems more broadly. And that is, that is very, very different than what we were doing before. And, and I think that’s really, if you look at the future, I joke that the future is cyborg. And, and what I mean by that is nothing is more powerful than an AI agent with a highly capable 23-year-old right now in the workforce. And if we can create lots of highly capable 23 year olds with strong AI agents next to them, all sorts of next level services and implementation work and other types of things will, will be extraordinarily effective. And so that’s really what we’re looking to do. And we think that will create a competitive advantage over traditional businesses that don’t have the benefit of our training model coupled with the AI work streams.

MMG: Let’s break this down by sector for a minute. As I understand, achieve Partners focuses on a couple select industries. I know you mentioned healthcare and healthcare it, for example, which industries are seeing the greatest need for AI skilled workers and, and some of the greatest gaps there?

DP: First of all, I think this is across the economy. What is truly amazing to people when, when I mentioned, when everyone’s talking about AI taking away jobs, we still have net positive job creation in America, despite everything going on right now, every, every quarter, every month. And, and the reason for that is every CTO of every company out there right now is saying, oh my God, what do I do about AI? And so what do they, who are they calling? And they’re calling their services firms to help them figure out what to do with AI? So we are looking at a lot of technology services organizations. We are in the EPM space, employee performance management space, Workday. We have a Salesforce implementation company. So we see a lot of those. We just invested in a really interesting company that helps biotech firms with all the processes they need to go from molecule to a drug. What we’re seeing right now is, across the board, high demand for AI skilled workers who can transform businesses and really use the technology in new and exciting ways. We have a business, for example, that helps procure goods like a logistics company. Imagine it used to be that you would negotiate, I’ll just give you a simple example. You’d negotiate, you know, with Home Depot for one broad 10% discount across pens and cartridges and all that kind of stuff. Now, you know, you can have an AI bot with a young apprentice going out and negotiating directly with the pencil provider and the cartridge provider and the pen provider to get the best rates. And we’re seeing various substantial reductions in, in costs from that. So we are creating whole new services areas and accelerating our ability to implement services across the ecosystems leveraging AI. So I don’t think it’s one part of the economy. And the amazing thing about when a new technological revolution like this happens is that it impacts wide swaths of the economy. And that is, there’s some positives to that and some negatives right now. I joke that we’re cautiously optimistic, but scared as, you know, a four letter word I won’t say on a podcast. And, and that’s because we think we’re following the classic hype cycle. So if you, if you went to business school and learned the hype cycle, it’s like everyone gets really, really excited about everything then, then we get a little depressed. That’s not, that the technology isn’t quite as good as we thought. And then over time it makes sustained fundamental changes. It feels like with AI, we’re going through one of the fastest hype cycles in anyone’s memory. But, you know, we, we remain cautiously optimistic that the demand for labor will grow through this cycle as new jobs that we don’t even know exist come into play. I mean, I joke sometimes if you went to an Egyptian building a pyramid 5,000 years ago and said, you know you, you’ll have machines that will hue rock from stone and build them and carry them up. They’d say, oh my God. Well, what will anybody do? So every time we’ve had a technological revolution, we’ve created more jobs. The problem is there’s a lot of disruption in there. And that scares people as well as should. And so right now we’re hopeful that we’ll have a transition more like, you know, ATMs for banks than we did during the Industrial revolution when we, you know, haul it out whole industry. So cautiously optimistic there.

MMG: I want to learn more about why you have chosen the route of apprenticeships. Why is it that an apprenticeship program is so impactful to address today’s labor challenges?

DP: The reason why that is the most impactful right now is because that’s where the broadest labor arbitrage is. There are lots and lots of 22 year olds, 23 year olds who did everything right. They went to school, got a degree in a STEM field, they got good grades, they did everything right, and they still can’t find a good first job. Remember, 50% of college graduates are not finding good first jobs. That represents an amazing opportunity to hire somebody, pay them, say, 30 bucks an hour, which is still a great wage, right? With full benefits and everything else, but we can bill them out at a hundred, $150,000 a year. So the margins on our apprentices are substantively higher than the margins in general, right? And with all the caveats are the margins on those, those apprentices are far higher than retraining an existing worker. And so we, we view that as sort of a, a, you know, a core part of our philosophy, but we also do retraining of workers. So, and, and by the way, for every worker, no matter what they do, private equity professionals, right? We have to get better too. The world is changing so fast that we need to be constantly upskilling, reskilling ourselves as well.

MMG: Yeah, that’s a great point. And, and one kind of aspect of this strategy that I recognize and appreciate, and I’m sure a lot of our listeners appreciate too, is that it’s putting energy and effort into supporting workers through this massive transition. And the fear is so broad, as you kind of mentioned there, and the fear of getting our jobs replaced is, is there too, but to kind of support employees through that change, I think is so powerful. I want to round out our conversation today with some guidance. I want to ask you, what, what steps should businesses, business owners and operators implement today to not only make sure that their businesses are ready for ai, but their employees are ready for that disruption as well?

DP: This is really hard. This is not an easy conversation. There is a lot of uncertainty. I had someone who said I thrive in FUD, F-U-D, fear, uncertainty, and doubt. That is the muck and mi we are walking through together, not just as business leaders, but as a society. There is no one answer to this question. I think the single most important thing that businesses can do is to have their CEO start using AI that I have found when a CEO or business leader or board chair, whatever, actively embraces the use of AI, uses the technology, the results are the best. Lead by example, get a cloud subscription actually code something, whatever it is that you do, take one thing that you do off your plate with ai, even if you’re, you know, an MD at a private equity firm, and especially if you’re a CEO leading a business. And then, you know, what I’ve found a lot of our CEOs doing where it’s been successful and where’s there’s a lot of growth is going and having an honest conversation with people and saying, look, I’ll, I’ll protect your job no matter what for a year, no matter what happens. Your job here is safe for a year, but at the end of a year, you know, who knows? But what that does is it gives the employee base some level of security as they embrace this technological shift. But I think that you are going to see very significant reallocation of labor which is extremely scary. Generally I’m cautiously optimistic as I mentioned, but for individuals, this can be extremely, extremely scary and hard. You’re seeing newsrooms lay off large numbers of people, right? But you’re also seeing independent content creators hire large numbers of people. So you’ve get this very odd kind of on one hand reductions on the other hand, growth. And, you know, I just hope that as a society will even that out over time.

MMG: All right. Achieve Partners, founder and managing director, Daniel Pianko. Daniel, thank you again so much for speaking with us today. We really appreciate it.

DP: My pleasure. Glad to be with you.

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

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