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 ACG’s Middle Market Growth Podcast. I’m your host, Carolyn Vallejo. It seems we can’t have any conversation about middle market M&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 Pianko. Daniel, thank you so much for being here today.

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

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

DP: Sure. I co-founded Achieve Partners with my partner Ryan Craig. Funny enough for this conversation, I was his summer intern in 2003, between my first and second years at Stanford Business School. I started my career as a Goldman Sachs banker and realized pretty quickly that’s not what I wanted to do with the rest of my life. I ended up in education and training, and have invested in education and training ever since. I started working with Ryan shortly after interning for him in 2003, so it’s been 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’m a girl dad and used to be really into musical theater, so I would 100% choose some version of “My Shot” from Hamilton, or “Do You Hear the People Sing?” from Les Mis, because I love how these musicals and songs inspire people to build great societies going forward. In the Hamilton version we were successful; the Les Mis version clearly failed. But in both cases, I love that musical incitement to building things that are great and durable.

MMG: Great choices, 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. 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.” 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.

It’s important to note, first of all, that around 60, 70, 80 percent of our value creation is specific, traditional private equity, work: tuck-ins, M&A, adding CFOs, building out KPIs, et cetera. But what we do that’s unique and special is we effectively build apprenticeship programs.

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. 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 was that they put me in a room 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. At 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, and partners who’ve been at Goldman for years.
What we do now is bring that experience to the lower middle market. We’re actually building what are effectively investment banking-style analyst programs into tech services and healthcare services firms that have this kind of real talent need. 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&A process?

DP: First, we will only buy a business where we feel we have a unique reason to win and where we have found a business that has this fundamental talent problem. Most people will talk to a banker and say, “What is a sector that you’re most interested in?” Instead, we basically say, “Show us your founders who will talk about their talent problems.” That is very common.

Once we do that, we identify what are the skills needed? What is the job to be done? I’ll give you one simple example. We were looking at a healthcare staffing business that staffed nurses and schools. This company had been extremely successful at staffing nurses who treated physical issues in schools. Think of a kid who has a feeding tube, right? That’s a physical problem, but a very small percentage of their revenue was behavioral revenue. Think about autism services, you may have heard that there are a lot more kids who require autism services, and that’s a growing market. We talked to the founder and said, “Well, why aren’t you growing in that area?” The founder would say “I can’t find enough trained, certified, registered behavioral technicians or RBTs.” So we invested in that business, started an RBT training program, and grew it – that helped us grow dramatically. In the case of that healthcare staffing business, at exit the behavioral side of the business was almost as big as the traditional physical ailment side of the business.

We do this early. When we’re meeting with founders and sellers, we’re literally saying, “Okay, who are the businesses for whom this fits?” Before we even buy the business, part of our investment memo details how we’re going to build out this strategy. 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 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 as a barista at Starbucks, jobs that don’t require a college degree.

We go to those colleges and say, “College costs a lot of money. We’ll help your graduates find jobs.” We partner with those universities. We have a newsletter that goes out to about 20,000 people interested in workforce issues every week, written by my partner Ryan. We talk to provosts, deans, and others, and say, “Hey, this is the job we’ve done, here’s what we need to fill.” 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 to 100+ applicants for every program we start, so finding the people isn’t actually the problem. The problem is really identifying the companies where we can build these types of programs.

MMG: Now, this is something that helps multiple parties involved here. Tell me about what the strategy looks like when implemented successfully, for employees, the business, and for you as the investor.

DP: We do this because it drives substantially more revenue growth and EBITDA expansion for our businesses. It also has a lot of non-market benefits, right? People like training the next generation, founders and sellers feel good about it. We’re not just giving them money; we’re partnering to build a legacy for them in the industry.

I’ll give you one example of how it worked. We invested in a business called Optimum Healthcare IT, which implements IT platforms in hospitals. 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 electronic medical records. Optimum implements and updates Epic at hospitals, among other things.

Optimum had a fundamental problem: how do you attract people into healthcare IT? There are over a hundred thousand unfilled healthcare IT jobs around Epic and a couple other platforms in America, jobs that pay hundreds of thousands of dollars per year. These are really good jobs that are just left unfilled because we don’t have enough certified people.

So we helped Optimum, which was based in Jacksonville, Florida, partner with the University of North Florida, a 20,000- to-40,000 student university based in Jacksonville, Florida, part of the University of Florida system, similar to a lot of the universities we partner with: good state schools. They helped us identify their recent graduates who were bio or stats majors. We then partnered with CHIME, which is the association of healthcare IT CTOs, and buyer of Optimum services. We built pipelines into healthcare technology because no 23-year-old wakes up on Saturday morning and says, “Oh my God, I really want to be in healthcare IT” — so we create that. By exit, we were training well over a hundred analysts or programmers every year. 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 Optimum.

MMG: So this is not your first rodeo – you have proven the value and the success of this investment strategy. With Workforce two, the second fund, you are kind of continuing on from that existing strategy from Workforce one. 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 labor challenges that you are seeing today.

DP: AI is very transformative. Overall, there will be very few changes from fund one to fund two terms of the core thesis. But 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. In light of the broader AI question, what is clear is that what we’re training is changing.

We started doing this teaching primarily to teach people how to code. The very first time we did this, we were training coders. Now, we spend much less time teaching people code and are much more focused on industry dynamics. The menial jobs that first year analysts did in investment banks and services firms around the world, AI is really pretty good at them. So what we need employees to do is to be able to be industry experts, to be able to think just one step beyond AI. We’re training people much more on industry specifics, on how to present, and how to think about business problems more broadly. That is very different from what we were doing before.

If you look at the future, I joke that the future is cyborg. 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. 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 will be extraordinarily effective. 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 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 some of the greatest gaps?

DP: I think this is across the economy. What is truly amazing, when everyone’s talking about AI taking away jobs, is that we still have net positive job creation in America, despite everything going on right now, every quarter, every month. The reason for that is that every CTO is saying, “Oh my God, what do I do about AI?” And so who are they calling? 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’re in the employee performance management space, in Workday. We have a Salesforce implementation company, 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 that helps procure goods like a logistics company. It used to be that you would negotiate. I’ll just give you an example: you’d negotiate with Home Depot for one broad 10% discount across pens and cartridges. Now you can have an AI bot with a young apprentice going out and negotiating directly with the pencil, pen, and cartridge provider to get the best rates, and we’re seeing various substantial reductions in costs from that. We are creating whole new services and areas and accelerating our ability to implement services across the ecosystems leveraging AI. 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, with some positives and negatives.

I joke that we’re cautiously optimistic, but scared as a four letter word I won’t say on a podcast. That’s because we think we’re following the classic hype cycle. If you went to business school you learned about it: everyone gets really, really excited about everything then, then we get a little depressed when the technology isn’t quite as good as we thought. Over time, it makes sustained fundamental changes. With AI, we’re going through one of the fastest hype cycles in memory. We remain cautiously optimistic that the demand for labor will grow through this cycle as new jobs that we don’t even know exist yet come into play.

I joke sometimes if you went to an Egyptian building a pyramid 5,000 years ago and said, “You know you’ll have machines that will hew rock from stone and build them and carry them up?” They’d say, “Oh my God, well, what will anybody do?” Every time we’ve had a technological revolution, we’ve created more jobs. The problem is there’s a lot of disruption and that scares people, as it should. Right now we’re hopeful that we’ll have a transition more like ATMs for banks than like we did during the Industrial Revolution when the whole industry hauled out. So, cautiously optimistic.

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 of 22 and 23-year-olds who did everything right. They went to school, got a degree in a STEM field, got good grades, 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 and pay them, say, 30 bucks an hour, which is still a great wage, with full benefits and bill them out at $100,000 to $150,000 a year. The margins on our apprentices are substantively higher than the margins in general and with all the caveats – the margins on those apprentices are far higher than retraining an existing worker.

We view that as a core part of our philosophy, but we also do retraining of workers. For every worker, no matter what they do, we have to get better too. The world is changing so fast that we need to be constantly upskilling and reskilling ourselves as well.

MMG: YYeah, that’s a great point. 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. The fear is so broad, as you kind of mentioned there, and the fear of getting our jobs replaced 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 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 and not an easy conversation. There is a lot of uncertainty. I had someone who said I thrive in FUD – fear, uncertainty, and doubt. That is the muck and mire 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. I have found that when a CEO or business leader or board chair actively embraces the use of AI, the results are the best. Lead by example, get a Claude subscription, actually code something, whatever it is that you do, and take one thing that you do off your plate with AI, even if you’re an MD at a private equity firm, and especially if you’re a CEO leading a business. What I’ve also seen work well is CEOs going and having an honest conversation with people and saying, “Look, 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, who knows?” What that does is give the employee base some level of security as they embrace this technological shift.

I think that we are going to see very significant reallocations of labor, which is extremely scary. Generally, I’m cautiously optimistic, but for individuals this can be extremely scary and hard. You’re seeing newsrooms lay off large numbers of people, but you’re also seeing independent content creators hire large numbers of people. So you get this odd mix, reductions on one hand, growth on the other. I hope that, as a society, it evens 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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