Coding school Holberton today announced that it has entered into an agreement to be acquired by African Leadership Group (ALG). The seven-year-old company, with physical schools across the globe in addition to its core online platform, will split in two. Holberton's technology platform will become part of ALG's existing ALX online learning platform and the existing 34 physical locations will get spun out to become a stand-alone business under current Holberton COO Florian Bucher.
As Holberton co-founder Julien Barbier told me, the pandemic obviously put a lot of pressure on the company, given its early focus on in-person education. As those locations shut down, Holberton quickly moved its curriculum online and last year, Holberton pivoted to mostly focus on SaaS and began offering a white-labeled online learning platform to others. Barbier, whose co-founder Sylvain Kalache left the company at the beginning of the pandemic, noted that a number of potential acquirers approached him last year, but he didn't think that they were a great fit and with plenty of money in the bank, there was no pressure to sell. ALG, however, seemed like the right kind of fit and while neither party disclosed the acquisition price, Barbier, who will join ALG together with most of the Holberton tech team, did say that he was “happy about the numbers.”
ALG started out as a Holberton customer, Barbier explained. “There are a lot of similarities between the two companies and the missions that we are after,” he said. “The talk about an acquisition came very naturally at one point. When you hit those big numbers with a partner, you start thinking if there's potential for a merger? Would it make sense to combine the two companies? And it made a lot of sense and that's how we started talking about it — first as a joke and then very seriously.”
And big numbers is what ALG's ALX is all about. ALG founder and CEO Fred Swaniker started the organization as a leadership academy (now the African Leadership Academy) for small cohorts of students. He then added the African Leadership University to reach a broader group of students, but still with a focus on leadership and entrepreneurship. With ALX, the group has now set its sights on teaching tech skills to not just thousands but potentially millions of tech workers.
“Four years ago, we realized that the world is going through a digital transformation and there will be a need for skills like software engineering, data science, cloud computing, cybersecurity — and so we created ALX,” Swaniker explained. “It's not a high school. It's not a university — but it's for people who already have college degrees and then we re-skill them for these careers in the fourth industrial revolution.”
The ambition here, he said, is to train about 200,000 students per year. Currently, ALX is working with just under 150,000 students — up from only 2,000 last October. “The reason for that is that young people in Africa have realized that their future is in technology,” he said when I asked how he explained this rapid growth. “The world has a massive shortage of technology talent and the traditional sources of finding this talent like China, India and the U.S. are all aging, so we see a tremendous opportunity to really solve this global shortage of technology talent by training millions of software engineers in Africa — and then make that available to the world.”
That's where ALG's business plan comes in. Swaniker noted that the traditional coding school model of training students for free and then getting a share of the graduate's income after they graduate was going to be challenging. So instead, ALG is taking a two-pronged approach. First, there's The Room, ALG's talent agency and its B2B businesses for providing businesses with access to technology talent (and ALX will use Holberton's existing curriculum to train them). But maybe just an importantly, Swaniker hopes to build a technology services business that can offer technology solutions and staff augmentation to other businesses. Together, those two businesses would create enough revenue to finance the education side of ALG/ALX.
As Swaniker noted, the challenge for ALX is now to build its B2B brand and execute on its vision. “We're not capital constrained, we have the technology and it's now about execution,” he said. “Can we build our brand effectively with corporate clients? Can we acquire them? Can we deliver the talent that they're looking for? Can we deliver the solutions that they're looking for and can we continue to grow with excellence even as we scale?” He also noted that there's some risk in the current geopolitical climate, which may push companies to become more insular as governments, too, start doing the same.