917: LIVE From the 2024 ⁠Career Education Convention⁠ - with Mary Kelly, CEO, StrataTech

Welcome back, everybody. It's your time to EdUp on the EdUp Experience podcast where we make education your business. This is Dr. Joe Sallustio back with you for, I don't know how many times today, probably close to 10 times now with my counterpart, ladies and gentlemen. He's Douglas Carlson. He is head of partnerships with Lead Squared. Of course, we're here because of the great partnership and generosity of our sponsor, Lead Squared. Douglas, thank you for being here. It's such a pleasure. And you've now done more co-hosting podcasts with me than any other co-host in the history of the EdUp Experience podcast. Did you know that?

Douglas: I will take that mantle. It feels good. A lot of pressure now to keep that going.

Joe: You know, we've had a lot of conversations. The thing about podcasting is you have to make the conversation you have in the afternoon as good as the one that you have at 8 AM. So we're going to be doing an assessment on you, my friend, by the end of the day and see how you do. How are you feeling about that?

Douglas: I feel good. I'm more awake than I was at 8 AM. That's for sure.

Joe: Well, we have somebody who's ready to talk and tell us about her institutions that she's running. And I can tell you she's got a lot of energy and she knows what she's talking about. So let's get her in right now.

She's Mary Kelly. She is the CEO of Stratatech Education Group. Mary, welcome to an EdUp Microphone. How are you?

Mary: I'm great. What a great introduction. I love it. Can that follow me around everywhere I go?

Joe: I don't know. It's my new theme song. Let's try it. How are you? Tell us a little bit about Stratatech.

Mary: Yeah, sure. So Stratatech Education Group is the parent company of Tulsa Welding School, which is the largest accredited welding school in the country. There are four of them. And then we're also the parent company of the Refrigeration School, Inc., which is based out of Phoenix, which is the largest sole HVAC school in the country.

Joe: You're an accredited HVAC school. No kidding. Yeah. You know, so I go to your website, which is super good by the way, and the first thing that smacks me right in the face is "a student-first education company." Can you talk about what that means, why it's on your website like that, and how do you practice that?

Mary: Sure. That's something that... so we're a little bit different. I actually tell people all the time – I might lose my theme song, but I tell people all the time – I'm an accidental CEO. So I started out as a teacher. I had a rough background and a teacher made a difference for me. And I said, that's what I'm going to do. And I got into teaching and somehow ended up being a CEO. My chief operating officer is somebody who is actually a high school dropout. And this industry got him back into school and subsequently he's gotten, you know, he's had many positions and has gotten a baccalaureate and a master's degree.

So we're actually a school that's kind of run by old teachers. So we have that as our mission. Like we're really doing this. It's not just a coinage that we care. We really do care. We're doing this because we believe in what we're doing. And there are a lot of people, you know, in this country that were born on the wrong side of the tracks. And the only way to get off that wrong side of the tracks is through education. So that's our stance.

And what we focus on is return on investment, right? Like we do short-term programs. We make sure they're relatively inexpensive and that a student can make probably about one and a half to two times a return on their investment so they can get in and get out and go to work. They're often the first in their family to go to college or to post-secondary education. And that's important to us, right? Because it creates a legacy going forward for that whole generation.

Joe: Now, just one quick clarification. You said this is a company run by old teachers, what you meant to say was seasoned teachers.

Mary: Brandon would kill me. He's actually a bit younger than me. I'm an old dog. I've been around for a long time.

Joe: You know, so welding, it's incredible, right? I mean, you think about... we've had so many amazing, cool conversations. Welding is one of the ones Douglas didn't ask me, but he did ask Jason Altmeyer what program he would pick of all the career college programs. Welding would be mine just because it's the complete opposite of anything I can do. Welding would be what I would pick. It just seems cool. And there's a coolness factor coming back to these careers. Can you talk a little bit about maybe how social media and exposure to these types of careers is making it cool again?

Mary: Yeah, listen, it's a couple things, right? And we always say that welding's sexy. I mean, we do welding, electrical, and HVAC, right? And actually electrical is our best-selling program right now. Like it's taken off by a long shot. Welding still sells a lot. We're up every year on it. It is a little more sexy. It's kind of a passion program. And there are people that get attracted to welding because they've been exposed to it. We have farm boys that come from Nebraska that maybe moved to Tulsa that were welding on a tractor and their grandpa welded, you know. Or we get people that are in the inner city and they've heard, hey, like this is how you can make a lot of money. And they say, that looks really cool. I think I can do it.

We've had people across the board. So I do think social media is part of it. I think COVID was a great leveler. I think higher education was on the way to changing anyway. And then COVID just blew the lid off of that. Right. So people now are asking about return on investment. Am I really going to go get a four-year degree? And I was someone who did that, right? That's what you did back in the day. I got an English degree, became a teacher. I just did it, right? Because if I didn't do it, my parents wouldn't let me stay in their house. So I said, okay, I had to do something.

But today people are really looking at what am I going to get for my money? And there is a lot of focus on the skilled trades. Mike Rowe has been fantastic. We had a partnership with him a long time ago where we partnered up on the Mike Rowe Foundation to drive some scholarships through there. And he's been saying, I think probably for the last eight years, he's been calling this out. We have had an impending retirement coming from all the people in the skilled trades. Look, skilled trades are hard. Welding is sexy, but it's hard.

And if you're welding out in the field, you're probably around 40, you're probably feeling it. And you're thinking, I got to retire, right? Or you come and teach for me, which is great, and you give back, right? So if you're out there, please let us know. We love to have folks like that come. But there's a limited timeframe on that. So we had this huge amount of people that were retiring, and we stopped doing vocational school. We just got away from it. We said, we made a commitment in this country, and it was the wrong commitment, that everyone should go get a baccalaureate degree.

I'll call it out – it was academic elitism. It wasn't right. I've been annoyed about it since it started and now the trend is reversing, right? Because how many kids were pushed into going to college that didn't need to go to college, wouldn't be successful in college, and now they owe all that money for nothing because they were pushed into it. It's wrong and we need to own it and we need to take care of it. And I think now people are really taking a look at where can I go, where do I belong, am I good with my hands, you know, where can I go in a short amount of time and go to work, and that's the skill trades. Or healthcare, but we don't do healthcare.

Douglas: Fair. Well, and I had the pleasure of spending some time with Dylan actually yesterday on a presentation. And one of the things he called out is really was the cool factor, but I was wondering if you could elaborate a little bit more. He had mentioned something about it was a competition or something that you're doing on the marketing side. It sounded really, really neat. I was wondering if you could elaborate on it.

Mary: Yeah, sure. So that he was talking, I think about our top welder competition. So we have a social influencer who's fantastic, Dale Bixby, he's very well known, he's a Texan, big personality, and so he has a huge following, and he narrates it, and it's basically a competition for who's the best welder. And it's kind of a reality show.

Joe: I like that.

Mary: It is really cool, and people really like it. We also do outside of that, within our schools. We actually have a top welder competition with all of our students. When you come in into a cohort, you can be the top welder of your class. And we have a welder and a couple other things that we give to them if they win that, that have been donated by our vendors.

Joe: Demand going up, demand for these careers. What are you seeing? Where do you take a Stratatech education? Look at multiple locations, more locations, growing the ones you have. Talk about strategy a little bit for us.

Mary: Yeah. So we definitely are looking to grow. We just opened Dallas in August. We got Title IV for it. Thank you. And there are almost 700 students there. So, yeah. And people kind of asked us, "Hey, you're going to be like, you know, you're pretty close to UTI and Lincoln and they're big players." We're like, we don't worry about that. Right. So there's so much demand and you know, we're a little bit of a different model. We make sure every one of our schools is on a bus line. Not everybody does that.

Because once again, we're looking to take the student who really needs what we have and put them to work, right? So it's great to have a student make good money when they go out. It's even better when you take the student who needs it the most to get them to go out there and make that kind of money. You know, the one piece why that's important is, and for anybody that works in higher ed, you know this, but the purpose behind that is because you're going to have students probably that are driving to your school and they're gonna get in a car accident or they're gonna have somebody hit their parked car and they're gonna have a $700 bill to fix it. And they're gonna go, I can't afford, I gotta fix my car. I can't be without a car. Wait a minute, I don't have the money to do that. I have to quit school because I don't have the money to pay for school now. No, you can get on the bus. You can get on the bus line. You can find a way to get to school if you have a bus line near you. So it helps with retention. It helps with keeping everybody focused, right?

Yeah, look, it helps on every level. At the end of the day, you're right. I mean, it helps with retention, it helps with everything else. It also lets us bring in a student that not everybody's bringing in because we're really good at that. Like our retention is great. I have a 92% placement rate for everybody. And there are people, and I would not say there's, there are people that worry about students that take the bus and will you be able to place them? I placed 92% of them. Yes, they come from low-income places. Yes, they have a lot of outside problems, but those are the students we want to work with, right? My people are really, really good at surrounding them with support. You can take that student no matter where they're from if you surround them with love and support and get them through the program.

Douglas: Well, and tell me, so it has been fantastic talk about the student, the demand, you know, these are exciting careers, this is life-changing, and then we've already hinted at a little bit as of where you go next. Can you talk a little bit about the demand for welders and students and have you seen a marked change in that? We've kind of hinted at it, but has that changed markedly even in the last five or 10 years?

Mary: Yeah, it's definitely gone up, right? So it was a more finite universe of folks that were looking at it. Now you have a lot of novices that have never been exposed to welding that are looking to weld and I don't want to just do welding. Yeah, because we do just as much on the HVAC and electrical side. Yeah, we're almost 50-50 now. So an electrical is crazy like that.

Joe: Why do you think it's going so fast?

Mary: I look, there's a lot of demand and people are not... everybody can weld, right? Like we can take someone who can't weld, we can weld them, but still not everybody can weld. It's a very fine art. I can't weld. So I went out to the lab and it was ugly. They all laughed. I'm great in virtual welding, but you put a real rod in my hand and it's ugly. So I can fix an air conditioner though. It's also a different type of student, right? People that like to weld generally are loners. They like to work alone, right? And your HVAC and electrical students are a little bit different.

So, yeah, and we used to be, it's different now because everybody's online, right? But back probably like five years ago, all of our HVAC and electrical people were coming online where our welders were not going through an online site to come to us. They are now because all the kids are online. But it's just a different group. There's so much out there, like the Wall Street Journal, everybody's writing about the skill trades. Like this is where you can make money. Why go to school for four years, right? Why spend $100,000 on a degree when you can go to work like in six or seven months?

Douglas: 100%. And then, so then speaking of the jobs, who's hiring? Like where are students going? Are they, you know, it sounds like in some cases they might be getting jobs even before they graduate. So can you talk a little bit about that?

Mary: Yeah, some of them are lined up before they graduate. We do have some employers that like will sponsor students while they're in school and pay for like half a scholarship if you're half their tuition. They have to sign something that they're gonna go work for that employer. Sure, that makes sense. Yeah, but they're good. I mean, it's every industry and there's... it's actually a misnomer like a lot of people think of like, let's just take welding. A lot of people think that's oil and gas. That's actually not the biggest industry employer for us. Our biggest industry is like fabrication and transportation. Like shipping is huge. We have a large trailer company. I'm not going to disclose all my employers. But there's a large trailer company, right? They're one of our largest employers. So, you know, putting parts together. Rail yards. You know, the petrochemical industry. It goes across the board. You know, electrical and HVAC are there too, like construction's very big and as you know that there's been... and we're in states where we're also very strategic about where we go, right? We're in booming states. We're in Arizona, Texas, two schools in Texas, Oklahoma's mid-ground and then Florida. So if you take that out of most of our, you know, two-thirds of our schools are in the fastest-growing states. So we're very careful about where we put our schools. We have another location picked to your point.

Joe: It will be a place that you don't want to tell us where it is. I know you can't do that.

Mary: You'll find out soon. We're negotiating the lease. So, and we're very good at what we do. We can actually build like once we decide on a place, we can have it built and go through the regulations within a year, ready to go. So we're a little more efficient than other places in doing that. We are owned by Private Equity, which has been a great road. I know some people like it. I've been very fortunate with my groups. They've always wanted to be involved in the mission. Halifax is a great group that the folks that we're with now. They also own one of the largest autism providers in the country and they own healthcare services. So when they pick companies, they also pick mission, right? And that's why we were aligned with them. We went with them in 2019.

And because we went through a change of ownership, we were on a growth hold for two years. So we're off that now. So watch out, baby. That's a... We were on a hold, but we're not on a hold anymore. And we have probably like four or five sites planned. We're looking at acquisitions. So new programs... this is going to be exciting to watch Stratatech here.

Yeah, we're really excited. And we feel like we've been kind of in a cage and we're just ready to go.

Douglas: Well this is super exciting. So there's sort of like two sides of this coin. Like we've heard a lot of demand. You're not the first person to tell us how excited they are at some of the opportunities that are out there. So I'm loving to hear that in the industry. There also is kind of the flip side of sort of some of the regulations and things of that nature that seem to be a little bit of headwinds or at least just it's there. Is that a worry of yours? You think about those things, how does that play in your world?

Mary: It's a great question. Look, it's a pink elephant in the room, right? So for us, no. And I don't mean to be flip about it. We don't worry about it. But we always say like we built our company with a structural advantage, right? We stayed in the skill trade. So back in the day, my first investors, rightfully so said, hey, you know, why don't you bring on medical? I said, well, then if we're doing medical, what's our story? That's a split. Yeah. So we stayed in our space. Like we stayed in our lane. We do what we do and we do it well. Right. The return on investment. We've always looked at that.

We've always focused on short-term. We've always said the program should be short-term so the students can go to work right away and the students have to make a return on investment. No offense to people doing pharmacy technician, but why would I ever do that when you can go to Walgreens and you can go through their program? I have to have something that I'm doing. That killed pharmacy techs, that online training. Right.

And you know, even online training. I mean, when we were going through the process of a change of ownership, we had lots of people courting us. It was a lot of dating. And one group actually asked us, why don't you do welding online? And I'm like, well, I could do welding online. I probably could do, you know, an 80% profit margin, but I'm sure as hell not getting on a bridge that someone learned how to weld online.

Joe: Yeah, no kidding.

Mary: So, you know, there's all those pieces. I think with COVID, when COVID happened and everybody went online, people also saw the value of like, there's some things you just can't do online. That said, there is a change coming in higher education, right? Hybrid education is here to stay. We've embraced it. When COVID happened, I had literally students crying and being like, I gotta go to work and I can't come in to weld. We were lucky we were in states that were much more open about being able to come in.

Joe: Yeah, you really were in all the right states.

Mary: We did, and we did some work politically, like Texas closed us first. I'm like, Texas, of all the places. But then Oklahoma, we got approval there, so we went to Texas and said, look, Oklahoma said we're a critical infrastructure school. How are we not with you? So we did all that, right? But there was some downtime, and we had to figure out how to get students their physical skill sets because they needed them. So I think during the height of COVID, which was April of 2020 through like September of 2020, we placed about 2000 students.

Joe: Wow.

Mary: So we were placing students through this. And that's also what happened. People were watching COVID and saying, who's going to work? Yeah. We need more people to do this work to keep it, you know, because eventually you're going to return to work and that meant critical infrastructure for everyone.

Joe: That's right. That's right. And it was amazing because they were heroes again. And this country was built by heroes. We wouldn't be here today without our masonry people, our carpentry, all those people were the heroes that built this country. And then somehow we said that was a dirty thing and only people that aren't academically smart go into that. What a tragedy.

Mary: It really is. What a tragedy. It makes me so angry, but it was great to see COVID reverse all that. And all of a sudden they were heroes again and watching the upswing. And this is something you can be proud of is really exciting for us.

Joe: I was, I told, who was I saying it to? I was telling Jason Altmeyer. And I said, you know, for those that have bias against students who are trained in a career college or for-profit or the institutions themselves, call your, when you need an electrician, call them, have that him or her come to your house, ask them where they went to school. If they answer for-profit, a for-profit school or career college, ask them to leave your house and stick with bad electricity because most likely that person went to a career college. There's a really good chance they did and you want the help. You can't fight it and have it when you want it. You have to either support it or don't. And if you're not going to support it, then don't take electric services. Probably your HVAC isn't going to work.

Mary: You know, that's fine. You can open your oven and you can get heat that way if you want to, if you're lucky enough.

Joe: Think about it, right? Your car's probably not going to get fixed.

Douglas: You make a great Ed McMahon, by the way.

Joe: Thank you. The way you just laughed. Yeah, keep doing that Douglas. But I mean, think about it that way. Just start turning people away and you won't have, your house will not work.

Mary: Joe, you're so right. You are so right. And that's the tragedy of what's going on with the regulations right now, right? The whole reason why career colleges came to be was because nobody else was serving these people. And we said, we'll do it. Yeah. Right. And so you have the government speaking out both sides of their mouth. Like they're saying, hey, critical infrastructure bills, they're putting millions of dollars out on being able to have all these jobs, but yet they're targeting the places that have the bulk of the jobs.

So to your question about, do I worry? I don't, cause it goes back to, I've been in this too long. Almost 30 years. So I've gone through all the waves. I've seen it come. I've seen it go. And for me, I've always been concerned. What's the worst that the Department of Ed can do. And so we've built our company around that. Right. There is some, I don't like it. Sometimes they do surprise you though.

Joe: Sometimes they do, but look, I don't like what they're doing, but some of it...

Mary: Some of it needed to happen. Right? Like there needs to be a quality control and you shouldn't be like putting students through that can't, you know, find... when they shouldn't... They should apply it equally across the board. Right? That's part of the problem.

Joe: It is part of the problem that they're not applying it equally. But I think that's changing. I mean, outcomes focus is happening. They were talking about it in 1970 about outcome-based funding. And here we are today and we're talking about it again. But I think it will happen because there's huge public support for it. Right? Like what are you doing with what the taxpayer is paying for? And that's a valid question.

Mary: So but to your point no, I mean BDR, you know, everyone got hit with BDR claims we had I think six and they were from like five years ago when they were because somebody probably went and found them and there was like no... It took me two seconds to answer them. So the funniest part about that is you talked to some of these attorneys over here from... I won't name all the firms. They have clients from large public nonprofit institutions that had scores, if not hundreds of BDR claims. And I thought that was hysterical. And they did not have the infrastructure to respond. They had to go to outside counsel because they'd never responded to anything like that before. And then they started putting things in place that the career colleges have had in place before, like disclaimers or whatever else. And they're going, did you guys ever tell a student this? Did you ever tell a student that?

Joe: It was like a bloodbath for a while for those schools to get on top of that stuff.

Mary: It totally was. It totally was. You wouldn't know that. Those are the behind the scenes things that the average person never knows that the career colleges run really well as a business because they've been overregulated. When you're overregulated, you got to prepare. What is it? Prepare for the worst, but prepare...

Joe: I don't know. Plan for the best, prepare for the worst.

Mary: Yeah. No, no, listen, once again, Joe, you're right. So I would give homage to Southern New Hampshire. Yeah. They came right out and I know the CEO there, gosh, his name escapes me.

Joe: Paul LeBlanc?

Mary: Yeah. Yeah. Paul. Yeah. I know he left, but he did such a great job with that university. And he always says, I saw what the for-profits were doing and I modeled it. And that's the thing that burns me to the midnight because you take the biggest schools, Western Governors, Grand Canyon, Southern New Hampshire, what did they do? They had the idea when University of Phoenix got absolutely whipped and said, well, there's a market here. What do we do? How do we do it? Well, let's just go hire all their people. And they went and they hired all the people from the for-profits and then they grew this great nonprofit.

Joe: It's the truth. And they will tell you that. It's the truth.

Douglas: It's the truth. Douglas, final question.

So, and actually, a lot more tactical question. I'm interested to understand how quick you can get through these programs, what's the standard length, what's the standard format. Obviously, it's gonna vary from the different ones that you offer, but I just wanted to get a sense for that.

Mary: Yeah, so most of our students are working. We have about 25% are high school students that come during our prime a little bit throughout the year. And then there's probably another just under 20%, probably 15% that are military and the rest are traditional adults. So because they work, we've actually scheduled our structure for them. So they're done in seven months. Most of our programs are only seven months. And classes are five hours a day. They're not all day, they're five hours a day. They're now hybrid. So whatever didactic piece you have, you do that online.

We invested in a very expensive LMS. We're always working on making that better. And then you come in for your labs and you have to do those on site. So five hours a day is all you have to dedicate, which means that you could go to work if you go at night, you can work in the morning, you could go in the afternoon, you could work a morning or afternoon shift, or morning or night shift. So that's mostly how it's structured. We also have weekends now. And we're looking at putting an overnight shift in two of our schools.

Joe: That's incredible. And I want to say something back to you because I think it's so powerful. Traditional adult students. I love that. I like that.

Mary: Yeah. Well, everybody's trying to fight for those now, right? Because as high schools drop and all of a sudden they're interested in adult students. You'll find that most schools that are their solution to their declining enrollment in the quote-unquote traditional higher education sector is to go after the adult student with a semester-based calendar that only runs fall, spring, and you're up. They ain't waiting for you. They're going somewhere else. Right. First you didn't care about them at all, and now you need them, but you're still not trying to give them what they need. And you can't change fast enough to serve them because of inertia.

Joe: Anyway, ladies and gentlemen, my guest co-host, he's Douglas Carlson, and he is head of partnerships at Lead Squared. Douglas, this is probably, I'm not going to say my favorite because then I would piss off all the rest of the guests, but it would be one of my top podcasts of the day.

Douglas: Absolutely. This was very fun, informative, interesting, and so appreciate you.

Mary: Well, listen, I appreciate you and everything you guys are doing. I mean, you're doing a service to our industry and you're a lot of fun too.

Joe: Well, how do you like that? I'll take that compliment and I'm going to just quit for the rest of the day. Our guest, here she is. She's Mary Kelly. She is CEO of Stratatech Education Group. Mary, it's been an honor to have you join us. Thank you so much.

Mary: And I'm canning that. I'm going to have it follow me wherever I go.

Joe: Please do. Wait for it, ladies and gentlemen, you've just ed-upped.