Poizner’s Gubernatorial Miss Lands Him at Web-Education Startup

Steve Poizner, who focused on job creation in a failed bid to become California governor last year, is again angling to cut unemployment. His new Silicon Valley startup uses the Web to retrain out-of-work baby boomers.

Poizner, a technology entrepreneur who in 1995 helped develop global-positioning systems for mobile phones, is running a startup called Encore Career Institute. The company is designed to provide training to the generation of workers born from 1946 to 1964, whose job prospects and retirement plans are diminishing. He lost the Republican primary for governor in 2010, the last year of his term as state insurance commissioner.

The former politician is returning to the private sector to achieve his mission of bringing down California’s jobless rate, which was 11.8 percent in June, the second-highest in the U.S. behind Nevada. Encore is teaming up with the University of California at Los Angeles Extension school to offer programs for people who need skills in areas where there are available jobs, including education, health care and clean technology.

“I’ve been driven by trying to do something to help get California back on track, be it running for governor or being insurance commissioner or starting companies,” Poizner, 54, said in an interview.

Poizner co-founded Encore, based in Los Gatos, California, early this year along with Creative Artists Agency in Los Angeles and Sherry Lansing, the former chief executive officer of Paramount Pictures and a member of the University of California Board of Regents. It’s Poizner’s third startup.

Digital Economy

Encore is focused on baby boomers because the economic slump has forced many in that age group to push back retirement, Poizner said. They also may have difficulty finding work, with many of their previous jobs having disappeared. Manufacturing, construction, telecommunication and utility industry positions have vanished in the past decade, while jobs in education, health services and the sciences have increased, according to the U.S. Bureau of Labor Statistics.

“They’re getting older now, and as this economy becomes more digital, they haven’t been employed as much as their usefulness would dictate they should be,” said Michael Yanover, head of business development at Creative Artists Agency and an Encore board member. “They need to be employed still because they’re living longer and their 401(k) plans are diminished.”

Online Colleges

Encore’s biggest challenge, after getting students to sign up, may be distancing itself from the tainted reputation of for-profit online colleges. Education Management Corp., the second-largest U.S. for-profit education chain, was accused earlier this month of using improper recruitment practices to secure more than $11 billion in student aid, prosecutors said in a civil lawsuit.

At least 27 whistleblower cases have been filed against for-profit colleges under the U.S. False Claims Act since the 1990s, according to a 2009 article by law firm Gibson Dunn & Crutcher LLP, which defends companies against such complaints.

The Encore program will cost students about $9,000. Poizner said the company won’t offer government-subsidized loans and instead is looking at alternatives for scholarships as well as loans from private sources.

“We really want to distinguish ourselves in many ways from some of the controversy going on in the traditional for-profit online world,” Poizner said. “We’re simply not going to be looking to the government for any kind of subsidies, any kind of student financing -- zero.”

Web Collaboration

Working with UCLA’s extension school, which holds classes for adults, Encore is offering 12-month programs consisting of eight classes that will give students certificates in fields where there’s job growth. The program will also provide an assessment of students’ interests and skills as well as a career resource center for resume writing and mock interviews. Encore’s technology will let students in different time zones collaborate on projects and communicate with instructors.

Courses are focused specifically on job training. Someone who wants an environmental job can take classes on renewable energy to become an energy-panel installer, for example, or students can study the structure of the U.S. health-care system to be certified for jobs in hospitals.

“We started by looking at national employment trends,” said Cathy Sandeen, dean of the UCLA extension school. “This is really innovative and we’re serving this demographic that we had been noticing needed help.”

Venture Funding

Encore’s first set of classes will begin in September 2012. To build the technology and hire a staff, Encore raised $15 million in June from InterWest Partners in Menlo Park, California, and Granite Ventures of San Francisco. The company has 12 employees and is looking to add another 25 as soon as possible, Poizner said.

UCLA will provide the instructors and issue certificates to students, while Encore is developing the software and paying for marketing. Encore and UCLA will share the profit, and the deal includes a minimum royalty payment from the company to UCLA of $5 million over five years, Sandeen said.

A graduate of Stanford University Business School, Poizner started his first venture, Strategic Mapping, in 1983, developing software for digital maps. Around the time he sold that company, he co-founded SnapTrack Inc., which brought GPS technology to mobile phones. Qualcomm Inc. paid $1 billion for SnapTrack in 2000.

Education, Technology

Poizner then entered government, serving as a White House fellow in 2001 and volunteering as a teacher in a San Jose public high school the following year. In 2006, Poizner was elected as California Insurance Commissioner. He ran for governor last year, and was defeated in the primary by Meg Whitman, former CEO of EBay Inc. Whitman lost in the general election to Democrat Jerry Brown.

Poizner said he can envision returning to politics someday. For now, he’s focused on building a new company in what he expects to be a multibillion-dollar business.

“I have a passion for education and I love applying technology to solve problems,” he said. “The bottom line behind this venture is we want to change the way employers think about boomers, and to empower boomers with the right skills and products and services to help them stay economically viable in this very difficult marketplace.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE