Two Year Startup ‘Apprenticeship’ Program: Innovative or Exploitative?

Enstitute is raising $50,000 for a program in which participants work full-time and unpaid at a startup.

Ms. Ittycheria and Mr. Sarhan.

Want to spend two years working full-time at Thrillist, Learnvest or Birchbox for free? If Enstitute’s campaign on Indiegogo is successful, a group of 18- to 24-year-olds will be heading to New York City for a two-year unpaid apprenticeship at a startup, with living costs covered.

Higher education is a ripoff that leaves graduates indebted and often jobless, Enstitute says, in contrast to its planned “two-year, full time experiential learning program,” which places students at startups in New York where they shadow a founder for a year and then specialize in one area such as sales or product design for the second year.

Two years with no pay? Sounded fishy to us, especially in the startup scene where companies fail fast, fail hard, and are always trying to save money. The list of startups participating is…. well, okay, it’s solid, although no Foursquare, Tumblr or Etsy. There are a few founders from young TechStars companies as well as some names we’d never run into before, like Jason Beckerman of Unified, a social advertising startup.

The U.S. Department of Labor runs a Registered Apprenticeship program, but those gigs must pay a “competitive wage.” By contrast, internships may be unpaid, but they must meet all of six federal criteria, including that “the training is for the benefit of the intern” and “employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.” The internship must also comply with five additional criteria under New York state labor laws, including that “the training is general, and qualifies trainees or students to work in any similar business.”

“Our students don’t work for free,” cofounder Kane Sarhan wrote in an email to Betabeat. “We cover [their] housing, food, and transportation costs for the entire 2 years of the program and provide a stipend to them to spend of personal costs. Our model is very similar to what happens through Americorps programs across the country already and our legal team has worked hard to make sure we comply with all labor laws.”

The stipend, he said, will depend on how much funding is raised. Enstitute is in its final rounds of interviews now, with 100 applicants left in the pool.

Mr. Sarhan was in Americorps himself, and found himself apprenticed to LocalResponse’s Nihal Mehta. His cofounder, Shaila Ittycheria, is a former Microsoft employee who helped her friends launch Birchbox for free (what, no equity?) and met Mr. Sarhan while working at LocalResponse.

Enstitute has raised $12,250 of its $50,000 funding goal, and has signed up 31 founders including Wiley Cerilli of SinglePlatform, which was just acquired by Constant Contact; Philip James of Lot18, which recently had to cut 11 employees and two verticals after overexpanding; and Matt Shampine, who is referred to by Enstitute as the founder of Onepager, although he transitioned out of Onepager a few months ago. Life as a startup sure moves fast.

Two Year Startup ‘Apprenticeship’ Program: Innovative or Exploitative?