RE: [MLUG] The dusty remains of Linuxgruven are being sued...

[Jonathan King <EMAIL:PROTECTED>]

On Wed, 9 Jan 2002, Spurling, Shannon wrote:

> First off, training doesn't guarantee that the student is "Smart Enough"
> to take advantage of it.

That's true even if you have entrance requirements. :-)

Seriously, I don't dispute that a significant proportion of the kind of
people who would take a training course like this were going to be pretty
disappointed at the end.  What seems to have been particularly odd about
Linuxgruven is that they claimed to have identified jobs and employers for
their successful graduates, but may apparently have really only had
available the job title "trainer for Linuxgruven".

> The second issue I have with that article.  If you have a company and
> you have promised goods, and go out of business, how do you fulfill your
> obligations? Aren't they SOL? Forget that it's not an intangible item
> like training. If they sold apples (The fruit, lets not get in a my
> computer is better than yours argument), and they took payment for a few
> thousand bushels, and went out of business before being able to obtain
> the apples, what would happen?

The people you contracted with are creditors, and get paid in order of
seniority/security.  Your employees, interestingly, do get paid some pro
rata salary first if possible.  An interesting thing about some of the
recent dot bombs is that the companies ran absolutely out of money and
also ran way behind payroll, which has the effect of basically stiffing
everybody.  In a situation where you know you can't meet payroll (or
fulfill a contract) but promise to do so anyway [e.g., it was out-and-out
fraud], you can be hoisted pretty high.  I believe that's one of the few
cases where the officer of a corporation is not protected from being
directly sued for damages.

> The assets get liquidated, and the investors get paid,

Actually, if there is no reorganization that can be approved, the assets 
are liquidated and the *creditors* (not necessarily the investors) get
paid along some sliding scale if there is not enough asset value to cover
obligations and debts.  So that's when employees owed back wages, banks,
bondholders, merchants....[long list omitted] and finally stockholders
get payed off.

> but what about the customers? The liquidation of Commodore clearly
> showed that the stock holders get the shaft, but what about
> unfulfilled customer orders, that can't be filled?

They are technically creditors, but might not get much back, especially in
the dot bomb era.  (Some may remember the neutron bomb, which killed
people but left infrastructure untouched; the recent bombs dropping leave
the people, the routers, and the fancy deskchairs intact but vaporize
every last penny of cash...)

> I imagine what they had were ads for trainers, and they hired the best
> people they could get for trainers. As the number of applicants
> increased, they increased the difficulty of the test in order to make
> sure that they didn't get an overload of people to interview.

That's consistent with their story.  However, the theory is that since
they were using jobs for successful completion as a lure, but did not
expect to have anything like enough jobs around, that the increase in the
difficulty of the test was a bit too convenient.  I mean, the other
obvious thing to do was to take the job guarantee out of the advertising,
but I suspect somebody realized that would leave them very short of
students, so...

> I'm not sure where they get the idea that training for any thing comes
> for free.

It certainly doesn't, but we all know that in certain situations employers
are quite happy to pick up costs for employees or even for potential
employees.  There are also fairly obvious ways to make this seem fair. In
the late 70s and early 80s, H&R Block used to offer free income tax
preparation courses to people coming in off the street.  Obviously, they
didn't do this out of any sense of charity, but because it was the easiest
and cheapest way for them to identify (and train) potential employees.  
Everybody knew that the best students would be interviewed and (quite
possibly) be hired.  As it turned out, the training was pretty good, in
the sense that other people would hire you as well if you'd finished the
Block course.  So at some point, Block starts to charge for the course,
since it is no longer just a feeder for their own hiring.  (And I think in
some situations where they are hard enough up for employees, they'll still
do freebies.)  Nobody really had much of a problem with this, as far as I
know.

> I guess proof of fraud would lie in the wording of the ads. Just
> because I get training from Global Knowledge, or Skyline, doesn't mean
> it's free, or that they are going to pay for it. Come on! Before they
> could do something like that, they would have to be able to measure
> your aptitude, and make you sign a contract.

Something like that.  But its clear that you can abuse the situation.  
Ross Perot got to be infamous in some circles for forcing employees
to sign no-compete/payback contracts for training that in some cases 
seemed to consist primarily of just doing their job at EDS.

Anyway, I think the issues here are fairly important given that there is
possibly a growing degree of mismatch between what employees want and what
conventional higher education is providing in the way of specific job
skills (that's understandable) or even enforcing/credentialing a basic
level of overall aptitude (which is more disturbing).

jking

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