Lighthouse Labs co-founder and CEO Jeremy Shaki says he is “still processing” some of the lessons from his journey building, leading, and letting go of his company.
In a candid fireside conversation at TechExit.io this week, Shaki sat down with Garibaldi Capital Advisors founder and CEO Brent Holliday to unpack Lighthouse Labs’ winding, 12-year journey from idea to exit to bankruptcy—and what he has learned from it along the way.
“I don’t know how to write a lesson for it, because I’m not there yet.”
Speaking on stage at MaRS Discovery District in Toronto on Oct. 21, Shaki walked attendees through the Canadian coding school’s early days, the challenges and growth it experienced amid the pandemic tech boom, and “the writing on the wall” it saw for its business during the downturn and emergence of artificial intelligence (AI).
Shaki also spoke candidly about how Lighthouse Labs’ two failed attempts to sell its business led him to engineer its eventual acquisition by workforce training platform Uvaro earlier this year, and reflected on the bankruptcy filing mere months later and the impact both have had.
“I didn’t just sell shares,” Shaki said. “I sold friendships, relationships, I sold a ton of my legacy, and I sold something that really, really mattered to me.”
Lighthouse Labs was a Toronto-based technology education company that claimed to have trained over 40,000 learners since its inception in 2013 through in-person and online programs that taught skills in areas like cybersecurity, data science, data analytics, and web development.
By late 2019 and early 2020, Shaki said Lighthouse Labs had bootstrapped to approximately $10 million CAD in revenue and $1.5 million in earnings before income, taxes, depreciation, and amortization (EBITDA), with 70 employees and a physical presence in six cities across Canada. He said the company was training 1,200 people a year for tech roles at the time.
COVID-19 brought new challenges, forcing the company to lay off staff and move its bootcamps online. Following those changes, Shaki said Lighthouse Labs saw rapid growth during the pandemic-fuelled tech boom as its revenue soared to $30 million with $4 million in EBITDA in 2023.
But by early 2024, Shaki said Lighthouse Labs could see that the outlook for its business was deteriorating. Between proliferating tech layoffs, a much tougher market for entry-level jobs, and the emergence of AI, Shaki said the company’s leadership team realized “all the headwinds are coming against us.”
RELATED: Uvaro acquires coding school Lighthouse Labs to take on AI-augmented job market
This led them to consider what the outcome would look like if they wound down the business immediately and whether they were willing to develop new programs and products to remain competitive.
“The questions that really came out were, where are [tech] jobs going to be in the next five years?” Shaki said. “And no matter who I talked to … nobody felt confident.”
Given this, Lighthouse Labs ultimately decided to explore a sale, and Shaki contacted a list of 75 prospective buyers the company had amassed from prior acquisition discussions. It received 14 confirmations of interest and four letters of intent before landing on Uvaro.
Shaki said he felt as though he had a good rapport with Uvaro as well as an understanding of why the two businesses might be a good match.
Headquartered in Kitchener-Waterloo, Uvaro provided skill development and career services. At the time of the acquisition, Uvaro said it thought Lighthouse Labs’ hands-on training for mid-career professionals complemented its existing workforce development programs.
“I watched someone for six months who ran [the company] with really good intentions and strong vision, strong capabilities, make mistakes that I didn’t have the control over.”
Jeremy Shaki,
Lighthouse Labs
Shaki collected 90 percent of the sale price—which was not disclosed—upfront because “cash in hand is what’s real,” and this move proved prescient given how things ultimately played out.
“My exit story is a medium exit story,” Shaki said. “It didn’t end up in the most amount of money that we could possibly get. It didn’t falter and fail—I got an exit out of it.”
But Shaki said it also led to watching a business he had built for more than a decade “fall apart” when, two months ago, Uvaro and Lighthouse Labs ceased operations and filed for bankruptcy. Shaki is still picking up the pieces.
Uvaro and Lighthouse Labs’ websites now redirect to their trustee page, and a frequently asked question document for creditors and stakeholders shared there indicates that Uvaro raised capital to fund its purchase of Lighthouse Labs, then started to burn cash when its forecasted sales pipeline and government contract awards did not come to fruition within predicted timelines.
RELATED: Bankruptcy docs claim faltering sales pipeline sunk Uvaro and Lighthouse Labs post acquisition
“I watched someone for six months who ran it with really good intentions and strong vision, strong capabilities, make mistakes that I didn’t have the control over,” Shaki said. He noted that “aggressively” shifting market conditions post-acquisition also played a role in Uvaro and Lighthouse Labs’ downfall.
The hardest part for him, Shaki said, came when Uvaro suddenly went bankrupt and fired the Lighthouse Labs team. When that happened, he said every former Lighthouse Labs employee, partner, and unpaid vendor called him because “I was still that guy.” While they appreciated that Shaki was no longer in charge, this didn’t make the moment any less difficult.
“Nobody called me an asshole, but [I] felt like one because [I] walked away with an exit and [I] gave the pieces to somebody, and now they did something with it, and, nefarious or negligent or not at all their fault and just market-related—one way or the other—it ended in the antithesis of what I had tried to build for 12 years, and it ruined a lot of people’s next six months because of how it played out,” Shaki said. “That one I’m still very much going through and grappling with … I don’t know how to write a lesson for it, because I’m not there yet.”
BetaKit has reached out to Uvaro co-founder and CEO Joseph Fung for comment on Shaki’s assessment of what led to Uvaro and Lighthouse Labs’ bankruptcy.
Shaki acknowledged that managing Lighthouse Labs’ decline “took a toll” on him, and advised other entrepreneurs interested in selling their businesses to ensure they understand how much control they do or do not have over their company’s future post-acquisition.
“It mattered to me, and losing it really, really still hurts,” Shaki said.
Feature image courtesy Cube Business Media, producer of TechExit.io.