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#120 - Austen Allred

Y Combinator podcast.

May 04

Austen Allred is the CEO and cofounder of Lambda School.

Lambda School provides a CS education that's free until you get a job. They were in the Summer 2017 batch of YC.

You can learn more about Lambda School at lambdaschool.com.

Austen is on Twitter at @austen.

The YC podcast is hosted by Craig Cannon.

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Topics

00:00 - Intro

1:01 - Encouraging people to do something that they're scared to do

5:16 - Where did the insight for Lambda School come from?

6:26 - College vs developer schools

10:26 - Building a network

12:16 - Does Austen see value in a traditional liberal arts education?

14:56 - Steven Klaiber-Noble asks - As competitors begin to copy your model what front do you believe you'll be competing on?

17:56 - Why did Austen choose to raise money?

20:06 - Fundraising falling through on Austen's first startup

21:36 - Moving back to Utah and writing a book about growth

23:26 - Why Austen wrote a book

26:26 - "Starting a company is by definition saying, I think what I can do is worth more than what other people will pay me for."

27:26 - Mispriced human capital

30:21 - Other opportunities for Lambda School

32:46 - Modeling risk

35:36 - David Kofoed Wind asks - When Lambda School is incentivized to take in people that will land high paying jobs, how do you think about the diversity of candidates? One would imagine that it quickly becomes a game of pattern matching the stereotypical SV people.

37:51 - Will Lambda School ever not be remote?

41:16 - Dave Dawson asks - You appear to be on the successful path now, was there a point early in Lambda School when you wanted to stop?

43:46 - Helping everyone become an autodidact

46:46 - Rethinking where to start on an online course

48:11 - Dave Dawson asks - What keeps you up at night at this point?

49:46 - Dayo Koleowo asks - “I have made remarks I do not agree with” - from Austen's Twitter bio. What is that one remark you wish you didn’t have to disagree with?

53:26 - Choosing remote work as a core problem to solve in your company

55:56 - Analysts aren't good at measuring product quality

57:36 - Teaching taste

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Hey, how's it going? This is Craig Cannon, and you're listening to why Combinator is podcast. Today's episode is with Austin Allred. Austin is the CEO and co founder of Lambda School. Lambda School is a C s education That's free until you get a job. They were in the summer 2017 batch of I see you can learn more about lamb to school at lambda school dot com. And Austin is on Twitter at Austin. All right, here we go. All right, so today we have Austin Allred. He is the CEO of Lambda School, which was in the summer 2017 batch and land a school is a. C s education that is free until you get a job. So,

Austin, what I wanted to ask you about you mentioned this on a few podcast that I've listened to you on. And basically, there's this core idea in land the school that you have to be kind of confident enough to even apply, and this is a great opportunity for many people. But what I'm curious about is how do you encourage people to do something that's probably good for them, that they might just be scared to do or they make

1:2

excuses about. Yeah, I mean, I think that's that's the actually the problem. We grapple with the most, Um, and you know, I think Patrick Collison said something along the lines of, you know, if you think about it, the highest leverage activity any human can have is inspiring other humans to do what they're capable of. And in many ways, I see land of school as, like the realization of that. So we've had a lot of students in the past. You would graduate, and then whenever you felt ready,

you would start applying for jobs, and we have students. It would just wait and wait and wait. And we'd be like, What? You know why they're not working hard, What's going on? And you talk to him and you realize it's massive imposter syndrome. They're just not They're not confident or comfortable with the idea that they're now a software engineer, and so they're just kind of procrastinating. That s so now we have some mechanisms that get you to, you know, start applying earlier, but, um, yeah,

like the minute they start applying, they get interviews, they get higher, they get a six figure job. It's like What? What are we waiting for, right? You're totally capable. And what about what about the people

2:5

before Lambda School? A few of the questions that can from Twitter were basically like, Isn't this just an opportunity for rich people, you know, like being ableto leave your job and commit full time to a seven month

2:17
How do you encourage people to do something they are scared to do?

Highest level activity one can have is inspiring other humans to do their best. Massive imposter syndrome often prevents people from taking a leap. In case of Lambda School, many early graduates were great at their work, but they did not feel confident in their new shoes to start applying for jobs right away, so Lambda came up with a few mechanisms to build self-confidence and encourage these folks to leap forward. People don't realize that tech work is in such high demand, they'd get jobs the minute they actually apply.



program? Yeah, My first answer to that would be we have part time programs as well, so you can do it evenings and weekends. We have experiments running where we pay people living stipends that will be expanding greatly. Will be announcing something in the near future along those lines in concert with a few other tech leaders here in the Valley. Um, but yeah, I mean, the number one problem we have to solve on the admission side is getting the people who are qualified toe actually apply. Yeah, it's kind of you wouldn't think of it as being a problem. It's a pricey problem, Thio. Yeah. No, totally.

Yes, yeah. Um, some of the best cos there's like EJ don't know if I could get into icy and that's that's the difficulty of having a good reputation where a lot of people want to go there. You just there people who assumed that they won't get in, which is not the case, right?

3:13

I mean, so your acceptance rate, maybe it's changed, but I heard you say it's 25% of the people who make it through that first initial test

3:21

of the people that make it through the pre coursework. It might even be higher now. I mean, the three course work is more difficult, but the vast majority of our selection mechanism is the pre coursework of how well you do on it. If you'd put in the time, Um, sometimes I wonder if we could just make the pre course work really long and have that be it. No. No interview, No nothing. Just just the work. Yeah. I

3:45
Is Lambda School and computer science work just for rich people?

Not at all. In fact, one of the hardest thing for Lambda is to convince people who qualify to apply. Often case people don't recognize they have what it takes.



mean, because that's obviously like your business hinges on you assessing that risk, right? Correct. And so, if you could make it sufficiently difficult, it would work

3:54

in theory, Um I mean, you run the risk of false negatives or false positives, I guess. Um, but yeah, that all that we need to find out is are you of average? You know, mental intelligence And will you work really hard? Yeah, I think I see is similar, right? Like when I got into Y C, I felt super intimidated. There were. And there are brilliant people all over in the room. But just because you went you have a PhD in computer science from M I T.

And you got a 1600 on the S. A. T. S is a freshman. Doesn't necessarily mean you have a successful company. It's not directly correlated.

4:33

I think in the in the past, it's possible that y c was fooled more often by fancy degrees and PhDs and stuff like that. Possibly not

4:41

the case anymore. I mean, in my wife see group, there are a couple. They're, like, 15 and a 16 year old. Yeah.

4:50

Yeah, that was that was a fringe case S o I I'm curious about, like, there's just court insight with Lambda School, which centers around What? What if we didn't have to charge $10,000 for this? You know, deaf school. Um, how did you reach that point?

5:7

So I was living in rural Utah before I moved to San Francisco. And when you moved to San Francisco from a small town and you see just the discrepancy in opportunity, I guess, eh? So it was easy to look around rural Utah and be like, Look, that guy is justice capable and intelligent as that guy in San Francisco. But in Utah, that guy's making 30 K in San Francisco. That guy's making 1 50 he's leading a team. So you know, how does that work out? Is it just what jobs are available? And I mean, if you talk to people, you realize it's it's more about opportunity than anything. So to tell a guy that's making 30 K hey,

just drop, you know, 10 k on an education, and there's a 7% interest rate on the other side, and hopefully it works out. That's that's actually a really big ask S O. I have to put it in terms for veces sometimes and say like, imagine spending half of your annual income on an education on a bet right you have most feces are very well. Often you have that kind of risk that you can take, so you have to kind of put it into that similar psychological context that people just can't afford. that risk. So why

6:20
Why do people choose college over code schools?

Colleges do a great job marketing their programs, and our society in the last couple of decades come to believe that if you go to college and get a degree you will be successful, but often that is not true. In fact, many successful people do not have fancy degrees.



are people in these situations signing up for University of Phoenix type programs, but not the deaf schools? Because it's it's a similar choice,

6:29
Why do people choose college over code schools?

Colleges do a great job marketing their programs, and our society in the last couple of decades come to believe that if you go to college and get a degree you will be successful, but often that is not true. In fact, many successful people do not have fancy degrees.



Right? S o. I think the first reason is honestly, because the University of Phoenix is more aggressive in their marketing tactics. Um, they I mean, they have the they don't really care whether you succeed to some degree if they can, you know, they're backed by the loans were backed by Uncle Sam. And whether or not you're successful, they get paid. Yeah, said the incentives are fundamentally misaligned. And if the university of things can get you to sign a piece of paper, they get 80 grand. Okay, and that's it.

Um, the reason people are the reason people opt for universities, generally speaking versus code schools, eyes. They've, you know, my entire life growing up. Nobody ever said there's a path to success that's not college on. And I'm not a college graduate. My older brother is in a college graduate. A lot of very successful people I know are not graduates. Um, but yeah, everybody growing up just said go to college. Doesn't matter what it costs. Just get a degree.

Doesn't matter what you study and you'll be successful. And I think my generation is now realizing like that's fundamentally untrue. It isn't. Only not good advice is probably bad advice. Net net. Um and the newer generation has the benefit of seeing people with hundreds of thousands of dollars in student loans and working at Starbucks. Yeah, and clearly something was off in the advice that we were given.

8:0

Whoa. Yeah. I mean, I went to N Y u I graduated with, like, 50. It's

8:7

pretty good going to N Y u s. Okay, Yeah,

8:9

I got a bunch of scholarship and I worked out all right. Yeah.

8:12

There's still a lot of debt to be clear.

8:14

Yeah. Dude, I was an English major. So, Theo, all the jobs have gotten have been through skills I've learned outside of N Y. You can write fairly well, but, um, but the real upside was being in a huge city where I could start working early, and I think that was a really competitive advantage. And I'm curious about lame to school in this way, because it n y u You know, once I started, I never went home again. You know, every summer was working,

and then I was working during the year. And then I was like, realizing that I could cram all my classes on one or two days and work full time. And so I had easily a four year advantage on all my friends who went toe. You know, Colgate or something in the middle of nowhere, right? So how do you take advantage of that Atlanta school? Like getting people in early? Getting them in network?

9:1

Yes. Oh, so they're a couple things. One is you. Land school is nine months full time versus a four year degree, which is obviously four years S. O r. The average Lambda School grad. If you got two students, one started a university at the same time as another student started Lambda School. By the time the students graduating from University, the land school student has three years of experience and has paid Lambda School off and is 1/4 $1,000,000 ahead at least of the university grad. So you know, net net. It's It's pretty obvious, but the network is pretty key. Yeah,

So most of our students are coming in with no network. A lot of students from either inner cities or rural areas. We basically have to help them build that and then build a network around them. So we have a full time team that is just bringing in companies to hire students. Part of the school itself is actually. Okay. Here's how your network. Here's how you find other people with similar backgrounds. Hired an engineering rolls on lengthen. Now we're gonna go contact them where sets actually built in the curriculum.

10:9
How do help code camp graduates benefit from the same network value that college graduates get?

Code camps are shorter so you won't be stuck studying for years on end. By the time you graduate from Lambda vs a regular university, you have another 3 years to get jobs and experience to get more network than a college student would. Meanwhile, the camp has a full-time team to work on hiring and connecting and educating students. Networking is built into the curriculum.



Yeah. Can you actually break those down? I'm very curious about how you, you know, tactically explain networking skills because I know you wrote a growth book with Orlando school. Right? So you're kind of like into breaking these things down. Yeah, so, yeah. Say I'm a graduate. I'm inland school. At what point do you start teaching me? I guess you could call it soft skills.

10:29

So now you meet your career coach at week three s. Oh, it's very integrated into like it. It is Lambda School, right? It's not a separate external thing on, and we have careers lessons every week for the for the entire school. So, for example, the you know, we train students to do informational interviews, which is find someone with a similar educational background to you. So use lengthens advanced search and search for schools that are X y Z in locations that air this and with careers that air this. Now you have a huge list of people who are just like you. Um, reach out to them and ask if you can grab coffee just or jump on a phone call and say, Hey,

I want to break into this field. What do I do to break into this field? And probably our best job offers actually come through that your best job offers always come through networking and meeting people. Um, we're really close to the point at which we just say, you know, if you have to use an application to, like clicking, apply button somewhere, just throw it in the garbage. Don't don't do that anymore, or at a minimum, we'll have somebody else do that for you. S. So now to help with that, um,

we're hiring right now. 37 interview sore sirs. Um, so those air folks that are just going out, they'll take your specific information and they'll go out and help find companies as well and bring the companies to you. Um, so we have an entire team that's dedicated to that. The future. We're going to look a lot like a talent agency basically for software engineers and designers and whatever

12:10

else. Right? Right, Right. So in terms of the other, they're they're a couple questions around. Well, so John Palmer asked Ken, or what other pieces of the university experience could be unbundled. And the thing that I'm in particular curious about is the way you treat education in the sense of land school is like, Hey, this is job training, right? Like this is the goal of making money. It's not about, you know, being altruistic and necessarily making artists or whatever you want. Right? Um, do you see a traditional of value in a traditional liberal arts education and like those elements

12:47
Is there value in traditional liberal arts education?

Absolutely. There is value in liberal arts. You might not have to do it within the walls of a University though. For example, if you are 35 and you have never had a high-paying career, taking thousands of dollars in loans to take a few years off and go to a University is not a bad thing, but it might not be the right thing at the right time. Lambda School is looking to create vocational curriculum to help you accomplish these goals on your own terms.



that school for sure, So I I see value absolutely in the liberal arts, right? Um, I do disagree that a the only way you can learn the liberal arts is within the walls of the university. Um, so in my mind, a lot of the people that we're talking to, you know, if you're 35 you've never I had a very high paying career. The prospect of let's take out $50,000 of loans to set of Shakespeare is not a bad thing per se, but probably not the right thing at the right time. Yeah, so we're Yeah, we're entirely, um, vocational or a trade school basically,

and we want to help you make much money as you can, and then when you're making a lot of money, it's a whole lot easier to make decisions around what you'll learn in the liberal arts. Fact that maybe an ad on we add to the school later, but not it's just not the focus right now. There are a lot of people that do a really good job at that. Um, we're okay to leave that to them for Yeah,

13:54

yeah, because I think that's it's one of those things similarly to signing a student loan. When you're 18 you don't really know the terms of that. I mean, you get like, you can read it on paper, but you don't really understand the dynamic you're about to enter. Where is when you're say, Yeah, you're 35 thinking about switching careers here. You're much more practically minded. Yeah, or you might just be interested.

14:14

And I think we've romanticized it a little bit, right. I went to the liberal arts portion of the liberal arts degree before I got into the specialization and, like is valuable, but I've learned way more by reading books and meeting people and other stuff than I did in the university. So I get the value. But I don't buy the argument that, like, that's the only time and only place that you can become well rounded. That doesn't

14:41

make sense to me. Yeah, I mean, do you see, there are There are elements of value and unbundle ing other aspects and, like, really building that in Tau Lambda school for sure. Yeah. Yeah. Okay. Um, So there's another question here from a Steve Klehb or Kleber Noble, us. As competitors begin to copy your model, which is we should talk about. It's an income sharing agreement. What? Um what front do you believe you'll be competing on?

15:10

Um, all of them eso eso. The way I describe Lambda School is its people no land to school because of the business model. But the business model is something that's up front. That's not what makes lamps school works right. You can, you can. You can charge whatever you want or however you want. The key is making that successful. Um, so our product A our educational experience is, I think, among the best in the world. And it has to be the way we've built it in order to make a free up front and online education work when we started, our dropout rate is what is killing us. Um, now we're graduating.

You know, more than 85% of students that start day one and ah, lot of the drop out is because of reasons outside of our control, its financial or life circumstance or whatever else. So we have. We have a product that people love that come out on the other side is great software engineers, and we have ah hiring network ready to hire them. That's all really difficult. Um, then the admission side of knowing who and how and what to accept. Like, that's not. That's not something you can buy, right? You just have to, like,

figure that out over time and eventually will be very data driven. Very. You know, we'll be able to tell on before a student begins lam to school. What they're likely to be hired at and what they're likely outcome will be similar to, you know, lending company. Yeah, but there's no credit score for people, right? You can't say, Like, what is this person's potential? There's no there's no inputs that you can take right now. That could determine that. So nobody knows howto underwrite student risk.

Nobody knows how to train students online. Nobody knows how to play students nationally and scale. And figuring all that stuff out is the hard part, right? Plugging throwing an I s a on the front end is the

17:1

easy part. Yeah. Okay, so you're just hoping that, like, you're you're much further ahead than people realize.

17:6

Way further. Yeah. Yeah. Um, I'm sure there will be competitors. Sure. The the thing that scares me isn't somebody adopting our business model. That probably has happened. That I haven't heard about will happen a 1,000,000 more times. Um what what will make us win is the student experience and how fast we can move in making that better over time. Um and that includes the outcomes the students have. So all of my time and effort energy is focused on that. And that's really freaking hard. Okay, it's way

17:41

hard. Yeah, Yeah, it s so you were profitable before he did. I say right? Correct. Okay, Yeah. Maybe not usually profitable but profitable.

17:51

Were profitable by any definition.

17:54

That there? Yeah. Okay. Cool. Um, so was there an element of fear around being copied that that led you in the path of raising money?

18:5

No. Um, so we actually sat down with ah Y c partner. And we said, Okay, we don't need to raise money right now. Um, but if we d'oh will suffer X percent So we modeled it out. We actually created a financial model and said, Here's the delusion that will suffer. And with that money that will raise, we'll be able to grow like this and therefore, you know, and it came out to something like Lambs School will be 10 times bigger than it otherwise would be. And it will suffer. Call it 15% dilution. So that's easy trade off if you actually model it out.

And that's the reason we have continued to raise. I mean, before we started Lambda School, I was like, I'm never raising BC

18:53

again, right? Well, we should tell. That's right. That was cool story.

18:56

Yeah, so and now we've Ray, it's a year and 1/2 later. We've raised 48 million, and it's not going to be the last we've raised right? But if you look at the growth rate of the school and the revenue, if you look at any number, all of those races were a wise decision. In retrospect, um, and there's a reason VC exists, right when you have a company that can grow at extreme scale and capture a market and create way more value, that's why you raise VC. Um, and the realization for us was realizing that Letter school could be a successful bootstrap company. But if we raised and used a little bit of fuel, we could just be much bigger and much more impactful. Yeah, I

19:43

don't actually don't think it's dissimilar from student loans like there's a dynamic where it works really well for you. And there are other dynamics where if you don't know the terms of the deal beforehand, there are different incentives, and it doesn't work out well for you. Right? Right. So this is kind of you got burned before with your first company? Yes. Yeah. So this I mean, if I remember correctly, right, you were about to raise an A, and then it just fell through.

20:7

We had we had Doc's done friend a, um which is not normally when things fall through. It was a very abnormal story, so it was. I mean, it was December 23rd way. We're waiting for a wire any day. Um, and then the gentleman who is leading our Siri's egg called me and said, actually, we're not. We actually had his secretary call me and say, actually, we're not doing the deal. And I said, Can you tell us why I'm like, Wow,

we're just not confident in the company after, you know, a month of due diligence and going through all the paperwork. And, um, our law firm was like we have We've done thousands of these deals. We've never seen this happen. Um, and we were, like, out of money. So that was like, I didn't want people to go through the holidays planning on coming to work in January, and then the company not being there s So I called the whole team on December 23rd and said, I think it's over, Guys,

I don't I don't know what other options we have on. We had other people who would have funded us, But it's really difficult to like Hey, you know how we went down in a month and 1/2 with that? Come with that VC? Well, they pulled out. So you should fund us. That's not It's very momentum driven. That's why I was very anti V. C. Um, Now I think there are companies that should raise. We see their companies. That shouldn't be See, It's just dependent on the circumstances in the details and what you're looking for.

21:32

Yeah, yeah, But then you left and you went to go work for another start up right after after writing the

21:38

book. So the So I was broke, um, where I was working remotely in the middle of nowhere in Utah during this time. So we go back home. It's not like they're tech jobs. I mean, the closest tech job was probably two hours away an hour and 1/2 away, um, out of money. I used all my savings to make employees and contractors hole because we're burning it down to the wire with the company funds on. My daughter, who was born ended up in the hospital for a month. So we were We were just like, actually, she's only in there for a week, but it felt like a month,

Um, and that the bills might may as well have been for a month. So we're out of money trying to figure out how to recover. Um, and I had written a couple of block posts about growth as we were working on the company that had taken off. So I said, Okay, we're going to turn those block posts into a book, and I e mailed everybody who had subscribed to my block and said, All right, we're launching this Kickstarter. I'm gonna finish up this book and the kick started it. Something like $120,000 in sales. I mean, that's what I'm good at, right?

How many people were on the list? A couple 1000. Um, that's really good. Third. Yeah, That's if there's one thing I'm good at in life. It's growing something quickly. Building hype for something quickly. Yeah, that's kind of my superpower. Some degree. So use that in its fullest for the first time. Um And then a few companies saw the book and said, Hey, come work for us, one of which was lend up. Which is why C company.

23:16

So this is it's still interesting because it's fairly risky, you know, like you lived in the bay before. You, like you lived in your car, right? And then you move back to you so you could conceive of getting a tech job, right? Rather than writing your book at that time for sure. Why didn't you do that?

23:36

Um, so I kind of did both, right? It was just It was whatever I can do to get money right now. And a book was honestly, faster than a job hunt. Graham. Well, maybe that's not true, Executive. That's actually not true. I don't know. I think they had offers, like, within days. Yeah,

24:0
How much can I get paid?

If you can measure how much you are worth, it would be easier to leverage the pay you deserve. There a lot of people who get underpaid every day simply because they don't know their true worth. Don't let people peg you into a specific number, instead figure out your own number.



s o. I imagine the scenario is like, Hey, here's something like, um, I've been really interested in this, like, idea in question lately of like, at what point did you kind of find your voice on and you know people talk about that in the context of art, but I think it's the same for entrepreneurs. Um, in that kind of confidence, like, Oh, I'm just gonna do my thing. And I could Yeah.

24:22

So it's funny. I had, as everything was winding down, I went 1 to 1 of our past investors and I was like, What? You know, what am I going to do? And I was paying myself. I'd started out paying myself 40,000 and I had recently given myself a race 60,000. Um, and I went to that investor and I was like, What? You know, how can I pull this out? I don't know what I'm gonna do next. And he said, Well,

you know, you don't have any marketable skills. You're never gonna make more than $60,000 a year. Um, so maybe you should go find an internship somewhere. I was like, Okay, um, it's like that's where you're like Mindset is right. Maybe I could make $60,000 a year, so I actually made sure that the first job offer I got was double that just just out of spite. But it took me a while. to build up the confidence to, like, you know, people are telling me that.

Well, when you're the CEO of a company, your only job is to make that company successful. And if that company fails, by definition, you're not a good CEO, right? You could debate whether or not that's true, but that's realistically, Warner zero was successful, right? Um and so that calls into question. Well, what do you actually do? What are you good at? Do you have a skill set on?

And I never worked. I'd worked in, like, marketing before, but never in growth growth. And so I was like, I don't I don't know if there's anything I can do. Yeah, um and I didn't believe that people would trust that. I had, like, a skill set that was valuable because I had investors telling me you don't, Andi, clearly they know more than I do. Right? So it was a psychological psychologically difficult time,

and I thought, you know, the only way I can show people what I can do, um is by publishing this book, it's funny to think about that. I've never thought about that. But in retrospect, starting a company is by definition saying I think what I can do is worth more than people will pay me for. Yeah, right. I think that I could do something, whether it's because you can't measure. I think Paul Graham has an essay about this. Something about measurement and leverage and how companies can't do any of those things very well. So if you want to get to a place where you can make a lot of money, get to a place where you can measure it,

get to a place where you have leverage. So you look a TTE pro athletes like, yeah, anybody can measure the number of dollars that Michael Jordan brings in, so it makes sense to pay him $100 million a year, whereas even if you're the best software engineer in the world at a small company, they're not gonna pay you $100 million a year. Um, Google might has spent $100 million to retain Sundar and stuff like that, but, um, yeah, it's it's mis priced. Human capital is kind of fundamental

27:30

to it. Yeah, but it's also 1/4 business, but

27:33

that, like that's Yeah, I think that's the key, that is the inside is saying there. If you look at any asset class in United States, it's being traded on Bloomberg terminals instantly, all over the world, right? So you can trade, you know, £100,000 of pork bellies without anything moving, and it's priced instantly. And there are 1,000,000 people trying to figure out what the accurate prices for those pork bellies. But for some reason, humans don't have that right. It's you get a job or you don't and I'm there Specifically, there have been women who applied to Lambda School.

We get to the negotiation stage and they say, You know, I have always been paid X, and we have say you're worth more than two X So we're going to pay you what we actually think market is. And turns out they just always been underpaid and they didn't know to ask for more. Um, and I think that happens all the time all the time. Well, you know, because

28:30

the thing is, when you start out, you're just applying for jobs, right? And you take what you can get and then, like you mentioned before many of these, you know, quote great jobs are never advertised, right? And so you anchor in this weird way that until you know, people who make 400 grand a year, you're just like all the job says 75 grand a year, right? And and that's awesome to like, You know, if you're making 35 75 fucking killing it right, But then you're just like,

Oh, there's probably, like, some ceiling at, like, 100 something in your advancers. Actually, no, right, It just keeps going. But companies are incentivized to not publish that

29:7

as well, right? No, it's Yeah, it's Ah, that's a funny thing when you get to Silicon Valley and you see, like there is a a desperation around top talent. Um, and there are people commanding, you know, a $1,000,000 salaries, and the companies will happily pay it. Um, obviously, that's not an entry level salary, but And there are people in the Midwest who are capable of being paid six figures in the Midwest, that air making 20 in the Midwest.

And that's crazy to me like that's the problem we're really out to solve. Is why Why is there no mechanism to help people realize their full potential both in economic standpoint and a non economic standpoint. And why is there like there's nowhere near inefficient market place for capital? No, No word close. And that's crazy. Because if you look a TTE GDP and spending and like where we can make the most improvement as faras efficiency goes, human capital is the most un optimized asset class we've ever had. Yeah, that's insane.

30:14

Well, especially in the States to where people aren't working in factories for the most part, right? So, aside from the tech jobs that you offer right now, what other opportunities do you see is like, really great for arbitrage in that way.

30:28

Um, So right now we're hiring a new economist to help us make sense of all that. Um, but some of it you don't have to be an economist to see, um, you know, you can talk or download data from the U. S. Department of Labor and see, like, how many people are applying for the jobs and how many jobs are out there and there are some that have drastic, like 321 shortages that pay really well and there just aren't enough people, so nursing is one of them. Every nursing school is at capacity because they have some. So there's something called the 90 10 rule, which says that only 90% of your money as a school can come from federal funds. Thea other 10% has to come through people paying tuition or private sources somehow.

And that is actually the thing that drives the education system. The United States that 10% finding that 10%. So every school is just desperately trying to find that 10% and however big that 10% is, they can blow the rest out with federal funds all day. Um, so nursing schools, for example. There's a huge shortage of nurses. Boomers are getting old. Millennials aren't going into medicine, but nursing schools are capped because they can't find that 10%. So it's like that drives massive labor shortages across the entire economy. And that's that's crazy, right? That's just that's just a market inefficiency. So,

um, you know, we're not working on it right right now, But don't be surprised if you hear by the end of this year announcement that Lambda Nursing is going live and we're launching a nursing school or, you know, So we look at it backwards from a labor market perspective, and we're starting out with where the shortages in labor markets and let's fill those gaps. And turns out some of those gaps are five million people at a time. Um and that's a huge inefficiency. And if we could be a toll road, that takes a very small told to get you there. Yeah, it's an enormous company, so

32:37

Yeah, I think so too. Uh, yeah. Um So Okay, I'm curious about that. How you end up modeling that risk. If the program I imagine the nursing burger might be a little bit longer than nine months, you're gonna have to give people I imagine. Like you're talking about testing out these living stipends stuff like that. How do you start modeling that risk?

32:59

Um, in the beginning, you make good guesses, and you put it on a spreadsheet on and you give yourself a margin of error Gruesome. Yeah. Um I mean, it looks like any other fintech industry where you start out saying All right, we're gonna make some loans. We don't really know how it's gonna work out. We're gonna learn from that, and over time, we'll have a really predictive model. We're getting better on the just income share agreement for education side for software engineering. Right. Um, we're not all the way there, but we we had to some degree know what can predict what the returns will be given the macroeconomic environment Staying the same.

Um, so you kind of just have to, like, create terms that make sense and figure it out as you go. And then, you know, when we talk about a moat over time, you can better predict what repayment will be. You can better predict how much money you're going to make. You can write a tighter model. If you can write a tighter model, you can bring down the cost of capital. You can bring down your costs or you can increase. The service is that students get. Um, there's just a fundamental advantage to having done that before on now,

we've got a couple of years head start on everybody else, and we can pretty act. I mean, not with 100% accuracy, but we have a pretty good sense of how successful student will be by the time they're starting our couple months. So, um and you know we have We're hiring teams that are going to focus on just that. How can we shorten that feedback loop so that we can determine very quickly how successful people will be?

34:30

Can you kind of quantify someone's work ethic or grit?

34:35

No. But they all along the way, we'll spit off data that you can use to try to approach that So the numbers are in output, not input. Um, but I mean similarly to a start up, right? Like you can't quantify the grit of founders. But you can look at what they're doing and the results of that you could retroactively say, Yeah, that looks gritty. Um, and if you get enough data points, machine learning is actually like That's one of the places where a I makes the most sense is saying, You know, let's take all of this data And let's figure out a model that maybe humans couldn't put together, but in computers can figure it out.

And pretty soon you can underwrite the likelihood that a person will be a successful software engineer before they paid a dollar. Yeah, um, and then that changes everything. So what?

35:30

Someone asks us questions I want. I want to credit them somewhere. Oh, no, I know who it was. Yeah, David could feed wind. Basically asked. Um, imagine a market dynamic where it's mostly white dudes getting hired for suffer engineering jobs. Is it possible that your model could learn in the wrong way and say, Onley select white dudes for land of

35:51

school? So it could if that's what we're actually happening. Um, that's not what's actually happening. The reality is, if we can make someone to be make someone a strong software engineer, they're getting hired. And, um but, I mean, there are ethical concerns that we have to be aware of, right? I mean, I used to work in lending. You have to be very cognizant of that in lending because, for example, if you use it code and you say,

Look, the people from this sip code tend not to repay zip code is very directly correlated with demographics and their ethical concerns that you have to be wise about, um, what we're seeing right now is actually the reverse to some degree s, obviously not, You know, it's not causation by any stretch of the imagination, but we can tap into markets of completely untapped talent because we're not charging anything. Folks who are brilliant just haven't had opportunity before. And so, you know, we actually over index to, um, those types of communities. So where, I think is a school where less than half white,

which is not the traditional makeup of a code school by any stretch of the imagination. But that's not because we're, like, intentionally skewing admissions that way. It's just because that's where a lot of untapped talent is. We try to find and train that untapped talent, and companies are happy to have it. In fact, it's a huge need for cos we don't sell ourselves as diversity solution. But it just so happens that our students, who are great engineers, are generally speaking, more diverse than Stanford would be.

37:39

Yeah, that makes sense. Um, super great question. Yeah, I know. It is really interesting on this. Yeah, yeah. Um, so you guys now are remote, right? So, like all the coursework happens, live stream. Do you see a version where you become centralized, You buy?

I mean, like, my buddy, just, uh he worked at a college in Vermont. It just went under, right. I imagine you can buy colleges at this point like, yeah. Do you see a world where you're like, I mean, maybe probably with the nursing program. You'll have to You would have Thio by.

38:12

Yeah, it changes. It changes the cost structure. So the less we can be in person, the better. Yeah, we have some experiments that were running where we were actually housing people in group housing together s o they live and work in the same environment. They're still taught online's because it's we don't have to have the density of instructors in one place at one time. We could just get students together. Um, I mean, I've looked at it. Hey, can we just buy a summer camp and run Camp Lambda and have, like that be awesome? Yeah, way.

Just have to like, decentralized housing is much cheaper than centralized. Eso students would have to be willing to build that into the cost. Um, So what I like to say is, you know, you look at Amazon. Amazon in the beginning was saying, No, we're entirely online. We're going to be focused there, But once that's nailed. Then you start to play with other stuff. Well, probably the same way. But the core of land a school for the foreseeable future is online.

Whether students are in the same place or not, we actually have a monthly meet up in every major city in the U. S. Are students all get together in person, and that's working pretty well. So there may be more of that, Especially as we have more density. Um, but but the educational experience will probably always be online. Yeah.

39:38

I mean, this is what I've heard from, you know, like the guys. That's happier, who just You basically have to be intentional and, like, build that remote culture. Very intentional, because if you don't, you could easily see a version where Oh, you weren't in class today, then you don't hear the thing. You didn't hear the tip, right? Yeah.

39:53

Advantage. And I think you have to do that as a company. As a school Like it, it's not something that happens on accident. Yeah, and in the beginning, you know, we started out by figuring out okay here, all these people who could be watching Netflix right now, so it actually goes back to our instructional design where? I mean, if I think back to my college classes, maybe 50% of people were paying attention. If I'm being optimistic, um, at least I mean, this was call it 2010. At least 50% of class was on Facebook.

40:23

And I think you have you seen those photos from back in the day when Facebook just started? So, yeah, I'm sure I don't think it's Photoshopped, but I imagine there's a real one out there somewhere where it's like from the back of the class and the professors talking like it's 70% of the screens or Facebook.

40:37

Oh, yeah, yeah, yeah. So for better or worse, I actually think it's a secret advantages that we can't rely on the crutch of, just like looking at somebody and seeing what they're doing. So we have to use data and software and instructional designed to make sure everybody's working on the right thing at the right time. Um, so e. I mean, yeah, it's a different world that you have to build for, and you have to build it for it from first principles. It's like you can't just tack that on at the end. Oh, by the way, we're online. That doesn't. Does

41:9

not work. Well, most moves Air. Yeah. Disasters credit. 10% or something? Yeah. Of the good ones. Yeah. Yeah, it's crazy. Um, So Dave Dawson asked several good questions. He says you appear to be on the successful path now. We'll just take that for granted. Was there a point early on and land to school when you wanted to stop?

41:33

There was never a point I wanted to stop on DDE. I mean, I I would if you pay me minimum wage to do this forever, I would do this forever for minimum wage. Um, maybe I'm just a save Esther Massachusetts or something. Yeah,

41:52
What made Lambda so successful despite other code bootcamps having difficulties in online education?

Existing bootcamps tried to solve online with the same tools they were teaching offline. When they put their curriculum on the internet and it did not work as expected, they assumed the internet was broken. Lambda realized that in order to teach their students online, and to get them jobs, not just the whole curriculum but the whole ecosystem for the students had to be changed from the ground up.



you might have to move back to U T. O.

41:54

Um, but there are definitely times when it was just, like, this is not going to work, and we're screwed. And I mean, in the beginning, it was like all those other schools were right. Like when we started. Everybody said you can't teach people effectively online. You can't teach people effectively without skin in the game. They have to put something up. Yeah, um, you know see, people aren't going to get jobs if you don't, if they don't have a network like you can't accept the categories of people that you're accepting and have them be successful Software engineers,

which like looking back like a ridiculous thing to say. Yeah, but everybody believed that, like, the entire code boot camp industry believes that online was not very effective because they're all like, we haven't in person class and like, yeah, let's, like, throw it online. And it didn't work. Well, clearly that's fundamentally broken. Yeah, um, everybody who had ever tried a free upfront thing didn't use any sort of filtering other than a paper resume.

And so and people would show up on day one, and they wouldn't show up on Day two and then say, Oh, that's clearly isn't working. And so uh, yeah, there are a whole lot of times when we said this, like, maybe they were right. That was the rial reaction. Like maybe we were wrong this whole time. And, you know, we're out here saying, Hey, you guys were all old school.

You're all doing it the wrong way. We're gonna do it over here. Well, maybe maybe there's a reason that hundreds of years of education have been have worked this way. Yeah. Um, but really, I think what what happens is we don't have another option, right? We have to figure it out where we die. And that's a very

43:38
Why are some students unsuccessful in completing their education?

It seems that traditional educational models assume that some students are going to succeed and some will fail, and instead of helping those who might fail, they are making sure the other ones are guaranteed to succeed. It does not mean you cannot learn the curriculum, but if a student and the school don't share the same goals to begin with, it becomes even harder for someone to succeed when faced with a challenge.



powerful motivator. Not getting a real job. Uh, yeah. Yeah. Have you ever completed online course before?

43:48

Right. Okay. And in fact, we're talking about the book. Um, the book was available as an online download. Yeah, and one of the things that made me want to build in this model and I sold the book for 100 bucks, right? It was not cheap. Um, 50% of the people that bought the book ever downloaded it. Even so, there's, you know, between looking at that and looking at MOOCs, it was like,

Has anybody ever figured out how to make education actually successful? Or we all just opening the top of the funnel so wide that some people are gonna fall out the bottom and like, and that's become my thesis is that there's some percentage of society who are auto died acts, and they just have a ridiculous advantage over everybody else. Um and so part of land of schools. How can we help the other? 98% learn how to be auto didactic howto see a CIA problem. Approach it, figure that figure out a solution. Um, and I don't So we approached instructional design with no assumptions. And I think every school ever has looked at everything and said, Okay, we'll hear the successful students. So our job is just to wed everybody else out. Yeah,

when Really, Like wire those wire, the other students unsuccessful. Is that because they suck? Or is that because you suck on? We've found that it's really just because you suck most of the time. Um, it's really easy for schools to just look the other way,

45:23

huh? I have been wondering. I'm doing ah, duelling, go. Right now, uh, I've been curious about I mean, it's cool, but it's very open, like you could just choose where you want to go. They, like, motivate you a little bit by keeping a streak up. But I'm actually a little surprised that people if if people finish it, because I'm doing it

45:42

every day. But I think if you guess what their completion numbers were you'd be right. Yeah, um, I think about, you know, when I went to college and I had a class and I showed up and it was a Shakespeare class, I think about the work that I put in in that class and then the work that I put in outside of that class, there's no way in hell I put in his much work studying Shakespeare on my own as I would in the Four Walls of the University. But I don't think that's because there was a physical campus with a professor wearing a tweed jacket. Necessarily, that's just because they're there was social pressure. There's instructional design. There were external mechanisms that forced you to put in the work, eh? So we had like, that's what we built in Tau Lambda School. But you also have to make it fun total. You have

46:30

to motivate in that way. You know, it's why I learned to program. It's why I learned to video at it. It's why I learned everything on the side because you had a clear goal, like, Hey, I want to build this thing and it's enjoyable to build the thing you want.

46:43
How is Lambda School curriculum different from a typical University computer science course?

Universities like to start with fundamentals and build a holistic picture over time. That works for some students, but not all. Lambda gives you a project to play with on day one, enabling you to experiment, to change things, to get excited about what you are learning first. Once you are motivated to learn, learning becomes a natural process.



Well, so you look at it as an example. Computer science programs, right? They have ridiculous dropout, Um, and they're proud of that. But in my opinion, it's because they start like writing Java or they start writing, see, And you you have to go semesters before you get to a point where you can write any code that you can see or touch or actually play with. Um, and so, like, yes, you're getting the fundamentals. But lam school works the other way.

So you have a site that you can play with the first day, and it's not, You know, you don't understand the fundamentals of programming. It's crabby HTML and scrappy CSS. But you can see it. You can touch it, you can play with it. I think there are a lot of people, if not the majority, of people that learn that way on the people who aren't going to become researchers. And that's okay. And just because you start at that point doesn't mean you can't drill down until you're doing the fundamentals like you do need to know how to write, see, to be a good engineer. You do need to know how memory management works But maybe let's not start with memory management as, like an entry level point to software

47:48

engineering. Yeah. No, I I did it a year of CS and even high school. And it was just like, What are we doing this for? Right, What is the point of?

47:56

And there are a few people that are interested by that enough that they can carry on. But that's not enough. People toe build the world of software that we need. No. So yeah,

48:7

yeah. Uh, So, Davis, another question that I want to cover, and that is what keeps you up at night now.

48:16

So we we agreed as a team to no longer share the number of students that we have enrolled. Um, but it is not a small number, and it is growing at an insane pace. Um, well, we'll soon be measuring land school scale by percentage of the overall number of students learning to program every year to give you some context. Um, and being able to support that kind of scale effectively is what keeps me up at night, mostly specifically hiring mostly hiring executives. Right now, um, who can build out 100 150 person teams beneath them. Um, those people are difficult to find, and it's a very important decision. And we need,

like, five of them yesterday. Um, and then, you know, on the individual contributor side were probably we need to hire, like, 100 people very quickly. Um, and that is hard,

49:28

but that would be remote, right? Those

49:30

jobs most of your moment. Correct.

49:32

Yeah. So if you're looking for a job Oh,

49:35

please. I think we're hiring for, like, 50 positions right now. Lambda school dot com slash careers. Please. Please, please.

49:42

All right. So I'm going to talk about the couple, like two other topics. So one actually like this one day. Oh, call Kaleo s. I've made remarks I do not agree with. That's a quote from your Twitter bio. Yeah, you're a prolific on twitter if people don't follow you. Uh, what is that one remark? You wish you didn't have to disagree with one remark that I So I think what he's trying to get you to say is what is something that you may have had to like, say, or go back on, And perhaps, like, politically correct or like, environmentally

50:16

soon? Since a lot of layers. So that question, that's a tricky one. So,

50:24

or maybe even a core belief where you're just like, Oh, maybe I'm just wrong here.

50:28

So the one that I go back and forth on the most, um is as a company being remote versus in person and the trade offs of that. Um so we bring people together a lot, and I see the advantages of that. Um, and a lot of our executive team will probably end up being in person. Um, so it's I would say that I wish that remote work we're at this incredible place where there's no trade off, and I think that's something that everybody wants to believe and some people do believe. But until you're kind of in the CEO or executive role trying to bring a company together, you don't see some of the trade offs. Yeah, um, so I I mean, I would love to be able to move anywhere and not pay what I pay for rent and by extension, not pay everybody else when I have to pay them so that they can pay rent. Um,

but I still think, and a lot of our students come in wanting to be remote. Um, A I don't think remote work is built into enough cos yet where I would be comfortable telling somebody that I love that they should start their career as a remote junior software engineer. Um, be I think we're still figuring out what the right dynamic is in person versus remote. Like as as a tech industry. Um, what the trade offs are and what the ideal way to do that is, um, my first company was entirely remote, and that's really hard. We're trying to come together and create something, but nobody's in the same spot. They're just trade offs. That said,

all of our instructors a remote all of our career coaches a remote and all of our students remote. And because we've built around that we've built into that, it doesn't matter. Um, but I think the two things that our most like my most controversial beliefs baby or most like seemingly like don't seem to jive with each other is that I think the best high growth companies are still going to be built in Silicon Valley for right now. Or are we still having an executive team in Silicon Valley. Um, but also, I believe the best schools are remote. Um, and I don't think that's a contradiction, though. It certainly feels

53:19

like one. Yeah, Yeah, that's a good thing about. You know, uh, I was listening to Michael Sybil talk yesterday, and he said he's had his mind changed about remote company's. Given the success of get labs appear type companies, right. But the way he puts it now is that it has to be one of your like, core things, one of your core innovations. And if you're thinking like maybe we have the energy or the insight to innovate on a couple, maybe three categories, are you willing for remote work to be one of

53:52

them? Yeah, I think that's exactly right. You can only solve so many problems as a company. And I mean, I I've talked to the CEOs of both sappier and get lab in the past couple weeks, and they think about that all the time. Yeah, And the nice thing is, the talent advantages that you have when you do that are enormous. Um, you know, one's Appier's like, Yeah, I like this guy in Ohio and this guy in Nebraska. It's like, Man,

you know, I'm hiring. But But at the same time that the trade offs are that if you're you know, you have an office in the financial district and you're hiring five executives, there are 100 companies that have been high growth that, you know. The funny thing is a lot of the people who they join AA high growth company, they know how to grow. They figured it out. Now they're successful, and they have less incentive to move than other people do. Yeah, So, like, I think the pool of high growth executive talent with 15 years of experience growing high growth companies is still largely concentrated in San Francisco. Like if you need or call it Silicon Valley.

If you if you need 50 people to do that, it's really difficult to find 50 people in Ohio to do that. Um, if it's still difficult to find 50 people anywhere, Um, yeah, if you've built that in, um, all right, get lab and happier. Have, you know, in other companies like envision or whatever else they've chosen, that is their path. And they have to spend a whole lot of time thinking about and focusing on and optimizing for that. Maybe that's a trade off where they have to spend less time hiring or less.

There's a less competitive hiring market. I mean, the instructors that we have now there's no way on Earth. We could have had a similar quality of instructor base in San Francisco. They're just They're fundamentally is not, um So it's it's a trade off.

55:53

Yeah, it's difficult. It's a tricky one. Um, okay, so the last thing I want to cover is I've heard you mention a couple interviews that the market is not very good at measuring product quality crest or something to that effect, right? Yeah.

56:6

So I think what I usually say. Specifically, analysts. So people who are and if you look a TTE public companies or V C's or whoever else, um, another way to say this. I think PG has said that product is our revenue is a very, very trailing indicator of product. So I think you know, back when I had spare time, I would play the stock market a lot. Um, and I think people just don't have a very good There's no way you can quantify product quality very well. So people who are looking at things from a quantitative standpoint underestimated every single time. Um, E look att. Some of the classic companies like you look at the White Sea Cos the Airbnb is the stripe.

They all had competitors. Some of their competitors had a head start. Um, some of their competitors had more money and more market share it at different times. But there's a reason those companies win and become durable. Cos another drop box as an example. Well, it's

57:18

It's one of my favorite Steve Jobs videos. I don't know if you've seen this one before, but it's like a very hot burn on Microsoft and where he's just like, Listen, they're good people. The problem is, they just have no taste. What does curious about with you is like, Do you think you can teach taste in a school because it's very much it's related to product. It's related to listening to users. It's all of that. But there's something like more ethereal about it, you know, I

57:47

think that the main thing is having I thought about it a lot and then having seen it and having noticed it when you see, it s O, for example, We use slack, um, as a school. So we've got I could tell you how much we spend that would tell you how many students we have. It's a non trivial amount of money for slack. Um, and people say, you know, why don't you use you know, competitors or just use IRC, but like, it's very, very subtle. The work that has been put in the slack,

Um, it's like has it's not perfect, right? But as a product, you could just tell. Yeah, and so it's a whole lot of the way I like to think about. Product is a whole lot of subtlety built up over time, to the point where it becomes an advantage. If you build up a lot of those advantages over time, it compounds to some degree. Um, and I think because it's difficult to measure, it's so subtle. I mean, if you,

for example, if you like Dr A model s and then you go drive a similar cost Jaguar, for example. Um, the model s like the materials or worse. Um, the build is probably not as good, like they're not as good at like assembling the pieces. But just the experience of that car versus the other one. It's not even close. Um, so test was probably the canonical example of, like, product matters way more than analysts can measure

59:26

coupes. You just think exposed students this over a long enough time frame. I think you

59:32

show people like that when I started to realize it is when I had a few product minded people like point out some of the subtle details to be like You breathe like you find yourself looking for one app for one piece of software using something more often. Yeah, and it takes somebody to sit down and point out like you know why you're doing that right? It's because this is happening at this specific time in this specific way, like Oh, that was very pleasant, actually. In retrospect, um, and pointing that out and then beginning to look for it is when I think you start to notice. The key difference

60:7

is fair enough. Yeah, I like being critical sometimes, actually, products, um all right meant so If people wanna sign up or learn more about land school, where

60:16

should they go? At Lambda School? dot com

60:18

and you're on Twitter

60:19

at at Austin. Go, Vinny. Like the feminist author. Not like the city.

60:24

All right. Thanks for coming in for me. Thank you. All right. Thanks for listening. So, as always, you can find the transcript and video at blogged out y Combinator dot com. And if you have a second, it would be awesome to give us a rating interview wherever you find your podcast. See you next time.

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