- Austin Allred, CEO of Lambda School, discusses the challenge of encouraging people to apply to the program due to imposter syndrome and fear of failure.
- Lambda School offers part-time programs and living stipends to make the opportunity more accessible to a wider range of people.
- The admissions process at Lambda School focuses on pre-course work and assessing a candidate's work ethic and intelligence.
- The core insight behind Lambda School is the belief that education should not come with a high financial burden, as seen in traditional universities.
- The University of Phoenix's aggressive marketing tactics and societal pressure to attend college contribute to the preference for traditional universities over coding schools.
- Lambda School aims to provide students with a network and teaches networking skills as part of the curriculum.
- The average Lambda School graduate has three years of experience, has paid off their education, and is financially ahead compared to a university graduate.

- Lambda School integrates career coaching and soft skills training into its curriculum
- Students are taught to do informational interviews and network for job opportunities
- Lambda School is hiring interview sourcers to help students find companies and job offers
- The school focuses on vocational training and helping students make money
- The value of a traditional liberal arts education is recognized, but not currently a focus of Lambda School
- The school's business model is not the main factor in its success; the educational experience and student outcomes are key
- Lambda School raised money to fuel its growth and increase its impact
- The founder's previous experience with raising venture capital influenced the decision to raise funds for Lambda School
- The school's growth and revenue justify the decision to raise venture capital
- The founder's previous company had a funding deal fall through, leading to a desire to be cautious with fundraising.

- The speaker's company was supposed to receive funding but it fell through, leaving them out of money.
- They called the team and said the company might not be able to continue.
- They decided to turn their blog posts into a book and launched a successful Kickstarter campaign.
- They received job offers but chose to focus on the book instead.
- The speaker faced doubts about their skills and worth but used the book to prove themselves.
- They discuss the mispricing of human capital and the lack of an efficient marketplace for talent.

- The speaker discusses the potential for arbitrage opportunities in the labor market, particularly in industries with shortages such as nursing.
- The 90-10 rule, which limits federal funding for schools, creates a challenge for nursing schools in finding the necessary funds.
- The speaker mentions the possibility of launching a nursing school to address the shortage of nurses.
- The company uses a labor market perspective to identify gaps and fill them.
- The speaker explains the process of modeling risk and creating predictive models to determine the success of students.
- The company focuses on data and machine learning to assess the likelihood of success in software engineering.
- The speaker addresses concerns about bias and diversity, stating that the school attracts diverse talent and is not intentionally skewing admissions.
- The company operates remotely, but also organizes in-person meetups in major cities.
- The speaker emphasizes the importance of building a remote culture intentionally to ensure equal access to education.

- The speaker discusses the challenges of online education and the need for effective instructional design and data analysis.
- They mention the skepticism surrounding online education and the belief that it is not as effective as in-person classes.
- The speaker talks about the importance of autodidactic learning and helping students develop problem-solving skills.
- They emphasize the need for motivation and fun in the learning process.
- The speaker criticizes traditional computer science programs for starting with complex concepts instead of allowing students to immediately engage with coding.
- They express concerns about the rapid growth of their own school and the difficulty of hiring executives and individual contributors.
- The speaker mentions their active presence on Twitter and discusses the challenge of making remarks that align with political and environmental correctness.

- The speaker discusses the trade-offs of remote work versus in-person work for companies.
- They believe that remote work is not yet built into enough companies for it to be a recommended career choice for junior software engineers.
- The speaker believes that high growth companies are still best built in Silicon Valley, but remote schools can also be successful.
- They mention that the market is not good at measuring product quality, and that taste in product design can be difficult to teach but can be recognized through experience.
- The speaker emphasizes the importance of subtle details and user experience in determining product quality.

The speaker discusses the importance of being critical when evaluating products and suggests visiting Lambda School's website for more information.

- Austin Allred, CEO of Lambda School, discusses the challenge of encouraging people to apply to the program due to imposter syndrome and fear of failure. 
- Lambda School offers part-time programs and living stipends to make the opportunity more accessible to a wider range of people. 
- The admissions process at Lambda School focuses on pre-course work and assessing a candidate's work ethic and intelligence. 
- The core insight behind Lambda School is the belief that education should not come with a high financial burden, as seen in traditional universities. 
- The University of Phoenix's aggressive marketing tactics and societal pressure to attend college contribute to the preference for traditional universities over coding schools. 
- Lambda School aims to provide students with a network and teaches networking skills as part of the curriculum. 
- The average Lambda School graduate has three years of experience, has paid off their education, and is financially ahead compared to a university graduate. 
- Lambda School integrates career coaching and soft skills training into its curriculum. 
- Students are taught to do informational interviews and network for job opportunities. 
- Lambda School is hiring interview sourcers to help students find companies and job offers. 
- The school focuses on vocational training and helping students make money. 
- The value of a traditional liberal arts education is recognized, but not currently a focus of Lambda School. 
- The school's business model is not the main factor in its success; the educational experience and student outcomes are key. 
- Lambda School raised money to fuel its growth and increase its impact. 
- The founder's previous experience with raising venture capital influenced the decision to raise funds for Lambda School. 
- The school's growth and revenue justify the decision to raise venture capital. 
- The founder's previous company had a funding deal fall through, leading to a desire to be cautious with fundraising. 
- The speaker's company was supposed to receive funding but it fell through, leaving them out of money. 
- They decided to turn their blog posts into a book and launched a successful Kickstarter campaign. 
- They received job offers but chose to focus on the book instead. 
- The speaker faced doubts about their skills and worth but used the book to prove themselves. 
- They discuss the mispricing of human capital and the lack of an efficient marketplace for talent. 
- The speaker discusses the potential for arbitrage opportunities in the labor market, particularly in industries with shortages such as nursing. 
- The 90-10 rule, which limits federal funding for schools, creates a challenge for nursing schools in finding the necessary funds. 
- The speaker mentions the possibility of launching a nursing school to address the shortage of nurses. 
- The company uses a labor market perspective to identify gaps and fill them. 
- The speaker explains the process of modeling risk and creating predictive models to determine the success of students. 
- The company focuses on data and machine learning to assess the likelihood of success in software engineering. 
- The speaker addresses concerns about bias and diversity, stating that the school attracts diverse talent and is not intentionally skewing admissions. 
- The company operates remotely, but also organizes in-person meetups in major cities. 
- The speaker emphasizes the importance of building a remote culture intentionally to ensure equal access to education. 
- The speaker discusses the challenges of online education and the need for effective instructional design and data analysis. 
- They mention the skepticism surrounding online education and the belief that it is not as effective as in-person classes. 
- The speaker talks about the importance of autodidactic learning and helping students develop problem-solving skills. 
- They emphasize the need for motivation and fun in the learning process. 
- The speaker criticizes traditional computer science programs for starting with complex concepts instead of allowing students to immediately engage with coding. 
- They express concerns about the rapid growth of their own school and the difficulty of hiring executives and individual contributors. 
- The speaker mentions their active presence on Twitter and discusses the challenge of making remarks that align with political and environmental correctness. 
- The speaker discusses the trade-offs of remote work versus in-person work for companies. 
- They believe that remote work is not yet built into enough companies for it to be a recommended career choice for junior software engineers. 
- The speaker believes that high growth companies are still best built in Silicon Valley, but remote schools can also be successful. 
- They mention that the market is not good at measuring product quality, and that taste in product design can be difficult to teach but can be recognized through experience. 
- The speaker emphasizes the importance of subtle details and user experience in determining product quality. 
- The speaker discusses the importance of being critical when evaluating products and suggests visiting Lambda School's website for more information.

Austen Allred is the CEO and cofounder of Lambda School.

https://twitter.com/Austen
https://lambdaschool.com/

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

The YC podcast is hosted by Craig Cannon.

https://twitter.com/craigcannon

***

Topics

00:35 - Encouraging people to do something that they're scared to do

4:50 - Where did the insight for Lambda School come from?

6:00 - College vs developer schools

10:00 - Building a network

11:50 - Does Austen see value in a traditional liberal arts education?

14:30 - Steven Klaiber-Noble asks - As competitors begin to copy your model what front do you believe you'll be competing on?

17:30 - Why did Austen choose to raise money?

19:40 - Fundraising falling through on Austen's first startup

21:10 - Moving back to Utah and writing a book about growth

23:00 - Why Austen wrote a book

26:00 - "Starting a company is by definition saying, I think what I can do is worth more than what other people will pay me for."

27:00 - Mispriced human capital

29:55 - Other opportunities for Lambda School

32:20 - Modeling risk

35:10 - 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.

37:25 - Will Lambda School ever not be remote?

40:50 - 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?

43:20 - Helping everyone become an autodidact

46:20 - Rethinking where to start on an online course

47:45 - Dave Dawson asks - What keeps you up at night at this point? 

49:20 - 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?

53:00 - Choosing remote work as a core problem to solve in your company

55:30 - Analysts aren't good at measuring product quality

57:10 - Teaching taste

All right, so today we have Austin Allred.

He is the CEO of Lambda School, which was in the summer 2017 batch, and Lambda School is a CS education that is free until you get a job.

So Austin, what I wanted to ask you about, you mentioned this on a few podcasts that I've listened to you on.

And basically, there's this core idea in Lambda 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 excuses about?

Yeah, I mean, I think that's actually the problem we grapple with the most.

And I think Patrick Colson 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 Lambda School as like the realization of that.

So we've had a lot of students, you know, in the past you would graduate and then whenever you felt ready, you would start applying for jobs.

And we'd have students that would just wait and wait and wait.

And you talk to them 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.

So, now we have some mechanisms that get you to, you know, start applying earlier.

But yeah, like the minute they start applying, they get interviews, they get hired, they get a six-figure job.

And it's like, what were we waiting for, right?

And what about the people before Lambda School?

A few of the questions that came in from Twitter were basically like, isn't this just an opportunity for rich people?

You know, Like being able to leave your job and commit full-time to a seven-month 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.

We'll be announcing something in the near future along those lines in concert with a few other tech leaders here in the valley.

But but yeah, I mean, the number 1 problem we have to solve on the admissions side is getting the people who are qualified to actually apply.

It's kind of a, you wouldn't think of it as being a problem.

Some of the best companies are just like, yeah, I just don't know if I can get into YC.

And that's the difficulty of having a good reputation where a lot of people want to go there.

You just, there are people who assume that they won't get in, which is not the case.

Right, 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?

Of the people that make it through the pre-course work, it might even be higher now.

I mean, the pre-course work is more difficult, But the vast majority of our selection mechanism is the pre-course work.

How well you do on it, if you put in the time.

Sometimes I wonder if we could just make the pre-course work really long and have that be it.

Yeah, I mean, because that's obviously like your business hinges on you assessing that risk, right?

And so if you could make it sufficiently difficult,

I mean, you run the risk of false negatives.

But, 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?

Like when I got into YC, 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 MIT and you got a 1600 on the SATs as a freshman doesn't necessarily mean you'll have a successful company.

in the past it's possible that YC was fooled more often by fancy degrees and PhDs and stuff like that.

In my YC group there were a couple, there were like a 15 and a 16 year old kid.

So I'm curious about, There's this core insight with Lambda School, which centers around, what if we didn't have to charge $10,000 for this dev school?

I was living in rural Utah before I moved to San Francisco.

when you move to San Francisco from a small town and you see just the discrepancy in opportunity, I guess.

So it was easy to look around rural Utah and be like, look, that guy is just as capable and intelligent as that guy in San Francisco.

In San Francisco, that guy is making 150 and he's leading a team.

And, I mean, if you talk to people, you realize it's more about opportunity than anything.

So, to tell a guy that's making 30K, hey, just drop, you know, 10K on an education and there's a 7% interest rate on the other side and hopefully it works out.

So, I have to put it in terms for VCs sometimes and say like, imagine spending half of your annual income on an education on a bet, right?

You have, most VCs are very well off and 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 are people in these situations signing up for University of Phoenix type programs, but not the dev schools?

So I think the first reason is honestly because the University of Phoenix is more aggressive in their marketing tactics.

They don't really care whether you succeed to some degree.

If they can, you know, they're backed by, the loans are backed by Uncle Sam and whether or not you're successful, they get paid.

So, the incentives are fundamentally misaligned and if the University of Phoenix can get you to sign a piece of paper, they get 80 grand.

But the reason people opt for universities, generally speaking, versus code schools, is they've, you know, my entire life growing up, nobody ever said there's a path to success that's not college.

My older brother isn't a college graduate.

A lot of very successful people I know are not graduates.

But yeah, everybody growing up just said, go to college.

Doesn't matter what you study, and you'll be successful.

And I think my generation is now realizing that's fundamentally untrue.

And the newer generation has the benefit of seeing people with hundreds of thousands of dollars in student loans and working at Starbucks.

And clearly something was off in the advice that we were given.

I know the feeling, I graduated with like 50.

yeah, I got a bunch of scholarship and it worked out all right.

So all the jobs I've gotten have been through skills I've learned outside of NYU.

But the real upside was being in a huge city where I could start working early.

And I think that was a real competitive advantage.

And I'm curious about Lambda School in this way.

Because at NYU, once I started, I never went home again.

Every summer I was working, and then I was working during the year.

And then I was realizing that I could cram all my classes on 1 or 2 days and work full time.

so I had easily a four-year advantage on all my friends who went to Colgate or something, like in the middle of nowhere, right?

So how do you take advantage of that at Lambda School?

Getting people in early, getting them a network?

1 is Lambda School is 9 months full-time versus a four-year degree, which is obviously 4 years.

So the average Lambda School grad, If you had 2 students, 1 started a university at the same time as another student started Lambda School, by the time the student's graduating from university, the Lambda School student has 3 years of experience and has paid Lambda School off and is a quarter million dollars ahead, at least, of the university grad.

So most of our students are coming in with no network, a lot of students from either inner cities or rural areas.

And 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 you network, here's how you find other people with similar backgrounds, hired in engineering roles on LinkedIn, now we're gonna go contact them.

I'm very curious about how you, you know, tactically explain networking skills, because I know you wrote a growth book before Lambda School, right?

So you're kind of like into breaking these things down.

So yeah, say I'm a graduate or I'm in Lambda School.

So now you meet your career coach at week 3.

So it's very integrated into like it's, it is Lambda school, right?

And we have careers lessons every week for the entire school.

So for example, we train students to do informational interviews, which is find someone with a similar educational background to you.

So use LinkedIn's advanced search and search for schools that are XYZ in locations that are this and with careers that are this.

Now you have a huge list of people who are just like you.

Reach out to them and ask if you can grab coffee.

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.

We're really close to the point at which we just say, if you have to use an application to click an apply button somewhere, just throw it in the garbage.

Or at a minimum, we'll have somebody else do that for you.

So now to help with that, we are hiring right now 37 interview sourcers.

So those are 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.

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 else.

So in terms of the other, there are a couple questions around, well so John Palmer asked, can or what other pieces of the university experience can be unbundled?

And the thing that I'm in particular curious about is The way you treat education in the sense of land to school is like, hey, this is job training, right?

It's not about being altruistic and necessarily making artists or whatever you wanna call it, right?

Do you see a traditional, a value in a traditional liberal arts education and like those elements?

So I I see Value absolutely in the liberal arts, right?

I do disagree that a the only way you can learn the liberal arts is within the walls of a university.

So in my mind, a lot of the people that we're talking to, if you're 35 and you've never had a very high paying career.

The prospect of let's take out $50,000 of loans to study Shakespeare is not a bad thing per se, but probably not the right thing at the right time.

And we want to help you make as 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.

In fact, that may be an add-on we add to the school later, but it's just not the focus right now.

There are a lot of people that do a really good job at that, and we're okay to leave that to them for now.

Yeah, because I think that's, it's 1 of those things, similarly to signing a student loan when you're 18.

Like you don't really know the terms of the day.

I mean, you could like, you can read it on paper, but you don't really understand the dynamic you're about to enter.

Whereas when you're say, yeah, you're 35 thinking about switching careers, you're much more practically minded.

Or you might just be interested in indulging.

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 it was 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 that's the only time and only place that you can become well-rounded.

I mean, do you see there are elements of value in unbundling other aspects and like really building that into Lambda School?

So there's another question here from Steve Claybor, Claybor Noble, who asks, as competitors begin to copy your model, which we should talk about, it's an income sharing agreement, what front do you believe you'll be competing on?

So the way I describe Lambda School is it's, you know, people know Lambda School because of the business model, but the business model is something that's up front.

That's not what makes Lambda School works, right?

You can, you can, you can charge whatever you want or however you want.

So our product, 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, upfront, and online education work.

When we started, our dropout rate is what was killing us.

Now we're graduating more than 85% of students that start day 1, and a lot of the dropout is because of reasons outside of our control.

It's financial or life circumstance or whatever else.

They come out on the other side as great software engineers.

And we have a hiring network ready to hire them.

Then the admission side of knowing who and how and what to accept, that's not something you can buy, right?

You just have to figure that out over time and eventually it'll be very data driven, we'll be able to tell before a student begins Lambda School what they're likely to be hired at and what their likely outcome will be.

But there's no credit score for people, right?

You can't say like, what is this person's potential?

There's no inputs that you can take right now that can determine that.

So nobody knows how to underwrite student risk.

Nobody knows how to train students online.

Nobody knows how to place students nationally at scale.

And figuring all that stuff out is the hard part.

Plugging, throwing an ISA on the front end is the easy part.

So you're just hoping that you're much further ahead than people realize.

And I'm sure there will be competitors, but The thing that scares me isn't somebody adopting our business model.

That probably has happened that I haven't heard about and will happen a million more times.

What will make us win is the student experience and how fast we can move in making that better over time.

And that includes the outcomes that students have.

So all of my time and effort and energy is focused on that.

So you were profitable before you did YC, right?

Maybe not usually profitable, but profitable.

So, was there an element of fear around being copied that led you in the path of raising money?

So we actually sat down with a YC partner and we said, okay, we don't need to raise money right now.

We actually created a financial model and said, here's the dilution that we'll suffer.

And with that money that we'll raise, we'll be able to grow like this.

And it came out to something like, Lambda School will be 10 times bigger than it otherwise would be, and it will suffer, call it 15% dilution.

So that's an easy trade-off if you actually model it out.

And that's the reason we have continued to raise.

Before we started Lambda School, I was like, I'm never raising VC again.

And now it's a year and a half later and we've raised 48 million and it's not going to be the last we've raised.

But if you look at the growth rate of the school and the revenue, if you look at any number, all of those raises were a wise decision in retrospect.

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.

And the realization for us was realizing that Landers School could be a successful bootstrapped company, but if we raised and used a little bit of fuel, we could just be much bigger and much more impactful.

Well, I 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.

So this is kind of you got burned before with your first company.

So if I remember correctly, you were about to raise an A and then it just fell through.

We had docs done for an A, which is not normally when things fall through.

So it was December 23rd, and we were waiting for a wire any day, and then the gentleman who was leading our Series A called me and said, actually, we're not, well, he actually had his secretary call me and say, actually, we're not doing the deal.

And like, well, we're just not confident in the company after, you know, a month of due diligence and going through all the paperwork.

And, I mean, our law firm was like, we have, we've done thousands of these deals.

So that was, I called, 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.

So I called the whole team on December 23rd and said, I think it's over guys.

And we had other people who would have funded us, but it's really difficult to like, hey, you know how we went down a month and a half with that VC?

Well, they pulled out, so you should fund us.

Now I think there are companies that should raise VC.

It's just dependent on the circumstances and the details and what you're looking for.

But then you left and you went to go work for another startup, right?

I was working remotely in the middle of nowhere in Utah during this time.

I mean, the closest tech job was probably 2 hours away.

I used all my savings to make employees and contractors whole because we were burning it down to the wire with the company funds.

And then my daughter, who was born, ended up in the hospital for a month.

So we were just like, actually she's only in there for a week, but it felt like a month.

And the bills may as well have been for a month.

So we're out of money, trying to figure out how to recover.

And I had written a couple of blog posts about growth as we were working on the company that had taken off.

And so I said, OK, we're going to turn those blog posts into a book.

And I emailed everybody who had subscribed to my blog and said, all right, we're launching this Kickstarter and I'm going to finish up this book.

And the Kickstarter did something like $120,000 in sales.

That's if there's 1 thing I'm good at in life, it's growing something quickly, building hype for something quickly.

That's kind of my superpower to some degree.

See all Y Combinator transcripts on Youtube

A CS Education That's Free Until You Get a Job - Austen Allred of Lambda School