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I'm curious what long-term revenue story Lambda School would have convinced investors to shell out $14Mn. Perhaps, dominating a world where universities are irr

I'm curious what long-term revenue story Lambda School would have convinced investors to shell out $14Mn. Perhaps, dominating a world where universities are irrelevant? I do wonder though that with MOOCs becoming cheap, and that motivated students are able to get a lot of value from them, would Lambda School slowly transform into another credentialing/ signaling system for hiring? If that happens, I guess we will come around to a full circle of disruption in education.

austenallred 8y ago
The long-term revenue story is easy. How much you make per student * how many students = revenue. How much you make per student is a factor of how much they’re getting paid. If we help a student get hired for $90k they’ll pay us back $30k. So if we place 3,333 students/yr at that price point over the long run we’ll do $100m/yr in revenue. Of course, that’s a lot of students, but that’s also a lot of revenue, yet a tiny fraction of the total market of up-and-coming software engineers. Cost of capital is very real, and it’s one thing to say that and another thing to do it, but we don’t have to replace the university wholesale for that to work, we just have to be the best trade school there is. MOOCs are great, but are hardly the be-all-end-all of education. Content is everywhere, ability to actually learn from it is more difficult, and expert help, structured end-to-end curriculum, a community of learners on the same pace, etc. just make for a better learning experience. Sometimes it feels like if I made a nickel for every time I heard, “I learned more in 3 weeks of Lambda School than a year of self study” I could fund the whole company.
- tom_b 8y ago
  The education model (immersive, time-intensive, mastery learning) Lambda School has in place seems like a very sweet spot between bootcamps and traditional university CS programs. But some of that success has to be attributed to riding a boom wave of demand for software engineers. I'm a mid-career software engineer and have seen at least two "bust" cycles where experienced, well-credentialed, and just smart engineers went 12+ months between jobs. The effects of that have been reflected in undergraduate CS enrollments - we see big dips in the mid 90s and prior to 2006 (where a huge push up in enrollments begins again - https://cra.org/data/generation-cs/phenomenal-growth-cs-majors-since-2006/ https://cra.org/data/generation-cs/phenomenal-growth-cs-majo...). How well positioned the Lambda School revenue model to handle a 50% drop in demand and significant drop in starting salaries? I am a big believer in the trade school process for software engineers, but I also think that the long term view for programmer careers is one that includes greatly reduced salaries in the average case and one reason I feel that way is that a learner can be productive in the workforce with a shorter-term and less specialized educational background.
  - austenallred 8y ago
    Of course we started in a market where we got that sweet spot, but I think it’s there for most industries. The only reason every single bachelor’s degree is four years is because that’s what accrediting bodies require if you want to pull down federal student loan dollars; not because that amount of time makes the most sense. From a selfish perspective, I would love for a recession to happen today. When recessions happen money is tight and people go back to school who otherwise would have been employed. Of course, we are exposed to risk at the market level; if we stop hiring software engineers as a society Lambda School is in trouble, so we’re betting on that not happening. That said, the purpose of Lambda School is to take people to the highest point of economic potential as quickly as is possible, not just to be a tech trade school. It’s crazy that there’s no institution in the US that’s great at optimizing human capital other than four years of school and hundreds of thousands of dollars at a university. So soon we’ll be training for other verticals as well that aren’t just tech.
    - rficcaglia 8y ago
      I have hired several coding school grads - not Lambda but very similar. I’ve seen these employees plateau and have recommended they consider going back to a traditional degree program to power the next phase of their career. I agree the current university system is not effective for everyone, but economic potential flattens out quickly for tradespeople, which fits the “coders” job description. Most rock star coders I know in SV who have remained coders are making roughly the same now as they were in 2001, adjusted for inflation. Which means their purchasing power has dropped significantly. Meanwhile those I know who have a liberal arts degree + an MBA or JD have steadily increased their purchasing power. They made much less initially, but steadily and reliably accumulated experience that is highly valued in the market as a function of time. Will the best React or Angular coder grad today command 10x their salary in 10 years? Also SF Bay Area is notoriously age biased against older “doers”. Good luck finding a coder job in a GV startup if you are over 35 at a salary commensurate with your experience. I agree a 4 year degree is insufficient, but I would argue it is a necessary foundation on which to layer on even more education. A career is a marathon, not a sprint. And it should be about more than how fast one can achieve high score. Overall though, I agree there is a niche for this. This has been done for other verticals, particularly in nursing. So it should work great for a very specific population and a very specific market need. But I don’t see it as being a fix to “optimizing human capital” over a lifetime. (I’m not sure education should be about optimizing anything.) I see it as a short term win-win until companies do in fact automate away 99% of coding, and for the under 30 student in an economy that is overheated, in a country that doesn’t provide a quality public education to alll its kids. I’ll be a buyer until the market cools and more candidates flood in, but I’ll continue to recommend they enter a degree program.
- aczerepinski 8y ago
  If you're graduating hundreds of students per month, you can't be very selective on the entrance criteria, right? I'm skeptical that there's a curriculum out there that's so good it can turn thousands of "whoever happened to apply" students into $90k starting-salary junior devs, year in and year out. That's way over the average in most markets.
  - austenallred 8y ago
    We accept <5% of applicants, but our admissions process isn't what you'd think. It's mostly based on grit and determination, we don't care about your resume.
    - aczerepinski 8y ago
      In order to maintain that 5% grit & determination bar while realizing your goal of 3k annual graduates, you will need to attract more applicants than Harvard does.
- mooreds 8y ago
  I am sure you've thought of this, but what about referral fees for employers? Seems like you are building a great pipeline of talent.
codingdave 8y ago
Their debt mechanism is a lower risk model for investors -- After you sign on, before you finish the program, you sign future income away. And investors are buying into that pool of future revenue. There are arguments for and against this mechanism. I'm against it, clearly they are for it -- everyone should make up their own mind. Wikipedia has a high-level write up: https://en.wikipedia.org/wiki/Income_Share_Agreement https://en.wikipedia.org/wiki/Income_Share_Agreement
- kjksf 8y ago
  If you're against Lambda School model then what are you for? The only viable alternative is to take a loan and go to college. The average us student debt is ~$40k (https://studentloanhero.com/student-loan-debt-statistics/ https://studentloanhero.com/student-loan-debt-statistics/). So what model do you think is better? a) College "give us $40k now, good luck with your job search" b) Lambda School "we'll teach you for free; we'll help you find a job; if, and only if, you get a high-paying job, you'll re-pay us $30k for the education that we already gave you"
  - CynicalDio 8y ago
    Option 3: Find a different bootcamp with a flat fee (usually 10-15k) Option 4: Self teach using one of many of the free curriculums online (Not arguing for or against any of these, just pointing out that there are additional options)
    - austenallred 8y ago
      Lambda School has a flat fee as well ($20k for 7.5 months of FT training)

austenallred 8y ago

The long-term revenue story is easy. How much you make per student * how many students = revenue. How much you make per student is a factor of how much they’re getting paid. If we help a student get hired for $90k they’ll pay us back $30k. So if we place 3,333 students/yr at that price point over the long run we’ll do $100m/yr in revenue. Of course, that’s a lot of students, but that’s also a lot of revenue, yet a tiny fraction of the total market of up-and-coming software engineers. Cost of capital is very real, and it’s one thing to say that and another thing to do it, but we don’t have to replace the university wholesale for that to work, we just have to be the best trade school there is. MOOCs are great, but are hardly the be-all-end-all of education. Content is everywhere, ability to actually learn from it is more difficult, and expert help, structured end-to-end curriculum, a community of learners on the same pace, etc. just make for a better learning experience. Sometimes it feels like if I made a nickel for every time I heard, “I learned more in 3 weeks of Lambda School than a year of self study” I could fund the whole company.

tom_b 8y ago
The education model (immersive, time-intensive, mastery learning) Lambda School has in place seems like a very sweet spot between bootcamps and traditional university CS programs. But some of that success has to be attributed to riding a boom wave of demand for software engineers. I'm a mid-career software engineer and have seen at least two "bust" cycles where experienced, well-credentialed, and just smart engineers went 12+ months between jobs. The effects of that have been reflected in undergraduate CS enrollments - we see big dips in the mid 90s and prior to 2006 (where a huge push up in enrollments begins again - https://cra.org/data/generation-cs/phenomenal-growth-cs-majors-since-2006/ https://cra.org/data/generation-cs/phenomenal-growth-cs-majo...). How well positioned the Lambda School revenue model to handle a 50% drop in demand and significant drop in starting salaries? I am a big believer in the trade school process for software engineers, but I also think that the long term view for programmer careers is one that includes greatly reduced salaries in the average case and one reason I feel that way is that a learner can be productive in the workforce with a shorter-term and less specialized educational background.
- austenallred 8y ago
  Of course we started in a market where we got that sweet spot, but I think it’s there for most industries. The only reason every single bachelor’s degree is four years is because that’s what accrediting bodies require if you want to pull down federal student loan dollars; not because that amount of time makes the most sense. From a selfish perspective, I would love for a recession to happen today. When recessions happen money is tight and people go back to school who otherwise would have been employed. Of course, we are exposed to risk at the market level; if we stop hiring software engineers as a society Lambda School is in trouble, so we’re betting on that not happening. That said, the purpose of Lambda School is to take people to the highest point of economic potential as quickly as is possible, not just to be a tech trade school. It’s crazy that there’s no institution in the US that’s great at optimizing human capital other than four years of school and hundreds of thousands of dollars at a university. So soon we’ll be training for other verticals as well that aren’t just tech.
  - rficcaglia 8y ago
    I have hired several coding school grads - not Lambda but very similar. I’ve seen these employees plateau and have recommended they consider going back to a traditional degree program to power the next phase of their career. I agree the current university system is not effective for everyone, but economic potential flattens out quickly for tradespeople, which fits the “coders” job description. Most rock star coders I know in SV who have remained coders are making roughly the same now as they were in 2001, adjusted for inflation. Which means their purchasing power has dropped significantly. Meanwhile those I know who have a liberal arts degree + an MBA or JD have steadily increased their purchasing power. They made much less initially, but steadily and reliably accumulated experience that is highly valued in the market as a function of time. Will the best React or Angular coder grad today command 10x their salary in 10 years? Also SF Bay Area is notoriously age biased against older “doers”. Good luck finding a coder job in a GV startup if you are over 35 at a salary commensurate with your experience. I agree a 4 year degree is insufficient, but I would argue it is a necessary foundation on which to layer on even more education. A career is a marathon, not a sprint. And it should be about more than how fast one can achieve high score. Overall though, I agree there is a niche for this. This has been done for other verticals, particularly in nursing. So it should work great for a very specific population and a very specific market need. But I don’t see it as being a fix to “optimizing human capital” over a lifetime. (I’m not sure education should be about optimizing anything.) I see it as a short term win-win until companies do in fact automate away 99% of coding, and for the under 30 student in an economy that is overheated, in a country that doesn’t provide a quality public education to alll its kids. I’ll be a buyer until the market cools and more candidates flood in, but I’ll continue to recommend they enter a degree program.
aczerepinski 8y ago
If you're graduating hundreds of students per month, you can't be very selective on the entrance criteria, right? I'm skeptical that there's a curriculum out there that's so good it can turn thousands of "whoever happened to apply" students into $90k starting-salary junior devs, year in and year out. That's way over the average in most markets.
- austenallred 8y ago
  We accept <5% of applicants, but our admissions process isn't what you'd think. It's mostly based on grit and determination, we don't care about your resume.
  - aczerepinski 8y ago
    In order to maintain that 5% grit & determination bar while realizing your goal of 3k annual graduates, you will need to attract more applicants than Harvard does.
mooreds 8y ago
I am sure you've thought of this, but what about referral fees for employers? Seems like you are building a great pipeline of talent.

codingdave 8y ago

Their debt mechanism is a lower risk model for investors -- After you sign on, before you finish the program, you sign future income away. And investors are buying into that pool of future revenue. There are arguments for and against this mechanism. I'm against it, clearly they are for it -- everyone should make up their own mind. Wikipedia has a high-level write up: https://en.wikipedia.org/wiki/Income_Share_Agreement https://en.wikipedia.org/wiki/Income_Share_Agreement

kjksf 8y ago
If you're against Lambda School model then what are you for? The only viable alternative is to take a loan and go to college. The average us student debt is ~$40k (https://studentloanhero.com/student-loan-debt-statistics/ https://studentloanhero.com/student-loan-debt-statistics/). So what model do you think is better? a) College "give us $40k now, good luck with your job search" b) Lambda School "we'll teach you for free; we'll help you find a job; if, and only if, you get a high-paying job, you'll re-pay us $30k for the education that we already gave you"
- CynicalDio 8y ago
  Option 3: Find a different bootcamp with a flat fee (usually 10-15k) Option 4: Self teach using one of many of the free curriculums online (Not arguing for or against any of these, just pointing out that there are additional options)
  - austenallred 8y ago
    Lambda School has a flat fee as well ($20k for 7.5 months of FT training)