#117 Austen Allred - Lambda School's Founder Brings His Best Ideas

Sam Parr (@theSamParr) and Shaan Puri (@ShaanVP) are joined by Austen Allred (@Austen) on the pod today. Austen is the founder of Lambda School (@LambdaSchool). In today’s episode you’ll hear: Austen gives background on Lambda School and explains the challenges and opportunities in the education space (1:05) Shaan asks Austen to explain his rise from sleeping in a car in San Francisco to running Lambda School (14:00), Austen talks about how his Mormon mission prepared him for a life in business (20:28), Austen breaks down how colleges make money off of application fees (28:35), The guys talk about the big business of college entrance exams (36:35) Austen pitches his idea of increasing productivity at companies by reducing the slack from employees (47:20), the guys discuss the pros and cons of employee tracking software in the age of COVID and mass remote work (50:33), Shaan asks Austen to predict ways different “Lambda School’s for X” are going to grow into the future (58:00). Thank you to our sponsor Square! Square makes it easy for your business to accept payment, and so much more! Check out this week's sponsor at square.com/go/hustle! Joined our private FB group yet? It's a page where people share each others million dollar ideas or what they're already working on: https://www.facebook.com/groups/ourfirstmillion. See acast.com/privacy for privacy and opt-out information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:19Shaan Puri?

  Okay, so Austin Allred, is that what you said your last name?

• 0:22Speaker 01

  Yep.

• 0:23Shaan Puri?

  Yeah, so Austin Allred's here. He's the founder of Lambda School, which I've just been shamelessly pimping on the podcast for like a year. So you probably already know about that. He's a, he's an interesting dude and I don't know which Austin we're gonna get. There was controversial Twitter Austin that was around for, I don't know, like a year. And then like cleaned it up a little bit, tightened it up as the company was growing. So I don't know, are we gonna get tightened up Austin or we're gonna get Lucy Goosey?

• 0:47Speaker 01

  Wait, you can request.

• 0:50Shaan Puri?

  Oh, for Lucy Goosey, for sure.

• 0:52Speaker 01

  My comms team isn't listening right now, so we're, we're good.

• 0:55Shaan Puri?

  Right. Dude, I'm in it for the, I'm in it for the clicks and the listens. So, you know, the more controversial and interesting things you say, the better.

• 1:03Sam Parr?

  So can you give Sean and Austin, can you give background? What is, his business is called Lambda School. What is that?

• 1:09Speaker 01

  Uh, yeah. So we train people to be, uh, software engineers and data scientists in live online classes. But we don't charge anything until you're making more than $50,000 a year after the program. So the idea is if we can de-risk education for people, then you can kind of go for the education that you ought to. I mean, incentives are aligned between the school and the student. So we don't get paid unless, and we don't make money unless you're successful. And that's kind of how we think it should be.

• 1:37Sam Parr?

  So like a free school and you get a percentage of their, of the revenue that the student, a percentage of the salary that student makes to a certain point, and that's how you get paid back.

• 1:47Speaker 01

  Yep, that's right. So basically we get 17% of salary if and only if you're making more than 50K a year. And then once you've hit $30,000 or 24 payments, monthly payments, whatever comes first, it's done. So it's either two years or 30 grand, whatever comes first. And if you don't get hired making more than that amount, then we never make anything.

• 2:08Shaan Puri?

  And give people a sense of the, the sort of scale, because it's been pretty wildly successful so far. Uh, and, and kind of just getting started, but give people a sense of, of, you know, how Lambda School has grown over the last few years.

• 2:20Speaker 01

  Yeah, I mean, we started. What was it, three years ago, um, with our first twenty students? Um, and now, you know, we enroll three hundred or four hundred students a month. Um, so, you know, we're talking in the realm of, we're, we're like, that's a lot of software engineers, actually. You know, it's not the biggest university by any stretch, but, you know, we're, we're placing more software engineers and we're, we're, think about like the UC system, right? All the UC schools, um, we're about, we're a little bit bigger than that as far as software engineering goes.

• 2:56Shaan Puri?

  Than all the UC schools combined?

• 2:58Speaker 01

  Correct.

• 2:59Shaan Puri?

  Wow, that's kind of awesome.

• 3:03Sam Parr?

  Wow, so the math is if you're adding three hundred a month, that's thirty six hundred a year. If you, if it just stays the same, you can earn thirty six thou-, I think you said thirty six thousand dollars off of that. So that means you're adding a hundred and thirty million dollars of revenue or a potential revenue, lifetime revenue.

• 3:21Shaan Puri?

  Sam, you're just flexing that mental math right now.

• 3:24Speaker 01

  Yeah, I mean, the, I, I wish it were that simple.

• 3:29Sam Parr?

  Okay.

• 3:29Speaker 01

  But yeah, I mean, so let's say us, our average student gets hired making seventy K, right? Um, so that student will pay back just less than twenty five K, um, but we'll round it to twenty five for sake of simplicity. Um, so if we're getting four thousand students, um, a year hired, then that's a hundred million a year, kind of overtime run rate. Um, but you have to finance those ISAs, so we basically borrow against them, um, and we pay a lot for that. Um, and then every student that either drops out or doesn't get hired, we don't get paid for. Um, so those, those cuts are, you know, the, that's a difficult thing, right? And

• 4:12Speaker 01

  So you think about like, you know, a university that had like a 75% graduation rate and a 75% hiring rate. Those are pretty good numbers. Really quickly, you're at, you know, 50% of the students who enrolled were successful. So those multipliers eat in really quickly. And that's the name of the game is making it so that as many of the students who you can possibly make successful are successful.

• 4:38Shaan Puri?

  That's, that's why the incentive aligned matters, right? Because traditional school, you enroll and you know, whether you get a high paying job or not, you know, of course, they'd like you to get a high paying job, but they don't need you to get a high paying job. They got their money either way. And so for you guys, it's not that you're nicer people than everybody. It's that the business model actually depends on you successfully getting people high paying jobs, which is what they want to. And so like when everybody gets excited about Lambda School, they always talk about ISAs, which is like, you know, this mechanism, it's income share agreement. But that's kind of missing the point. It's more about the fact that you, your success is tied to the success of the student in a way that a normal university is not. And that's why your product is going to be better. That's why you're going to train

• 5:22Shaan Puri?

  them better. That's why you're going to hustle harder to get them jobs. That's why you're going to filter candidates better because you need that to work for your business to work. And that's not the case for a traditional school.

• 5:32Speaker 01

  Totally. Yeah, there, there ought to have been a few points where we've kind of, you know, looked around the, the room with, at my executive team and, you know, our, our executives are like, they're the best in the world at what they do, you know. And you look around and say, you know, we are at a point right now where we're doing a pretty damn good job. And if our only incentive were, was to like, you know, we produce a report at the end of all this or something like, we would be patting ourselves on the back. But we're looking at our business model and saying, oh my gosh, no, we need to drive so much harder. We need to do so much better to get to where we want to be. So, so yeah,

• 6:14Speaker 01

  I think you're right. The ISA is cool. But the ISA itself isn't that interesting. I mean, it's nice to, you know, it's a more flexible financial instrument for students, but the incentive alignment really is the key. And we'll dump millions and millions of dollars into getting our hiring rate up a couple of points if the math works like that.

• 6:35Sam Parr?

  How, how old are you, Austin?

• 6:37Speaker 01

  I'm 30.

• 6:38Sam Parr?

  You're only 30. Wow. Okay. How much money has a company raised?

• 6:42Speaker 01

  Uh, just over a hundred twenty million.

• 6:45Sam Parr?

  And so you guys have only been around for three years. How the hell does that happen so fast?

• 6:51Shaan Puri?

  When I, when I first talked to Austin, I remember you had, you know, we were talking. I was like, I want to invest in this company. And at the time, I remember you had in total graduated eighty students. I think there was eighty students total in the pipeline, including graduated and not graduated yet. And I remember that same math you just did where you got to like four thousand, it takes about four thousand students to get to about a hundred million in revenue. That was the math I did. I think I got all of the variables wrong, uh, like the wrong. I had the wrong like assumption of how much you keep. I had the wrong assumption of whatever, but I also got to four thousand. I was like, oh, he's going to get to four thousand for sure. And you've, you know, you're, you're on your way now. Um, but anyway, sorry, that's, that's how crazy, that wasn't that long ago when it was like eighty was the total number of students that who had even experienced the goddamn thing.

• 7:34Sam Parr?

  Dude, Austin being twenty wasn't that long ago, like.

• 7:39Shaan Puri?

  Austin losing his virginity wasn't that long ago. And that's really what everybody needs to know.

• 7:44Sam Parr?

  Now they're, they're talking like the hundred million dollar range business.

• 7:48Speaker 01

  Well, I mean, to be clear, that's like a hundred million dollars of like, you know, I almost think about it like GMV, right? Like we don't.

• 7:58Sam Parr?

  Sure.

• 7:58Speaker 01

  It's, it's cute to say, look, if we get four thousand students hired, then we'll eventually get that. A, we're not getting four thousand students here hired. Um, we're a fraction of that. Uh, B, the, the financing mechanism is probably the most important and most misunderstood aspect of Lambda School. Because the, the cost it would, you know, if we could raise half a billion dollars and then just sit there and wait for that hundred million to come in, we could do that. But that's not, that's not how it works, right? Like, so our, our equity investors do not want to put in, you know, a bunch of money to buy ISAs. They want to, they want to build a technology company. And so we have a different, different pools of capital that are for basically borrowing against the ISAs.

• 8:41Speaker 01

  And you have to, you know, so you kind of take what is the expected revenue per student at, you know, early on in the program. And then you discount that a little and we can borrow against that. And then after that, it starts to trickle in over time, but.

• 8:54Sam Parr?

  How, how, how big will this get, you think? I mean, multi-billion dollar a year business?

• 9:00Speaker 01

  Yeah, for sure. I mean, so I, you know, think in terms of students, right?

• 9:04Shaan Puri?

  So casually.

• 9:06Speaker 01

  I mean, it's not going to be easy to get there by any stretch, right? Like there, there's a reason no one's done this before. And that's because it's just really freaking hard. Um, but from, from a kind of macroeconomic standpoint, right? Think about how many people there are in the United States who are making $30,000 or less, who could be making 50,000 or more. Um, and you can, you know, you can move those numbers to 40 and 70 or 30 and 50 or whatever, right? Like, the number is outrageous. And think about how many companies would hire those people if they had the right skills. That number is outrageous too. So the difficult thing is you have to have closed that full loop.

• 9:48Speaker 01

  So you have to take someone from having never heard of you to hired and repaying, which is like three different businesses baked in there. Um, and then you have to have that right match, right? Um, so it's not too dissimilar from a two-sided marketplace in some instances where you have to find the right person. You have to find the right company. You have to train the person and you have to get the person there. Um, and there are different mechanisms of doing that, but it's, so it's, it's really difficult to do, but if it works, it's really, really powerful.

• 10:17Sam Parr?

  And how, and last question for me on this, how, how many people work there?

• 10:20Speaker 01

  Uh, right now, 170 and change.

• 10:23Sam Parr?

  Damn, that's just a lot of stuff to do in three years.

• 10:26Speaker 01

  Sam, you know, well, that's, that's full time. We have, we have full time or, uh, part-time kind of TAs. We've got about 300 or 400 of those. So it's a, it's a big organization for sure.

• 10:40Sam Parr?

  What are we saying, Sean?

• 10:40Shaan Puri?

  Sam, when we were going through the acquisition process, I was like, oh, it's either going to be this big company, this big tech company, that big tech company, or this big tech company. And I was like, damn, where would I actually want to work? And I was like, I was like, the only company I'd want to go work at to earn out of any deal would be Lambda School. That was like the most exciting. It was like top of my list. So I emailed Austin. I was like, hey, you want to buy my company? It has nothing to do with what you guys do, but we've done some live video stuff and we're pretty smart. And, uh, he's like, all right, well, you know, what do you think? Oh, yeah. He looked at it. And then I was like, you know, we'll take, you know, 7% of, of Lambda School. And he was like, yeah, no reply.

• 11:14Shaan Puri?

  But I was like, that would have been, you know, I think every kind of five years is like a handful of companies that are really interesting to work for. When I moved to Silicon Valley, those were like Stripe and Angel List. I thought were the two most interesting companies to work at. They were small at the time, but I thought they might get big. And right now I would put Lambda School in that bucket with, I don't know what else I would put. What do you think, Austin? What are the other like?

• 11:36Speaker 01

  I'm super curious who else you're gonna name?

• 11:38Shaan Puri?

  Let me think.

• 11:39Speaker 01

  Like, I think about who like the hot companies are.

• 11:42Shaan Puri?

  I think Flexport's kind of interesting.

• 11:44Sam Parr?

  Dude, I don't want to hear that anymore. That's been there, done that. We all know. We all know that's badass.

• 11:50Shaan Puri?

  Four years ago, it would have been the one. Like Airbnb and Uber at, you know, in the 2009 range, 2010, 11, whatever. That was like the time when when those were really exciting.

• 12:02Speaker 01

  Yeah, I think, I mean, when I was starting Lambda School, so, you know, a couple of years ago, the ones that I was like, oh, my gosh, these are gonna be incredible companies. Airtable, I was just like, oh, that's, that's gonna be a winner. You could already tell. Same with Notion for, I mean, for different purposes, superhuman. I was just like, oh, finally, someone's making a great product in this super, super obvious space. I'm in love with Rome Research. I don't know how big the business gets, but I think it's super interesting. It's still super early.

• 12:36Sam Parr?

  I don't want to hear about Rome Research. I can't stand this shit, man. I like, because like, it's like, I'm sure the the creators seem cool, the products seem cool. It just doesn't make sense to me how a note taking app can. So I'm a, I'm a small time, I'm a part owner in a small note taping, taking app, and it does 80K a month in revenue, which is probably what Rome does. And I'm like, wait, what? How does, how does this company raise at a multi hundred million dollar valuation? I don't get it. I don't get how you could do that with the $5 a month thing.

• 13:07Shaan Puri?

  Well, companies that VC, companies that VCs understand in general get like a 30% premium on, on everything, you know, because they can explain it better to each other. And so they all get it. But, but yeah, Sam, this is good. The more you, it's like when you insulted Gen Z and they all came for you and they all discovered our podcast. This is the same. Insult the Rome Research cult and they'll all be here to defend themselves up in arms.

• 13:31Sam Parr?

  It's crazy, man. I don't get it. Like here, like here's what your computer gets, my pen and paper. I don't get it, but whatever.

• 13:38Shaan Puri?

  Awesome. You should tell people about, I know you've probably told the story a bunch, but frankly, it's kind of, it's kind of a great story, which is you're like, I was sleeping in a car before I, before I, you know, started Lamb to school type of thing. So explain, explain that story. So you, you come to San Francisco, you want to live the dream and you, how the hell, why were you sleeping in a car?

• 14:01Speaker 01

  Yeah. So I mean, going back a little bit further, I, I was going to college, I was at BYU in Provo, Utah. And I was just kind of like, I always knew I wanted to do something entrepreneurial and I'd always loved technology. And for some reason it didn't click until I was like 20, that that was like a thing that you could just like go run tech companies. So I was like, oh my gosh, that's awesome. And there's this place called Silicon Valley. And so I would, you know, and the Provo scene, like the Utah startup scene is, you know, it's, it's getting there now, but at the time there'd been kind of omniature and there was word perfect, but

• 14:38Speaker 01

  it was a very sales driven culture for a variety of Mormon-y reasons. But I, you know, I've found that like, everybody was just like, hey, let's build a marginally better crappy product and let's just go sell it like crazy. And they, I mean, that works, right? Like that totally works. But I wanted like, I had a real love for product and design and like the way things worked and like, you know, changing the world in a way that you can't just like, you know, let's make a new SaaS app for dentists and like, let's sell it like crazy. So I, I was pretty frustrated that I couldn't find that there. And I wanted to be a part of that. So

• 15:21Speaker 01

  it was even more than just Silicon Valley. It's like, I want to be in somewhere where they make great products. They make great stuff. And, you know, the, the culture in Utah was like, yeah, we'll find a developer off the shelf and they can like build a thing so that we can go sell it. And like, that was where the excitement was. But I didn't have any money. I didn't really have a job. I didn't really have any, you know, super tangible skills. And I saw on like Hacker News, there was some guy who'd like re like reworked his Honda Civic to live in it. And I was like, oh, my gosh, I have that same two seater Honda Civic. And crazy as it sounds, like I started looking at like rent in the Bay Area and it was like 800 bucks a month.

• 16:04Speaker 01

  And I was like, who can afford 800 bucks a month? That's ridiculous.

• 16:08Shaan Puri?

  Right for one.

• 16:09Speaker 01

  Um, yeah. So I just put an air mattress in my car and drove out there and said, I'll figure it out. And eventually did and it worked out.

• 16:19Sam Parr?

  Um, what was your, what was your job before Lambda?

• 16:22Speaker 01

  I did like some marketing agency stuff, like some SEO stuff when that was a thing that people like that was a career path for a while was like you could do SEO.

• 16:33Sam Parr?

  In San Francisco?

• 16:35Speaker 01

  Uh, no, just freelance. Like there's, there's actually a company that I got connected into randomly that they needed like SEO copywriting, right? So it wasn't like real SEO, it was just like, hey, we need content about this thing. And we don't even care what it says. So we just need like, we just need, we just need a monkey to pound out some words and I'll pay you like five dollars for every 500 words that you pump out.

• 17:00Shaan Puri?

  We need 2000 words and 25% of them need to say the word email.

• 17:03Speaker 01

  Totally. When I, I, yeah, was working with a buddy on it and he probably had the better methodology. He would get super high and just like crank stuff out like crazy while I was tripping and nobody cared because it said the right amount of words and the right, you know, phrasing. Um, but I, I never.

• 17:21Sam Parr?

  But then, but then you, you like, you like thought of this idea and then you went through Y Combinator and that's kind of how you got.

• 17:26Shaan Puri?

  Was there an in-between? So you, you're, you go to San Francisco, you're in your car. What happens between there and Lambda School?

• 17:31Speaker 01

  Yeah. So actually I, I started another company between there and Lambda School. Um, so that was a, we're saying, hey, social media is all over the place, but it's not fact checked. And we're still relying on these reporters who are at the end of the day, just like random people on social media, trying to like figure out what's going on. So we built like a crowdsourced newsroom, kind of a Wikipedia for journalism, basically where you can go in and the product would let you like pull in sources and fact check them and kind of try to do that in real time. Um, it was semi-working, but it didn't, I mean, it was so far from actually working. We had a bunch of users, um, but. Far from a revenue model, which turns out is, you know, you want to be close to a revenue

• 18:15Speaker 01

  model. Um, so it raised a little like half a million dollars burned through that and there's a long story and it ended up going to zero. Um, and then went to work at a company called LendUp, which was a kind of Y C company in San Francisco. Um, so that was basically me moving from, hey, I'm like 10 steps away from money changing hands. I want to get as close to the money as I can. Um, and so I kind of went down the fintech route, which is a lot of why land school worked because I was always thinking about risk and capital markets and, you know, how you can move money from one place to another and what the IRR needs to be to make that happen and how securitizations happen and stuff like that. Um, and then when land school was just getting started, I was like, wait, there's got to

• 18:59Speaker 01

  be a different way that you could, you know, think about this risk and shift it around and pool it and that kind of thing.

• 19:07Sam Parr?

  And you, you're Mormon, right?

• 19:11Speaker 01

  Yeah.

• 19:11Sam Parr?

  From, um, I just went and lived in Utah for, I mean, I, I lived in San Francisco. Uh, I gave up my place. Now I just live on Airbnbs and I picked Utah because the Mormons fascinate the shit out of me. You know, Sean and I are friends. Sometimes when I'm out or Sean's out, he's our friend named Stu subs in for one of us and he converted to Mormonism, which is weird because no one in his, no one in his family's Mormon. Like I've never heard of that. And so he kind of like taught me about it. And then I also had a friend of a friend with Josh James, the guy who started Amature and he like would tell, and so I'm like crazy fascinated with, with Mormons and the culture there was so unique and interesting. What is it that makes this so, this high penetration of interesting startup entrepreneurs?

• 19:56Speaker 01

  Yeah. I mean, it's a, it's a few things like the, for me, the most formative period of my life and by a lot was serving a mission. Um, so for those of you that don't know Mormons, when they're, it used to be when they're 19, when they're 18 now, you basically put in your papers and you say, hey, send me somewhere and I'll go teach people about Jesus and do service all day, basically. Um, so I put in my papers when I was 18. Um, and then what they call it a mission call. So basically a letter comes and you gather around with all your family that says, You've been called to serve in this area. Um, so for me, it was Donetsk, Ukraine. So Eastern Ukraine, kind of up against the border of Russia. Um, so you spend a little while trying to learn the language

• 20:41Speaker 01

  and kind of getting your feet wet. And then you're basically just shipped out and you have to figure it out. So I had to learn to speak Russian. Um, you know, I, I went on my mission in like

• 20:52Shaan Puri?

  Isn't that kind of a crazy ask to be like, yo, just learn to speak Russian. Uh, you only have two years on the mission anyways, right? So it's like,

• 20:59Sam Parr?

  What do you, it's, it's not that crazy, dude. What happens when you're, when your family immigrated here? Like, that's just what you do, right? I mean, so many people have to do that.

• 21:07Shaan Puri?

  Well, it's one thing to do it like kind of on your own choice and your own accord. Like, I want to go to America. That's why, you know, and I speak a little bit of English. I'll improve it. Versus like, you're told, hey,

• 21:18Speaker 01

  An organization.

• 21:19Shaan Puri?

  Ukraine it is for you. Start brushing up, you know, you, you want to, even if you wanted to spread the gospel, you, you literally have to first learn a language, which takes months. So what, what did you even do the first few months when you don't know how to speak Russian?

• 21:33Speaker 01

  Yeah. So, so you go to the missionary training center and that's like, uh, like, Lamb School is kind of modeled after that, actually. So it's like, you show up on day one and by the end of the day, you're like, you should know the alphabet and you should be praying in Russian, right? And obviously it's terrible. Um, and you don't understand cases. You don't understand the grammar, but like you just.

• 21:53Shaan Puri?

  School equivalent of day one. What do you know? Day one of Lambda.

• 21:57Speaker 01

  I mean, day one, you should be submitting your first poll request, right? Like, um, and I don't think that's actually day one anymore. That's, uh, but like, yeah, you're going to build your first website using HTML and CSS. Like, you're going to go. Um, and the pace is intense and it's very much like, you're going to get thrown into the deep end and figure it out because that's the only way anybody learns anyway. I mean, like I, so I, you know, I came back, you know, spoke Russian fluently, um, and went and took a couple of college classes and they had, you know, a way that you can like test out based on what your level of Russian was. I think I got like three years of full, like I got like a hundred credits of Russian. And, you know, you still go into the

• 22:41Speaker 01

  Russian classes of the people who weren't living in the country and they're like, you know, trying to figure it out. And you're like, oh my gosh, there's, there's no way. There's no way. Um, So there's definitely something to immersion and just like getting thrown in.

• 22:54Shaan Puri?

  Mormon question, do you keep track of how many people you convert? Like, do you know how many people, you know, sort of heard the message and and actually like sort of went down the path?

• 23:05Sam Parr?

  Yeah, what's like your quota?

• 23:06Speaker 01

  Yeah, I mean, so it depends a lot, right? Um, if you're in South America or Africa, it's very different than Eastern Ukraine. So in my mission, if you converted anybody, like over the course of two years, that was a win.

• 23:19Shaan Puri?

  Right, like one is a win.

• 23:20Speaker 01

  Yeah, and like my friends in South America, like, you know, two or three on a weekend is normal. So it just totally depends.

• 23:31Sam Parr?

  And then Ukraines don't, the Ukraines don't need Jesus, they're just not into it.

• 23:34Speaker 01

  I mean, take 25 years of government forced atheism and then layer on, hey, we're this American church, you should join like it's, there's not product market fit there.

• 23:46Shaan Puri?

  Right.

• 23:46Speaker 01

  To say the least.

• 23:48Sam Parr?

  Also, you got good at sales.

• 23:49Speaker 01

  Yeah, stop drinking and smoking and only have sex with your partner who you're married to like this is not. It's not interesting to the average Ukrainian.

• 24:01Shaan Puri?

  What was your approach then? How did, how did you go about it? What, what's the sales funnel?

• 24:05Speaker 01

  Yeah, it's a really good question. Um, there are a couple of ways. First is English classes. Um, so I taught an insane amount of English. Um, and for a couple of reasons, first, that tends to bring out people who are a little bit more open minded about. Like, if you're like hardcore Russian Orthodox, you wish you could go back to the Soviet Union. Like, you're not going to come to an English class. And a lot of people, I mean,

• 24:31Speaker 01

  it's, it's just a different culture, right? Like, people thought we were spies, people did not like Americans, they did not trust Americans. They were kind of bummed that capitalism was a thing because their version of capitalism is basically run by the mafia.

• 24:46Speaker 01

  So just super, super different, right? Um, then the other one is just sheer brute force numbers. So, you know, there were probably six months at a time where I would spend 12 hours a day knocking on doors or approaching people in the street. And your top of the funnel is huge and it doesn't, you know, your funnel is not very efficient. And if you have a sales funnel like that, at most companies you would get fired. Um, but that's just what you did. So.

• 25:12Shaan Puri?

  Were you like extremely motivated every morning when you woke up like, I'm gonna do this? Or was it like, well, I'm gonna enjoy the Ukraine and I'm gonna do a little bit of this.

• 25:22Speaker 01

  No, it's super sucked. Um, and there were times like months at a time when I was kinda depressed, honestly. And every, you know, that's not unique to me. I think that's just like when you, so you have, you keep a really intense calendar and you follow the calendar to the letter. Uh, we call them planners. Um, you set goals every week and you report on those goals. So, you know, everybody in the mission reports their numbers up to the mission president. Um, and so you're keeping really, I mean, Stephen Covey was.

• 25:53Sam Parr?

  This is, this is business school.

• 25:54Speaker 01

  Yeah. I mean, Stephen, Stephen Covey, like it basically took the Mormon missionary planner system and turned it into seven habits like that.

• 26:05Shaan Puri?

  This is, this is like, you know, when I, when I hear somebody's time in the military and I'm like, wow, that's an incredible amount of adversity, resilience and sort of like, um, you really developed yourself during that time. But this is that with, um, you know, less of some things, but more of other things, which is like sales, human psychology, uh, marketing, uh, you know, you have to develop those skills in order to be successful here. Um, so I, I may only work with Mormons going forward.

• 26:32Speaker 01

  But yeah.

• 26:33Sam Parr?

  Well, well, there, uh, I think McKinsey or Bain, they used to have a joke where it was like, uh, military, uh, uh, what was it? No, military, McKinsey or Mormons. That's who they wanted to hire.

• 26:45Speaker 01

  I think that's Harvard, actually.

• 26:47Sam Parr?

  Was it Harvard?

• 26:48Speaker 01

  Harvard Business School is military, McKinsey and Mormons. Yeah.

• 26:52Shaan Puri?

  Yeah, that's, that's now my, my school also. That's how I, I now believe.

• 26:57Sam Parr?

  So is that okay if we just jump right into some ideas because you tweeted something? There's two ideas that I want to bring up to you. The first is levels because I see you're wearing it.

• 27:07Speaker 01

  I am wearing it.

• 27:08Sam Parr?

  And Sean and I were beta testers for it and it was cool. The second is college applications. You tweeted out something today that was crazy fascinating. You said that colleges earn close to $500 million a year, I think, from college applications. What's that?

• 27:26Shaan Puri?

  What's that?

• 27:27Sam Parr?

  What's that about?

• 27:28Shaan Puri?

  Such a strong buildup. Just like you gave up at the end. Say things.

• 27:35Sam Parr?

  Like, what's that? What's that about? So you're like the $40 application I fill out? That there's $500 million worth of it?

• 27:41Speaker 01

  Yeah, I mean, do the math on that, right? And you actually look at it broken down by like school. And it's like, you know, UCLA will have 100,000 people apply and they'll all pay 80 bucks, right? Like, that starts to get crazy money.

• 27:55Sam Parr?

  So isn't there like a common application?

• 27:58Speaker 01

  Yeah, so there is something called the common application. Which, I mean, the interesting thing is if you're UCLA, like you don't want to use a common application because then.

• 28:11Shaan Puri?

  Where's that $8 million?

• 28:12Speaker 01

  Yeah, you do and you don't. So the common application, you can basically like set a trigger and be like, yeah, I will accept applications from the common application. The problem with it is everybody who's using the common application is just spraying and praying to everywhere.

• 28:28Sam Parr?

  It's like indie.com.

• 28:30Speaker 01

  Right. And it, yeah, exactly. It's or like the LinkedIn, like one click apply unless LinkedIn is a sponsor and then it's a different.

• 28:37Sam Parr?

  No, they're not.

• 28:41Shaan Puri?

  You're either a sponsor or an enemy as far as I'm concerned.

• 28:44Sam Parr?

  Yeah, unless they want to pay us $5,000. And then in that case, yeah, we'll talk about it.

• 28:49Speaker 01

  Yeah, but it's like, so the way you use the common application is to get your acceptance rate down because you're going to get 100,000 applications of people that aren't really interested in going to your school. They're just going to check everybody and hit submit. And now you have a 2% acceptance rate because 100,000 people who are never going to go to your school. Um, applied and for some messed up reason, that's like the main metric that the school rankings use, like the US weekly school ranking, like the first thing it looks at is the acceptance rate, which is a weird set of incentives to be like the school that turns down the most people must be the best school.

• 29:28Speaker 01

  Um, but that's, yeah, that's the other game that people play.

• 29:33Sam Parr?

  So there is no business down this path is what you're saying.

• 29:37Speaker 01

  I don't know, like the incentives are just messed up, right? So you have to like, you have to work backwards from the incentives of like, what does the school want? The school wants a ton of applications. It wants those applications to be as expensive as possible and it wants to be able to broadcast as low of an application percentage acceptance as possible. So maybe they're, and like, that's who you really need to serve at the end of the day. Like you can serve this, the would be applicant in that world. But like the schools have the quasi monopoly. So if you don't please the school somehow, there's nothing there.

• 30:15Shaan Puri?

  So the business that I saw that was in this space, uh, I, I've talked about this before. This was the company I was, uh, could have invested in at the seed is now a billion dollar plus company. And it's called Apply Board and what they do is they, they went to the colleges and they, they basically realized this one insight, which is colleges make three times more from international students than domestic students.

• 30:36Speaker 01

  Oh, that's a killer business.

• 30:37Shaan Puri?

  And so they went to the schools and they said, Hey, uh, you know, if I'm sitting in Malaysia right now or in the Philippines and I want to apply, you know, what do I even, I, I don't even know that Brown is a university. I think it's a color. So, hey, why don't you pay me $3,000 for every student that you admit that's international? And I'll just up your international volume for you. And the school's like, all right, sure. It's success fee based, right? I'm making 30 K off this person. I'll give you three. And so then they went and signed all these deals with all the universities. And then they went to the students in Malaysia, the Philippines who wanted to come to the US and they're like, Hey, we will, we'll make it super easy to apply. Right? You, you do a comment app here, I will send that comment app everywhere. And it's like this international, uh, student, like, you know, um, what are those like?

• 31:20Shaan Puri?

  Human trafficking things, it's like that, but with a, you know, with, with less evil. And that business is amazing.

• 31:26Sam Parr?

  Like Ivy Leaguers.

• 31:27Shaan Puri?

  Yeah.

• 31:28Speaker 01

  No, that's super smart. Yeah. I mean, the, the thing that makes money more than anything else in higher education is international students. Um, and that's one of the reasons that so many universities are struggling right now is, I mean, A, yeah, it's there. The desire to come to America to go to college is lower than it has been in a while. But they're, I mean, not even because of COVID, the Trump administration is basically, I think, at times intentionally being like, hey, if we, you know, stop this revenue flow, then all the universities hurt and all of those guys, basically.

• 32:06Sam Parr?

  Just fuck them.

• 32:07Shaan Puri?

  So by the way, why, why do schools charge three times more for international? Like, what is their shitty justification for that?

• 32:14Speaker 01

  It can. I mean,

• 32:15Shaan Puri?

  That's crazy.

• 32:17Speaker 01

  It's like, yeah, you guys want to come here so much more than we want you here. So you're paying full freight. For like an in-state student, we're going to cut our tuition in third or whatever. Like basically it's, it's international students subsidizing local students.

• 32:31Shaan Puri?

  So I think there's probably an opportunity there to cater to international students who, who would like to not pay the three X rate. And, um, and, and so maybe there's a, there's an opportunity to either as a university differentiate by not doing that, or, um, like come up with some shitty system that like, it'll be apply as a domestic, you, you create like a body double that, that sort of, you know, like gets them in at the domestic rates.

• 32:56Speaker 01

  I've, I've always been kind of fascinated by this, but like, I mean, you hear about in the old, olden days, people would get into all sorts of colleges and like, and there, I've heard the number of stories of people applying under a fake name or like, I mean, now I'm sure they've locked it down, but for a while you could just tell a school you had like a perfect SAT and they'd be like, oh, awesome. Like, please come here and they never check. Like, that's crazy. Um, but anyway, um, I actually think there's, there's something to schools moving away from the SAT and ACT. That's going to be really interesting.

• 33:32Sam Parr?

  So a new, a new SAT, a new ACT.

• 33:36Speaker 01

  Yeah, I don't I don't totally know what the right angle is, but basically if you look at the UC is one of the they're kind of like the same way California from a regulatory standpoint, whatever California does, a lot of other states tend to follow. UC is kind of that for colleges. So UC kind of sets expectations and they're moving away from the SAT and ACT entirely.

• 34:02Speaker 01

  And basically what they're saying is, hey, these tests are racist because different populations perform differently. Um, so we need to find a different measure that, you know, matches that. Um, and they so they went back and they did a study and the study came back and said, okay, yes, that's true, but it's also a leveling feature because if you're a poor student who's really smart, there's no way in hell you're going to have the same extracurriculars as someone who

• 34:33Speaker 01

  who came from money. So your only shot is the standardized tests. Um, so net net, you know, it's going to hurt diversity, but the pushback against the SAT was so strong that they killed it anyway. And so now there's like this, there's this black hole of like, what is the right way to evaluate? You know, who should become a student and, you know, one of the main reasons, in my opinion, that employers are like, it's really easy to hire a Stanford grad because you know they're going to have a high ACT score, they're going to have a high AQ, they're going to come from wealth, they're like, all the risks are gone, generally speaking.

• 35:12Sam Parr?

  Wow. So check this out. Okay. So I'm just Googling this while we're talking. You know all about this, I imagine. The, uh, the, so is this how it works? The College Board owns the SAT. Is that correct?

• 35:24Speaker 01

  Yes.

• 35:25Sam Parr?

  That the company's called the College Board and then Educational Testing Service, that's the one who administers the test. Is that right? I don't know what that means administers. What's the difference between administered? I think they run like the brick and mortar, like proctoring of the test.

• 35:38Speaker 01

  College Board like creates the test and then you show up at like a, for me, it was like you go to a high, a local high school and there's people there making sure you don't cheat and like handing out your Scantrons and stuff.

• 35:49Sam Parr?

  Okay, so the, uh, so Educational Testing Service, that's the name of the company, ETS, right? That, wow, they did $2.1 billion in revenue last year, and then the company, the College Board, it's a nonprofit, so this is all public. In 2018, they did north of a billion in sales and something like $200 million in profit. Fucking crazy. And all they, all they do is make the test. That's nuts. I mean, that's a lot, but that's pretty crazy.

• 36:23Speaker 01

  I mean, what they really did is got all of the universities to agree that that was the thing, right? Like, if you have that, then, you know, you can do whatever you want on the other side.

• 36:33Sam Parr?

  And the revenue has almost doubled in 10 years.

• 36:36Speaker 01

  Yeah.

• 36:37Sam Parr?

  I mean, it's...

• 36:38Speaker 01

  Now, like, and they kind of started this meme that, like, the reason some kids aren't getting into good schools is because they never take it. So they kind of, they, they're trying for like a bill that like government would fund taking the SAT or the ACT. So like, any high school student just signs up and they get a check from the government. Now they've kind of forced it into like, hey, school districts, you should really find a way to pool money and like guarantee that every student takes it. So it's, that's good business.

• 37:08Sam Parr?

  Is there a world where, is there a world where somebody, and by the way, I didn't even look up the ACT, I have no idea how that big is. It looks like it's a little bit smaller, but in the same, but in the same ballpark, maybe. What about, is there a world where this, where a new standardized test could exist?

• 37:27Speaker 01

  Well, so I think the pushback against standardized tests is going to be big enough and broad enough that I don't know if that's the angle you can take. I mean, there are companies, like Criteria Corp has a test called the CCAT, the Criteria Cognitive Aptitude Test. It's basically think SAT for adults, right? For adults entering the workforce, and there are...

• 37:55Speaker 01

  Enormous companies with hundreds of thousands of employees that will use that as one of their criteria for deciding whether or not to employ you.

• 38:04Speaker 01

  Now, there are some legal footwork that you need to do because in the US,

• 38:12Speaker 01

  for basically everybody other than the military, it's illegal to hire based on IQ alone for obvious reasons. For some reason, the military just does what it wants. And like, so you can't really get into the military with an IQ of below eighty-five. And the military tests that rigorously, and it's fine. And everywhere else, you know, the argument is made that IQ is a suboptimal measure, which I agree with. But it's also a really easy way for employers to, you know, rule people out, or to, you know, find the diamond in the rough, whatever. So there's, I don't know, there's still something around, how do you test and how do you find the right type of talent that is interesting? I don't know what it is.

• 38:55Shaan Puri?

  So I have a half-baked idea here. When I was in the seventh grade, I took this test. I don't know if you guys took it, but it was called the TIP, the Talent Identification Program. Did you guys ever do this?

• 39:09Sam Parr?

  We did something similar. Ours was called the Iowa.

• 39:12Speaker 01

  I took the Iowa.

• 39:13Shaan Puri?

  Yeah. So, so the one I took was actually, it was called the Duke TIP Program. And it was basically, Duke University's endowment had created this thing called the Talent Identification Program. They did it for seventh graders, which is kind of like earlier in the funnel, before you even take your PSATs, that sort of thing. And they created this, and it was their own little test. And if you took it, you basically got this like certificate that was like, congratulations, you're like in the program just for taking it. And your parents were all happy because like, oh, this university says you're talented potentially. And then if you did good, if you're like in the top twenty percent or ten percent or whatever, you would get this like special thing, which was like, we have identified you as a talented person that we would love to have you someday come to this school. And it was their like way of just getting a whole bunch of people to know about Duke and then apply to it. That's kind of what I...

• 39:58Speaker 01

  Lead gen.

• 39:58Shaan Puri?

  Yeah. And it worked on me. Like, I literally went to Duke, and I remember getting like, recognized in this thing back in seventh grade, and it planted a seed. And so, I wonder if you could create a new TIP program, and maybe you do it like... For you know, minority students or in lower socioeconomic classes where you you go to certain neighborhoods and you basically host these free things that you can come take. And then that's your leads for colleges will actually potentially pay to have access to these leads and to market to these students because they want to, you know, hit their quotas, have bigger, have diversity, but be able to surface out who are the most talented students in these.

• 40:33Sam Parr?

  It's like, it's like your barn system.

• 40:35Speaker 01

  Yeah, that totally works. That totally works. Here, here are all of the, you know, minority kids who test really well on this thing that you probably want to come to your school. You're going to pay me 500 bucks a lead to start marketing to them now.

• 40:48Shaan Puri?

  Exactly.

• 40:48Speaker 01

  I mean, I know the pricing is.

• 40:51Shaan Puri?

  You can pay me 25,000. I'll do the marketing for you. Even better, right? And you basically just create this like, this engine that just functions for the universities. Now, I don't know. Some people are going to probably think that's, you know, a little predatory or whatnot. But I think, you know, I'm just throwing out ideas here.

• 41:05Sam Parr?

  You want to hear something crazy that I that I've I had a I knew guys who ran GMAT quiz companies like GMAT study supply, you know, I mean, teaches you how to do well in the GMAT. Yeah. And they would tell me that a qualified lead, like someone who is X smart or, you know, like, whatever, I don't know how they qualify the lead, but like, they would charge or they would pay Harvard and many other schools, something like $2,000 or $3,000 per lead. Is that accurate, Austin?

• 41:37Speaker 01

  Uh, for for what? Like, what was the?

• 41:40Sam Parr?

  Like an MBA school lead. Like, someone to get on the phone with you about why you should apply to Harvard.

• 41:46Speaker 01

  For a while, there was like, the, the education, like, hot swap market. So like, if you could get someone who is on the phone, who is willing to like, sign up for a student loan to go to University of Phoenix, like, yeah, easily couple grand, right? And like, there are some schools, if your tuition is $45,000 a year and you're like an online school, you have a $15,000 CAC per student and not care, which is like. Messed up, right? Um, but the reality is, I mean, the

• 42:19Sam Parr?

  It is. I mean, it's just math.

• 42:21Shaan Puri?

  Yeah, but the value that they're giving.

• 42:24Speaker 01

  Yeah, the willingness of people to sign up for $45,000 of student loans after a phone call is what's messed up. Right? Like, that's, that shouldn't be true.

• 42:35Shaan Puri?

  The reason, the reason it works is because he's got like University of Phoenix, they were able to tap into the government financial aid. So if I had to give you 45,000, I wouldn't do it. But if I just get to go to school and I'm going to take out this loan and it kind of feels like this later problem that I don't have to worry about. And then you don't deliver on giving me a diploma that helps me get a good job, then that's, you know, fucked up.

• 42:57Speaker 01

  Yeah, I mean, there, there, so this kind of caused this environment where for a long time, there are a bunch of schools that had like higher student loan default rates than graduation rates. Right? So like 40% of the people who are taking out loans to go to your school are defaulting and 20% of them are graduating. And it's just like, oh my gosh, that's, that's a travesty.

• 43:21Speaker 01

  But yeah, I mean, the, the reality is if you can, we've created this weird world where it doesn't faze people, the thought of paying $40,000 a year in tuition. And the fact that that, like, people definitely don't understand the interest on that, right? Like, if you're, you know, if you go to NYU and you have $100,000 in student debt and you're paying off a thousand bucks a month, you can pay that for the rest of your life and you won't even touch the principal.

• 43:47Speaker 01

  And that just like, doesn't, that doesn't sink in with people. So that's, that's, that's the tough part.

• 43:54Sam Parr?

  Austin, this whole idea of these tests, I find to be just like crazy fascinating. Another test that I, I was obsessed with for a little while, and I just consider, you probably know a lot about this is StrengthsFinder, Strength Finders, is it Strengths? You know what I'm talking about, Strength Finder? It's owned by Gallup, which is most famous for their polling, but they own this thing. Do you know anything about that?

• 44:17Speaker 01

  Yeah, there, there, and there are a few different versions of it.

• 44:21Sam Parr?

  Basically, to the listener, it's like a $50 test, right?

• 44:24Shaan Puri?

  It's a personality test.

• 44:26Sam Parr?

  It's a $50 personality test and it's famous for the book, StrengthsFinder, but sorry, go ahead.

• 44:31Speaker 01

  Yeah, and there, there are a few different versions of this and there are some.

• 44:36Speaker 01

  You know, like every, every ATS has their own little version, right? So hired has their own version and LinkedIn has their own version. And it's just like, if you as an employer think that you can get a person to take the test and that it will make you N percent better at hiring, then yeah, what's a $50 test? Who cares? Um, but then you do the math on the other side of that. Like, oh, my gosh, for, for doing nothing, you have to develop the test and that might cost you a hundred thousand dollars. Um, but then anything on top of like 2,000 people taking it is just gravy. That's a great business to be in.

• 45:14Sam Parr?

  How big do you think that StrengthsFinder thing is? I've been trying to figure that out. They're privately owned. If you told me that that one $50 test makes 200 million dollars a year, I wouldn't be surprised.

• 45:23Speaker 01

  I guess it's in that. Let's see, StrengthsFinder. What's the name? I guess it's Gallup. So usually I can like.

• 45:28Sam Parr?

  It's owned by Gallup.

• 45:29Speaker 01

  It's a privately owned company. Yeah, usually you can like try to back into it by number of employees or something.

• 45:35Sam Parr?

  I've been trying. I've been trying to figure this out. I've used Web, Arch, I've used everything. On their website, they'll say like this many people took it. And I'm like, okay, I guess that's the only guesstimation that I have.

• 45:45Speaker 01

  What's, what's that number? How many people?

• 45:49Sam Parr?

  Over 100 million people have tried it, it says.

• 45:52Speaker 01

  Oh, it's gotta be, I guess, 200 to 500 million a year business? I have no idea. I'm totally guessing, but like.

• 45:59Sam Parr?

  That would be nuts because they do it one time.

• 46:02Shaan Puri?

  So Austin, I'm curious, uh, before you came on the podcast, I don't know if you had any time to think about one or two ideas that are interesting to you, uh, that you think that, you know, uh, so the audience might be interested in, or just, you know, half-baked startup ideas that you can't pursue because you're running Lambda School. Um, what's on, give us some ideas that are, that are cool to you.

• 46:21Speaker 01

  Yeah, there's one that I like, I've been thinking around the edges of it and I can't quite like, so it came partially from my experience running Lambda School, partially from, um, if you read the blog posts of Frank Slutman, who is the CEO of Snowflake that just went public. Um, you know, he talks a lot about how much like activity at companies is wasted.

• 46:45Shaan Puri?

  Yep.

• 46:45Speaker 01

  Um, and then, you know, there's a whole kind of lean thinking and lean methodology and lean manufacturing and all this stuff. And I've been reading a bunch of books about that because I'm, you know, I want to. Run a very efficient organization at Lambda School. So I've been trying to figure out like, is there a way that you could parse out like how much?

• 47:07Speaker 01

  And, and, you know, again, everybody that works at Lambda School, I'm sure is working on really hard stuff. Um, they're working really hard. Um, but I'm not sure that if, if I knew what everybody was working on at any given time and I were playing God, that I would be focusing that amount of time and effort on that thing. So I'm trying to figure out, I mean, I know some companies will use like Asana in a way that will like, figure out what everybody's working on and make sure the prioritization makes sense. But I don't, I feel like there's some missing product there, especially in a remote world, where everyone's just kind of doing their own thing and everyone's working long hours. But I guess something like 90% of the effort is just unnecessary.

• 47:51Speaker 01

  It's like finding a way to channel that.

• 47:54Shaan Puri?

  Right. How do you find all the slack in the system? That's not laziness. It's, uh, you know, some combination of like, uh, laziness plus, you know, just not being focused on the high priority things or chasing down the wrong, going down the wrong rabbit holes.

• 48:08Sam Parr?

  This idea that I'm going to say is definitely extreme and I might get roasted for bringing it up, but let's just like play it out and listen to what it is, which is there's this guy named Joe Lamont. You know who Joe Lamont is?

• 48:19Speaker 01

  Yeah, really well.

• 48:21Sam Parr?

  You heard of him?

• 48:22Speaker 01

  Yeah.

• 48:22Sam Parr?

  Oh, okay.

• 48:23Speaker 01

  I know Passover.

• 48:25Sam Parr?

  Okay. So then it sounds like you have some type of experience with them, but you could talk about it if you want. But basically Joe Lamont, some billionaire guy who has this company, software company. He buys software companies and outsources the jobs to India. And then he was, he got in trouble because he would install this keystroke software into the Indian employees' computers. So you could see their screen and where they type at all times. And like, that's, it sounds evil, sounds crazy, but like,

• 48:54Speaker 01

  I mean, it sounds, I mean, obviously it would work, right? Like. Like that's when and I've seen there is a there's a company, I think it's in Y C called Squiggle or something where it would basically like it. The idea was, hey, you want to like even it's trying to find a non invasive way of doing that. And I think they ended up like they would take like pictures of your screen and a picture of you and like share it with everybody else at random periods. But like, and I think they were legitimately trying. Yeah, they're legitimately trying to do like, you're working remotely with a group of people. Video conferencing is really high bandwidth.

• 49:37Speaker 01

  What's like a lower bandwidth solution to that thing? I don't think that's the right solution necessarily, but there's there's something there, right? Like the coordination problem. And, you know, the crossover thing, you can, you can debate whether or not you would want to work with a company that puts a keylogger on your computer. And I think you have

• 49:56Sam Parr?

  Well, the answer is no, you would not want to. But like, what I would want to objectively see the results to the experiment.

• 50:03Speaker 01

  I would not be surprised if they are phenomenal. I would not be surprised one bit. I know a tiny bit about crossover and Joe.

• 50:12Sam Parr?

  So then you'd have to ask yourself why? And like, is there a way where this is, you feel more comfortable doing this? That is something similar?

• 50:19Speaker 01

  Right. So there's there's two questions, right? First is, is Joe or is crossover just willing to pay people that wouldn't have that job any other way? And like, I mean, they're being open to everybody who will take a programming test to decide if you'll be a programmer and then paying them like 30 bucks an hour. Like, yeah, you're going to find people that do not love the idea of that software being installed on their computer. But for 30 bucks an hour, I'll do whatever you want, because I'm in Bangladesh, and I will live like a king if you pay me that. And just because I know someone's going to take that out of context, I'm not talking about Bangladesh. I'm not like, the fact of the matter is there are places with lower costs of living and lower salary

• 51:00Speaker 01

  expectations, and you can pay those people more. So now that I've dodged that bullet, the other

• 51:08Shaan Puri?

  Our trick is we just step in so many muddy, you know, puddles that, you know, people can't pick which one. We paralyze people who want to cancel us by saying so many things that, you know, off the cuff, that it just becomes a safe space, actually.

• 51:22Sam Parr?

  Austin, do you know what WAP is?

• 51:26Sam Parr?

  Last episode, we put the lyrics of WAP into the GPT three thing, the AI thing. It had it write more songs. I did it today. It came up with a great new song called Walk the Plank.

• 51:39Sam Parr?

  I'll tell you what it's about.

• 51:40Speaker 01

  I don't know what that's a euphemism for, but okay.

• 51:44Speaker 01

  So anyway, the other way is you could find a way to get the same like effect for the employer or the organizer without being quite so like, you know, like keylogger, keylogger in the US would not work, but is there something that's a little lighter weight? I think Sam Lessin was working on a company that was doing something like that for operations heavy companies where the idea was, you have people who are like doing very rote regimented operations heavy stuff all the time, but they don't think like a programmer. So they can't be like, okay, here's exactly how you should automate it.

• 52:24Speaker 01

  So the idea was, you know, the software will watch you do the thing and then we'll kind of spit out the instructions or the playbook or what that is. And then you can have a programmer running in behind them and automating it. Which is a lot, but I mean, companies like Flexport, there's a whole lot of that happening, right?

• 52:42Sam Parr?

  Like There's this, there's this company called CS Grocers. It's based in somewhere up here where I am in New York. It's the, maybe the third or fourth or fifth largest privately held company in America. And it's a grocery, they, they, they wholesale groceries to, you know, stores. And they made a change in the eighties where they started paying their workers by their warehouse workers. They would give them a small hourly rate, but then a, they had to hit a quota for boxes packed.

• 53:10Speaker 01

  Oh, I need to read about this. It's fascinating.

• 53:12Sam Parr?

  It's, I wrote all about it on my Twitter thing. I'll, I'll share it to you, but if you Google CS Grocer, warehouse workers incentives or something, it's a pretty famous case study, I believe. But they like built all this great technology to try to automate a lot of stuff. And then for the workers, they just changed how they paid them and like revenue like went through the roof. They're like, all right, we're not like, this is just fair, guys. We're not just gonna like, people just started packing like so many more boxes.

• 53:36Speaker 01

  I mean, that's the old like Charlie Munger, like analogy of when he, you know, he's, there's a guy who's working for FedEx and they're trying to like get these airplanes packed on time. And every night they're failing. They're trying all these different things. And finally it said, you know what? We're gonna show up on Friday or whatever, and as soon as this plane is packed, everybody can go home. And it was like, okay, two hours, they're out of there.

• 54:02Shaan Puri?

  Incentives.

• 54:02Speaker 01

  I mean, that's that's supposed to be his analogy. Yeah, about the importance of incentives. But I've been trying to figure out if there's a way to do that within Lambda School that's not draconian. I haven't found it yet, but I'm super interested in that.

• 54:14Shaan Puri?

  I've told this story before, but I worked at this place with this kind of crazy billionaire guy. I worked under him in Indonesia and he he bought this software from Boeing that Boeing used. Either it's Boeing software or the same software Boeing used. And they used it to like manage their factory. So the same sort of thing, whenever you have this like kind of assembly line process, you can kind of just measure inputs and outputs quite, you know, it doesn't feel like it's like a human question. It's like, no, how much are you inputting and how much are you outputting? And he used it in our office with people on their computers. And basically, like, everybody on the on a giant wall next to everybody was this huge projection. And everybody got one, every square represented one person in the company. And it would just have this like color and like this like meter, basically.

• 54:58Speaker 01

  See, green and red based on how productive you're being.

• 55:02Shaan Puri?

  On how productive you're being. And nobody really even understood what is measuring and how it all works. You just knew if something's installed on your laptop. And you were just like furiously trying to do shit because you just didn't want your shit to go red. And so like it was like placebo productivity, you know, in a way. But, you know, he could do it because he was, you know, pretty crazy. He had all kinds of crazy, like, if you got pregnant, he was like, the woman needs to be at home. So you you no longer have a job here. Like, he was like, pretty wild and is now is now actually in jail for, for, you know, different frauds he committed. But it was a it was a very interesting work experience nonetheless.

• 55:32Speaker 01

  Fascinating.

• 55:33Shaan Puri?

  I have two more quick ones. And obviously, you guys want to be Lambda School for many things, all the valuable ones, and let everybody chase all the not valuable ones. So, look, what do you think when you just see a new Lambda School for X come out? And what do you think are the ones that you're you guys are going to pursue? And what do you think is something you're not going to do that other people should?

• 55:53Speaker 01

  I mean, my first answer is always like, oh, good luck. Like I, I, for a while, it was just like, oh, Lambda School. That's like, I, I ran the math on that. That's easy. I'm gonna do that. And a year later, they're like, oh, my gosh, like, I have to get five things working and none of them are going to work. Um, so this sucks. Um, yeah.

• 56:12Shaan Puri?

  Could have told you that. Um. Has anyone successfully done it?

• 56:16Speaker 01

  I haven't seen anybody make the model work yet, um, which is saying something because there have been, I don't know how many, I mean, the, the one model that does work is like, hey, you're gonna owe us 10% of your income for five years and hear a bunch of videos. Like, it's hard not, not to make that work, but it's not like, it's not gonna get big either.

• 56:37Shaan Puri?

  What, what does it cost you all to educate somebody?

• 56:40Speaker 01

  Us, like, north of 15K.

• 56:43Shaan Puri?

  15K, right. So you, so you have to basically make sure that you're able to recoup that. Whereas if you put the videos up on a website, okay, your cost of educating.

• 56:51Speaker 01

  Yeah. And then you, you might, you know, your average successful student might pay you $30,000. You might make $2,000 a student. But if your cost for 500 bucks a student, who cares? That's just a very different business than the one that we're running. Um, and I, I don't think it would grow very well because people, you know, eventually you're gonna find a different way to do that. Um, we have the intensive, expensive, high-quality one is pretty difficult to make work.

• 57:18Shaan Puri?

  I had a guy pitch me one this morning. Uh, give me your instant reaction to it. So he said, it's Lambda School for, um, uh, mortgage, mortgage loan officers or something like that. It's basically like the, the loan officer who issue, who issues mortgages. Um, and what he was saying was that, you know, there's this large, um, uh, in, you know, same thing as software engineers, like there's, there's more, uh, capacity for hiring, uh, folks who can do this than we have folks who are trained to do it. Um, the current model for how it's done is like kind of broken. It's like run through a bank. You have to like get certified in this like slow process by the bank or something like that. Um, and basically he was like, you know, in two months, you can get trained and certified to be issuing these.

• 58:00Shaan Puri?

  The people who are high volume at this are making like 300K a year. At the bottom end, they're making like 70 to 100K a year. Um, and with interest rates being so low, there's just a, you know, high demand for people to, to, to be mortgage lending professionals. Um, so what's the Austin Allred official quick take on that?

• 58:17Speaker 01

  I mean, my first response is just a lot of nervousness around macroeconomic environment. Like, I mean, that's, that feels like a short-term arbitrage that might work for a little bit and then go away. A part of that is because I don't believe, I mean, I don't believe that mortgage officers add like an insane amount of value versus like in a quasi-automated process. So I'm nervous about the long term. And the short term, you could probably, I, I don't know enough about the industry. You could probably spin it out, spin it up and get some cash spitting off. Like, the interesting thing about that is like, you can't like fail at becoming a mortgage officer very easily, right?

• 58:59Speaker 01

  Like, the reason land school is so difficult and so powerful is because you can, it's really hard to become a software engineer, but when you are, you get, you get paid really well. Um, and so that's just a di- different end of the market.

• 59:13Sam Parr?

  What, what's the, this is, what, what's the likelihood that you guys are gonna just fail miserably? I mean, is this a company that like, like, uh, if this works, it's gonna be the biggest thing ever? And it's gonna be massive? Or is there a likelihood that you just go to zero? And, and I mean, you know what I mean?

• 59:30Shaan Puri?

  There always is a probability. What do you pay your probability of failure at?

• 59:34Speaker 01

  A few percent.

• 59:36Sam Parr?

  That's a pretty good, and.