Austen Allred: How to Fix Our Broken Education System

Austen Allred is the co-founder and CEO of Lambda School, a full computer science education that’s free until you get a high paying job. In this conversation, Allred and Anthony Pompliano Discuss Y Combinator, the challenges of building a startup, what it takes to train a computer engineer, why the current student debt problem is so bad, and how Lambda School is helping hundreds of people avoid debt and build a better career.

• 0:02Speaker 00

  What's up everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:15Speaker 01

  Austin Allred is the co-founder and CEO of Lambda School, a full computer science education that's free until you get a high-paying job. In this conversation, we covered why Combinator, the challenges of building a startup, what it takes to train a computer engineer, why the current student debt problem is so bad, and how Lambda School is helping hundreds of people avoid debt and build a better career. I really enjoyed this conversation and think that Austin's work is important. I hope you find this conversation as engaging and fun as I did.

• 0:43Speaker 00

  This podcast is presented by Blockworks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur, and want to attend exclusive events and dinners, visit them at blockworksgroup.io. I promise you won't be disappointed.

• 1:01Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 1:28Speaker 00

  All right, guys. I've got Austin here. Super excited about this conversation. We got a lot to cover. Everything, education. So before we get started, I don't think, I actually don't even know what your background is pre-L lambda.

• 1:45Speaker 01

  Sure. Yeah, I grew up in Utah.

• 1:51Speaker 02

  Did a bunch of crazy stuff when I was younger, ended up working in

• 1:55Speaker 00

  Wait, hold on, back. What crazy stuff?

• 1:57Speaker 02

  So, so I'm Mormon. So I served a mission in Eastern Ukraine. Came back, dropped out of school, went to China, vagabonded around China.

• 2:07Speaker 00

  Where?

• 2:09Speaker 02

  My home base was Shanghai, but I, I literally didn't live anywhere. I just kind of, yeah, had a suitcase and went wherever. Hostels are super cheap there, so I just jump on a train.

• 2:22Speaker 02

  Yeah, then went back to, to Utah, decided to get into tech somehow, had, had no money, had no skills. So I just jumped in a Honda Civic and drove out to Palo Alto and lived in my car for a while while got things off the ground and

• 2:38Speaker 00

  So hold on, what, what were you doing in China?

• 2:42Speaker 02

  I mean, this was like 2011. If you, if you remember at the time, China was the thing, right? Everybody was always talking about China. I'd, I'd been selling on stuff on eBay and importing stuff on a small scale. So I was just interested in import, export, wanted to figure out what was going on, basically.

• 2:59Speaker 02

  And so, yeah, just decided to go out and see what was happening. Decided that import, export wasn't for me. It's highly regulated. It's just, it's a nasty space that's full of antiquated stuff. And now Flexport is taking it on, bless their hearts.

• 3:16Speaker 02

  But yeah, I really just decided to double down on tech when I was out there and

• 3:19Speaker 00

  Yep.

• 3:20Speaker 02

  Yeah.

• 3:20Speaker 00

  All right. So you come back, drive to Palo Alto, uh, living in your car?

• 3:25Speaker 02

  Yep.

• 3:25Speaker 00

  All right. Uh, so one thing I always, I mean, are you, do you sleep in the front seat, passenger seat, backseat?

• 3:30Speaker 02

  Yeah. So you lay the, the passenger seat and the backseat down, feet in the trunk, head on like the passenger seat. Twin air mattress halfway blown up. It kind of like covers up the, the gaps.

• 3:43Speaker 00

  You had like a, like a suite in there?

• 3:45Speaker 02

  Oh, it was, it was swanky.

• 3:48Speaker 00

  All right. So and so

• 3:49Speaker 02

  Bougie Civic.

• 3:50Speaker 00

  While you're, uh, while you're sleeping in the car, hanging out Palo Alto, what, uh, interest kind of focus, what are you doing?

• 3:58Speaker 02

  Yeah. So at that time I was working on a company called Grasswire. Basically trying to crowdsource, um, fact checking of the news.

• 4:08Speaker 02

  It worked. So we ended up getting, you know, half a million dollars in VC and running it for a year and a half.

• 4:16Speaker 02

  It worked. We got like half a million visitors a month at its peak. But it's still, there was no real good way to monetize the news at that time. If it were today, you would have put a coin on it and done some crypto stuff somehow.

• 4:31Speaker 00

  Put a coin on it. I never heard of it before.

• 4:32Speaker 02

  Put a coin on it?

• 4:33Speaker 00

  Put a coin.

• 4:34Speaker 02

  I like that. Yeah. Kind of steam it style stuff would have worked, but there was no way to incentivize anything. There's no way to monetize other than generic ads. It was just a nightmare.

• 4:46Speaker 00

  Also, the, uh, the term fake news had not been coined yet.

• 4:49Speaker 02

  Right. If we were about a year later, we would have.

• 4:52Speaker 00

  You'd have been riding that fake news wave?

• 4:54Speaker 02

  Yeah. Yeah. We were too early. So we, we basically died the December before Trump started coming to power, so to speak.

• 5:03Speaker 00

  Got it.

• 5:05Speaker 02

  And really that's, you know, the fake news thing was really largely a reaction to Trump, but, um, so bad timing.

• 5:12Speaker 00

  Yep. Okay. So, uh, so go through that and obviously, you know, learn a bunch, I'm sure, et cetera. Company dies. What do you do?

• 5:21Speaker 02

  Yeah. So, um, it was not.

• 5:26Speaker 02

  It was not a good time for the company to die. Um, we're, my daughter, or sorry. My wife was like eight and a half months pregnant.

• 5:36Speaker 02

  Let's see, we, yes. So we were, we were remote. So I was living in the middle of nowhere in Utah by my in-laws farm.

• 5:45Speaker 02

  And yeah, so.

• 5:47Speaker 00

  You got a house at this point?

• 5:48Speaker 02

  No, we were still renting. We were like, oh, man, $120,000 for a house.

• 5:52Speaker 00

  No, no, I meant like, well, you're living in a house.

• 5:54Speaker 02

  Yeah, yeah.

• 5:55Speaker 00

  No car, no field?

• 5:57Speaker 02

  No, yeah, there's.

• 5:58Speaker 00

  I've never been to Utah, so I'm just trying to make sure.

• 6:00Speaker 02

  Yeah, like a three bedroom at the time was like 120K. You could rent it for like 600 bucks a month. So there's no point. Yeah. Yeah, so company goes under. I'm like, oh, shoot. Burn through all of our savings, paying off contractors and making employees whole and all that stuff. And then our daughter ends up in the NICU for a long time. So we're like broker than broke, no job, living in the middle of nowhere. There's no tech, anything. It's just farms and a community college. So I decided to write a book about growth, which is the stuff that I had learned in the past couple of years. Sold that. It did really well. And then that started kind of circulating in Silicon Valley.

• 6:42Speaker 02

  A company called LendUp in San Francisco saw it and reached out and said, hey, can we have you join our growth team? And I said, yes. So it ended up in San Francisco.

• 6:52Speaker 00

  Got it. And just overall, how to grow a tech company, acquire users?

• 6:57Speaker 02

  Yep, user acquisition. And the idea was how to go from zero to 1,000 users for free. You know, kind of cheap guerrilla, growth hacky stuff, but very tutorial like. So it takes you through, okay, you have this company. Here's how you figure out which channel to use. Here's how you figure out, okay, let's take Instagram. Here's how you can win on Instagram, step by step. Literally just do this stuff and it'll work. Here's how you win on Twitter, step by step, step by step, and it'll work. And, you know, so I, I kind of sold it as like a tutorial more so than a generic marketing book. And it did well. Sold quarter million dollars of it. It was all self-published. So you just basically keep that. And that got us out of the red. Yeah.

• 7:41Speaker 00

  Love that. Love that. All right. So you get to lend up in San Francisco, working on the growth there. What made you leave?

• 7:49Speaker 02

  Yeah, so left to start Lambda. Basically, you know, coming from a rural area to San Francisco, you just see the, the huge discrepancy in opportunity. So, you know, in.

• 8:03Speaker 02

  The town I was from, the median income is like 30K. And so I'd talk to people and say, hey, there are code schools out there. And $10,000 to go to a code school, like in San Francisco, that's a referral bonus. That's, that's nothing.

• 8:18Speaker 00

  Yep.

• 8:19Speaker 02

  But there is just no possible way those people could move to San Francisco and go to a code school and not go broke all at the same time. So the original idea was just, hey, let's take a code school. Let's put it online so that it's more accessible. Let's make it cheap. Since we don't have physical buildings, we can drive the cost down. The whole, I mean, just classic, hey, let's put this on the internet kind of thing.

• 8:41Speaker 00

  Yep.

• 8:42Speaker 02

  And yeah, started that as kind of a side project while it lended up and did, you know, we would get these huge free classes to kind of promote it. So we'd have 7,000 people in this free class. And then we would convince a few of them to pay us 10 grand. And that was enough to quit our jobs and go full time.

• 9:00Speaker 00

  And what they're doing is so free class go in all online. They're sitting at home. They're taking like a daily course. They're doing a, you know, kind of once a week. How does that work?

• 9:13Speaker 02

  Yeah, so the free course is basically every night, Monday through Thursday, for a few hours, you know, we're introducing a topic. You're working on some stuff. You have a review. Obviously, you can only do that so much when there are 7,000 people. So it's a little bit different of a structure there. But it was basically, hey, let's teach you how to program, you know, up to a certain point for free. And then if you like it, you can pay $10,000 and, and do the rest. We'll, you know, train you for three months. Kind of a standard code school model. We weren't that creative in the beginning. And that, that was really all it was to get off the ground. We were just saying, hey, let's take, you know, code schools exist. Let's put them online and make it not suck. That was the entirety of the, the vision.

• 9:55Speaker 00

  And is this one of the schools when you first started where you were recording a video? Or is it one where you're building like modules and people could go in and actually type?

• 10:06Speaker 02

  So not either, not either of those things, actually. So we felt and still feel that it was very important to have it be live. So it's like live streamed and then you'll have group working sessions where you're all working on the same code base at the same time. Or, you know, individual coding sessions. And that's true to this day. It's still live and interactive. It's, I mean, it's not exactly like a classroom environment because we try to make it better being online. But no different than, you know, showing up at a class and having an instructor walk through stuff with you.

• 10:37Speaker 00

  And so as you're doing this, you realize, hey, we can get, you know, thousands to sign up for a free class, pay attention. We can convince some subset of them to pay us, you know, of real money.

• 10:50Speaker 00

  And you leave and it's just you. You've got a co-founder, a team. What was those early days?

• 10:55Speaker 02

  Yeah, it's just me and my co-founder. He was basically teaching 9:00 AM to 9:00 PM. And I was basically trying to get butts in seats 9:00 AM to 9:00 PM. And as a part of that, we started emailing, you know, the thousands of people that have signed up for the free class. Like, hey, why don't, why don't you pay $10,000 to the school you've never heard of and like, join us? And every single time the response was, you know, A, I don't have the money. B, I can probably get the money, but that's just way too much risk. What if it doesn't work on the other side? I just blew 10 grand. And frankly, that's deserved in the code bootcamp space. There's a lot of bad product out there, a lot of really bad schools, frankly.

• 11:38Speaker 02

  So I can't fault anybody for that. And so we, we had like, for our second cohort, we had one empty seat. And we basically emailed everybody and said, hey, we have, you know, one seat left. If you'll pay us $1,000 upfront, then you can pay us the other, you know, we'll add on a finance charge. So pay us $10,000 after you get hired, same course. And we had like 200 applications come in. And that's when we realized, okay, there, there is some. Thing to the idea of de-risking it for the student. And if we can do that, then we can, we can fix all this other stuff that we've wanted to do. Like, we felt like three months wasn't really long enough to get you from where you needed to be,

• 12:20Speaker 02

  or from where you are to where you need to be as a software engineer to get hired. But if you don't, you know, if you're not charging $10,000 and you have to charge $20,000, how many people are going to charge you 20 if it's hard to get them to pay you 10?

• 12:34Speaker 02

  So from that, we basically moved to a model where it was, hey, you can either pay us $20,000 upfront, or you can just pay, you know, then we started delving into an income share agreement, where you don't pay us anything until you get a job. And then you'll, we'll do an income share for a couple of years if and only if you get a job. And we got a couple of people to pay upfront, and that funded the rest of the class. And then we, when we announced that, we had thousands of applications coming in.

• 13:00Speaker 00

  On the, on the free upfront with the income share on the backend?

• 13:04Speaker 02

  Yep.

• 13:05Speaker 00

  Got it. And so what is the model today?

• 13:09Speaker 02

  So the model today is, is basically that. It, it's completely free until you get a job that pays more than 50K a year in the field that you study. Otherwise, you never pay anything. If you do get that job, we share, so you pay a 17% of your income for two years, capped at a total possible of 30K. So if your income is below 50K, you pay zero. If it's above 90K, you pay 30K. If it's somewhere in between there, it's a percentage of income. Pay it off over two years and you're done.

• 13:41Speaker 00

  Got it. That, um, definitely de-risks for somebody who wants to learn and say, I'm going to bet on myself, right, to some degree. But either one doesn't have the money or two, you know, the, the price is the hurdle. What has been the success rate on the backend?

• 13:58Speaker 02

  Yeah, so our first cohort, 83% of the students were hired and making more than 50K.

• 14:05Speaker 00

  Wow.

• 14:06Speaker 02

  It, it stayed right about that level.

• 14:11Speaker 02

  It's incredibly

• 14:13Speaker 00

  That's a big number.

• 14:13Speaker 02

  Difficult to get to that, frankly. But, but yeah, it's, it's working.

• 14:19Speaker 00

  And so let's talk about the education, kind of in the traditional world, right?

• 14:25Speaker 02

  Sure.

• 14:25Speaker 00

  So.

• 14:26Speaker 02

  What's the issue there, right? Why is there so much demand for what you're doing? There are a couple of main factors that, I mean, so right now, if you are living in middle America and you want to change a career, there are two huge problems. The first is that it will take you probably four years. You have to go get a university degree and two years is going to be studying Shakespeare and the liberal arts, which I have no problem with, but not an efficient way to switch careers. And the second is that it's really freaking expensive. It's gone up like 2,000% in the last 10 years alone. The average person that gets a

• 15:08Speaker 02

  degree, you're looking at 100, 150K in debt. That's just too much to handle, right? That's, you know, I always think about it from a risk perspective. That is a whole lot of risk to take on, hoping that this new career change pays off for you. So, you know, the opportunity cost of your time and the cost, cost of the tuition and living expenses for four years is just astronomical. So, we basically, we de-risk the education by making it free upfront. And then,

• 15:43Speaker 02

  yeah, we, the other aspect of that is a university isn't really built to get you a job. That's kind of a, they view that as a side effect of what they do, but they're not like gunning for that. For us, that's all we care about. And you don't come to us if you don't want a job, but you do come to us and we will do everything we possibly can to help you get a job, or we don't get paid. And the incentives really, really matter. How do you drive that high, like, success rate in getting the job? Yeah, I mean, the first thing is picking qualified students that show us that they're capable. The second thing is picking a job market where there is high demand. And then the third is just...

• 16:27Speaker 02

  We know that we have to make you the best engineer you possibly can be. And if you're a really solid software engineer and you're looking for a job, you will find one. It's it's just a matter of do you have enough time and gumption to to look? Which is a problem we run into in some of the lower income backgrounds. They just don't have the day graduation hits, they're out of money. And that's a problem we we have to deal with. But but generally speaking, it just works, right? The the promise of, hey, you can learn this skill and people will pay you to perform that skill. It just it works. It always has. And you don't have to believe us because, you know, you otherwise you won't pay us anything.

• 17:12Speaker 00

  Yep, that makes sense. What do you think about the traditional world? There's an argument that I recently, I think it was an op ed that I read that said, you know, a place like Harvard, for example, has such a large endowment that they should lose their their education status, their school status, because it's basically like a financial institution with just a school attached to it, right, for some tax benefits. I don't even, you know, I have no opinion in terms of agree, disagree. But how does that type of endowment model and kind of the the large financial focus for some of these institutions play into, you know, how much they charge, how the kind of the overall system works?

• 17:53Speaker 02

  Yeah, Harvard could. Sorry, one sec.

• 18:02Speaker 02

  Harvard could make their tuition zero. And relative to the size of their endowment, it wouldn't move the needle that much, right? It just, they may as well take 40K a semester from rich people because that's what a lot of their student body is anyway. I I think the goal of Harvard and the goal of Lambda School are just very, very different. I had a conversation recently with someone who did, who does the the interviews for Harvard. And in their handbook, they say, you know, Harvard, you know, we're trying to find the next Michelangelo. We're not trying to create the Medici's, who are the people that funded Michelangelo. So there's kind of a a social element there or social class statement that, you know, we don't want to train the merchant money making class.

• 18:47Speaker 02

  We want to train something higher, something more enlightened. So. And that's just not our goal, right? We'll create as many Medici's as we possibly can.

• 18:58Speaker 00

  Yep.

• 18:58Speaker 02

  And we want to take people that aren't Medici's and make them Medici's. And then they can fund the Michelangelos later.

• 19:05Speaker 02

  So I think just fundamentally, the, you know, our goal isn't necessarily to create,

• 19:11Speaker 02

  you know, Nobel Prize winners. And we're not, you know, it's just a very, very different organizational structure and goal.

• 19:21Speaker 00

  Absolutely. What is the like biggest problem as people go through the program that you see if somebody's not technical? Becoming technical and gaining that skill set? Like, what are those challenges that you guys really work with people to kind of, you know, smooth over the transition?

• 19:41Speaker 02

  Yeah, I think the first and foremost,

• 19:45Speaker 02

  people, I don't know if they have forgotten how to learn or if they've never learned how to learn. But so many people come into Lambda School and they're like, okay, you know, what, you know, what is required? What's going to be on the test? What do I have to do to check all the boxes so that I can signal to whomever that I know this stuff?

• 20:05Speaker 02

  And that just doesn't, that fundamentally does not work in software engineering. In software engineering, you have to be able to approach something you've never seen before, understand how to decompose that, understand what works, what doesn't work, what will be optimal, what will be suboptimal, make trade offs, and then solve the problem. And that is very, very different than the way the educational system has traditionally been run. So we have to kind of beat that out of people. We have to beat out of them the idea that you show up, you check boxes and you're done. Or, you know, you jump through various hoops and that shows everybody that you can do all the stuff that you need to do. You just can't do that as a software engineer.

• 20:48Speaker 02

  So we basically spend the first month trying to create a new system of incentives and motivation that are, you know, you, we need people to learn how to learn. Once that clicks for people and you can, it's almost visible. Then then they're set, then they're off to the races and they can do anything and everything. We don't have to worry about them anymore.

• 21:13Speaker 00

  No, that's awesome. And do you find that once they get over that hump of, you know, here's how to learn again, the the information that they acquire, like there's an acceleration?

• 21:26Speaker 02

  Oh, absolutely.

• 21:27Speaker 00

  And that even continues like post the program into their job?

• 21:30Speaker 02

  Yeah, I mean, the the cool thing is at the end of Lambda School, not only can you do the stuff that we've taught you how to do, but when you see something that you've never approached before, yeah, a good student will say to themselves, oh, I know how to learn that. I've never touched it before, but like, let's dive in. Let's look at the documentation. Let's figure it out. I think that that's an acquired skill for most people, at least in the US today. Just that even the notion that you can see something that you know nothing about and you can figure it out is very foreign to most people. Most, you know, most people come to us because they don't understand

• 22:13Speaker 02

  that that's possible. And we have to teach them to do that.

• 22:17Speaker 00

  Well, and not only is it how to do it, but it's the desire to want to learn something new, right? A lot of people see something that they don't understand and they just walk away.

• 22:26Speaker 02

  Yeah, I mean, the funny thing is, I look back, you know, when I was younger, and I see that in myself. Like, there were so many times when I would see something, and I'd be like, I can't figure out how to do that because I'm not, I'm not a software engineer. I've never been trained to do that. And it was once I really started to say, okay, you know what, I'm just gonna do whatever I want and I'll, you know, figure it out as I go. Which, by the way, that kind of clicked for me when I was living in Ukraine, learning to speak Russian. And just like, yeah, I don't, I don't know how to speak Russian, but I'm gonna. Try with this guy, you know? And that, that really matters. So now it's, you know, I'm dealing a lot with, I mean, as a CEO of a rapidly growing company,

• 23:11Speaker 02

  everything that I'm dealing with, I've never touched before, never imagined before. But it's not that intimidating. It's just, I know there's a learning curve. I know I have to pick stuff up as I go. I'm not a finance guy, but had, had to learn finance, more of, you know, structuring all this stuff, had to learn how to manage, how to organize a company, all, all that stuff. But you can do it and there, there are materials out there, there are resources, there are people, and you can just figure stuff out.

• 23:37Speaker 00

  Absolutely. How many people have gone through the program?

• 23:39Speaker 02

  So we've had 150 graduates and then 700 are concurrently enrolled.

• 23:45Speaker 00

  Got it. What, what are some of the things you've learned from, you know, because there's probably thousands of applications, you've got hundreds now who have either gone through or going through. What are the biggest things you've learned about people and, and kind of going through this transition?

• 24:00Speaker 02

  Yeah, I think the first is you assume that everybody has the same,

• 24:09Speaker 02

  like requirements and needs that you do. You just figure that, oh, this is what I needed. So everybody else is the same way. The, I mean, instructional design is not, I mean, there are a lot of code schools that like, yeah, we don't need to worry about that stuff. It'll just, you know, we're engineers who will figure it out. We can teach. But a good, really good instructional designer that's done that for 10, 15 years knows how to take all these different things into consideration when they're building a curriculum so that it works for people from all sorts of different backgrounds and stress levels and all sorts of stuff. So we definitely underestimated the difficulty in creating a really good curriculum.

• 24:55Speaker 02

  And then the other thing is just the, and this is constantly a learning battle because a lot of our students come from very low income backgrounds. They're very stressed financially from. Day one, creating an environment where somebody that's already that already has stress at level nine, based on their normal life circumstances, getting them to learn something that's incredibly difficult is hard. And we have to to build in support for that kind of thing. Sometimes that's financial support.

• 25:30Speaker 02

  We can only do that so much. A lot of the time, it's just emotional support. It's just, you know, sometimes people just need somebody to talk to. And that's, that's, that's another thing we definitely underestimated.

• 25:42Speaker 00

  Got it. And then what are the challenges that you guys have gone through that you guys have already overcome? Right? So as you started building this, it sounds like there was, you know, people who came in, you had to learn a lot about who are these people? What are they kind of going through outside of the school? What are their goals? How do we actually get them into jobs? And, you know, kind of this, the nitty gritty blocking and tackling of building a company. But are there specific challenges that stick out to you in terms of, you know, they hit you really hard? And, and forced you to kind of wake up and get through them?

• 26:15Speaker 02

  Yeah. So if you look at Lambda School as kind of a traditional, you know, what are all the risks that are involved in this startup? And let's start peeling them away. It basically starts out with, can you get people who haven't paid anything upfront to finish a six month program?

• 26:31Speaker 00

  So really, really focusing on the persistence of somebody's desire to finish.

• 26:39Speaker 02

  Yeah. I mean, when we started, everyone was like, you guys are going to get killed because students have no skin in the game. You guys took on all the risk. What, you know, if they just shut a laptop and walk away, what happens? And they're right, right? Like, we have to find people that are dedicated and motivated. And then the course has to be so good that there's never a point where they're just like, you know what? To hell with this.

• 27:03Speaker 00

  How do you screen for the dedication and motivation?

• 27:06Speaker 02

  So now we. You know, in the beginning, we would try stuff like, hey, let's try this logic challenge. And if you can figure, you know, if you can think analytically enough to get through this challenge, then we'll accept you. Now, we actually require all of the students to go through a class before they start. And we monitor people when they're in that class and see how well you do in that kind of trial environment. So we call it tryouts. And we accept people based on how well they're able to be dedicated and, you know, finish stuff and all that. So you kind of put in sweat equity as opposed to a cash.

• 27:44Speaker 00

  That's the skin of the game. Is that you got to get through the tryout. And if you're good enough to get through the tryout, then you're welcome. If not, then see you later.

• 27:51Speaker 02

  Yep. That's exactly right. And you would be shocked at how many people who are incredibly talented just don't have, they won't show up every day. And that's, I can, I can take somebody that will show up every day and work hard, and I can teach them how to code. If you're an already mediocre coder, and you still won't show up every day, I can't help you. So that's, yeah, I think what we really learned was, the grit level of a student is the most important factor.

• 28:24Speaker 00

  What, um, is it an all day, every day? Or is it a night class? How do you offer students, when you say show up every day, right? What is the ask of them on a daily basis?

• 28:37Speaker 02

  Yeah, so it's, it's for the full time class, it's 8am to 5pm. Your button seat, so 8am to 5pm Pacific. So, you know, different time zones are different. Monday through Friday for seven and a half months. For the part time class, it's 6pm to 9pm Pacific, which is, you know, 9pm to midnight, Monday through Thursday, and then three hours on Saturday for a year. So basically, you can either say, I'm going full time, I'm not going to have a job for seven and a half months, or I'm going to keep my job, and I'm not going to have a life for a year. And there's just, there's simply no way around that, right? You have to be able to put in the hours, or there, there's nothing we can do to help you.

• 29:24Speaker 00

  What's the number one reason people quit is just the rest of their life? Like everything else kind of just takes over?

• 29:29Speaker 02

  Yeah, by far. You have a spouse supporting you and then the spouse loses a job. You have a death in the family. Sometimes it's like, we have a lot of students in the Southeast and when hurricanes hit, it's just so frustrating.

• 29:45Speaker 00

  Shark attacks, just all kinds of like stuff going on.

• 29:48Speaker 02

  Yeah, I mean, when, you know, we have 700 students enrolled right now. At that kind of scale, like something crazy is going to happen to somebody. It's just, it's just going to happen. So there, you know, that's just comes with the territory and we have to build it into our model and work with people. We had a student that was in, on vacation in Costa Rica, I think. Either Costa Rica or Puerto Rico, one of, one of the two. Got mugged, got everything stolen, like couldn't, you know, barely made his way home. So, you know, we didn't know what happened to him. He just didn't log on and then three weeks later he shows up and says, hey, I got, I got mugged and it took me three weeks to get back home.

• 30:31Speaker 00

  Wow.

• 30:32Speaker 02

  And, you know, so we can, we can accommodate stuff like that, but stuff happens.

• 30:37Speaker 00

  Yeah. And this is, the classes are all in English?

• 30:41Speaker 02

  All in English.

• 30:42Speaker 00

  Know the languages yet?

• 30:43Speaker 02

  Nope, we, not yet.

• 30:45Speaker 00

  Not yet, alright, one day.

• 30:48Speaker 02

  Yep.

• 30:49Speaker 00

  And then, what are you teaching? Right, so you're teaching one single language? Are you teaching multiple languages, nigh as a student could pick? Walk me through kind of, you know, some of the content itself.

• 31:00Speaker 02

  Yeah, so, so we separate it into different tracks. The, the full stack web development track. We'll teach JavaScript, which is, you know, React, Node. We used to teach Mongo. We recently removed Mongo and replaced it with relational databases, SQL, Postgres, stuff like that. That's kind of the first 15 weeks is full stack, traditional JavaScript stack, web development. Then we have 10 weeks of computer science. That is based in C and Python. So Python and Django, just because we want you to have exposure to a new language. We'll do a lot of the data structures and algorithms training in Python.

• 31:40Speaker 02

  First of all, because it's a different language, but second of all, it's Probably a better language than JavaScript. I should be careful saying that, but it doesn't have the same side effects that JavaScript has and is a little better to reason with when it comes to data structures and algorithms. And then C because C doesn't let you abstract away all the hard stuff and you have to deal with the lower level. So when we're talking about systems and architecture and operating systems, we use C for that. And then we have a five-week apprenticeship that we call Lambda Labs. It's kind of a simulated dev shop environment. You can use new languages. We have students build stuff in React Native

• 32:25Speaker 02

  or Ruby and Rails or whatever. That, you know, you can kind of choose, choose your own path. We also have a program that's a little bit different for the full stack web development called Lambda Custom. And that is when an employer comes to us and says, "Hey, I want to hire 10 Phoenix and Elixir engineers." We'll basically swap out the traditional curriculum for something that includes Phoenix and Elixir. But they have to be willing to guarantee that they'll hire 10 students for it to be worth our time doing that.

• 32:59Speaker 00

  Got it.

• 33:00Speaker 02

  Then we have other tracks. We have iOS, we have Android, we have UX design, we have data science. And those, you know, fall a similar pattern, but you'd have to map what I just said on, onto those different.

• 33:10Speaker 00

  That makes sense. What about blockchain interests? Right? So obviously, most of the people listening are super interested in blockchain, crypto, et cetera. Are students aware of it? Are they interested in it? Are they looking for jobs in the industry? What have you seen so far?

• 33:25Speaker 02

  Yeah, a lot of students come in. I don't know if I should say a lot, but there are definitely some students that come in interested in crypto. And we have some, some side stuff that we send them through so they actually understand the cryptography aspect of crypto, not just, here's how the blockchain works, but, you know, keys, all that stuff.

• 33:48Speaker 02

  Yeah, we have a few students that are hired as blockchain developers. It's not a majority of the students, but those students are really well-paid. There's a pretty big shortage of blockchain engineers.

• 34:01Speaker 00

  Well, you say pretty well-paid. What do you think, average?

• 34:05Speaker 02

  Our, I shouldn't, our, our average is ridiculous. Our average for blockchain based engineer is like in the 190K range.

• 34:13Speaker 00

  Hundred ninety thousand. I mean, you know that like 20 blockchain engineers just went to their boss and said, hey, I need a raise.

• 34:19Speaker 02

  Yeah. Um, I, again, I'm not saying that's average, but that, that's what our average has been. I, I would imagine that it will net out to being this kind of software engineering salaries plus a 20% you know, bonus for understanding how crypto works.

• 34:40Speaker 00

  Yep. And, and then, um, do you see any difference between the people who come in that are interested in crypto versus not? And, you know, going through the program, uh, or, or kind of the, the skills that they're better at or worse at? Cause it sounds like there's definitely on the backend, there's a difference in, in kind of maybe salary, but anything in, in the middle of the program?

• 35:00Speaker 02

  Um, I, I, I think it's just a different like focus area for them. So there, there are a lot of people that are kind of, you know, hey, Bitcoin is cool and I have a Coinbase account.

• 35:13Speaker 02

  And then once they learn to become a software engineer, then they, and once they learn to learn, like we talked about, then they start to actually delve into, how does a blockchain actually work? What is this? What is, what is a ledger? You know, how, what, what are we actually talking about when we're talking about moving crypto from point A to point B? What, you know?

• 35:34Speaker 02

  So that, that's really cool to see that they, there's a certain point where it moves from, hey, crypto is this abstract thing and there, you know, prices go up and down to, let's understand the tech under the hood. Let's read what Satoshi wrote. Let's understand, you know, all of that stuff.

• 35:53Speaker 02

  And I think there are surprisingly few people in the crypto community that understand all of that fully.

• 36:03Speaker 02

  There are a lot of people that are trusting other people when they say crypto is secure. Crypto is, you know, a private method of transaction. Crypto is, you know, you, you could probably list off a bunch of different things, more than I could off the top of my head.

• 36:22Speaker 02

  And people get that conceptually, but when you understand the tech, when you understand cryptography, when you understand how mining actually works, instead of, hey, I'm just gonna buy a GPU rig and plug it into something, it's pretty cool to see. Yeah.

• 36:36Speaker 00

  Absolutely. What do you guys need the most help with, right? So people who are listening, what can they do to make you guys more successful?

• 36:46Speaker 02

  The first thing is stop lumping in Lambda School with other code bootcamps that suck when you're hiring engineers. That's probably our biggest battle is people look at us and they say, oh, I hired somebody from an eight-week code bootcamp once and they didn't perform very well. Of course they didn't.

• 37:05Speaker 00

  Yep. How do you get over that right now? You just say, hey, that was eight weeks and ours was seven and a half months?

• 37:11Speaker 02

  Yeah, right now it's like, so we have a lot of companies that come to us or we come to them. We have a biz dev team that's constantly trying to create those relationships. And they're like, yeah, you know, we're looking for someone with a CS degree that writes Java. And we're always like, okay, just interview one. Just try it. And we've had multiple companies that, you know, first of all, they hire that person. They pay them 110K and then they come back to us. And we literally have companies coming to us now saying, can you send us 50 more? Can we, you know, what can we do to, you know, we need to hire 200 engineers next year. We want to make 150 of them Lambda grads. Get me more of that.

• 37:54Speaker 02

  So there's some, some element of just, you know, they need to try and interview and hire the right person and then, then they get it. So we've had companies now that have hired seven or eight students. And we've, we've only had graduates for six months, right?

• 38:10Speaker 00

  Yep.

• 38:12Speaker 02

  So that, that's really how we win in the long run is just by better product.

• 38:16Speaker 00

  Yeah. Well, so I definitely agree with that. What is your incentive? If I'm a student and based on the way that I understand the, the pricing mechanism, right? Basically, As soon as I get paid more than $90,000, you're kind of capped out, right? And so what is the school's incentive to help me go from 110 to 130 to 150, let's say, on that salary? Is it just the better that I leave with a great experience, great job, et cetera? I become an ambassador for Lambda? Or how do you think about that?

• 38:50Speaker 02

  Yeah, so we intentionally capped how much we take from an income share just because, I mean, if you're making 80K and you pay us back, you know, 27K, that's a pretty fair trade. If you start to make 150K and all of a sudden you're paying us like 60K, then that feels, I mean, obviously incentives are still aligned, but that starts to feel a little bit shady at that point. So we just put a hard cap on it.

• 39:15Speaker 02

  That said, you know, we want you to be as successful as we possibly can be. We do report averages, we do report, you know, incomes. I love it when our students get hired for 110, even though that doesn't change our income level at all from when you're getting paid 90. I mean, the truth is, we do get it a little bit faster still because they'll, you know, they're still paying the 17% and they'll hit their cap earlier. So that's a small bonus, but I mean, really the long-term, in the long run, the way Lambda wins is if we have thousands of successful students out there that employers trust.

• 39:55Speaker 02

  And, you know, later on in Lambda's life cycle, we'll start to have, you know, more products for, hey, you want to hire a software engineer that has two or three years of experience? Now we have thousands of software engineers with two or three years of experience that sell a relationship with us. There are all sorts of, I mean, that, our relationship with the student is usually really, really strong. They, they're grateful, they are, they want to give back to the community in some way. So we're just trying to foster that as much as we can.

• 40:28Speaker 00

  Absolutely, that makes sense. All right, so.

• 40:33Speaker 00

  I've got two questions for you and then we'll wrap it up. But if you could change anything about the current education system, what would you change?

• 40:43Speaker 02

  I would, oh man, there are like 80 things. The first is you have to realize the education system is 100% built around Title IV funding.

• 40:55Speaker 00

  Okay.

• 40:56Speaker 02

  So Title IV funding is basically Pell Grants, federally subsidized student loans. Every university, every college is 100% built to pull money out from that pool or they're dead.

• 41:11Speaker 02

  That is what education is built around entirely.

• 41:17Speaker 02

  To be able to receive Title IV funding, you have to become accredited, which means you have to go through an accrediting body recognized by the US Department of Education. And there are a couple of ways you can do that, but basically those are the people that are making the rules for the entire educational, for all of higher ed across the US, because everyone is reliant on Title IV funding. Those rules are insane. When we're looking at it, you have to have, for most programs, you have to have two years of general studies, which may or may not make sense depending on what you're going into. You have to have your curriculum approved by certain people, which makes it really

• 42:00Speaker 02

  difficult to adapt and change curriculum, which in the computer science world is just a recipe for disaster.

• 42:08Speaker 02

  You have to have a librarian on staff full-time. So even if you're in an online school that doesn't actually have a librarian, you have to have somebody with a master's degree in librarian studies on your staff.

• 42:20Speaker 00

  That's wild.

• 42:21Speaker 02

  So it's just, it's literally, if you took 50 PhDs, sat them down in a room and said, what do you think the requirement should be for education in the United States? That's literally what is happening and they can write the rules for everybody. And the only way you can break away from that is if you're not taking federal funding. And there's a rule called the 90-10 rule, which is that if you're a for-profit college, you can only take 90% of your income or revenue from federal funds. And that's a huge problem is people are trying to stay below that 90%. So like that gives you a sense of how reliant

• 43:04Speaker 02

  everybody is on student loans, basically, or Pell Grants and whatever else. If you made, if you said, people can now bankrupt their way out of student loans, like you can't declare bankruptcy on student loans. They're there forever. That would rock the education system. If you said, schools have to, you know, less than 50% of your students can default on their student loans, that would rock the education system, which is crazy. 50% is a huge, huge default rate, especially when you're talking about something that you can't bankrupt your way out of and is with you forever. So I think the big problem is that there's just no, like the blind are leading the blind

• 43:49Speaker 02

  and there's nobody that can raise their hand and stop anything. So it's just this incestuous, you know, the PhDs write the rules for how accreditation is granted. As soon as accreditation is there, you have unlimited backing from Uncle Sam, so you can charge whatever you want. It all ends up on the student's back. The student ends up screwed, but you don't care because I got mine. It's just a very, very broken system across the board.

• 44:14Speaker 00

  Absolutely. And I think we're now starting to see the impact of the debt that we're putting on all of these students is pretty misunderstood, I think, years ago. And now is quite sad, frankly.

• 44:27Speaker 02

  Yeah, I mean, when I went to college, you know, most of my high school buddies came from lower, middle-class environments. And nobody told us anything about student loans, ever. It was all just go to the best school you possibly can, study something you love. And if you get a degree, it'll all work out on the other side. And that's just fundamentally not true, especially in this day and age. Now, you know, a lot of people have degrees and they're I wish I could remember the the number, but there's something like 5,000 people in the US with PhDs that work as janitors. It's just.

• 45:06Speaker 00

  That's a ton.

• 45:07Speaker 02

  It's a whole lot. Yeah, it's the expectations of the students and society are just completely misaligned with the expectations of the university and frankly, the results. So, you know, net net, you still make more money if you have a bachelor's degree than if you don't, because of course, if you take all of the smart people in society and you have them get a bachelor's degree, by definition, they're going to, you know, it will bear out in the stats. But we've translated that into everybody needs a bachelor's degree, and if you don't get one, you're screwed, and pay whatever it takes, because that's the only way to make it.

• 45:52Speaker 02

  And that's, you know, coupling that with, and we'll give you unlimited money to do that, because we think it's really important, and we're not paying attention to what happens on the other side, is just a recipe for disaster, and we're seeing that now.

• 46:04Speaker 00

  Absolutely. All right, so ask one question to end it, and then I'll let you ask me one question before we're over.

• 46:13Speaker 02

  All right.

• 46:14Speaker 00

  You gotta admit that aliens exist somewhere in the solar system, galaxies, etc. Do we think that aliens have pets?

• 46:24Speaker 02

  Yeah, so.

• 46:28Speaker 00

  Are there alien animals?

• 46:29Speaker 02

  There's a paradox. I'm trying to remember what it's called. But this is not what you ask necessarily, but aliens, so far as we know, have not made contact with us, right? So either they don't know we exist, they're not advanced enough to make contact with us, or they have conscientiously decided that it's just better off to let those humans do their own thing and leave them alone.

• 46:56Speaker 00

  Like we're like too stupid for them?

• 46:58Speaker 02

  Yeah, I don't know, like. Yeah, you could be like, yeah, let's just not disturb their natural environment. Let's let them burn it to the ground on their own.

• 47:06Speaker 00

  Well, because we always think about like, we haven't found the aliens, right? But like, what if they know that we exist and we don't know that they exist?

• 47:13Speaker 02

  Yeah, it's, I mean, it has to be one of those three things by definition, right? Either they don't exist, or we're not, one or the other isn't advanced enough to make contact with the other.

• 47:26Speaker 02

  Or they're consciously deciding not to make contact with us, and they could. I think the latter is pretty unlikely. Like, I'd think if they could make contact, you'd at least try to say like, hey, what's up? Let's, you know, maybe there's some-

• 47:41Speaker 00

  Is it like a, like a you up text at 2 a.m.?

• 47:45Speaker 02

  Maybe there's some information sharing that could happen somewhere. I'm, I'm sure if you, you know, if you create one simulated environment and then another one, like, they'll both evolve in different ways. And, I mean, you, you don't get, you don't get a chance to say, let's, let's try all of humanity over again and see what happens this time. That'd be, that'd be cool.

• 48:04Speaker 00

  Yep.

• 48:05Speaker 02

  So, I'm gonna say that if there are aliens out there, they're not advanced enough to make contact with us. And if you look at, let's see, so how long was it from the time that we domesticated animals until we were a spacefaring civilization? Maybe, it's less than a thousand years, right?

• 48:30Speaker 00

  Yeah, I believe so.

• 48:31Speaker 02

  So, in the expanse of time and space, if we say, you know, the Earth is hundreds of millions of years old, I'm gonna say it's unlikely that they have reached the point of domesticating animals yet, because if they would have, then it's pretty likely that they would be progressing to the point where they could make contact with us. How's that for an answer?

• 48:52Speaker 00

  That's probably the most thoughtful answer I've gotten. Normally, people are just like, we are, we are the pets. We are, we are the animals. But, but no, I think, I think that's completely fair. All right, what, uh, what question you want to ask me?

• 49:05Speaker 02

  Let's ask you a hard one.

• 49:09Speaker 00

  This always scares me so much when people are like, oh, let me ask you a question.

• 49:13Speaker 02

  Crypto transaction volume slowly going down. Why?

• 49:18Speaker 00

  Yeah, look, I am a believer that it will continue to go down. So we're doing this in October of 2018. Right? I think that the beauty of a blockchain and crypto in general is security, right? And trust. And so like, I usually draw this spectrum for people on the left side of the spectrum. You have security on the right side. You have like, you know, innovation and like all the shiny stuff. Bitcoin specifically is like as far left on that spectrum as you can get in terms of security is the number one thing. Right? So really, really slow, you know, low transaction volumes because of the slowness.

• 50:00Speaker 00

  It just doesn't really work today as a medium of exchange for a whole host of reasons. What we've seen is a bunch of people try to push blockchain technology and crypto to the right of that spectrum. Right? So they started doing all sorts of things around speeding up transactions.

• 50:16Speaker 02

  On the left side of the spectrum, you have store of value. On the right side, you have means of exchange. Is that?

• 50:21Speaker 00

  Not necessarily. Right? So I think that I think of it as.

• 50:24Speaker 02

  We'll call it replacing credit cards on the right side, maybe.

• 50:27Speaker 00

  So if for payment specifically, yes, right? I think that I just look at payment or non-payment blockchains and crypto, you know, projects, companies, etc., all on this spectrum of like, are you optimizing for security? Or are you optimizing for, you know, speed, innovation and kind of all the shiny stuff?

• 50:44Speaker 02

  Sure.

• 50:44Speaker 00

  To me, we actually, because we're all like too smart for our own good, meaning people in technology, like we keep pushing farther and farther to the right of that spectrum. And we want all the innovation, the speed and all that stuff. And we should do that, right? That is where like the R and D and the innovation, etc., is going to happen. But I think that I'm probably much more of a Bitcoin maximalist than most in this idea of like, the security and the trust of the chain and the technology is the core component.

• 51:15Speaker 02

  Sure.

• 51:16Speaker 00

  And so. While people are doing all that innovation and doing all this crazy stuff, like people, the Bitcoin developers are just going to keep adding that to the Bitcoin chain, right? So smart contracts and all this stuff. And so when we look at transaction volumes, for example, well, the most adopted chain, which is Bitcoin, and the most secure chain is also a slow chain because of the optimization for security.

• 51:39Speaker 02

  Sure, so I could make the argument that if you're calling it a store of value, you don't look at like the transaction volume of gold to determine the value of gold, right? It's, it's

• 51:49Speaker 00

  So that's definitely

• 51:50Speaker 02

  That's just the wrong measure.

• 51:51Speaker 00

  Yeah, so that's one way to do it. I think that what becomes interesting, though, is is there a world where as we really solidify the security, the distributed nature of, of the technology, can we actually improve transaction volume, the speeds and all this stuff? And so that's not going to happen in the first 10 years.

• 52:13Speaker 02

  Sure.

• 52:13Speaker 00

  Right?

• 52:14Speaker 02

  So we're not at Bitcoin 0.1 yet. Don't try to do Bitcoin 2.0. Don't try to, don't try to layer on speed and payments because we're still figuring out the very, very fundamentals of

• 52:26Speaker 00

  Yeah, like, like we're at like

• 52:27Speaker 02

  Of the blockchain, basically.

• 52:28Speaker 00

  Let's say we're at Bitcoin, you know, 0.5, right? And people aren't even at 2.0. People are like, you know, there's some people who have launched like four, you know, improved Bitcoins already. Like, how are you on number four already? We haven't figured out like the original Bitcoin. And so I think that the saying of like the people with the longest time horizons have an advantage here is definitely applicable. And, you know, we're building a technology that if it can actually, you know, deliver on a third of the promise, right? So it doesn't even have to take over the money supply, doesn't have to, you know, do all this stuff. If it just delivers on a third of what the promise is, it's probably one of the most important technologies of our lifetime, right?

• 53:11Speaker 00

  And so that should be, you know, kind of proceed with care.

• 53:16Speaker 02

  Security is Everything, basically.

• 53:19Speaker 00

  So if there was a security issue of the Bitcoin blockchain, right? I would make the argument that Bitcoin would become unvaluable.

• 53:28Speaker 02

  Yeah.

• 53:29Speaker 00

  Right? So if there's a fraudulent transaction, if there was some sort of security breach in like a material way, what is the value of Bitcoin?

• 53:36Speaker 02

  I mean, zero, right?

• 53:37Speaker 00

  Yeah. So I think that, you know, when you look at, you know, what is the most important core focus? It is security. And so there's a saying in the military that slow is smooth, smooth is fast. Right? And so I think that that's kind of what we're seeing with Bitcoin of like, it goes slow, but it goes smoothly. And because it goes smoothly, we are actually making pretty fast progress.

• 54:01Speaker 02

  Sure.

• 54:02Speaker 00

  Because at any point, if we try to speed up and there's an issue, you lose all the momentum. Right? And so I think we've seen that with some of the altcoins. And so to answer your question, like, I'm not worried about the transaction volumes because I don't think that's like

• 54:16Speaker 02

  It's not the right metric.

• 54:17Speaker 00

  Yeah, I don't think it's the core thing to focus on. And my hope, though, is that over time it will improve after we've figured out kind of that foundational security.

• 54:26Speaker 02

  Yeah.

• 54:27Speaker 00

  Fair?

• 54:27Speaker 02

  Yeah, fair.

• 54:28Speaker 00

  Awesome, man. I really appreciate you coming. I'm a huge fan of what you guys are doing. But how can people find out more or apply to come to a class?

• 54:35Speaker 02

  Yeah. So we have free classes that start every month. You can try it out at absolutely no, no cost. Lambda school.com. L A M B D A school.com.

• 54:47Speaker 00

  Awesome. Well, let's get some more people in there. We'll get some more blockchain developers.

• 54:50Speaker 02

  Awesome. Love it. We need them.

• 54:52Speaker 00

  Thanks so much, Austin.

• 54:53Speaker 02

  Thank you.

• 54:55Speaker 00

  Hey, everyone. Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.