- When Austen Allred was going to high school, nobody said anything other than: “Go to the best college you can, pay whatever it costs, study what you love. ‘Because as long as you graduate from college, you will be set for the rest of your life.” After having been preached this for decades, Austen’s generation was one of the first to realize that that’s fundamentally not true. Today, we’re getting to a point where people are rethinking college education, and they’re weighing the costs and the benefits.
- There are a number of schools that if you just look at the outcomes of the students that attend relative to the debt that those students incur, most students would have been better off not attending that school in the first place. This is what sparked Austen’s idea for Lambda School – a radical new model to college education.
- Lambda School is entirely online, and they train people to be software engineers and data scientists for no upfront tuition in exchange for a piece of what you’ll make later. At Lambda School, you don’t pay until you’re hired.
Since filming, Lambda School has rebranded to Bloom Institute of Technology.
AUSTEN ALLRED: I strongly disagree with the notion that everybody ought to attend college. When I was going to high school, nobody said anything other than: "Go to the best college you can, pay whatever it costs, study what you love. 'Cause as long as you graduate from college, you will be set in the rest of your life." I think my generation was one of the first to realize that that's fundamentally not true. Now, I think we're getting to a point where people are a bit more wise in that, and they're weighing the costs and the benefits, and they're making different decisions. And in fact, I think the United States kind of misses that. If I'm a student and I'm going to college, if it doesn't work out, nobody bails me out. How can we not only make it so that people can attend, but how can we make it so that if it doesn't work out, they don't pay anything?
My name is Austen Allred, the Co-Founder and CEO of Lambda School.
Growing up in small-town Utah, there wasn't terribly much going on, so I basically lived on the internet. It was a really special time for the internet. It was just coming of age and nobody really knew what to make of it yet. There was eBay, and eBay was pretty early in how search worked. One of the things I got really good at was finding things that were mispriced. So something that would be one price in one place and another price in another. And I could buy it in that first place and sell in the second place. For me, being a kid, it was the first time where I felt like I could be taken seriously. I could be part of a community, and instead of me feeling like being a kid was the most important part of my personality, it was more about my skillset and my abilities and the way I could communicate. I think teenagers are generally capable of much more than we allow them to do. I'm excited for a world where teenagers can contribute in more meaningful ways instead of feeling like there's only one path, and that's high school until you're 18 and then college until you're 22.
I strongly disagree with the notion that everybody ought to attend college. I actually attended a couple of semesters of college, and I just felt like it was not a great learning environment, and I wasn't getting as much out of it as I wanted to. I thought it was really expensive, even though, in retrospect, I was going to one of the cheapest schools in the country. I just felt like I wasn't getting the value out of my time and my money that I wanted, and I could better serve myself doing it on my own. When I first dropped out, everybody thought that I was crazy and everybody thought that I was destined for failure. I wasn't surrounded by other people who did the same thing. And then, when I got to Silicon Valley and I started spending time around other people who dropped out of high school, by people who dropped out of college, traditional education just didn't matter nearly as much as what people learned on their own.
There are a number of schools that if you just look at the outcomes of the students that attend relative to the debt that those students incur, most students would have been better off not attending that school in the first place. And there are far more of those schools than I think a lot of us would like to believe. Even if it's the majority of students who are better off for having attended college, there are a lot of students who really should be considering other paths if it's right for them. I don't think we talk about that enough in the United States, and we are far from accepting that as reality or encouraging it, which I think we should be doing. In software, there's this terminology called software as a service. So you can buy software off the shelf, which is a one-time purchase, or you can get a full experience in an enterprise product, where somebody's job is to do a thing for you using software.
I think of Lambda School as being that. What we do is we provide the American dream to people, and the American dream being upward mobility, stable income, being able to provide for your family. And that's what we try to do for all our students. I normally describe Lambda School as a school where you don't pay until you're hired. Lambda School is entirely online. We train people to be software engineers and data scientists for no upfront tuition in exchange for a piece of what you'll make later. Generally speaking, the school is 6 to 12 months. It was a fantasy in the beginning, and in the early days, we just charged everybody upfront, and we would train them to code, and that was pretty much it. And then, we had people all the time that wished they would be able to participate, but they couldn't pay us. So we started trying to lower the barriers to entry with the idea of an income share agreement.
Originally, I found a study by Milton Friedman from sometime in the '70s when he'd been talking about this idea. And then, I found a small community of people who had actually been thinking about experimenting with the idea of an income share agreement. Then, I paid a lawyer who used to work at the CFPB to write literally just a document, kind of a contract, and we started enrolling students. We know that when a student enrolls in Lambda School, we're going to lose money unless they get hired. That is very different than the traditional education system, where no matter who's writing the check, whether it's a lender or the government or the student, I'm already paid, and what happens after that, I don't have to worry about.
Our incentives are entirely aligned with the incentives of the student. And if they're not successful, we lose out just as much as they do. So that changes everything that we do about the school, from what we teach, to who we enroll, to how we teach, to how we work with employers after graduation. It's just a completely different incentive structure which forces you to be a completely different school. We're moving from a world where you go to school based on the marketing or the rankings, and you're moving to a world where you're looking at what the offering is. Really, we're entering an environment where what will determine which schools people attend in the future is the outcomes. And I think that is far, far healthier than seeing who can do the best job of advertising.