How To Get An $85,000 Job Without Paying For Tuition With Austen Allred From Lambda School

How are you— what kind of pushback are you getting from traditional parents, right? Because like, if I think about my Asian parents, they'll be like, no, you should still go to traditional college, you know, that's what's understood, this seems risky, you know. So how are you dealing with that?

Yeah, I mean, we get that all the time. Um, the nice thing is our incentives are so aligned, and it's so transparent what you can expect that, look, if, you know, if you come to Lambda School and it doesn't work out, which certainly will happen, you know, it's not that every student ever will be successful, then you don't pay anything, we don't make any money, the only cost is your time. And that usually, like, people understand that when incentives are aligned like that, it means something, it's real, because we're not going to just do that and lose money on every student and, you know, keep perpetuating that. That doesn't make any sense. So usually students get it. There's still some parents that say, well, I'm not doing anything unless there's an accredited degree on the other side. And there's not much we can do about that. You know, we'll just let time tell that tale. So, but yeah, I mean, we, we get 50,000 applications a month, so we're not, you know, totally optimizing to solve the skeptical parent side.

All right everyone, today we've got the CEO and co-founder of Lambda School, Austin Allred. And I'm super excited because I used to work in online education and I love everything about what Austin is doing. He tweets a lot of cool stuff. So follow him on Twitter, by the way. But Lambda School is a live skills-based online school that aligns the incentives of school and students, schools and students through income share agreements. I'm going to let him explain what that means in a second. A lot to uncover here. So Austin, first and foremost, welcome to the show. How are you doing?

I'm doing good. Thanks for having me.

Yeah. Thanks for joining. So let us talk about, um, kind of, Let's talk about Lambda School and how you even started with the idea first, because I think that's interesting.

Yeah. So way back in the day, we basically said, let's take a really good school, code school, and put it online. Then, you know, we did that and started asking folks, you know, why aren't you joining Lambda School? How can we get you— you know, how can we make it a better fit for you? And what we heard again and again from basically everybody we talked to is, you know, I— it was a financial constraint. So I will— I'm happy to pay for it, but I don't have enough money. That's why I'm going to school, so I can get a better job. So is there any way that I can pay you back once I get a job? And so we started thinking about that and like, why, why isn't that a thing? Why can't— why don't schools hold all the risk? Why don't students, you know, only pay if they're hired? And started looking at various financial instruments that you could use to make that happen. Then actually stumbled upon kind of an experiment that Milton Friedman ran in the '50s, or an essay he wrote in the '50s about income share agreements, and kind of went from there. And so Lambda School is mostly built on an income share agreement.

Got it. And can you describe what an income share agreement actually means, just if people are even interested in signing up?

So yeah, so for Lambda School students, you basically don't pay us anything. unless and until you're making more than $50,000 a year. And then you pay us 17% of your income for 2 years at a maximum of $30,000. So basically it says you can study at Lambda School at no upfront cost, and if it doesn't work out, you don't pay anything. If it does work out, you know, you pay up to $30,000.

Got it. Yeah, I love— I mean, I would love to hear kind of some case studies, some success stories, because you're sharing these all the time on Twitter. Like, you know, X amount of people got hired today and they're working for amazing companies, right? So Just so people can get a sense, what are 2 stories you could— 1 or 2 stories you can speak to?

Oh man, just the other day I was talking to one of our first students who was ever hired. So he was living in Central Florida when he attended Lambda School. His first job he got hired at was in Ann Arbor making, I think it was $85K. So, you know, immediately his first job was making $55,000 a year more than he was before. And he paid us $30,000 over a couple of years. His second job that he took about a year and a little bit after he started the first job was making $150,000. So now he's making more than $100,000 a year, more than he would have. We ran the math with him the other day and realized that, you know, hey, if he were going to a university, he wouldn't have graduated even yet. So net-net, he's up about $470,000 versus where he would have been, including university tuition and time, by the time he would have graduated school. So yeah, it works really, really well.

That's amazing. And you know, the other thing too, from like those marketers that are listening to this right now, if you think about it, you put someone through this, they're forever going to be your ambassadors. They're forever going to be the ones that are out there championing your cause, right? And that sounds like what they're doing, right?

Yeah, I mean, we've— we have, you know, every indicator from a marketer's perspective of, you know, product-market fit. We have students with Lambda School tattoos. We have students that, you know, will get their entire church or their entire family signed up for Lambda School, or, you know, we'll have one student will do Lambda School, get hired, and then their partner does Lambda School. So it's pretty wild from that perspective. We can actually track, you know, this student got hired, and then we can watch his entire neighborhood start to apply. So it's, it's pretty effective. When it started working, our instinct was, well, let's start doing everything all at once, basically. But we hadn't built in the infrastructure to make changes across everything. So we, you know, when we have one program or two programs, we're always testing, we're always iterating, we're always making it slightly better every day. But we found that if we were doing too much and we didn't have the infrastructure built up, the experience would start to decline because we weren't able to take what we would learn in one track and apply it to all of the other tracks instantly. So now we're— we've kind of pulled back. We're just doing web development and data science right now, and just in the US. We pulled back from our other countries that we had launched in as well. And we're building, you know, systems and infrastructure with software that make it so that when you make a change once, it automatically rolls out to all the other, you know, schools and all the other tracks. So that's been a learning experience for us of how to go from 0 to 1 is one thing, but 1 to scale is probably 10 times as difficult in education. So we're preparing for that right now.

Let's talk about getting students hired because one of the online education companies I used to— or the online education company I used to work at was all about getting students placed, right? So how are you doing that right now? Yeah, let's just start with that.

Yeah, so for a long time, you know, we had, we've always had a career coaching team. We've always been building tools that makes it, that make it easier for a student to go out and kind of find their own job. Where we've really learned a lot in the past, honestly, in the past 6 months, is that we have some unique advantages that other schools do not have. And if we lean into those, we can not only de-risk the, you know, the education from the student side, but we can de-risk employment from the employer side. So, you know, one of the main reasons it's difficult to get hired is because the company doesn't want to fire you 6 months later. That's really painful and expensive to do. And we try to get as much signal as we can from interviews, but you can only learn so much about how things are going to work out. From an interview. So what we do now is we run a program called Lambda Fellows, where basically you can come to Lambda School and you can try out a student for a month, and Lambda School will pay the student. And then only if— Only if you decide to hire that student do you ever pay a penny. So if you decide to hire them, you pay Lambda School back for, you know, what our cost of hiring that student for the month. And if not, then you never pay anything. So we're doing the same thing on the employer side that we did on the student side and making it so it's not as hard or scary to hire people. And that's been working really, really well. And I'd imagine in the future, that's the way a lot of, if not most of our students get hired. But that's, that's still in its infancy right now.

Love it. Well, Austin, this has been great. What is the best way for people to find you online?

Probably on Twitter. I'm Austin, A-U-S-T-E-N, and I'm always there. Cool.

Awesome. And guys, don't forget, go to lambdaschool.com. It's a no-brainer if you're looking to learn all the cool things in the world. Well, we'll start with code right now and then eventually world domination for Austin, right? So thanks so much, Austin. Appreciate it.

Yeah, thanks for having me.