Are you interested in computer science? How would you like to go to school for free and learn what you need to in just a few months? Then, check out Lambda School!
Today, we’re talking to Ben Nelson, co-founder and CTO of Lambda School, which is a 30-week online immersive computer science academy. Lambda School has more than 500 students and takes a share of future earnings instead of traditional debt. So, it's free until students get a job.
Some of the highlights of the show include:
Bootcamps were created to address engineering shortages and quickly move people into technical careers
Lambda is not explicitly a bootcamp; its 30-week program gives students more instructions and more time spent on developing a portfolio
Employers appreciate the school’s in-depth and advanced approach, which results in repeat hires
Lambda avoids the typical reputation of traditional for-profit educational institutions by being mission-driven and knowing its investors want ROI
Lambda aligns its incentives with those of students; an income share agreement means the school doesn’t make money, unless students are successful
Lambda’s 7-month program is less of a risk for someone later in their career; some don't have capital to support their family while going to school for 4 years
Lambda incentivizes healthy financial habits; after two years of repayment, students can put that money into retirement, savings, and investments
5 Tracks Now Offered by Lambda: iOS development, UX, Full Stack Web development, data science, and Android development
Mastery Based Progression System: When you're learning something sequentially, where knowledge builds, you don't move on until you’ve mastered it
Lambda’s acceptance rate is around 5% and based on people who can keep up
Lambda works with different partner companies to help them find qualified graduates - people they want to hire
Full Episode Transcript:
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Corey: Hello and welcome to Screaming in the Cloud. I'm Corey Quinn. I'm joined today by Ben Nelson who's the cofounder and CTO of the Lambda School. Welcome to the show Ben.
Ben: Thank you, thanks for having me Corey.
Corey: So the Lambda School to my understanding is effectively a 30-week long online—I usually call it a computer science academy that has a somewhat interesting payment model compared to a lot of programs that have been tried like this in the past. So rather than me trying to stumble my way to a description, what is the Lambda School?
Ben: Great. Essentially, the Lambda School is like you said, online computer science education. It's free until our students get a job. We use what's called an income share agreement. The main idea behind this is that we try to create a more forgiving type of a student loan. Essentially, providing the ability for a student to defer payment until they're employed and then doing it with the most forgivable terms possible.
Our students don’t pay anything when they start and then once they're employed making at least $50,000 a year in a job that they got as a result of our training, then they pay back a percentage of their salary for two years. That’s capped so the maximum that they could pay is $30,000 if they were to get a 6-figure job.
Corey: So there are a number of bootcamp programs out there. But you're explicitly not a bootcamp. What is it that differentiates you from I guess first, what causes you to make that somewhat sharp distinction? And secondly, why aren’t you one?
Ben: Yeah, bootcamps, they rose out of a need to huge engineering shortages. They needed a faster way to move people into these technical careers and they're pretty unregulated. It's the Wild West and there are some good ones. There's a lot of bad actors in the space. Essentially, we work backwards or we looked at the bootcamp model and thought okay, what's working and what's not working.
They accelerated model for three months which is the typical bootcamp. That can work for some people but generally, it only works for some of the more advanced students. We tried to make a method that would allow more beginners to be able to have access with this type of education. The first thing that we did that was easier or this little hanging fruit is we made it longer. So again, typical bootcamp is 12 weeks long or 30 weeks long. So a typical bootcamp is six weeks of instruction followed by six weeks of working on projects and building out a portfolio.
Corey: I would agree, having spoken to a number of bootcamp graduates myself that there are a number of shall we say, poor actors in this space where what they're teaching is a lot less how to do the functional job and a lot more about how to game the job interview. These are the types of algorithm questions you're going to be asked to solve on the whiteboard, we'll teach you to solve them and ideally, you can pass one interview out of five and that’s good enough and there you go. That’s kind of a neat approach to get away from that particular model. It's not particularly common.
Ben: Yeah, and companies have been burned by that. They’ll hire bootcamp grads and the bootcamp grad essentially bluffed their way into the job and doesn’t perform well and has to get let go and then the company closes its doors to future bootcamp hires. We've kind of seen that. Some of the bootcamps out there burned to the ground in front of us and so we have to do some work to change that perception.
We do approach it from a more in-depth and a more advanced angle which our employers have really enjoyed and we've measured that by repeat hires. We've had many companies who have hired our graduates come back and hired more recently ones and talking about hiring 50 more graduates. So that’s been really good to see. The positive reaction from our hiring partners.
Corey: So something that may wind up being a common question is when people hear school, they generally assume nonprofit or they assume a terrible predatory model. So you are very clearly a Y Combinator company, you're backed by a number of impressive VCs, your Series A was lead by Google Ventures. As a general rule, not to disparage the VC model, they tend not to fund things purely out of the goodness of their heart. They are a venture capital firm, they're not UNICEF. So how do you wind up I guess getting away from the frankly terrible reputation that traditional for-profit education institutions deserved?
Ben: Yeah, I mean that’s a whole other conversation, you know, just how awful some of the for-profit educational institutions are. They're a huge driver behind the student loan crisis. A lot of the debt, you can trace it back to—a lot of community colleges are also for-profit universities. Our investors are looking for a return and we are a for-profit institution but we are mission driven though.
The angle that we’ve approached this is how do we align our incentives with the incentives of our students. Traditional for-profit educational school, the name of the game is get accreditation as quickly as possible so that we can get people in, siphon off as much, loan money as you can, and then graduate students and then pump them out into the marketplace and just grab as much money as you can from the government, from these government backed loan providers.
With us, while using an income share agreement, we don’t make money unless our students are successful. If a student is not successful on our course, so let's say they finished our course and they don’t get a job, the worst thing that happened is that they spent seven months getting this free education and they're not on the hook with this debt. If they get a job and they get fired, they don’t have to make payments.
So the payments are 100% contingent upon the student being employed, making more than $50,000 a year in a job that was related to the education that they received from us. By doing that, it means that we are not going to make money unless our students are succeeding. It's for-profit, we'll make money off of it but the ROI that the student is going to experience––a successful student is going to experience is going to be massive.
So even if a student ends up paying the maximum amount, they end up paying $30,000, that means that they're making a six-figure income as a software engineer. If that student still has 30 or 40 years left with their career, that’s a multimillion dollar swing, typically, in lifetime earnings that is occurring. It's an investment. We do want to be a profitable company from it but it's a very positive thing for our students because we will never profit off of failed students. We will not profit off of a fail in school. We only make money if our students are actually successful and I think that’s really powerful.
This is a little bit of a controversial opinion but I really believe that if you properly align the incentives, then for-profit institutions can do more social good than nonprofits in many cases. That’s a little controversial but I really believe that the way we've aligned incentives here are going to do a lot of good for our students and it has. If we were to go bankrupt tomorrow and be dead, we've already positively impacted lives of hundreds of students and that effect will last for them and their posterity and it's been a pretty cool experience so far.
Corey: One of the recurring themes on the show has been, where does the next generation career wise, come from. For the people who have been doing this type of thing for 10 to 15 years, there was either the academic path to get here or there was the path of having worked their way up in support floors, working in data centers, getting rocks falling over and crushing us. We learned over time different skills that helped us to evolve into the modern "Cloud World."
The question now becomes with those jobs having been gone, what are the viable paths to get to this type of career? If I understand what you're saying, you wind up charging a percentage of the student's income after they graduate, you take nothing until they make at least $50,000 a year and you hard capped never taking more than $30,000 versus I guess a more traditional approach of a four-year degree and I don’t know, underwater basket weaving where suddenly it's going to cost you $120,000 to get it, no guarantees tied to it at all and that debt will follow you until you die. That’s a very different model.
Ben: Yeah. It's riskier.
Corey: Well to be clear, when you say it's riskier, are you talking about Lambda School or are you talking about the traditional path?
Ben: I'm talking about the traditional path for somebody who's already later in their career. The idea here is that with Lambda School, we try to derisk that transition as much as possible. Back in the beginning of your question, you talked about where is this next generation coming from. This next generation is more on technical talent and software engineers. Traditionally it has had to come through universities on these four-year programs.
Corey: I've checked, you cannot major in Serverless. You cannot major in React, you cannot major in writing web applications. It's weird because people start talking about vocational abilities and going back to academia which is explicitly non-vocational in nature in most respects and hoping for that to have the answers and it never felt to me like that’s a viable path.
Ben: Yeah. You talk to the university and you'll ask them, "What's your purpose?" and the purpose is that you usually get some answer about how it's creating a more well-rounded person and it gets in more of these intangibles. Typically, from the student perspective, they're there because they want a good job, they want a good career and this is the next step forward and so there's a little bit of an incentive alignment.
We're not anti university and that’s great but this isn’t an option for a lot of people. Anyway, that’s where we step in. One of the hiring partners we've been working with, this is a bigger company, top of the Fortune 500 list and they project that within a few years, that they alone will have enough job openings to hire every single computer science graduate in the entire country from every university.
It's a pretty bold claim but that’s the type of scale that they're operating at and there just is not enough count in the workspace. Part of what we're trying to do is fill that vacuum and with it being a seven-month program, with it being online and accessible from everywhere and because you don’t have to pay upfront and you only have to pay if it's successful for you, the derisk for a lot of people that are later in their career, because maybe they’re married and have a family now and they live in the Midwest or something, they're not near any big technology hubs and don’t have access to a big university or don't have access to—they just don't have the capital to support their family while they're going to school for four years.
The idea here is to create this vehicle to where we can take people that are in industries that are maybe being replaced by automation or just people that are in a jobless stagnant wage growth and they want to get into something that has a higher earning potential and by making it online, by having an income share agreement, by making it seven months long and intense as opposed to the four years. It facilitates a quicker movement.
Corey: There's also something to be said for the repayment starts as soon as they land a job that pays above a certain percentage which in most cases is more than they've made previously. To some extent, you're enforcing good financial habits. At that point they haven't had the chance for lifestyle inflation to really set in to a point where if you pay someone $100,000 a year and there's no strings tied to that, people start to spend $100,000 a year in many cases.
If you're entering into this with a percentage based approach to some extent, you're almost incentivizing good financial habits because after their two years of repayment are done, they're used to living without that, they can start putting that money into retirement, into savings, into investments and I guess coming out with a better financial health model from this.
Ben: Yeah, exactly. That was a cool insight that we had. We actually partnered with Wealthfront. That's what we tell our students, when your payments stop, pretend like you don't have that increase of money and just take that same money, transition that, start investing it. We have some people that, you know, the work for students and talk about safe conservative ways to invest and save for retirement and things like that. Yeah, you're right. It leads to a good financial lifestyle that can benefit students throughout the rest of their life.
Corey: What I find interesting about a lot of these stories is, you talk to people in many cases who have been out of college for 10, 15, 20 years and they're still being haunted in many cases by student debt. I've looked at your offering, I have a hobby of playing around with personal finance more than I probably should but it seems to me no matter how I look at this, there really isn’t a part of the story where someone winds up taking your course and winding up down a financial rabbit hole. The only question comes down to the opportunity cost of, is this the best program for an individual student. It doesn't strike me as there being any edge case or corner case where doing this could be financially disastrous for someone. Am I missing something obvious?
Ben: That was the intent from the very beginning. The only thing that our students need to risk to come to Lambda School is the opportunity cost. The seven months they're spending in the program, the months they're spending on the job search and the time they're spending for the class. That does add up to a lot of time and we're working to make sure that our hiring rate is as high as possible. We never want to take money from a student who isn't able to afford it. We don't want to take money from students that did not greatly increase their lifetime earning potential. We don’t want to take that money unless it's fair, unless it's a benefit of the student.
Corey: Talk to me a little bit about your curriculum. You have multiple paths and tracks people can go down, what are those?
Ben: Yes, we teach iOS developments, UX, Full Stack web development, data science and android development. Right now, we're starting with these different technical tracks. We see ourselves in the business of taking someone from income A, increasing it up to income B, and then we take a piece of the delta. So eventually, we'll expand beyond that into other nontechnical areas. We even consider potentially in nursing schools and things like that. It's really moving people into jobs that have high demand behind them. Those are the five tracks we have right now and that will expand as we go forward.
Corey: One thing that I find neat is I guess you described it as a mastery based progression system. What does that mean?
Ben: Yeah. This is something that is widely acknowledged as probably the best way to learn things and it's something that most schools can't do it at scale effectively. Essentially, mastery based progression is the idea that when you're learning something sequentially where the knowledge builds on previous topics, you don't move on to the next thing until you’ve mastered the thing you're on.
The idea is that every week, a student takes an assessment and if they don't pass with an 80% grade or more, then they repeat the week. We do our best to remove any type of stigma around failing and the idea is that the students will continue to spend time working on the topics that they struggle with before they move on to something else. We found that students that before would have become overwhelmed, would have wanted to maybe drop out, instead it gives them a way to succeed and it really empowers the students and improves the experience significantly.
Corey: One question that I have for you is, I don't know if you're public about this or if you can give me numbers, but what does your acceptance rate look like? Something I noticed on your site is it's not sign up here, there's an application button which implies at least some subset of people are not a fit for your program.
Ben: Yeah, I mean unfortunately, we have to filter because it's a seven-month program, it's accelerated. Hour for hour, our seven-month class comes out to being a little bit more than about a year of college, this is kind of how you can think about it like counting for like home or time in class. But it's taken a year of college and condensing it down into 30 weeks. We move at a quick pace so we need people that can keep up. Our acceptance rate fluctuates but it's sitting around 5% right now.
Our attitude towards it is, we don't want to be exclusive. We don't want the exclusive nature of Lambda School to be part of the value that we provide to students. We want to accept everybody who can meet the high standards that we set. Think of it as like Stanford suddenly open their doors and everybody who applied who had a 32 on the ACT and a 3.8 GPA can get in. it's a high standard but anyone could attend if they could meet those standards.
That kind of breaks down and their type of the model but it's a little crazy that they turn away 95% of the people that want to pay them $100,000. Our perspective is, we want to provide this opportunity to as many people as possible, provided they can keep up and they can do well on the course because again, we don't want them to pursue the course if they're not going to succeed and if they can't keep up. We have like a try out at the beginning.
Corey: So let's say hypothetically that I find what you’ve said, compelling. Let's pretend for a second that I work for a giant company. Spoiler, I'm unemployable. How would I go about hiring your graduates? Is it something I can do other than keyword resume searches? Do you have a, "Reach out here and we'll put you in touch with our alumni." style program? Is it still early days, the point where that hasn't been formalized as yet?
Ben: Yes. We have a hiring partners page on our website. We have a guy who his full time job is working with different partner companies to help them find qualified graduates for their company and what they're looking for. because we're online, we have students––right now we have close to 600 students currently enrolled and they're scattered all over the United States. Every metro area we have students everywhere.
What we do is we look at students that are within that geographic region and we look at their requirements for the job. We work pretty hands on with these companies to help them find people that they want to hire. This is free service, it's a free white glove service. We don’t want to put up any barriers to people hiring our grads. We do quite a bit work with companies to make it easy for them to find qualified students to hire and make sure they have a good experience.
We follow-up with the companies and we get their feedback on the student, we apply that to the curriculum. We really work with them closely to gather any type of feedback they have around the students specifically and how that could maybe reflect on our school. If there's anything we can do better because we're constantly trying to improve the curriculum, improve the way we do things, we're always in this high learning mode.
Corey: One thing I feel the need to point out is despite how this entire episode has played out, this is not paid placement. You're not sponsoring the show. This is something I'm legitimately interested in and it sounds to some extent almost like I'm trying to promote the school itself. That's not based on any financial compensation. I just really like the idea personally which is why I thought this would be a terrific episode.
Ben: Thank you. I appreciate that. I'm really happy to be on here and talk about Lambda School.
Corey: Absolutely. People can find out more at lambdaschool.com?
Ben: Yes. That’s the best place to go.
Corey: Terrific, this is Ben Nelson, cofounder and CTO of Lambda School. I'm Corey Quinn and this is Screaming in the Cloud.