Invest Like the Best with Patrick O'Shaughnessy - Joe Liemandt  - Building Alpha School, and The Future of Education - [Invest Like the Best, EP.439]

Episode Date: August 26, 2025

My guest today is Joe Liemandt. Joe is the Principal at Alpha School and the founder of Triliogy Software and ESW Capital. He became the youngest member of the Forbes 400 in the 1990s before vanishing from public view for two decades—only to emerge with a $1 billion bet that he can make kids learn 10x faster using AI. Joe has built an AI tutoring system so effective that students at his Alpha School literally beg not to take summer breaks, achieving 2x learning outcomes in just 2 hours with standardized test results that compete with the best of them. We dive deep into why this could be the most valuable product he's ever built, his contrarian thesis that traditional SaaS is facing AI-driven obsolescence, and how his experience buying 100+ software companies prepared him for this moonshot in a trillion-dollar market that hasn't innovated in 200 years.  For investors, this is a masterclass in deploying patient capital to rebuild broken systems from first principles, with insights on everything from regulatory moats to the intersection of AI and human psychology. As your excited skeptic, I push hard on the technology readiness, parental adoption hurdles, and whether this audacious vision can actually scale to a billion kids. Additionally, in a Colossus Profile released last week, our editor-in-chief Jeremy Stern reported, for the first time, Joe as the product guy behind Alpha School in a can’t miss piece of writing. And now please enjoy my conversation with Joe Liemandt.  Joe Liemandt’s Colossus Profile by Jeremy Stern. For the full show notes, transcript, and links to mentioned content, check out the episode page ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠.⁠⁠⁠⁠⁠⁠⁠⁠ ----- This episode is brought to you by⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Ramp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Ramp.com/invest⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to sign up for free and get a $250 welcome bonus. – This episode is brought to you by⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Ridgeline⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Head to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ridgelineapps.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to learn more about the platform. – This episode is brought to you by⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ AlphaSense⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. AlphaSense has completely transformed the research process with cutting-edge AI technology and a vast collection of top-tier, reliable business content. Invest Like the Best listeners can get a free trial now at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Alpha-Sense.com/Invest⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and experience firsthand how AlphaSense and Tegus help you make smarter decisions faster. ----- Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠). Show Notes: (00:00:00) Welcome to Invest Like the Best(00:06:08) How Alpha School Is Revolutionizing Learning(00:12:47) Personalized Tutoring with AI(00:19:59) Measuring the Impossible: 2x Learning Outcomes(00:25:39) All Educational Content Is Obsolete(00:35:51) Motivating Students: The Key to Success(00:42:06) Life Skills Workshops: Real-World Lessons(00:47:47) The Key to Happiness: High Standards(00:52:33) The Role of Guides and Coaches(00:58:22) Feedback Loops and AI in Education(01:04:20) The AI-Powered Classroom Experience(01:18:06) From Self-Doubt to Limitless Learning(01:28:20) Challenges in Public School Systems(01:41:56) Gamified Learning and Technology(01:49:46) From Trilogy to Trillion-Dollar Markets(01:55:05) Why Software Companies Fail(02:01:21) Trilogy University(02:10:39) Lessons from Mentors(02:17:25) Pushing Limits and Finding Passion(02:27:12) Joe's Kindest Thing

Most software companies try to maximize your time on their app to juice engagement. Ramp does the exact opposite. Ramp understands that no one wants to spend hours chasing receipts, reviewing expense reports, and checking for policy violations. So they built their tools to give that time back, using AI to automate 85% of expense reviews with 99% accuracy. And since Ramp saves companies 5%, it's no wonder that Shopify runs on Ramp, Stripe runs on Ramp, and my business does too.

To see what happens when you eliminate the busy work, check out Ramp.com slash Ingram. Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus Review, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus Review along with all of our podcasts at join colossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions.

expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of positive sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of positive sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc. My guest today is Joe Lamont. Joe is the principal at Alpa School and the founder of Trilogy Software and ESW Capital. He became the youngest member of the Force 400 in the 1990s before vanishing from public view for two decades, only to emerge with a $1 billion bet that he can make kids learn 10 times faster using AI. Joe has built an AI tutoring system so effective that students at his Alpha school literally beg not to take summer breaks,

achieving two times learning outcomes in just two hours with standardized test results that compete with the very best schools in the world. We dive deep into why this could be the most valuable product he's ever built, his contrarian thesis that traditional SaaS is facing AI-driven obsolescence, and how his experience buying 100-plus software companies prepared him for this moonshot in a trillion-dollar market that hasn't been innovated on in 200 years. For investors, this is a master class in deploying patient capital to rebuild broken systems from first principles, with insights on everything from regulatory modes to intersection of AI and human psychology.

I try to be the excited skeptic here. I push hard on the technology readiness, parental adoption hurdles, and whether this audacious vision can actually scale to a billion kids. In a colossus profile released last week, our editor-in-chief Jeremy Stern reported for the first time, Joe as the product guy behind Alpha School in a can't-miss piece of writing. It's one of my favorite things that I've read in a very long time, and you can find a link to it in the show notes. I'll leave you with one of my favorite ideas of Joe.

He's convinced that across major disciplines, a new instrument often unlocks tremendous progress. whether that be the microscope, the telescope, or the analytical balance. He's convinced that generative AI is that instrument for learning science, and that as a result, we will be able to deploy this incredible knowledge to make our kids and ourselves learn faster and better than ever before. Please enjoy this great conversation with Joe Lamont. All right, Joe, so this is going to be so much fun.

I have learned so much from you about what you're building, and I'm extremely excited to share it with everybody else. and I view my role today as the excited skeptic, which I feel like is the role of a lot of the parents considering Alpha School for their kids. And so I want to go into deep detail about every aspect of what you and McKenzie have built. But since most people actually don't yet know what Alpha School is, I think you have to start the conversation by just explaining what it is and why the two of you are building it together. Alpha School, it's a high-in-private school. It's expanding across the country. but at its core is redefining what school can be for kids and what makes a great school.

I'm a product guy looking at it from a product aspect. How can you rebuild school and make it awesome? And so the core of it, we look at five things of like, how do you build a great school? And the first is kids must love school. That's just a crazy thought that most people do not believe you. And our standard is we want to build it so the kids want to go to school instead of going on vacation. A highlight is, I've been principal now for three years. McKinsey started it 10 years ago.

I came on three years ago. But about two months ago, our high school kids sent us a note and they said, hey, can we not take summer break? Because we're loving what we're doing so much. We want to continue through it. And so it's sort of a peak. Sounds impossible, but I'm good. Right?

And I was one of those kids who definitely did not like school. I dropped out of college and then high school I got in trouble because I skipped school all time. And so this is a different world for me. The second part of it is just on learning, kids need to learn 10 times faster. And so we built an engine, learning engine, all the talk about AI and learning science, where kids can learn 10 times faster. In our school, kids go in, spend two hours a day with the AI tutor, with screen time and all the things around that. We obviously consider very good screen time.

And they learn 10 times faster. So our academic performance is the top of any school in the country. And we do it in dramatically less time. And then the key to that is once you can crush your academics in two hours a day, the natural follow-on question is, well, what do you do the rest of the day? Because I can tell you as principal, the one thing parents don't want you to do is send them home after two hours. What do you do for the four hours? And so that's where we talk about life skills. And this is, you know, in reimagining, what are all the things that as a parent we want beyond pure academics, leadership, teamwork, entrepreneurship, financial literacy.

relationship building, socialization, hard work, grit, storytelling, public speaking, all of those kind of things. We do all of that in the rest of the day, and those are big project-based workshops that are super fun for the kids and team-based, not screening time. The first thing you ever said to me was something like educating kids is the single most important thing we do as a society, and it hasn't changed in 200 years. And let me just dig into that a little bit more as to how it began and why it hasn't changed, because it's been the same way for so long that radical approaches like this one. We're open to radical approaches in everything in the world, like the pace of technology. Everyone's excited about the pace of technology change,

but education is one place that I think parents, myself included, are scared because it feels like the ultimate risk to put your kid in something that's different. So I want to talk about this like 200-year legacy. Like, why is it like it is and why hasn't it changed? And to that point you make, every parent wants to educate the kid the way they were. I didn't start to school. McKinsey started the school 10 years ago. I went to Catholic school. My kid very Catholic school. She starts Alpha.

It took her two years of saying, come to my school. And I'm like, dude, no offense, McKinsey. I'm not sending my kid to your weird janky school. Like, it's weird. It's different. I didn't want to do it. And that's the normal parent reaction to all of this. And the reason is, because it's all we know.

So back to the 200 years is there were, if you go, Socrates, Plato, Aristotle, Alexander the Great. The elite had tutors. But fundamentally, 200 years ago when we decided everybody needed education globally, we created the industrialized model. And the way to do it is put a teacher in front of a classroom and whatever the class size is 20, 30. That is actually globally. It doesn't matter where you are in the world. You can be in the poor school district, you know, in India, and there's a teacher in front of a classroom.

Buildings not that nice. Or you could be down the street here at a $75,000 private school. And it's a teacher in front of a classroom and a very nice. Very nice building. And that is how teaching's been done. Now, what happened is 40 years ago, the schools of education, Stanford was one of the leading ones, lots of others, took a lead and said, how do kids learn and develop? And there's actually a thing called learning science, the science of how children develop. And they started writing papers 40 years ago that were basically the teacher in front of the classrooms the worst way to teach kids. And there's all these ways where kids can

learn two, five, ten times faster. And so it's not scalable, so you can't do anything about it. One of the first papers, there's Blooms 2 Sigma as a seminal paper, and they talk in the paper, well, if everybody had an individualized tutor, it'd be great. Obviously not feasible. There's a lot of other things to mastery-based learning, space repetition, all these other concepts, cognitive load theory. We can go into those, but fundamentally it just hasn't been possible to do it. And that's sort of, I guess, where how I came into the Alpha story, which was short version of my background was I was an old school AI, not the new neural nets stuff. In the 80s, I actually wrote a paper in high school on AI. And one of my paragraphs was like neural nets, but they're decades away.

Back then it was all expert systems and ontologies. Then I went to Stanford, and I was actually in a class with Ed Feigenbaum, Professor Feigenbaum, who was the father of expert systems. And he's talking about how these things are worth millions of dollars if you ever get them to work. And my classmates and I, a couple of us, we dropped out and started Trilogy. And our claim to fame in the 90s was we were the first AI product to sell a billion dollars. But old school. Old school stuff. I was doing Trilogy, private software company.

But then three years ago when Gen AI came out, I was like, oh, neural nets are here. It's decades here. And my kids were at Alpha because 10 years ago, I didn't talk about it. I eventually did send him to Alpha, which is a great story. how they got there. But it wasn't scalable, just like all other educational things. I was like, McKinsey, you have a great school here. And it's great for my kids and your kids and all kids go to Alpha. But this can't scale. Three years ago with Jenny and I was like, ah, this is finally the technology that is going to allow education to scale. And we can take all this awesomeness where kids

can learn two, five, ten times better, faster, and get it out to a billion kids. So that's when I became principal because I was like, okay, McKinsey, we could totally make this a super scalable thing. I'm a product guy. I got to be in it. I got to see what happens when fifth graders get in a fight and when parents yell at you and all of those things. So if we think about the school as there's lots of components, but I want to spend a chunk of time on just the two hours of learning, whether that should be one hour or three hours. And then the afternoon session, the sort of life skills, the motivation, everything else. Maybe starting with the chapters that the two hour learning has gone through. My understanding is that originally it's always been computer based, try to make it personalized,

using external tools like I-Exel and others that people may know about, but then layering in critically like a feedback mechanism, which I know for you is incredibly important in anything that you build, that tight feedback and iteration matters a lot. So maybe talk us through the various iterations of this software itself, literally what it is and what it does, what it feels like to use and how that's changed. Khan Academy is, because I've done an amazing job in getting that out,

you can deliver lessons online. there's various apps, or you can just learn on YouTube. And actually, homeschoolers know this a lot. Most homeschoolers only spend a couple hours a day with apps trying to teach. The evolution very much was using various apps, figuring out, okay, here's 10 years ago. Dreambox was one of the leading apps back then. There's using apps in order to have kids learn. Now, the evolution has been, how do you make the apps better, how do you get better educational outcomes, and less time?

So there's a little revisionist history since I've only been here the three years. But fundamentally, the design goal that our team uses is when we put in new software or new anything, does it increase their academic knowledge or reduce the time that it takes to learn it? How do I get knowledge into a kid's head and not crammed where they're going to forget it, where it truly is, back to learning science, can change the scheme of their brain? It's going to change it and it's going to be there forever. And how do I do that and create thinking and create knowledge acquisition? And how do I do that in the most efficient way possible? And there's lots of the learning science that says, here's how you do that. And so what we've been doing is saying, great, since I took over,

we came principal and started building out this product, was what are the principles of learning science that are the foundations of this that now can have a kid learn and learn well? But when you come in, so how does it work? So let's take a new kid. If you're going to come in, the first thing that apps are really good at is figuring out what you know and what you don't know. It's going to be able to ask you some questions and just think of any kind of assessment tests. A maps test would be a good example.

It's figuring out what do you know and what you don't know. And then once we figure that out, we give you lessons to build up your knowledge from wherever you are. The first thing you have to do in this that's very different is age grade and knowledge grade are very different things. Just because you're in sixth grade, age-wise doesn't mean you actually should be in sixth grade content. And this is one of the big things that's different for a teacher in front of a classroom model, where a teacher has to deliver sixth-grade material. I'm a sixth-grade teacher. I'm doing six-grade lessons.

The magic, and this is what AI tutor can do, is say, look, I don't know what happened. It was COVID. Whatever happened, you were on holiday, you miss those lessons. You don't know this fourth-grade material. I'm just going to give you this fourth grade lesson, even though age-wise you're in sixth grade. And the reason you've been struggling in sixth grade material is because you didn't know this fourth-grade concept. If you're doing fractions and you haven't mastered division, you're going to sit there and say, God, this fraction problem is really hard.

But the real issue is, well, just go back and learn your division, and then the fraction is going to be easier. Most of knowledge is hierarchical, where it's based on foundation. Algebra is basically advanced fraction manipulation. and fractions is multiplication and division. And you can just keep going down the tree where you have to actually learn bottom up and have mastery. One of the big concepts of learning science is you need to master material, not just no parts. What does mastery mean? Mastery means think of sports analogy.

Have you mastered the basics? How good are you? We always talk about in standard school, there's a whole set of things that 70% you're passing. You don't know 30% of the material. And then they move you on to more advanced things. It's sort of like in basketball, if you're the point guard, and you lose the ball 30% of the time going down the court, the coach is not going to be like, hey, let's work on the alley. They're going to be like, okay, let's get back to the basics and master the basics so you can get down the court. They're close to 100.

Close to 100. So our standard is over 90. One of the things that we do versus other apps and what we had to surround the apps was if you use existing apps and use them at the mastery standard they have, you'll struggle to get the results we get at Alpha. because the mastery standard that's embedded in all the apps and used is just too low. Can we spend a minute on the learning science and the cognitive behavioral stuff and cognitive load theory and all this kind of stuff that underpins less time, better content scores? Yeah, just dump on us the important aspects of those two fields that you've simulated. Let's go through just in order. If you take personalized lesson plans, the first thing is if you need a fourth grade lesson, it's really important that you're given a fourth grade lesson even if you're in sixth grade.

So it's like one-on-one tutor. It's like Bloom's one-on-one tutor. The second part is you do need mastery. And so back to fourth grade, go learn it. And when kids are struggling as they get older, the real issue isn't that they're struggling in the older material. It's the prior material.

And so just put them into the prior material. Then as you get into cognitive load theory, which is here's the way to think about that is simplification. And you have working memory slots. Every person has a certain number of chunks that you can work on or registers on a CPU if you're a technical person. When you're doing that, that's when you're computing, i.e. thinking, what is seven times eight? And I'm calculating what that is. Then the second part of it is,

how many reps does it take to take what's in working memory and put it into long-term memory? So you remember it forever. And there's a certain number. And actually, people are different. G.T. kids need fewer reps than other kids. But fundamentally, it's how many reps you need to put it in. And there's a whole concept of spaced repetition, which is, if you're you, you're a lot of you, you space them out over time, you retain it for longer. This is the I cram versus do you remember it? We have a workshop with the kids where if you actually take kids and say, okay, you're going to do vocabulary words 10 minutes a day every day. On Friday, here's your test score. We have another group that then volunteers and they're like, no, no, I'm going to cram the night before. They cram the

night before, and then they take the test, and they basically get about the same test and say, they're like, see, cramming works. We then retest them a week later, and the cram kids don't remember anything, and the people who've done it 10 minutes a day, I'll remember it, and the kids learn, oh, okay, I should actually not cram if I really want to learn this, which goes back to retention and learning faster. You can teach kids to be these self-driven learners where they learn these concepts and actually are excited to learn two, five, ten times faster. Kids want to learn as quickly as they can, assuming you give them their time back. Just to put a fine point on it right now, school's been around for a while, you've been there three years. Maybe just share your favorite,

some of your favorite outcome statistics, like so far we've been talking about a really radical, cool new way of educating kids, but you measure everything in our conversations. I've come to appreciate you are a measurement fanatic, and so you care very deeply about the measurable outcomes here. What are some favorite examples of what this method has allowed for in the kids? Well, our academic results are just crazy based on standardized tests. So there's two parts. The first is our kids literally spend two hours a day and that's it. Instead of sitting in class for six and homework, the amount of time they need to spend is so much less than what we spend or what parents expect. The data you need is the average kid at Alpha, if you're a year behind in a subject for whatever reason, to a parent,

you're like, oh my God, that's terrible. Well, your kid's only 20 to 30 hours behind. You can teach an entire grade level of material for one subject in about 20 to 30 hours. And you're just like, wait, there's 180 school days. Each class is an hour and it's 180 hours plus homework. And you're telling me it's 20 to 30 hours. And you're like, yeah, five to 10 times faster. Over and over our AP kids, like they'll do AP world history where our kids all got fives.

because the test came back a couple weeks ago, they all get fives, and they spend 75 hours max to do AP. So this whole, oh, there's a big AP loads, you know, in high school where it's hundreds of hours. You're like, oh, wow, it just doesn't take that long. And so this whole concept of we need to have kids spend six hours a day plus homework for 12 years. It's not even close to true in this new world. And then the second part is, okay, they're only doing it two hours. Your scores aren't high enough. And the reason we use a lot of standardized tests, first off, when I talk to the parents, I'm like,

even our parents don't like standardized testing. They actually love it with Alpha because they wouldn't believe our results. If I sat here and just said, hey, that's better. Trust me. Trust me, that two hours is totally working. They're like, what's the test? We do a mid-year test. So you come in in August or September and take your maps test that we use. We use third party. And then in January, get your mid-year update. For parents who come in, first they're like, okay, this sounds really exciting. And then their kids, comes in and is doing the two-hour day. Their kids love in school.

Somewhere around December, because they're home at Christmas and the family members are like, is your kid really learning and all this stuff? They start to get a little freaked out. And then the January MAPS test comes back and shows they're learning twice as much in two hours a day.

So our standard is, in two hours a day, you'll learn twice as much as sitting in class for six. For that, if you look on growth rate, our growth relative to any other school in the country is off the charts. There's a substack action that just came out

that literally just, takes our maps results and feeds it to AI and says, compare this to best schools in the country. And they're like, there is no school in the country who can deliver these kind of results because you can take in kids who are behind. And if they're learning twice as fast, they're going to catch up. So you can take a kid at 50th percentile and get them to top 10 percent. Or you can take a kid at 99th percentile, which is usually capped out and all of a sudden put them years ahead. And so it works on either side because you're just focusing on the growth, which is how do you teach the kids more in less?

time. And you also can just sit there. If you talk to the experts in learning science, they're like, well, theoretically, this has all been predicted for 40 years, but no one's been able to implement it. Oh, okay, I guess we're implementing it. And it's working. I like the idea that you told me one time that kind of like the microscoped unlocked biology, that AI unlocks learning science, it seems like that's just true. My favorite analogy is the sciences, biology, chemistry, and physics, let's take those. They had their days of wandering in the wilderness. lost in the wilderness where doctors were still bloodletting and chemists were blowing themselves up. And there was an invention of an instrument, the microscope for biology and the telescope for physics and the analytical balance for chemistry, that allowed more precise measurement.

And that precise measurement is what allowed those sciences to really take off. And so learning science has sort of been that way. It's in this wilderness period for 40 years where we still have teachers in front of the classroom in just a bad model. Teachers are great. Teacher in front of the classroom is the problem. The model is the issue, but teachers are awesome. I want to be really clear. We should talk about how important the adults in a building are.

But back to the learning science, AI allows you to do precise instruction to the student, and then second, measure the results. And if you take the AI out, your effect is dominated by the classroom. And you don't know, is the student motivated? Are they even trying? What's the prior knowledge of the student?

Did the teacher actually instructed correctly? The environmental variables dominate in the last 40 years with learning science. With ours, with an AI giving very precise instruction and being able to close loop measure it, that close loop is the magic to your point, which is we have a closed loop that no one else has. Our team comes up with an idea and says, okay, theoretically, let's take Dean Schwartz Chapter K and put it in, and we generate lessons. The students use them. How well does this improve teaching?

They take a standardized test. We measure how long, how much time they spend. They take a standardized test. We have the results, did it work, and keep that loop going. We're basically the only place that has that closed loop, which is why we're able to get these crazy awesome outcomes and other people aren't. You also told me the best way to learn is by analogy. And there's another analogy, which is, I think, quite cool,

is to think about this program like an iPhone. Every year for a long time, they were releasing a new one, and it's constantly getting better. And I want to understand some of the dimensions of that with the two-hour piece specifically before we get to the afternoon and motivators and everything else. I know you started, like I said before, with tools like I Excel.

You're starting with a standard set of curriculum that maps to the map tests and everything else. What has improved the most since you first started applying this idea of like, wait, not only is this core idea of the learning loop better, But each component part of it can probably get improved like the iPhone does year to year. Here's the magical part, and this gets into the time back of what we're going to be launching to bring this outside of Alpha. Is generating personalized lesson plans for kids for them is the magical unlock?

Because it affects everything, which is back to motivation and point of analogies and learning. Let me go far extreme. I have a first grade boy who's like, I hate books. I don't want to read. And you're like, here's a book. Good luck. Good luck. Okay, just a second.

What's your favorite movie? Oh, The Avengers. Who are the buddies on your soccer team? Okay. I am going to generate, right, a personalized, choose your own adventure story where you and your buddies are saving the world. It's going to be geared exactly to your Lexile level, right? Your reading ability, which is back to learning science, you want to stay within 10%.

of where they are so it's not too easy, not too hard, zone of proximal development. And so you're sitting there, and now I have a lesson that you are going to engage in. And you're going to be reading it, and you're choosing your adventure of where you're going and you're engaging. And kids will spend, who quote hate books, will spend an hour choosing it. And as they learn more, you can move up the Lexile level and set. And you can build a personalized lesson just for them that's dynamic. You want to learn fractions. you can sit there and say, oh, you don't want to do math, but oh, you want to be a fashion

easter and a fashion designer. Okay, well, how are you going to do that? We're going to make this all in rulers and dress patterns and all those kind of things. And all of a sudden, you're going to want to learn fractions. Or if you love baseball, I'm going to teach you statistics in the term of baseball. AI, and this is the generative part of AI that really matters, is all content, all educational content is obsolete. Every textbook, every lesson plan, every test, all of it is obsolete because Gen AI is going to be able to deliver, generate a personalized lesson just for you. And it's going to take into account what is your knowledge graph. What do you know and what do you not know? It's going to take in the curriculum, okay, what am I trying to teach you? It's also going to take into

account your interest graph. What do you care about? And so all of a sudden, you can sit and say, What is my knowledge graph of what I know and what my interest graph is? Here's an example of an AI, a generated one where people were doing AP World and they were coming back from a Taylor Swift concert. And they're like, I'm having trouble with the start of World War I. And you're like, okay, well, generate a lesson plan in terms of Taylor Swift. And all of a sudden, you know, when, I can't remember exactly, but when she was on the getting the award and they came up and took it and then there was all the controversy and there was a mediator. And literally it just created a table of all the people. who were involved, the Taylor Swift people, and then the World War I with Archduke,

Franz Verde and all that. And literally the kids like, okay, I'm going to remember this forever. Or for AP World History, our kids, our high school kids generated this, where they go into Sumo, which is an AI music generator, and they literally, just like Hamilton, back to interest level and generating content, every kid coming into high school these days, because we don't teach history that much anymore in standard school. And so if you transfer into Alpha, your knowledge of history is basically whatever is in a Hamilton song. If it's there, they know it, and if they don't, they don't. Well, taking that theme even further, for every unit in AP history,

the students generated a song to teach themselves the concepts. And they were all just singing the songs, going down, having a great time. And they made the material relevant to their interests, which massively aids engagement and retention. And so when you think about the biggest change is imagine getting personalized lessons geared for your interests, and those lessons, though, are all based in the concepts of learning science. Think of giving a kid an unending stream of questions and knowledge at 80 to 85 percent accuracy, which is sort of the zone of proximal development, which is you don't want to make it too hard where half the time I'm failing because you're going to get you. get disengagement. Talk to game developers. Yeah, they've learned about this. Yeah, you're just game developers. You use the same theory

as game developers is how do I keep them engaged? And if it's getting too hard, let's make it a little easier. Oh, it's a scaffolding issue where it's a prior knowledge issue. I can do that. I can use analogies that they know. It's Taylor Swift or baseball or whatever their concepts are. And I just give you an unending stream of questions that you're engaged with that you really like. The amount that you are going to learn is 10 times more than you would passively sitting in class. disengaged. And so that's really what the magic is of being able to auto-generate content for each student based on their interest graph. Now, there is cognitive load stuff also of when you feel confused and overloaded. That's usually when you're overloading your working memory.

That's also when careless mistakes come in. And you can sit there and say, make sure, because every student's different, you tailor the question based on how many slots they have, How many chunks do they have? So it's not too hard for them where you're not overloading it. A classic one on this one is fluency, which is fluency. You can solve harder math problems if you know you multiplication tables and division tables. And so for students who are struggling in advanced math, part of the problem is just go memorize your multiplication tables, which they all can do. And then all of a sudden, their higher level math scores get better. We have one student who was, this is sort of a unique, an extreme example, and I hesitate to say,

but we had a student who was 740 on the math SAT. And in looking, they were making careless errors. Some of the problems are overloading work and memory. And for whatever reason, a student didn't have fluency of multiplication and division tables. So we literally sent her back to third grade math. We're the only school in the world who will take a 740 math SAT student. Correct to third grade. Send back.

And she got a 740. A 790. And it's that kind of thing where when you talk about the science of learning and just, I say it this way, the parent and the student in this case, we're not excited that their 740 math student is being given third grade problems. That can't be the issue. But it is. It is because you're overloading the working memory and she's just making careless mistakes. A quick selfish aside. When will this be available for me? I keep referencing we're going to come back to motivation. I'm motivated to learn lots of stuff, investors in general. Motivated to learn lots of. of stuff. I'm often facing novel situations where I don't know the physics or the technicals or the this or the that. And I wish I could just input like, yeah, here's everything about me. Here's all my favorite stuff. Ask me anything you want to know. I'll tell you anything. Now, teach me whatever. Teach me abionics. Teach me whatever. I'll take tests. Like, I'll do whatever it takes. How long do you think we are from a normal adult that doesn't need motivating, just being able to input the thing they want to learn about and having a system like time back, teach it to us much

faster. We're focused on K through 12, and so there needs to be somebody else who does that for the adults. But the next five or 10 years, everybody can have this. This is going to be a standard thing for everybody. Yeah. One of back to a visionary, I was talking to some ministers of education of other countries. I was like, look, sometime in the next five years, I don't know exactly when. There's going to be a tablet that's less than a thousand dollars that is going to teach every kid on this planet everything they need to know in two hours a day. It's going to come. Our AI burn is like 10,000 bucks a kid right now, but it's going to be down. It's going to be for everybody. It's going to be on a tablet that everybody's going to have. That is coming. I believe that it's a reality that everybody

should, if you're a parent, you should wake up and be super excited. AI is going to affect people in various ways. There's going to be winners and losers. I'm in Austin, and we have the robotaxies and the waybo's and all the stuff. And I'm like, I would not want to be an Uber driver. This is just not good. It is not good for them. For kids, it is an unequivocal good. McKinsey's favorite line, and I completely agree with it, which is this is the best time in history to be a five-year-old because we are going to transform their first 12 years because they are not going to sit in class. People do not like school. School experience for most people is not good, and they don't learn. And we're going to completely be able to transform their dozen years

and make it awesome as opposed to the chore that it is too. How fast does the benefit diminish with age? Like, best time to be a five-year-old, what about to be a 10-year-old or a 15-year-old? Will that cohort still enjoy these benefits? Back to catching up and how far. We'll take anybody into an Alpha School academically if they're willing to put in the time.

And when you talk about the time, you're like, wow, you're really far behind, so you can't do the two-hour learning. You've got to do the three-hour, okay? You need to take one hour of homework or an extra hour in the daytime. Yeah, there's still half the time in normal school. No, because it's on our dashboard,

we literally have one for when people come in, where parents can look and say, how many weeks it will take their kid to catch up if they do one hour of homework? You can take a kid years behind, and you're like, well, you're 20 to 30 hours times you're two years behind. Great, you're 40 to 60 hours behind.

The number of hours just isn't that much, and you can just catch up very quickly. So anybody can take advantage of it. And I believe that it's getting the curriculum in, getting that closed loop and measuring it. Yeah. Let's talk about motivation now. We know that motivation is some huge percent of the problem. I think there's been interesting studies, the anonymous parent that wrote about whose kids in Alpha School talked about this idea that they tried to adopt themselves some of the programs that were underneath early versions of Alpha.

And they really didn't have a lot of success. Like their kids didn't really want to do it. They kind of complained about doing it on the weekend. And there wasn't the feedback mechanism critically to show the kids gamified where they are. But motivation, solving for motivation, both in giving feedback on their progress, but also in what happens in the afternoon, has been a critical part, I think, of alpha's success. So just talk me through the journey of learning about this and what you do. Motivation is 90% of the solution.

The ed tech is 10%. Just hitting the ed tech and the software and all that stuff, even though I come from the software background. Ed tech has failed. We keep putting ed tech into schools and test scores keep going down. it's failed. And the issue is ed tech is necessary but not sufficient. It's 10% of the solution. Educators will say you need two things to teach a kid. First and most important, a motivated student. And then second, you need to put them in lessons of the correct difficulty and not too easy, not too hard. So in approximate development. So ed tech does the second one really well. A.I.

tutors, right? We can ask you what you know and what you don't know, take an assessment test, and then we're going to give you those questions. But are you, you going to engage? Do you have any interest in engaging? Or if I don't engage with the app, then I'm not going to learn anything. And so motivation is 90%. And Alpha's 100% built on solving the motivation problem. There's two stories here on this was back to when I moved my kid over years ago, Brian, who was the co-founder with McKinsey of Alpha, I asked him, I was like, what's something that I don't believe about education that I need to know? He's like, kids must love school. The first commitment of Alpha is kids will love school.

And I'm like, oh, school's sort of like spinach sometimes. It sort of sucks and all that stuff. He's like, you are wrong. Kids must love school. That couldn't be more true, which is if we're going to fix education, we have to wake up every day and realize why don't we make these dozen years for kids? We spend plenty of money. We spend plenty of money.

We spent a trillion dollars for K through 12 of this country to make kids love school. Put them in class for six hours, give them homework, make it a very terrible environment. we're not doing that, but we need to change it so they love school, and that's tied into how you have to solve the motivation. If you want them to learn, you have to do that. And just back to the ed tech, one last thing on the ed tech is, EdTech has five or ten percent of kids who do well with it, right? And there's a whole paper out called the five percent solution where the successes around EdTech are, basically there's a set of kids who love academics for academic's sake. And learning more, they're self-motivated, high-conscientious, often high IQ kids who do really well in the current existing system and you give them apps and

they do it. That's not 90% of the market. 90% of the market is okay, how do we motivate kids? Motivation is the core of the design. So let's start with the first part of this, which is, so my first weakest principal three years ago, I'm now accountable to the kids must love school and love school so much they don't want to go on vacation. I'm talking to some fifth graders. I'm like, guys, they're new to the school. I'm like, do you love school? Would you rather go to school a vacation? They're like, no.

And I'm like, okay, well, what would make you love school? And they're like, less school. And I'm like, okay, well, how much less? And they're like, no school. And I'm like, okay, well, that seems a little light as a principal to, like, have no school. And so basically, we negotiated. I was like, look, how about this? If two hours a day, if you engage,

in the apps. Like, and you'd have to engage. You can't screw around. You can't be doing stuff. If you really engage with the apps for two hours and then you had four hours of the most awesome stuff you love to do in workshops and team-based stuff that you really loved, would you do that? And they're basically like, okay, I'm back with my team, my software team. I'm like, all right, guys, we have two hours. We have two hours and we have to teach these kids as much as we can. And look, all this learning science says it can be done and let's go figure this out. And let's create a system where these kids are going to crush it academically in two hours because first you have to solve it in two hours and give them their time back.

The code name of our product, it's actually going to be the product when you say, when does everybody get this? Next year, our goal is to get this out. My job is to get this to a billion kids. And so I need a software platform to do it. You can't do it with just the physical schools or just the alpha. But time back was the name of the product. Give kids their time back.

and that is by far the number one motivator for kids. Actually, in that article you're talking about from that parent, motivation is complicated. There's lots of ways to motivate kids. Our guides, our adults in the building, our guides and coaches, they spend all their day figuring out how do we motivate kids. And sometimes it's the kindergartner wants a sticker. Or sometimes it's, oh, some of the students are competitive and they want to be top of a stack rank, or say like that.

Other ones, parents give them screen time or video game talk. You know, whatever the motivation is, some is money, give them money. But by far the number one, if you take the biggest kids, your biggest one, your highest effect size is give kids their time back. And that drives the huge performance, which is, if you took all my other motivations that we use and you said they have to sit in class for six hours and do homework, I don't know any of those other motivations would work versus you have to solve the first one, which is you need an engine that teaches kids 10 times faster so you can give them their time back. And then once you

do that, these other motivations work as well. But time back is by far the most important motivation. And then with it, it totally works. Kids get it. You're like, well, do I want to spend two hours of gauge of the app to then do four hours of great stuff? Right. Almost every kid's like, okay, that seems a lot better. So what is the great stuff? What happens in the second, two, thirds of the day because the parents don't want the kids back. What's going on? So the afternoons are all the life skill workshops. And so think of, there's tons of stories around it, but these are project-based workshops where kids are doing stuff they love, but also teaching them life skills. And so think of a life skill that you want, oh, I want my kid to be, I want entrepreneurial life skills. So our fifth

graders last year, or two years ago, ran an Airbnb. And they loved it. And they had to learn P&Ls and gross margin and all these things. They had to learn business. And they were loving it. How do we set prices and decorating it? And this year, those same group were like, well, we want to launch a food truck. Austin has a big food truck scene. We want to launch a food truck. And I was talking to one of them. And I was like, why did you pick? They pick breakfast food. Dippers, they call themselves. Why did you pick breakfast? They're like, do you understand the gross margin of breakfast foods? It's just enormous. And you're like, okay, this is awesome. And they have the food truck and they're at on weekends, like they're going to car dealerships. have it open and they're making $1,000 and just think it's great.

When you think of life skills, we're trying to treat. We have a whole life skill curriculum because common core curriculum is the standard academics, but parents have a standard of, okay, well, how do we teach teamwork and leadership? Today, teamwork and leadership is taught via sports in America. Most life skills in America are taught in after school sports. And if you actually survey parents, they're like, where did you learn your life skill, grit, leadership teamwork, all those kind of ones. They're all like, oh, in sports. And that's why sports is such a big part of it. Now, you can teach those in school. You don't need to do it. And actually

school is a great place to teach leadership and teamwork and all these other life skills. And so our big one, it's leadership and teamwork. Second, storytelling and public speaking. And then talk about this one, which is, if you actually go to the average 10 year old and you're like, hey, do you want to do public speaking, the kid's like, yeah, it doesn't sound that fun. That's not exciting. how do you make it fun and exciting so they love it, you're like, well, we have post-game press conference where you're the athlete, everybody wants to be able to do their post-game press conference. So these kids all practice their public speaking, and then they go up to Austin FC, the stadium. Once they pass, they get to see the game, and they get to go then sit and see the post-game press

conference with their favorite star. And then we have a deal where then after the stars leave, a couple of the press stay, and then the kids go up and get interrogated by them. And every kid's like, okay, I want to be able to do that. This is a life skill I want to teach public speaking. How do I frame it in a way where kids are going to love this and really engage with it? How do you have the teachers, the guides, the coaches, do this more systematically. Like, the software really tracks with me. Like, it's very clear to me intuitively how it might scale, because you can program it into the system. It seems less obvious how you could scale something like those examples. I have a friend, a dear friend,

who I'm sure will enjoy this conversation whose son is super interested as a young entrepreneur, as a young teenager. And he's building this little online business. And I'm sure if you told his son, you're going to get four extra hours a day to work on your business. He would bust his butt on the two hours to do anything to run his online sweatshirt shop. But the most amazing version of this I can imagine is that some amazing person that knows a lot about entrepreneurship and online selling and all this kind of stuff is helping that kid. That matching exercise, it just seems less scalable and less obvious how a system can get built that allows that afternoon to be as buttoned up as the morning. The answer to that is it depends on the age of the kid.

So K through 8, you can build an afternoon, and we have built an afternoon set of workshop and curriculum that's structured and standard and can be rolled out. It's not custom where they're doing individualized projects. But once you get to high school, we have what we call AlphaX project, which is your four years. super passion project where you have all afternoon for four years to work on you love. And that is very custom. Every kid's different. We have one student who's putting, she's trying to get a Broadway musical. It's the first all-teen produced, developed Broadway musical. And so she spent years building it out. She sourced all the people from TikTok and all the singers. She can fill a thousand people into a venue now. To your point, there's no guide or coach at Alpha.

who can help her. Our high school curriculum very much is, how are you a self-driven learner who can use resources, including where AI really gives you superpowers, to be able to do these projects on your own? And that's the difference. K through 8, we have a life skills curriculum that the kids do that are designed and managed by the guides and coaches. And then high school is where they transition to where they take ownership themselves, and then they basically get feedback on how they're doing from the market, from the public. Are you selling stuff online?

And they learn how to reach out and they DM people on Twitter and are like, one thing we've found is super successful adults overinvest in ambitious teens. And so all these kids are out getting help from adults in order to do it because you can't hire a teacher staff who can do all that.

What about the stuff that goes to the K through eight bucket specifically? I could imagine if the carrot in the four hours was an amazing field day or something. That's different than like you need to learn, you know, to memorize some poem and give a public speech or something. Like the amount of actual motivation can range a lot and it's student dependent. What have you learned in the three years about the sorts of things that kids actually love doing? That is the reward for doing their two hours in the morning. Okay. I'm going to say the most controversial thing I think of the talk right now, which is there's three things that

if I could wave a magic wand and get every parent in America to believe, because they don't believe it today. If out of this podcast, this was the outcome, this would do more to change education than anything. The first thing is, your kid must love school. We've talked about it, and they should want to go to school instead of going on vacation. If every parent believe that, that would be critical to changing it. The second is, your kid can crush their academics in two hours a day. You cannot think and subject your kid to six hours a day plus homework. We need to stop that, two hours a day. And then the third, this is the controversial one about this and that we've learned is the key to your child's happiness is high standards. And that is the controversial part, which is kids want to do awesome stuff.

Kids think they're awesome. Kids are awesome. And parents are very worried naturally. They care about safety. They worry about their kids trying and failing. So the workshops that drive excitement, that drive kids loving it, what really engages it, it's not make the workshop easy. The kids want to go do hard things. They don't want to struggle and fail, but they want to struggle and fail on their road to success. Now, they need to be supported by a caring adult. You need high support and high standards. When we talk about our guides, we should go into that. But fundamentally, kids love it. One of the things you'll see in the videos, McKinsey's Instagram is basically all the videos of all these workshops. And all she does is just goes to school and films them and just films kids. And,

you know, there's like half a million or a million people who love it because you're like, wow, this is what school should be like. We have kindergartners who climb a 40-foot rock wall. And when you hear that, and you're not the alpha environment, you're like, oh, that is so bad. That's so whacked. That's too hard. But when you actually see the kids go through it, they love it. But it's hard. We mic up the kids as they're going up it. And you'll see somebody that's just like, okay, this is scary, but I have a growth mindset. I can do this. And then they achieve it. And it's all safe. And then they do it. And they come down and they're beaming and they're like, oh, this was great. Our guides who create these workshops, we have a whole library of the ones we've developed and

we're always constantly, what are the ones that really work and what are the new ones we're trying? But last August, our second grade guide, Faith, she comes and she's like, okay, all the second graders can run a 5K in less than 35 minutes. And I was like, oh, wow, this one, that seems too hard. That seems too hard. And, God, the parents are really not going to like that if that doesn't work. She's like, I know it. She was an athlete at UT.

She's like, they totally can. Let's do it. Let's do it. She's like, now, here's the key. We teach kindergarten first grade, teach a lot of growth mindset. You should think you can do anything. And she's like, we got to start teaching them in second grade how to do anything, not just think it, but how to do it.

And so she's like, we're going to teach them atomic habits, the book Atomic Habits, which is 1% better, basically. Most adults don't learn that until after college when they read the book. But the concepts in that book, you can teach a second grader. Everybody gets it. She gets all the kids together and she's like, we're going to run up 5K. Who thinks that's impossible? Every kid's like, okay, that's totally impossible.

I can't do that. Miss Faye. And then she goes out to the track. And she's like, I've signed you guys all this in August. I signed you up for the jingle 5K. You have the domain. Christmas, we're going to run it. Here we go.

She's like, but day one, we're just going to walk the track. And all the kids walk the 5K. And she's like, okay, so we've established everybody's going to finish the race. And then the next time they go out, they run a quarter lap, walk the rest, half lap. And they incrementally do it so that by December, these kids are able to run the 5K in 35 minutes. You look at the finish line and the parents that kids are crying. So awesome.

And back to the life skill that you taught. It's not just the heart. They love that it was difficult, but they sit there and they're just like, mom, dad, I know how to do anything now. And I have those skills that I'm developing. And as a parent, you're like, that's the life skill that you want your kid to know how to do. And the way to do it, though, first right back to how the whole system. system has to work. You have to have a system where the kids love school, where it only takes two

hours, so you have these afternoons to do this. And then you have to have those three beliefs, those three things, including high standards is the key to your kids' happiness. That's an amazing lesson. Can we talk about these guides? We've referred to them a lot. And I think everyone listening will imagine an amazing teacher that they've had or their kids had. Maybe they'll also imagine a terrible teacher that they've had or their kids had. It matters a lot. cite my favorite teacher, looking back to third grade or whatever. What have you learned about who these people are, who they should be, what skills they should have, what role they should play, like blank sheet of paper first principles approach here, I'm sure. Walk us through that part of that.

So the first part when you hear about AI tutors and all this stuff, that's just the complete wrong misconception is when adults in the building are critical. People have this image of robot Terminators. Don't send your school to the school with robot terminators. Terminology, we actually have a lot of discussion around the terminology. Should we call them teachers? But they don't do academic teaching. So if you are an adult in our buildings, you do not do academic teaching. And so that's why when we start, we're like, okay, we shouldn't call them teachers then because it gives the wrong impression. So guides and coaches. But then you're like, well, people think they're teachers and it's a new role for teachers. Anyway, we'll see. We'll figure it out. But fundamentally,

it's what matters. Think about this is every adult has one or two teachers who transform them their life. Every adult has that. Our guides are that for our students. Literally, we have a survey question that we ask every eight weeks, which is that exact question to kids, which is every adult had one or two teachers who transformed your life, is your guide that for you. And that is the standard we hold our guides up. These adults, these guides, coaches, and teachers, their job is, they're accountable for is to deliver the three commitments to the kids, that they love school, they learn 2x, and learn life skills. They're accountable for that. And they are seen by the kids as you are transforming my life. And so you think about who's good at that. The first part of it is,

and this gets back to academics and the teacher in front of the classroom, whoever is in your head, the reason they transform your life is not because they graded your seventh grade science quiz really well. It's because they met you and motivated you and understood you. And they probably held you to a high standard and convinced you that you could do a lot more. Back to the key to your happiness and success is high standards. High support, high standards. Great teachers are high support, high standards. Dr. Yeager has a book called 10 to 25, How to Motivate Dance from 10. It's great book. And we work with him a lot on all this stuff. And that is every guide. at Alpha lives that philosophy. That is what you're looking for. You are looking for individuals

who can hold high standards, but also high support. And it's different at age. So if you go into a kindergarten, you're going to get charity or Mallory, and they're going to wrap your kid at love at kindergarten. That's what you want. But as you get up to middle school and high school, they're going to be able to sit there and bond with you over, okay, let's talk about the high standards. Look at all these great things that you can do. It's various things, but we hire, because you don't have to teach seventh grade science in our school, we actually hire ex-coaches as an example, ex-coaches athletes. We'll talk about, like, we have a sports academy, and we literally have ex-NBA coaches, ex-NFL players, ex-MLB players, and they're awesome

at holding high standards and providing great motivation for the kids. When you don't have to do the academic side, you bring in all those other things and you focus 100% on I'm going to hold high standards for the kids. I'm going to be able to motivate them. We probably are the only school where we have a system where you can go in for every kid and see every motivation that's ever been tried by any guide at Alpha to motivate them, to see what do they really love, how do you engage this kid, what are their interests. And so our guides spend time getting to know the kids. As an example, during the two-hour session, the kids do 25-minute Pomodoro's during the math

Pomodoro, what the guide will do is pull the kid out one-on-one. They're like, you're not going to do the math stuff today. Come sit down and talk to me. And the guide's going to be like, how was your weekend? What happened? Oh, do you win the softball game? Whatever happened and get to know not as engaged anymore, what's going on. They talk through all of that with them.

And so they get to know the kids. And we talk about there's Mount Alpha that you're climbing up. And your guide is there to help the students get up the mountain. People who love to do that are the ones you want to hire. I guess a little segue also on that on just overall is we pay our guides a lot more at Alpha than standard teachers. How much more? Like what percentage more? Our minimum pay for a teacher is $100,000. In the Austin market, that's basically double the pay. You're going to go get great talent, and you're going to get great talent, not just in teachers. So we can go get people who are the best

teachers in any teaching one, but you can also get people who aren't traditionally teachers. That's very much what we believe. The core of it really is, students want these great teachers, and you don't have a class-sized problem. The economics of a school are based on fundamentally how much do you pay the teachers and what your class size is. We have some other economics like our AI and our workshop costs, but fundamentally that's driving the economics of schooling.

And so the lower grades, we have low tooling, which is, you know, you're going to have five students per guide. But as you get older, what you actually find is students don't want that. By the time you get to middle school, they're like, Mr. Limott, you know, I'm going to have a lesson. I don't need all these guides around. They want more freedom, but the ones they want, they want really high caliber, awesome people who are going to know them and motivate them and hold them to high standards. I want to talk about feedback loops. This is something that we've referenced many a time.

it's a huge part of your success outside of Alpha and leading up to Alpha that's allowed you to funded and be such a force behind it. In your life, you seem to have learned a tremendous amount about the power of well-enforced feedback loops. So maybe just give us the foundation of this belief. And then I want to talk about all the many ways in which you've been able to deploy these learnings into the Alpha School setting to give kids feedback, not just motivation, but show them their progress, show parents, show coaches and guides. Where did this deep belief in the power of iterative feedback come from in the first place? There's two parts to it, I guess, sort of the individual level and then the systemic level,

which is part of the feedback loops that are really important. And the biggest yet to be proven part is we need to scale this. We need to scale this. We need to get this out to a billion kids. And so how are you going to measure success? And so I always look myself as I'm a product person. But then, okay, how do you put in the systems that allow it to scale? And the key to the systems scaling is the feedback loop that you know what's going on.

So when we open a campus, how do I know that the kids love school? How do I know that the parents are super excited? How do I know they're learning 2X and 2 hours? Are the guides awesome? Is my guide in New York City going to be as good as my guide in Alpha? And so how are we going to be able to measure it all? The key on all these feedback loops is if you want to scale it, you have to measure it and you have to provide that loop if we're going to be able to say we're

going to keep this quality at standard at scale. And so there's sort of all that that we can talk about. And that's a big part of what AI enables and enables scaling at quality that I believe 10 years ago you couldn't have done. And then the second one around feedback loops is back to educating kids and just people is receiving feedback is like one of our most important life skills to teach is if you are somebody who actively seeks feedback to get better, that is one of the most important life skills you can teach somebody. Receive feedback in our life skills stack. At kindergarten, our test to pass, all our life skills, we have a test that you have to pass because you have to be able to measure it. Can you receive feedback without crying?

in kindergarten. By eighth grade, do you know that the key to you getting better is actively seeking critical feedback? And do you actively go seek it out in order to improve? The day that alpha parents get really happy is when their kid comes home and is like, mom, dad, I know I haven't been a good member of the family. How can I, how can I be better? And so that whole concept of seeking out in order to improve, that concept is critical to just. human development, getting better. We call it watching game film. Great athletes are like, yeah, I'm going to go watch a game.

How did I do? And how am I going to get and get it better? We actually do the same thing on the academics. We have game film where you're like, why did I screw up these questions on the test? And they literally will sit there and say, I miss this question because I didn't know the material. Or, oh, this was a careless mistake.

So they can start to sit there and say, is my problem? I don't know it or actually test-taking skills. And you help them do that. You show them the game tape of themselves learning. Exactly. Well, that's part of, like when we talk about our AI tutor, we believe the biggest user of AI in education. And how we use it is completely different than what everybody else thinks. There's this whole view that we are going to deploy chat GPT to everybody in America.

And things are going to get better because everybody needs to use AI. If you take away from Alpha, you're like, oh, we should deploy chat GPD to everybody. Okay. Wrong takeaway. That is literally the worst thing you could do. just to be very clear, you are not a principal to school if you think JATCBT is good. 90% of the use of chat Chepti is to cheat. Now, there are 10% use case of people who are like,

I need a Socratic tutor where I'm super excited about it, and I need to dive in deeper in that 5% to 10%. Those kids are going to crush it with it, and you should give it to those 5% or 10%. 90% of the kids are like, how do I use this to cheat? They want their time back. Because they want their time back, because they're just trying to get through it. We literally don't have chat functionality activated in our AI. It is not a chat bot.

It's terrible. And that's not what people need. Back to where we use the AI is generating personalized lesson plans and personalized lessons themselves. That is a great use of AI. A second great use of AI is actually to watch the screen and coach the kids to give them the game film. And we can go from the remedial of, hey, kid, you're like literally scrolling through.

through the article and looking at the questions and trying to search because you don't want to read the whole article. That's not really going to work well. Or, you know, when you miss a question, here's the video that can help explain it, the little explainer of what you got wrong, and you skip it. If you really want to get out of here in two hours, you need to do it. Our biggest thing is our vision model, which is actually part of the big expensive part because you're streaming fifth time thing. It'll come down in calls, but right now it's a lot. We have a waste meter. Because once again, if you are going to give the kids a time back, they want the time back, and they want to get better. They want to become a more self-driven learner where they can move through this faster.

So we literally are like, you're wasting 50% of your time. And the kids like, whoa, coach me up. I don't want to waste 50% on time. So I'm spending three hours when I could spend two. And so giving them the coaching of how to learn better, how to learn faster and more effectively, that's a great use of AI. But that's not something that all the other platforms are, So just so I understand, like, I almost want to like imagine we have the engineers of the system here with us and we're now in a technical explainer. The thing is built, I'm interacting with it. There's different things I can do and not do. The entire process, me looking at it, the touches, the scrolls, everything is being monitored. And that is being fed through what kind of system? Like, that sounds complicated. Like, how does that system know it's the little thing at the end, the explainer that I'm skipping? Like, help me understand the engineering of the thing. As a frame of reference,

Use Khan Academy since everybody understands it. And imagine a dynamically generated con lesson. The video is dynamically generated. The video can basically be about half as long as a con video because using the concepts of learning science and more active, passive is bad. So more active engagement, you can teach kids in less time. And it's based on their interests.

And so you're doing that. And then the video stream itself is actually being fed to an AI model sitting there looking for anti-patternors. What are the things that kids do? Because basically, what are things that are kids do that slow them down that are learning anti-patterns? And so it's looking for those. And then when it has, it's going to be like, ooh, look, that's waste. And then it's going to update the waste meter or flag the kid and say, stop doing it, depending on the mode is.

And when you think about the technology behind it, just think of back to what's valuable data. The same way, having the data stream of all the Tesla cars running around, that you're then saying, okay, what are we doing? The data stream of, okay, here's what kids do when they're learning and what they shouldn't do and what to avoid. And then you move it to, so the first phase is go find all the anti-patterns. And then the second one is coach them up on it. Maybe it's a data stream, just a raw data stream that you have privileged generation of

because the students are using the thing. Maybe talk about the team behind this. So like, how many engineers are working on this? What kinds of people are they? Like, where did they come from? Are these like the best engineers from your trilogy ESW days? Like, who are these people? And then what is their process of turning the raw data stream into actionable lessons in the software?

The software team, there's a couple different parts to it. So Incept is the core generation engine. And the name actually matters. This is important, especially with AI in education, which is Incept sort of has two definitions. One is the movie, you're putting a mind virus in kids' head. That's what you're doing when you're educating a kid. You're putting these thoughts into kids' heads. There's a second definition, though, like from a thousand years ago, the original from Cambridge

and Oxford, which was qualified to teach. And there was a subtle underpinning of you trust the person. Teachers are trusted because you're putting things into kids' heads. It's important to understand it's two parts. You're putting stuff into kids' head, and you need to be trusted on what's going in. And there's going to be a lot of controversy, I believe. There is just an AI in general, but especially in education. of how we make sure these are trusted generators that are putting things in.

You have TikTok as a untrusted generator that currently dominates. We should talk later about our standard of TikTok as our competition, which is we have to out TikTok TikTok if we're going to take over getting the right thoughts into kids' heads. But anyway, so there's the Incept team. And the Incept team you should think is we use all the different LLMs. We have our stuff on top of it where we are generating content. And it's going to be taking in streams of, okay, what's the curriculum we're doing? What is the kid's knowledge graph?

What is their interest graph? What is their cognitive load model? And then be able to generate the dynamic lesson. And so you should think this is going to be your standard AI-type team embedded with massive, a set of learning scientists. So the difference between us and the standard just using a normal LLM to generate content is we have probably the biggest team, best, team of learning scientists who are building this. And that's a critical aspect of it. That's why, if you just have, and why I believe all the LLMs that are out and all the educational ones, they're not embedded with learning science. They don't follow these principles. They don't embed

mastery and all these other concepts. And that's why generally, when you give them to kids, they just use them a sheet. So you have that side. Then the second side is, you're like, okay, I have this data stream. And now I'm basically, it's a video model. It's just a vision model. And you're just sitting there saying, how do I optimize this vision model to find what I need? But how it started is literally just humans. When you talk about human annotation, just watching videos. So three years ago, we would just sit there and have teams of people all night.

You know, the kids had finished. And then all night, you would just sit and watch the videos and annotate them of, okay, that's what's going wrong here. This is what the kids doing. It's like reinforcement learning. And it is. And it's just building out a video model, a reinforcement learning video model with human feedback.

And the human feedback's not from the kids. It's from people watching it to say, I need to train this up on how kids learn and what is effective learning, what are the anti-patterns, and what do we want to coach for. And so then you take that. And literally the first month back three years ago, August,

we literally would just take the output of watching the videos. and then the guys would just tell the kids the next day. They're like, hey, look what you're doing. So now the AI handles almost all of it. We still have some humans where we're still fine-tuning things. But fundamentally, that's what you're doing, is you need a vision model where you are sitting there training it on how to have kids learn better,

how to be more effective, where are the things. And back to the streams. You need this where you're generating content. You need this to see, are they engaging with it? And then you need to be saying, am I really? moving the standardized test scores. I mean, are the kids really learning this material? You need that whole closed loop to be able to say, okay, yes, we came up with this concept. We generated this material. Okay, look, yes, the kids are learning. And you can measure that. Can we talk about the

third one as the kid sees it? This is really helping. I'm glad we're going to a little bit more technical side of thing. So we've got Incept, we've got the vision model, and then we've got the feedback mechanism or whatever at the end, the standardized testing. How does the kid feel that, like in the anonymous parents' post about the school. They talked about hitting your minimums and your weekly scores, your daily scores, things like this. The kids seem to have this gamified sense of their own progress. So what have you learned about presenting that well and using that last closing part of the The kid's motivation. How do you drive kids motivation? You know, at the end of it, you're giving them a measure of how much do you have to do a day and how much do you want to do a day. So you have a

goal setting part where, okay, kids, you can set your goals. And this is what I want to achieve. And this is what I want to achieve. Then from that, you're like, okay, the system can tell you you need to do this much. Actually, last year, one of the changes we're making for the year coming up is we do, okay, you finished a lesson. And one of the problems is lessons are different lengths. You have a 25-minute Pomodoro and, okay, I have two 15-minute lessons. What's a Pomodoro? Pomodora is a 25-minute segment that the kids do for each subject. So they're going to do math, science, language, reading. Actually, you can do whatever order. It's 25 minutes. you basically go into the app in the morning during the two-hour session,

and you're like, okay, I'm going to spend 25 minutes in math. And then the system is going to give you the lessons. And you're going to be like, okay, here's the lessons I'm going to do. And I'm going to do them to mastery. So I'm going to do them to the highest standard possible. And then I have rings, the clothes that say, you did it. Yeah, it's just like the watch. And it's just like the Apple Watch, where it's going to be like,

you did it at the high accuracy. If you're doing it with low accuracy, you're not learning. You're just guessing and you're screw around. So you have to have 80% accuracy. You did it to mastery. You didn't sort of the mass practice up front. You locked it in. And I spent the time.

I did spend it 25 minutes. And then your ring closes, boom, you get it. And the kids, back to gamification, they have to do their two-hour sessions to unlock their afternoon. And so all these privileges come around because you unlock things. And when you come into Alpha, actually, your first day, and I'm transferring from standard school, you actually go into what we call standard school. where you literally sit at a desk. It's like you're in standard school. And it's like, okay, your job is to become a two-hour learner

where you learn the skills so that you can learn in two hours instead of six hours. The kids are like, I'm all into this. Let me do it. And so they're going to learn how to engage in the apps, how to use them correctly. If I sit and spin in my chair all day, I'm not going to be a two-hour learner. And I'm going to be stuck. Then as you achieve, back to motivation models, as you show you can be a two-hour learner, oh, I hit all my rings this week. I basically finish my lessons. You graduate to be a two-hour learner,

which then unlocks all these different privileges. Our guides have different ones at different levels. But think when you see the alpha pictures where the kids are in a bean bag with their computer, not sitting at a desk, they've unlocked those privileges where they're like, yeah, you know how to be a self-driven learner. You can do it however you want. The booths that we have, they're literally like the phone booths that you see in the Silicon Valley. We have those in our schools. And they're famous in our middle and high school because kids voluntarily go in those where students learn where do I learn best. My daughter's an example where we have a communal table where you can all just sit together here two are learning. You can just sit at the table. Now my daughter, she's a talker and

she's like, I can't sit at the communal table because I won't get anything done because I'm just going to sit and talk to my friends. So she'll like say, I'm going to go into one of the booths so I can get it done. Kids, right, they learn this. All kids learn, I totally know how to become a learner. And if they have the motivation, i.e., you're giving them their time back, they all do. Those skills where you talk about, do kids have agency, right? And do they own their learning and are they self-driven? That's all part of the system where you create these two-hour learners, which are basically you're creating self-driven learners, which when you think long term, that's a critical life skill that you really want to have. then how do you game it? What is the gamification? There is all different ones where

guides will have ones where you have individualized goals, you have team goals. Our Brownsville campus, the biggest motivated for the youngest kids is the petting zoo. So if the whole level exceeds all their academics for a week and a session, they get a petting zoo. When you talk about motivation, okay, they don't want money. You get the bunny and the petting zoo. Those kids, they'd go do 10 hours of homework. Can you talk for the kids that do want money about alpha bucks? We have a whole economy based on alphas. Alphas are used where fundamentally you do these academics, then you can earn alphas. And then how can you spend those alphas? It's all age dependent, so it gets very different, which is very interesting just talking about motivation and money.

In general, there's a lot of motivations that parents love. Oh, the petting zoo, that sounds really cool, or I get more privileges, that you're in privilege or stuff. to. Money is obviously the controversial one that causes everybody to just go, oh my God, and that's a terrible one. I'm going to give a couple examples of it. Your kid can earn money for doing academics. Parents generally like, okay, I don't like that. Now, your kid can earn money by doing academics so they can fund their passion project so that their afternoon workshop that they're trying to do. So when she's trying to do the Broadway musical and has to fly up, she's going to earn money that's going to allow her to do that. Parents are like, okay, that seems a good.

okay. Or since this audience, it's going to fund your financial literacy investment account. And we're going to take all the middle school kids. And if they crush their academics, we're going to fund an investment, a Robin Hood for kids or whatever, you know, whatever investment fund to teach them investing because the key, if you're going to teach a kid to invest, is make sure it's real money and theirs. And it's something they earned, not give it. Because your loss aversion, right, and all that. Oh, parents are like, oh, that's a great idea. We're going to have a 50% penalty for early withdrawal. Parents like that too, actually.

They're like, we're going to teach them to save. And so there's all these behaviors around money that are good. And so those are all examples that our system does with you can earn the alpha bucks and have those. Or in the alphas. Other ones, okay, they do good life skill workshops. And they have a bigger picture. We'll do another one. This is what every parent should do because this is super controversial.

Everybody hates it. And if you care about academics, this is the single best thing you can do to fix academics. So the number one issue in academics for kids, and let's start at middle school, is the reason they're struggling. And if you look at the curves and learning in America, they all start to flatten out in middle school. The median person in high school in America actually doesn't learn anything. It's scary. In a maps test, which is a 300 point scale, the median American goes up one point in four years, one point on a 300 point scale, not learning anything. it starts slowing down in middle school.

And motivation, engagement's an issue. The other is just it's the ramification of having a time-based education system instead of a mastery-based education system. And Saul Kahn and Kahn video, he has great videos around this, where he's just like, when you're pushing people up and they've only learned 70 or 80% of the curriculum, you should think it's like Swiss cheese. It's like you're building a foundation with all these holes. And then eventually, as you get high enough, it just gets too much and it collapses.

And you can't learn anymore. And that's what happens when kids hit algebra. The problem's not the algebra. It's the prior knowledge. And so the number one thing we do is, okay, we need to go fill your holes. So let's talk about marketing and motivation, which is actually probably half my job. You know, as principal is, if you go to a seventh grader and say, look, it's not your fault, however you got here, you don't know this fifth grade material. They need you to go back.

They are not into it at all. And the only person who's less into it than the student is parents are like parents have been taught. My kid needs to be a grade level no matter what. And that's just the opposite of what the learning science says. The opposite of what a tutor does. When you hire a tutor for your school, all they're doing is saying, just get on a fifth grade lesson. And they don't call it a fifth grade lesson or whatever, but that's what you're doing. Fundamental.

Correct. And everybody understands when you apply this concept to sports, every parent gets it. They all get it. They're like, yeah, master the basics. When it comes to academics, it's like, no, no, no, do all the advanced alley-ups. How parents think about the world is just not right. And so you're like, how do you fix it? I got to deliver it.

So I went to the seventh graders. I'm like, guys, all of you can get 100% on the Texas Star, the Texas standardized test. No way, Mr. We want. No way. Back to Money Motor. I'm like, I'll give you a $100 bill for $100 on the Texas Star, 100 for $100. They're like, that's still impossible. I can't get one.

I'm like, no, no, no. There's a catch. any grade level. They're like, I can take a kindergarten, Texas star, and you're going to give me $100. And I'm like, well, the Texas star starts in third grade. And they're like, okay, I'll take a third grade test. And I'm like, great. And so they go take a third grade test to start. They get $100 to give them $100 bill. They're like, can I do fourth grade? I'm like, absolutely. They do fourth grade, get $100 bill. They're like, okay, you're really going to let me do fifth grade? I'm like, absolutely. And so they take it and they get an $85, right, 75 or $85. And I'm like, do you want the AI tutor to generate the lessons so you can get 100?

And they're like, let me see how many. And then they see it. And they're like, I can do that in a week. And they're like, I'm in. And then they get 100. And then you do sixth grade. And for literally $400, we can do two really important things. We can whole fill, as we call it, which is we can go back.

And for whatever reason, wherever your kid is, you can go back and fill all those holes and put them on a foundation where they can keep learning. But second, you actually change how they think, which is, I can get a hundred on a Texas star. Every parent, like if you actually survey alpha parents, fewer than 10% of them think kids can get 100 on a Texas star. And that's because in the time-based model, the GT kids, right, only the super smart kids got 100. In a mastery-based model, everybody can. It's just a matter of effort. It's not about IQ. It's just about effort. And as soon as you break that link for a kid, it changes everything about education where they sit there and they're like, I can totally do this. Oh my God.

And so if you take the alpha stats, first of all, 90 plus percent of our kids who've been there at school a year are like, I can totally get 100 on a Texas Star. And the reason is, because they have during the year. Our building our K-36 building down in Austin gets more hundreds on the Texas Star than a school district of 100,000 kids. because it's just a different mentality and a mastery-based thing. You don't advance until you know it. And you sit there and back to motivation and how do you get it right? If you make everything 100, everybody thinks it's too hard. So you say you can pass it 90, but 100 for 100.

And everybody's like, okay, I'll do the extra work. It's only a couple questions. If they get less than 100, the AI tutor's like, here's the ones you miss. Was it careless or did you not know it? And if you didn't know it, I want me to give you the lesson. And so the kids can get to mastery. You put in this motivation, this very lightweight motivation. We spent 20 grand a kid in this country across Alpha's 40,000 plus,

but we spend plenty of money where for $100 or $400, we could literally change how everybody sees both their capability and how they see themselves. That's a part that just back to motivation that really matters is when money matters. Here I'll give you one more example on money, which is that's a perfect example of using money in order to get people to change how they think about themselves. and a lot of kids have a view that they have these limits.

That's high standards, high support. That's what guides are doing is they're breaking through it. And in academics, kids have these hangups of, look, I can't learn that much. I'm that kid. My daughter will probably kill me, but I'll use her on this one as an example. So when she got to middle school, she got to top 10%, and she's just like, you know, dad, her older sister is the academic one of the two. She's like, I'm not like my oldest sister.

I'm top 10% that's good enough. I'm not top 1%. I'm good. And I was like, the one thing I know about you that you care about more than anything is you love to shop. And so how about a thousand bucks? I bet you a thousand bucks that you can't get to top 1%. And she's like, oh, right? She's in middle school.

And she like fills her Evo's odd card with $1,000 of stuff. And she would just look at it in the morning and then go grind and just do her apps. And we had a lot of family discussions about this because my wife is like, okay, so first of all, you're paying for academics and you're setting this really high standard and all the stuff. And is this going to be good for her and all these things? That's common. Back to parent, you don't want to set too high a standard and is this motivation bad. Anyway, she got to top 1% and she buys all her stuff.

And she sits down actually with my wife and is like, Mom, I know you didn't like us doing this. but she's like, you need to understand what it did to my view, which is, I never thought it was smart as my older sister. I now realize I can do anything. And her internal change, right, her internal view of, I'm not capable, and then, oh, my God, I can learn anything. And breaking that internal thing, when we talk about it now as a family, you can see it's emotional. As a parent, you're like, that's what you want to do.

You would do anything for that. do anything for that and a thousand dollars like whatever you would do anything to have your kid think i am limitless i can do anything and i can see anything different that breakthrough of a lot of raising kids and stuff is there's internal limits on what their belief is and you want to put them in an environment where you're like you're limitless and i'm going to give you the high support and high standards that's going to let you see that and a lot of the development stuff when you talk about life skills and all of that and our guides and why the humans are so important and all the stuff. That part of it is part of the culture of a school that you have to build and it unlocks human

potential. When we talk about education can unlock human potential, you're taking these limits that kids have or as they see themselves and you're removing them. You're just blowing the doors off. And it's in all these different areas. And fundamentally, you're like, whatever motivation I need that's going to unlock my kid a parent's willing to do. And so now we will tell kids when they get to middle school, if you want to be top 1% when you transfer in and you're not there, we'll pay any kid at Alpha 1,000 bucks to get to top 1%. So they then realize I can do anything.

There is no academic height. Our kids at our school all believe I can go crush this academics if I just put the time in. And it's not an inherent, okay, I'm not smart enough or any of that. And that unlock, that's the part that this, new to our learning and all the stuff is going to. I'm sure listening to a story of your daughter, thank you for telling it. Every single parent, myself included, is just going to picture their kids' faces in their mind and agree instantly that they would do anything for this moment of

unlock or several of them, which demands that I think really important and exciting question, which is how the hell are we going to scale this system across the country? It's like so many things, like a great product. It tends to get built in a small space where it's artisanal and you're trying stuff and you're figuring out the system and then hopefully like software you can spread it and scale it across the country. What are the biggest barriers to that being possible? Let's talk on the technology side because it's not ready yet. We have a whole team of people who wake up every day trying to make it ready to scale broadly. And the engine, the timeback engine, we still have hallucinations, right? It's AI. And, you know, in the alpha environment,

an alpha environment's super safe. The kids love school. They're all stuff, the high school kids. It's literally, it comes up with some whack job thing. And the kids take a screenshot and send it in. They're like, AI's acted up today, and it's fine. You really sat into the wild and AI robot tutor is terrible. And so we got a burn down chart of how we think. And we do believe that next year, right, we hope to have betas between August and December of this year. This platform will be out.

And the first part is, I've got to get the technology a little better. Once that's done, now you get into what are your channels of distribution? So obviously homeschools, the biggest thing is there's millions of parents who are like, okay, let me do this at home. And so the biggest thing, we have a test with 50 plus homeschoolers. The problem on all of this, on the technology, technology is 10% of the solution. It's only 10. So my 10% still doesn't work yet. But then how are you solving the 90% of motivation?

So when you're in an alpha building, you're one of our schools, then all of a sudden you're like, yeah, we control it. We have the motivation and we do it all. you're at a homeschool. Is there any motivational model? So our tests, we're not getting two X and two hours with the homeschool kids. Now, literally every time we test it, we're putting, building in motivational models, putting in other things so that we can get there. So I believe next year we will have a homeschool version that somebody will be able to buy.

The kid's going to be able to sit down and deliver two X and two hours for sure. The second part is schools, right? We're going to have a platform that if a school wants to adopt this, then you can absolutely do it. Now, what are the hurdles? You've got to rebuild your whole school from the ground up. You can't just sort of tack it on. This is a full rebuild.

And so our school is really going to do that. Public schools, wow, they have a 10 times harder job than me. If I was at principal or a teacher or superintendent of public school, as a product guy, I'm like, you have the most impossible job in the world. My job's 10 times easier because I control everything. You have a really hard problem.

I believe, though, we need to start getting lots of data. proving out lots of things, showing the FSC, that this works with the hopes that in public school, you know, a decade from now, my vision on this is, I'm going to spend the next 20 years my life on this, and I'm going to need all 20 to get everything in public school spread for sure. The next phase, and this is one of my goals in being on the podcast, is entrepreneurs need to build new schools. And this two-hour platform will cover the two hours for you. You crush the afternoon. And let's go start. Let's have a platform technology. Yeah, build on top of it. And build on top of it.

And so I'll give you an example of one of the ones that's not funded yet, but the business plan is super awesome, which is Texas just passed school choice, billion dollars. And so this group is basically they're building Texas Sports Academy. Their goal is to go to every school district in Texas and build a microschool, which is going to be a micro middle school for D1 athletes. They're going to be based. on the timeback platform. And then in the afternoon, it's going to be one of the local coaches that everybody in town reveres who is going to have a school, middle school, for people who want to be D1 athletes. And they're going to spend the afternoon doing whatever awesome athletics, whether I'm seven-on-seven in football or we're doing basketball or soccer, all these things, where you can create these innovative educational models. So that for a kid who's like, oh, my God, I will go crush my, and their commitment. Don't get to do the fun thing unless they've done the time back, yeah.

Unless they do the time back. And because of that and because of the learning science and the app, they're going to make a commitment that when you look at their thousand school, there's thousand school districts in Texas, 1,200 or something, they're like, our thousand schools, our thousand microschools. They're like, when you compare us, if you view us as an entire school district, we will be seen as the best school district in Texas academically. We will have by far the best academics.

Tens of thousands of kids will be in these microschools. And their hope is to launch a year from now when the Texas ESA vouchers come due. And you can sit and see for parents who are like, wow, that is an economic model I could get behind or an education model I can get behind where, oh my God, my kid's going to love school, he's going to crush the academics,

and he's going to flicking do his sports that he loves afternoon, and that's the middle school. There's a whole set of parents who can then go build that out. and entrepreneurs who can do that. As we prove this out in scale, there's actually a lot of famous professional athletes who are like, I would love to start a school like that. And so I believe that's just a whole huge opportunity. There's another school that we've started, but it's one unit and we need entrepreneurs to scale it is GT school, gifted and talented school.

And gifted and talented school, we define as you love academics for academic sake. Like when you're motivated. The five or ten percent. Yeah, it's the five or ten percent. And my oldest daughter is actually. like that. She loves it. In high school, she read calculus books for fun. There is a set of people who just love that. And that's where you're just uncapping. Those kids aren't learning two X and two hours. They're learning three X, four X, five X. I mean, they're just crushing it because they love it. When we get all the guides together and we're like, okay, how do we juice love of school? How do we make kids raise it? The GT guides are like, more academics. We need a third power hour and all stuff. And all the other guys are like, no, we don't want more academics. We're life skills.

Anyway, but GT, you can just imagine... A different property? No, there should be 500 GT schools around the country built on the time back platform where kids who love that can just unleash it. It's new, but it's super fun. I mean, those kids are like, we're going to be the last human smarter than Aon. Right. And you literally just have this great group of kids who are just like, we love this stuff,

and we just love academics for academics sake and math Olympia and robotics and writing novels and all that. So every kid, right back to when you really focus on kids have to... to love school. You're like, okay, there needs to be different school types for different kids. This platform, this timeback platform enables that because you can sit and say, look, the academics are done. The coach doesn't need to teach the seventh grade science, right? The platform does it. The app does it. What the coach does needs to motivate the kids and then do the afternoon workshops. In this case, they'll be athletic. If I think about scaling, there's lots of paths,

and they all need to be tried. There's the microschools, there's entrepreneurs, We're starting schools. There's refitting that probably happens later in the adoption curve from the movie with the public schools is the very last, you know, that classic like adoption curve. But the answer is we just need to go hard at all of these solutions where time back and the motivation, the creativity around sources of motivation are thoughtfully paired together. This is one of the tasks that is on my list to do is first part is, okay, I got to build this product that makes kids learn 10 times faster. then the second is, okay, we have to have these schools that are sort of the exemplars prove the case, because no one would believe it. And so Alpha obviously is the flagship high-end private school model. There's a third part that we have to show in order to really unleash stuff. And that's a business model, the business of education. Because capitalism enters the chat.

Capitalism enters the chat. We need to bring capitalism in here. And that's obviously a very controversial view. And my view is with time back, we have to show here's a platform, but you can build great businesses on this. And you have to be able to build great businesses in order to attract great talent. It's a trillion dollar market with no good products. The economics historically of education having to work, this completely changes it. I believe we're going to show, I mean, we're in the cash burn phase and we're burning hundreds of millions of dollars, building. all this stuff out. It's just like anything, which is it's a huge market and if you have an awesome product. The one element is, if I was talking to an entrepreneur where everybody's like, don't go into education, can't make any money, it's terrible, it's failed, all those things. Great products. Parents will absolutely pay for great products. Societies pay for great education. We spend a trillion

dollars for a relatively bad product right now. As an entrepreneur, if you look at this, you build a great product, you actually can build great customer base, and it doesn't have to be a money losing nonprofit that's supported 100% on donations, which is the world today. You can't sustainably grow. Part of the problem on schooling today is everything has to be nonprofit, the organization is nonprofit, and so then you just caught out scaling. There are good school system charter schools out there where their gating factor is, well, I'm waiting for someone to give me $40 million so I can build a campus. I have a 3,000 person wait list. Back to my economics, I need someone to donate 40 million versus, okay, well, let's build a really good business model. That you can

build a business model out of it so you can open up 500 of them because capitalism will provide capital to this space. Let's adopt the ultra-sceptic mindset for a second. And as the principal, I know you get to deal with this because you're dealing not only with parents that are at the school, but parents that are considering joining it. If you had to name a thing or two that you struggle with the most personally, not skeptics that you can answer easily, but skeptics that are hard to answer. What are the hardest to answer skeptical points of argument that you come across most often? Well, I mean, your best example right now is just, we haven't done this at scale. And so here's all these things, but it's in a limited group. Easy for you to say you got all this money.

No, literally, you have infinite money, selection effects size, all those kind of things. Absolutely. Like, there's nothing in Alpha today that would say there's a billion kids. 10 years from now that's going to work. Now, I shouldn't say nothing, holistically. The viewpoint is, well, there's seedlings of data here of trying to figure out, wow, look at some of these data points of what we can do and have been able to do and then figure out how would you scale it. But fundamentally, the best example is, okay, you're this really high-end private school, and you have all these adults, you have all this money around that. The bigger one is, The biggest issue, and this is my product side, is education is hard because you have to define the product, and your customer bases have very different needs.

This is why when I talk about public school being impossible, parents do not agree on what the purpose of an education is. What a parent wants an education. Big bundle. It's a huge bundle, and they're diametrically opposed. They're diametrically opposed. We're having that in Austin on the public school side where we have three. schools that have failed, standardized tests, so they're trying to be shut down, and the kids moved to schools where superintendents like, okay, for those, we're going to shut them down and move the kids

to schools where the kids do better academically. Parents are like, I don't care about, I don't care that the school academics is failing because my oldest daughter went to that school and the teacher, the seventh grade teacher there is so great. And I know her kids don't really learn math, but she transformed their life. And they're going to pick it and say, I don't want academics. Actually, stepping back, if you had to say back to this problem, one of the things that I did not realize going in is how few parents actually care about academics. Back to product market fit and pivoting and all that stuff as a product side. Three years ago, I would sit down in the parent meetings and I'd be like, look, if your kid's going to engage in the app, they're going to learn twice as much. Two-X learning.

And I'd just be like, two-x learning and you'd sit there with the parent and you're like, look, Johnny's not watching the video. And if you just watched the video after you miss. is a question, he learned twice as much. And parents are like, why are you pressuring him to learn 2X? They don't want it. And it took me hundreds of parent meetings. I was slow on the listen to the customer side. Then we switched it to two hour learning. And then you're like, same meeting, same parents, same Johnny. And you're like, look, I'm trying to get Johnny on a year in two hours. But he won't watch the video. He can't do the workshops until he does. And the parents are like, Johnny, like, like, why don't you watch the video? Don't you want to do the cool things? And so back to product market

fit, figuring out positioning matters. Positioning matters. And every parent wants stuff differently. When McKinsey puts her GT families and the Sports Academy families, you know, and she has a lunch with them, the parents and talking about it, parents want different things for their kid. You know, the Sports Academy mom is just like, my kids come out for the search academy and, you know, they're sweating so much. I literally just throw them in the shower fully closed. GT parents are like, what is wrong with you? They're like, well, GT school was having a chess tournament at the end of the day. And when they came home, we just continued the tournament. Parents want different things. And so that's why I absolutely believe we need to bring

entrepreneurship. There's not one, there's not one size fits all. And we need entrepreneurs who are domain experts in the field. Do you want to do entrepreneurship? You want to build an investing, high school, all of that stuff that I believe, you know, if you look our New York campus, I bet we'll have more financially oriented workshops in the afternoon than our San Francisco one, which is going to have more tech oriented. So anyway, the whole thing. So the whole thing, thing, I believe we need to bring entrepreneurs in. We need to bring capitalism in here. And we need to create all the different parts of school choice so that parents can pick what they love. And there is this enabling technology when you talk about, do you have something that's 10 times better that can

transform an industry? Kids learning 10 times faster. And so that they can do it in two hours a day, is that breakthrough product that can do it. And then back to your point, what's the skepticism? It's like, okay, well, you have to prove this. The product's not done. So we got to get it done. We got to scale. And whether it's us or anybody else, the tech behind this is totally doable. Then the second is, for parents, is, okay, now that I can think about it, what do I want my kids to do in the act? I think the broader question on all this stuff is, I believe it's societal level. It's when I was talking to the education ministers. I was like, once there's this tablet and it's two hours a day, what is your education system? Because it's coming. How do we want?

our kids to spend their day. What does society want to say? This is where kids should spend their day because there's no point in having them in a classroom for six hours a day. That's gone. Back to my three things that I want every parentively, I'm like, we need to make it where kids love school. Because they only need two hours, they can love school, and then they can be in an environment of high standards and high support and do awesome things and learn life skills. That's the vision that I want, and it is hard to execute and all of those things. But that's That's the next 20 years. No, that's my next 20 years is to do it.

And I guess one last to anybody in the audience who's like, maybe I want to do this, I can tell you in the last three years, like just career-wise, obviously I had a great career. We'll talk about it in a minute. You know, made plenty of money and all this stuff. But there's nothing that's more fun and exciting and rewarding than working on education. The last three years in the whole scheme of things is 10 times better. I mean, it's awesome. And so, you know, in recruiting entrepreneurs to the vision and mission and excitement,

totally come aboard. We need to go build great businesses, but there's nothing that's more fun and rewarding. And back to the bigger picture, there's nothing more important for society. Can you tell us a little bit about Prodigy and the idea of using games to deliver this? Let's talk about motivational models. Prodigy, there's a game out there. People have talked about gamified learning forever. We very strongly believe in this.

investing a lot of money in this space. Because when you talk about scale, we have our physical buildings. And I got guides, and I got an expensive footprint, expensive cost to serve to drive motivation. Now, this engine, if I get kids to go through it, is going to provide the learning. And so how do I get engagement? And the people who know how to engage kids more than anything is video game developers. They know how to engage kids. TikTok and video games. Back to of the things. That is absolutely a scalable way. When I talk about this tablet, I absolutely believe that there will be video games on that tablet that are totally engaging to kids, that they will go through and it will teach them everything they need to know. So you'll see when Timeback launches,

there'll be a section where we have a team of people who's like using AI, where they're using AI to build video games on top of the timeback engine that kids will sit and play. The easiest way to think about this is, well, let's take fluence. Schools have stopped teaching multiplication and division tables, vocabulary lists. Memorization has sort of gone out of style, which is really, really bad. It's really important that kids learn this. But people don't like the grind, the engagement's the hard part. So I just saw this last week where basically think of a game like Candy Crush, but it's

teaching math fluency, math-fac fluency. And it's super fun and engaging and it's super high-quality game. Kids are basically just going to play this game and learn all their fast math facts. And that fluency will do more to move up math capability than anything you can imagine. It's obviously highly scalable and you can get that out there, broad distribution. Now, if you take that example, though, and then just go large, you can imagine a great AAA team of the best video game designers. We've invested over $100 million in getting some of the best video game designers in the world. They're down in Austin, and they are building a video game on top of the two-hour learning engine that they believe will rival any video game on the planet. And the difference

was parents will be happy to let their kids play it. Or pay to play it. And they will pay to play it. And they won't have to pay their kids because the kids will love it and get their kids to top 10%. And I absolutely believe that is back to motivational models. Absolutely. When we talk about the software side, we talk right now, it's all the physical building side. Back to the scale, the timeback team is like, okay, I got to get the engine working. But then 2026 is how do I take parts of the motivational model that's only been done physically in person and get it into the software? All of a sudden, you're like, okay, if these kids just voluntarily play a video game and they're going through it, you can imagine. Let me give you an example. As I watched a test case where you're asking a kid and you're

like, and I'm not a video game person, so maybe I'm, get the wording one. If I had a training center that would give you extra health, so it would increase your chances? How long would you be willing to go to the training center? And the training center is just going to be math problems or some academic thing. And these kids are like, it's going to give me extra health so like I can increase the win. And the more I do in the training center, the more health I get. And they're like, yeah. And the kid's like, I do 10 hours in that training session. I'm like, how long is these video games? And they're like, oh, you know, 10 or 20 minutes. This kid literally just is like, I would do 10 hours of academics. Now, remember, it's only 20 to 30 hours to do an entire grade level for one subject. There's all these

kind of motivational stuff. And so there's a whole video game one that back to, I absolutely believe the next set of big video games are going to be built on a academic engine that's going to teach kids. The old ones aren't based on learning science and mastery standard. And they're not engaging enough so the kid won't grind through it. And you have to have that standard. You have to have both. You have to have a learning engine plus the world's best video game. So there's that whole thing. And I think there's going to be a ton of video game developed. Back to getting entrepreneurs, it's too competitive. Yeah, the old video games are, it's too competitive. Come do educational ones. Because let me tell you, financially, parents are willing to pay way more money. The ARPOO on a video

game that's getting a kid to top 10% academics. You kidding me? There's 10 million moms in America who would pay $100 a month for their kid to love academics and drive it up. The second part is back to engaging is there's another team who's basically trying to out TikTok, TikTok, which is how do we create engaging videos, AI generated videos that teach these concepts that kids will scroll through by making it relevant back to the knowledge base of the kid. Every kid knows all the TikTok memes. And so how do I teach all these concepts to them in form of TikTok memes? and get kids to engage that way. And so their goal, what they're trying to build,

and these are farther out, and I hesitate to talk about them. But if you sit in a Stanford lecture, you retain about one to five facts or ideas or concepts per hour. Our learning engines right now can do about 20 or so to 40. This team, this TikTok team, we're gonna do 100 ideas, concepts, and facts.

It's gonna be a scrolling interface just like TikTok, and they're like, yes, we're going to be able to get all these ideas into kids' heads. Back to that Incept concept that is doable. So as soon as the engine works, then you need the entrepreneurs building out the motivational side on top of it. And there's going to be software innovation. There's going to be the physical school innovation.

There's even after school. So there's one where back to product market fit and deciding. So one of the schools that was opened was a video game school. Back to this, where you do your two-hour learning. It's a middle school only to can. catch kids up so they're ready for high school. And then you do video games in the afternoon. And back to product marketing, you talk to it and they're like, wow, it really works. But parents are like, I'm not saying I'm not going to get a video game school. That's a hard push.

But if you just pivoted a little bit and say, well, what if your kid came to you and said, mom, dad, I want after school tutoring. Parents are like, I'd love after school tutoring. And there's one that's going to be created, which is tutoring in tournaments. So after, school, you're going to have tournament games, video game tournaments. So you do your one hour in the app, and then you get an hour of tournament gaming time. And we're actually working with some of the big streamers and video game players who are going to host these big events. And you sort of compare the problem today where parents have to go push their kid for Kuman and do all that. And the kids hate it. And it's all this point in confrontation versus kids coming.

And you can totally build an environment where they love it. And they're like, yes, I'm going to go crank the app, especially because it's going to give me extra health in the video game, that I'm going to go play. I'm going to play in this huge stream with all these other kids. You can build those solutions. It's so exciting for me. We've talked before about this, but this conversation really made it click for me how much time back is sort of like an enabling platform technology. That if you get that three-part engine right in the software, which you're working on and is a tractable problem, a thousand flowers can bloom on top of it.

That makes me wonder, like, we spent all this time talking about Alves School. I would love to just hear a little bit about you and your background. There's not a lot about you in the world. Most of the press that exists about you is from the 90s. One point, you were the youngest, self-made Forbes 400 member or whatever, and then you sort of went into the wilderness. I don't know you disappeared. Tell us like your life story.

I would just love to hear your personal background, and then we'll dip into a couple of topic areas. Mine was, I grew up in a business-oriented environment. My dad worked for GE. I was learning what gross margin was and 12 years old and things like that. Back to my schooling, I didn't like school. I'd get in trouble. I almost kicked out of, I suspended and kicked out of high school. Didn't graduate college because I'm like, I can't sit here. I can't sit there. I can't sit to these classes. Now, one of the thing that's really important is academics is one piece of a very complex bundle. Stanford is an awesome school, even if you don't like the lectures. Because everything else around it, when I was at Stanford, it's like, oh, Steve Jobs is talking. One of my best friends, Julie Zelensky, she's like, oh, I'm going to go work at next with Steve Jobs. and learn all this stuff, and Bill Gates comes down or Scott McDeely, and you sit and you learn from all, whether it's your classmates or just the environment in general, all this awesomeness.

It's important in education, understand. It's a complex bundle, not just who does the best academically, even at a school like Stanford. My daughter's there, and now, as a freshman, and she's like, I am going to start skipping class. She doesn't have a teacher in 10 years. Right? She hasn't had a teacher in 10 years, and she is, like, the one who loves academics, and she always would look down on me. You would skip classes, dad, because she's very much that. Real follower. And then now that she's there, she's like, oh, wow, like, Math Academy is a way better math app than my math lecture. Yeah. I'll just use that. But she loves Stanford. The school's a bundle, and I dropped out, and I started Trilogy. In the 90s, it was.

We were... Trilogy started in 89. We started officially in 89. I would have been class of 90, if I'd stay and graduated. We were the rocket ship in the 90s. What was Trilogy at its inception? So Trilogy was the core product we built, and this is going to get very boring for everybody, but it's an AI product, an expert system, one of the core products of an expert system back then was a configurator. Or if you go to a Dell website or a car website and you do a configuration, now imagine it for a phone switch or a Boeing airplane or medical equipment, mainframes, things that are super complicated where you have millions and millions of combinatorics. and if you sell it wrong, you only find it out on the manufacturing floor, and then it costs you millions of dollars to fix. And so basically what our system would do is called Sales Builder.

It would basically take all the knowledge that was in engineering and manufacturing and put it. Laptops were new back then in 1990, and it would put it on a laptop so you could sell things that would work and be eligible and would save companies millions of dollars a day. And so they'd give us millions and millions of dollars for all that stuff. And so that was our first product. We then built around. We had sales stuff. So we built other things around that suite. And then after 2000, we started buying companies, not just build.

So 90s were all organic builds. And then 2000 was, let's acquire software companies as well. ESW, and that's continued through it. And it's a private company down in Austin. Generates lots of cash flow. It's why you can take a billion dollars and say, I'm going to go spend it on education. that is that history. So we've been doing it.

And I guess, I don't know if I told this part already, which was three years ago, I went to my team who'd been with me for 25 years. And I was like, you've been telling me for 25 years that you could run this company better than me. Let's see. Good luck. I'm going to go be a principal. And by the way, I'm taking a billion dollars so I can figure out and get that going.

So now I turned from Boston shareholder. Literally, I'm like the worst shareholder. now in the world. I feel like if I was, I feel so sorry for it because I'm like, guys, I need all this capital. This expansion that McKinsey wants to do, it's going to take $300 million. So she has to raise money or we're going to have to give it to her. Generate more cash flow guys. All these software companies you got to figure out how to be more capital light, which to their credit, I will give them a call out. Bill Gurley, by the way, lives right next to our high school in the building right next to it. But he said on his last one, I'd really love to see a

private equity firm that is taking advantage of the thousand dead unicorn. And that very much is what... That's what you do. That is what Trilogy in ESW, the team is doing. There's all these SaaS companies who loaded on a ton of debt in a growth play and they're gone. And so basically their equities is zero and they're being handed back to the private credit guys. And the private credit guys are like, what I want me to do with this?

What I put the pressure on them of, I'm going to suck a ton of capital out of you guys and cash flow out of you guys. They're like, how do we become capital light? So they're actually, and they've signed a few of these deals already and we'll see if it really takes off. But they're going to all the private credit guys. I say, we'll handle this off. We'll say, we'll take this whole company, give us this company for a dollar, and we'll split the cash flows. ESW and Trilogy is known as being the best operators in the space. They can generate more cash than anybody else. Some of the big names are like, they've sold them a few companies,

basically for a dollar, and they're going to split the cash flows and see how they go. But the point is, there's $20 billion of those companies out there on the books. Good luck, guys. Crush that for me. If you think about the lessons from, especially from ESW, let's talk about trilogy too. I'm always interested in software how incredibly hard it is to build software that anyone cares about pays for and uses. And then how surprisingly, efficiently, they can be run once you've achieved product market fit. So if you take like the Elon example that every time I talk to a software CEO in private, they'd be like, can you believe this guy cut 70 or 80% of the jobs? and things seem totally fine.

There is just a massive efficiency gain in software systems that are at maturity or past product market fit and that ESW fundamentally was about how do I take something that's working but wildly inefficiently run and make it massively more efficient and therefore more cash-logenerative.

Is that like a fair summary? Growth is expensive. A way to do it is if you're trying to be a hypergrowth company, your cost structure and your culture, it's just very expensive. when you say, okay, I don't need that kind of growth. That's why everything becomes that much cheaper. I guess there's two to mention because the Elon example brings it.

First, just though, just growth. Back to these deals, you're the private credit guy. The management team of that failed unicorn have been spending hundreds of millions of dollars to be worth billions and billions. And that's their culture and attitude. And if you go in and be like, dude, you're wasting some money here. They're like, what are you talking about? we have built a culture around all of this.

And if I change it, I'll lose all the employees. When you go in, you have to be able to say, We don't care if they go. Like to Elon Musk, Elon's firing them. But you fundamentally have to be like, my team can run this company. Back to Trilogy and ESW is just their capability is they're like, yeah, we can run this.

That old team that wants growth, they should go on. Companies have life cycles. And you're like, you guys are the growth team. You should go get your next growth. there's an AI startup that you could go raise a ton of money for and go do your growth playbook. But this particular company, wherever it is, it's not a growth play anymore. And so you should run it, not like a growth play. And so yes, Trilogy in ESW is very good at that and you can generate tons of cash flow. If you have to name like the three things that are most responsible for, okay, you get a new business at ESW,

either for a dollar or more than a dollar, dollars sounds like a good deal. And then a year later, or however long it takes, it's now way more profitable than it was before. What are typically like the one, two or three things that you're doing to make that possible? The number one is growth versus installed base. In a growth company, you care about the new customers. That's all you care about. And in an installed base company, you care about your existing customers. And so literally, like, our team, when they buy a company,

the first thing they do is they call all the customers every single one. You'll be shocked at these multi-million dollar customers who are like, wow. it's the first time I got a phone call from this company. Because management... And it grows on the prospects. It's not. It's all in the prospects. And you're like, hey, customer success,

the mantra trilogy in ESW's customer success. Hey, what do we have to do to make you successful? Why don't we set up quarterly calls where you tell us if we're making you successful and what are the joint metrics? And they're like, wow, this is the first time everybody said that. And when you do that, all of a sudden, you get retention, retention of the installed base. And that's actually how you grow the installed base is they're going to sit there and tell you what they want and how to do it. And sometimes you can do it.

Sometimes there's upsell opportunities and all of that as well where you're like, great, I'm solving the customer's problem and that is actually leading to more. But you have to sit there and you have to look at your installed base and be like, this is it. I don't get more. I don't get more. I really need to treat these guys really well. And I really need to understand what they want. And I need to figure out, hey, if I do add AI to this product, is there upsets? there? Is there something that's really valuable? Or, oh, my God, the prior guys have ignored you,

and it's a total nightmare, and you're trying to cancel. It's hard to get off enterprise software. And so you're two years into your three-year transition plan. Can I reverse that? Can I provide something where, oh, all of a sudden, I care about you, you're going to stop the migration off and get back on? And so that's 100% of what the playbook is. And is the idea, is the objective function actual cash flows that can be pulled out of the business versus enterprise value? Is that the same as the switch from growth to install basis. Like, look, this thing is a melting ice cube, it would always be the term of art in this space.

So just like keep it cold for longer, basically, and take the cash lows. And if the terminal value is zero, fine. I don't care. Yeah, you're correct. You're looking at your DCF, you're pulling the cash out. And if it goes to zero,

there's built to last. There's a cycle in a company where it's built to dot. And you're just like, this product is done. And what you're just doing is managing that. And you're just pulling the cash out to do it. And there is investment you make because that extends it. Software still is one where if you focus on the customer, I mean, just basics, that you can extend your area under the curve,

absolutely. And then you get some nice things like, oh, an AI uplift and things like that that allow you to do. What was the transition like for you going from this extremely young, extremely successful person that's on the cover magazine and stuff like this in the 90s to choosing a much more private, quieter existence? So that was all, that was done basic because I got married. So, like in the 90s, crazy trilogy, super awesome, right? We're on all the covers. We're growth. No, 100% growth.

It's totally awesome. My last podcast was 20 years ago. Coincidentally, 20 years ago I got married. And so I just decided I wanted a different path for the family and the kids and what it was. That was a different stage. So why I'm here is my youngest, she's a senior. She's like, okay, trying to give your kids as normal a world as you can. I just felt that being under the radar and more private was better.

Now, as I look forward to my future, I'm like, I got 20 years, and I need to be out there because we have to educate parents. The phase that I'm in very much is we talk about two things. We talk about how schools we educate kids and time back. We educate kids. Our marketing department's slogan is, we educate parents. Because parents' view of education, it's 200 years of all this old stuff. They just think things that aren't true.

It's not true anymore. Educating parents about what is possible. My new role is I have to go out and do that. What lessons did you learn from Trilogy University? I think it's so interesting that that used to exist back in the Trilogy days. And now here we are again. Tell us what that was and what you learned. Sure.

Let's go back to the 90s. Trilogy built itself. So we started in Silicon Valley, dropped out of Stanford, literally living in the garage. We couldn't raise venture capital. It was different back then. We couldn't raise veg capital, we thought our ideas were terrible. And one of our co-founders was like, if I'm going to be poor and have no money in Livida garage, I'm going to do it in Austin, Texas, because it's way cheaper than Palo Alto.

And so he moved to Austin. So we all followed him. He was our best engineer developer guy, visionary behind the engine itself. And the problem with Austin, Texas in 1992, when we moved there is there were very few software engineers. What we had to do was build basically the software. group down there. And so what we did is we basically went to all the best schools in the country and we hired 2,000 Ivy League grads, you know, Stanford, MIT, Princeton, wherever, and brought them to Austin. So that was our big thing. And back to the culture was we brought them in. It's an

interesting thing about high standards. So these are the best kids in the country coming for the best schools. And we're like, if you come down to Austin, we're going to put you in Trilogy University, and this will be the hardest 100 days you've ever done. You are going to work 100 hour weeks. It's going to be 8 a.m. to midnight, and we are going to build the most awesome products. And it's going to be the hardest thing you did, but it's going to be great. And that was why we were able to recruit everybody was because of the high standards. That's right. And it was actually interesting. You know, Microsoft at the time, our claim to fame was we got all the best students. At the time, I think Microsoft, sort of the peak of their power, 97, 98, 90% of the students

would go to Microsoft versus any competing company. Against Trilogy, it was like Microsoft only got 30% and we won 70. And the reason was, we made it harder. Kids want to do awesome stuff. Graduates want to do awesome stuff. And you don't want to give them a cush job or all this stuff. You want to put them on the hardest problems where they can work like crazy and do it. So that was Trilogy University, which that ethos, we continue it today. There's a program that's in Austin that's running right now called Gauntlet AI, because they're trying to figure out about AI and training where they're bringing down 100 people into Austin. So they basically scour the world, basically looking for the top 1 or 2% kids, and these are 20-somethings. And they're bringing them

down to Austin. They're doing 100 days of 100-hour weeks to live. learn AI to build apps with AI and retool your whole career to be like, what am I going to be in the future? And they have it set up where it's actually free for people to go through this. And then if you make it through and there's like a 50 plus percent washout rate, but they then get a $200,000 job because there are all these companies just lining up for being like, oh my God, these people just worked 100 hours a week. They're leading edge AI. Oh, I can't wait to hire them. It's a unique thing where when it started, people are like, no one going to go sign up to do that. But if you actually talk to the gauntlet grads, they're like,

this transform my life. This is the best 10 week, 100-hour weeks I've ever done. If I was to watch you like a day in the life from your podcast 20 years ago, now through today, with the focus on Trilogy in ESW, what was your life like? Were you just like a normal CEO running a software holding company, basically? Basically. You strike me as a person that's just relentlessly like pushing to make things better. Where would I find you most pushing in those days? What would be the parts that matter back then is it's always back to capital is you're trying to figure out is the tradeoff between how much I have to pay for this company and the more I pay the better caliber asset I get versus okay what's the cash flow I can generate out of it and then what are the things that generate the cash flow? And so first you're like, okay, what are the innovations we can make about customer interaction and delivering customer success and how do we innovate there? The second part is, okay, how do we take this code base and old code base? And how do we make the product better? And how do we make sure that we're being able to take these and revitalize them? And how do we do that? Third, how do you source the talent for this? You can't just take the Silicon Valley growth people. You're like, how do I go get people who care about this? And how do I find them? It's just looking at what are the parts of the company that drive your returns and fundamentally back to systems? You're like, you have to have these scalable systems. We've bought over 100.

companies. So anything we're doing, you have to be able to say, okay, can I apply this to a hundred companies? Where was the wastage in companies that you bought? We talked about the measuring and watching through the vision model wastage and learning. When you looked at people that worked in software companies, where were they wasting their time? I know you're just driving crazy amounts of efficiency in this. Where you're driving? Well, first, just the whole growth thing. Where if you're sitting there and you're saying, you have to grow. You're just there. And what's left, you're just fewer better people. culturally is sort of our same standard that we use with guides teachers which is everybody says it's student teacher ratio i would always take pay more to a teacher pay more get the best teacher

with a fixed thing and have a bigger class ratio because that's what matters software is the same thing i mean your returns from having the best talent is always there so interesting that you were like the software holtco guy long before that was popular yeah No, very much. There's obviously great ones. Constellations, obviously, you know, a phenomenal one and what they do on their world. Vistas that moved down to Austin, you know, in the middle. And so I spent a lot of time with those guys talking about their model and how it's different. Software is a great business. It's a less great business, I think, going forward. Why? It's going to be dominated by AI. The dynamic that's going to change is the ability to swap out your long-tail legacy is just way. easier now. Software companies, especially systems of record and transaction stuff, you're counting on a decade-long tail. You can't pull it out. And that's been true forever. And I believe this is the bear case on SaaS is can AI enable companies to swap out the systems that never have been able to be swapped out before in your world of melting ice cubes? Does the ice cube melt faster? It's not freezing.

It's heating it. Is AI just a sun? burning this ice cube down. The question is just, it's a matter of extreme. It is a true statement. AI allows you to replace legacy systems much easier than you could pre-AI. No one disagrees with that. It's just your rate of melt. If you had a fresh billion dollars with a new young version of yourself in a new LLC wrapper or something or C-Corp wrapper, and you wanted to invest it in software, how much worse do you think the returns that you would earn in the next 20 years would be from that, buying a similar playbook to what you applied versus the last 20 years. How much worse is the future of software? It's two parts in when we talk about SaaS versus AI driven. The SaaS stuff is going to be way worse.

Pure transactional SaaS, I believe, is just going to be dramatically worse than the big winners. The AI native ones, and it depends on what you call AI part of SaaS, AI native companies, calm software companies or whatever, AI native companies are going to be worth more than any SaaS company ever has. They can just do so much more for the customer. Yeah, it's just your breath of what you get to do. You could change fundamentally how the business works. Take education. You literally are like, okay, kids can learn 10 times faster. It's a multi-trillion dollar industry globally. And there's no other software that's out there, no ed tech, nothing that's ever been built, can have kids learn 10 times faster. And you're like, okay, I have to build a really good product and now kids can learn 10 times faster. I don't know what the value of that is. It's a lot. That product, Timeback as a product, there's zero doubt in my mind that time back as a product is the single best product I've ever built. By far, it doesn't ship yet at all these things. My team would kill me.

But the value that it will drive to the economy is just going to be huge. And I believe I've obviously just been focused on education, but it's got to be the same thing in every other. So you would not be a buyer of the new Constellation spinoffs or something like this that are buying old system of record software. I love for a phrase. It's how you're running them. You need to understand the economics are generally worse than what they've been. You really have to worry about how long your tail is. But if you are focused that it's a melting ice cube, to Gurley's point of,

there's a thousand of these. There's tons of stranded capital and stranded organizations and all this stuff where if you keep a growth team on something that's a melting ice cube, all you're doing is just incinerating everything. And it's miserable for everybody. The growth team's unhappy shrinking. The customers are unhappy because they're being. ignored. The investors are unhappy because they're not getting any return. And so that's all just a

mess and that needs to be cleaned up. If you were saying, I'm going to go in, I had a billion dollars and I'm going to go do that and I'm going to go clean that mess up. It can do really well. It is. And you can get great returns there. But the ones that are going to be like change the world's growth plays are going to be AI native by industry. For sure. Can you tell me what you've learned from Jim Abel? So Jim Abel, he was my head of HR and he came from old school. He was from Bristol Myers. I think I hired him. And this is in the early 2000s. Jim Abel was one of the most influential guys in my career for me. He was awesome. He still is awesome. On advice. It's ironic. If I had to say, what was the best business advice I got? It came from Jim.

And the reason was because, first of all, software businesses are HR. They are HR businesses. It's your biggest cost structure. It's your biggest leverage of getting return. It's all that matters. And he was an awesome HR guy. I was a terrible HR person. Still him. And he would just sit there and be like, let me explain why you're like the world's worst boss or manager or however, whatever category you wanted.

He did more to help educate me and grow me than anybody. I could give you 20 stories. Give you one or two. Give you one? Okay, here's the first one. I remember. So he comes in and we're doing our annual meeting. And I used to write a strategy doc and be like 20 pages.

Here's our children's strategy. Here we go. And we get them in. You know, there's 1,500 people in a big room, and I'm going to get up and we're going to talk to this strategy. And Jim was like, what are you doing? This is the dumbest thing ever. Here's what you got, Joe. You're allowed three lines, three words each. And you need to distill your strategy down to that because 20-page strategy documents, those are useless. And I remember sitting there and I was talking to somebody. And I was just like, God, does Jim understand we hire all these guys? from the Ivy League. Like, everybody can be a 20-based strategy document in the slogans. I'd be embarrassed to get up and sloganeer my way through with a super high end. And he's like, Joe, smart person disease. You have smart person disease. You need to craft your message and make it simple and clear. I was like, whatever. And I ignored him. And then he went and he interviewed every single person in the company. And it took him basically months. And he came back and he pulled me into his office and showed me on the whiteboard. And he's like, this is what actually people think your strategy is. because I just asked them all.

And I'm like, wow, that's like literally the opposite of our strategy. He's like, yes, because in a 23 strategy document, there's always one line that someone can attach to and say, see, I'm aligned because you said something. And he's like, you need to go create your strategy where there's no escape, where your message is so simple. Everybody can sit there and they have to read it. And if they feel discomfort because they're not aligned, that's what you're looking for. That lesson.

And feel it in the alpha school. Kids must love school. Three commitments. Kids must love school. And he's always about the edge. He's like, and how are you going to measure that, Joe? And he's like, instead of vacation. Jim Abel would definitely pass that as like, there's no escape from that. If you're a guy, if you are going to be hired to be in charge, you sit there as a teacher and you're like, I need to make the kid love school. He has to crush the academics and do the life skills. There's no escape from that. And if you don't think that's possible, you won't take the job. Last week, a friend and I went through five, we were looking for new companies to be interested in investing in. And we went through 500 company websites blind. We didn't look at who their investors were, just companies that had gotten some funding.

And we went through 500 websites. And we didn't find a single one where it was totally clear and obvious what the damn product did for the customer. I think if everyone in the world did the three lines, three words each, the world would be a far better place. It absolutely would. He's doing it from corporate strategy, but then once you do it, you're like, okay, we'll just communicate everywhere. No, it's just true everywhere. And if you communicate that out, he's an HR guy, his marketing insights. He came through like Pepsi and he is, a great consumer marketer as well, where he'd just sit there and be like, it needs to be a magnet. Good marketing needs to attract and repel.

You need to go find who is your target audience. And if you're giving platitudes, then that's not repelling. anybody. That's terrible marketing. That's terrible vision for a company. He'd look at most, you know, one of the five things. And he's like, if someone won't say the opposite, it shouldn't be on the list because then it's a platitude. So he's like a controversial one when we were back then was integrity. Everybody has integrity on it. Because of course you want that. He's like, it's a waste word because no one's going to put on their core values. I want a company with no integrity. Nobody says that. Yes, you have to have it. I love that. The opposite being in fact. If it's not the

opposite. And you have to have, it's a magnet, attract and repel. And if there's not somebody else who will say the opposite, it's wasted. You're not getting the clear message across. Is there anyone in addition to Jim that taught you something as valuable that you remember from your business career? Jack Welch was a mentor of mine. My dad worked for him, and then my dad passed when I was 25. And Jack called me and was just like, I'm here any time of coaching or help I can give. I would fly up during the 90s. I'd fly up and spend the day. with him at GE or wherever. He was awesome.

His ability to motivate you back to limitless was phenomenal. How did he do it? Like, what did you take from him? Youngest member of the Ford's 400. I'm on the cover of the magazine. I'm freaking 20-something. Life is awesome. I'm awesome, right?

That whole attitude. And I go up there and we talk literally at the end of the lunch. He's like, okay, so Joe, you're like a good product manager. Is that how I should like think about you? level seven or whatever G. He would just sit there. First of all, brutally honest on the feedback. Let's talk about your strengths and weaknesses here, Joe.

And you sort of suck at this. Not just sort of suck. You're terrible. But then taking that to make sure you understand where you are, I remember I flew back from that trip. And I spent, I have so much to do. I have all these things I need to do. I got to get better on this dimension

and my company has to get better here and I have to build better product. I need to learn more. he'd inspire you to just incredible greatness with the highest standards possible around it. I'll give you one more. Gee Medical had bought one of our products in 1997. I was up talking to him. He's like, yeah, Med doesn't like your product.

And I was like, I don't know if you know, it's just one e-commerce product of the year. In the year of e-commerce, and then he said, Jack's like, Joe, I don't care if it comes from heaven above. If General Electric doesn't get a return on its investment, your product sucks, you suck, your company sucks. No. You go from, oh my God, I won product of the year to he's making a really good point about return. And literally, that helped us create our customer success and how we could show return that we wouldn't just be a product company, but we could show value of the customers. And so that was what he definitely did. I love that. I'm curious about your motivation.

We talk so much about other people's motivation. What is the through line of all your hard work? One of the things that comes up a lot when you ask people that know you, I think, decently well, they'll say some version of this. Joe's like nine-tenths, just a really nice, high-energy normal guy. And then he's one-tenth business killer's psycho. I'm curious about that 10% of you, maybe for you to describe it if that resonates with you or not. And if so, where it comes from. Is it true, first of all?

Does that feel like a good... I'm just a normal guy with this extreme. That's my daughters. They probably have a good view on that. There is an element of pushing the limit is where you get all the alpha. That's where you get all the benefit. it's at that extreme where the real truths come out. And I absolutely believe I'm always trying to figure out,

how do you take this? Where's the limit? Turn it to 11. Let's work 100 hours a week. You know how we're going to get all these kids? We're going to build craziest boot camp, Children's University, back to two-hour learning. My first day, I literally sat in front of the parents.

It was first day of school, which was two weeks after I started. And I was like, we're not going to have any adult do academic teaching in this school. You know, there's like hundreds of parents. who are just like, this dude's a whack job. I appreciate all of those who stayed to us. Some did rage quit, obviously, and totally understandably. But to me, I'm like, yeah, this is how we're going to make it work and it's going to be fine. And of course there's not going to be teachers doing academic teaching because this can do it better.

That's where you get the, okay, that seems like that 10% of just pushing to it. And today, or two-hour learning engine in two-x and two hours. You're just going to go push on that. Well, there's no reason why not to because the kids, 100 facts and ideas an hour. in their head with the TikTok interface. It's just whatever this is, well, let's just do more. And on the scale, when you say I'm the 10%, obviously Elon Musk is always the thing.

Like, you go to dinner with him, and he's like, 100 X. I'm like, oh, I really suck. He's like, I don't understand why you don't have 1,000 schools already. I don't know what's going on. I'm like, well, it's all these issues. It's all a continuum on where you sit. But yes, that part of it is designing the system and designing the ecosystem, whether it's a problem,

product or whatever, you're like, what are those things? What are the levers that if you really push them, that's what keeps going? So learning sort of happens at the limit would be like a calculation? Learning happens at the limit. It's learning and there's always the ideas and then actually how do you implement it and scale it? It's the Steve Jobs thing of, it's really easy to visionary a good product and there's 10,000 decisions you have to make to make them all work together. There's 10,000 decisions we've made in the alpha system and a two-hour learning system in this ecosystem. There's 10,000 decisions that you need to make and they reinforce each other. One of the things people often say about me is they're like, I want 85% Joe. Right? I want what Joe's

doing, but I'm going to do the 85% version of it. The answer is, and they find out, it doesn't work. If 85% work, I do that. It doesn't. I'm pushing it to where it needs to be for it to work. And if all of a sudden you back off those, it's going to fail for some reason. If you don't believe your school needs to have kids love school, they'll go instead of vacation, it's not going to work. And people are like, that standard is so ridiculous. Yes. That's the one that makes it work. That is the one that makes it work. It's the spinal tap approach to product building. Exactly. When was the first time you experienced that? This spinal tap approach, turned it to 11. I'm so curious about its roots in you. Like, we liked that as a kid. Like, what was the first time you remember pushing something to 11 to see what you could learn at the limit? In high school, this is a dysfunctional 11, I guess,

which was I was always about what's the minimum academic score I can get, but still hit goals. So, like, I would sit there and be like, well, if I get an 89.5, that'll round a 90, which gives me an A, which is the same as getting 99 or 100. And I literally would just do the work to get an 89.5 right at the limit. There's a time where I literally turned in a test where I didn't finish all the questions. Because I'm like, oh, it's enough now. I hit my 89.5 and turned it in.

The teachers just, God, I hate you, Joe. Really? You can't just like finish it. So I didn't like school side. I was trying to figure out how to game it. How many days could I skip school and not get expelled? When I really turned it on was when I dropped down and started trilogy. So the story here is my parents were very, very. unhappy that I dropped out of school. My dad was definitely more of the rule follower type. I was too

much of the renegade and my mom was very upset. There's that Forbes article where they're like, you're a moron, this famous title. This was a little over a year after I'd started trilogy. I was with my dad. My dad was like, I know I didn't like you. I'm so excited that you started trilogy because I was so worried that you were a lazy little shit. I was so worried about it. And it was just because you were in academics and you didn't care. And so you were always trying to shirk and do the minimum. He's like, we're working 100 hours a week. We're sleeping under the desk.

We're just doing everything, right? He saw that I found what I loved. That was that unlock that you want to see. That feeling of limitless. That feeling of limitless. And that I would just run through walls to do that. For him, that was the point. So that would be the first time when I really demonstrated that, at least to him, would have had that.

I agree that I strongly believe every kid has a thirst for learning. It's just not always academic. And you're just trying to tap into that. For me, it became starting a business and learning everything about it. And I was one of the world's expert in configuration. I can't tell you why. But it was a means to an end. I wouldn't have just done, I'd sit in the Stanford CS library, you know,

back then you had to read papers and all that stuff. This is, it's very different, which is finding that unlock. And then once I did it, it brings. brings the energy and excitement to it. What was the switchover from Trilogy to ESW? What was the first time that that new unlock happened? Yeah, there really wasn't. It was a continual.

Like, to me, it's all trilogy. There was a name issue. There's like a corporate legal entity, but it's all the same trilogy. There really wasn't, which was we bought a couple companies, and we're like, oh, we really are good operators. Yeah. We're like, oh, we actually run this.

Yeah, oh, wow, look at this. And we bought a company and we made, I don't know, 10 times our investment on it. You're like, oh, wow, this is like, this is cool. Yeah, this is really cool. It's so interesting, the limitless thing, maybe it's a nice place to start to wrap up, is the same person I mentioned earlier, my friend, his name is Graham Duncan, who had the teenager selling the sweatshirts that would be so motivated by it, an amazing kid.

He has this notion of trying to get people into positive feedback loops. And it strikes me that that is what you were doing now with your time and your money and your attention. You know, I haven't quoted numbers, but it's an enormous amount of your own personal money that you're putting behind this. And it's pretty amazing for me as a dad, and I'm sure for everyone listening with kids, to think about your time and your energy and your money that basically what you're doing is putting kids

into positive feedback loops where they can feel that feeling of limitlessness, which for anyone that's felt that knows, you don't have to talk about. They know that is the biggest unlock of their lives. And so I'm very thankful that you're doing what you're doing. I think it's one of the coolest projects happening in America that people are just starting to learn about.

hopefully now a lot more we'll learn about. I think you know my traditional closing question. What is the kindest thing that anyone's ever done for you? I've had so many. My wife runs a kindness campaign around all this stuff. And the kind world that we live in is just when you look at the kids at the school and you just sit there and say, when we look at maybe kind or grace that they're part of this, when I wake up every day, the kids who are in the schools,

we are like forging new ground. This is a startup school. And there's all these kids who buy in and are like, we are part of it. And to a large extent, they're putting their faith in the adults, and that includes obviously me, to be like, this seems really crazy. This seems very different. But I'm all in and I buy in. That's the part that for me, I'm just like, at the end of the day, it all comes back to the kids. and their buy-in around this stuff

and their willingness to be part of it is the thing when I think of gratitude and kindness, that's the core that makes this all happen. And that's where my appreciation goes. Amense amounts to all of them. There's a few of them who are watching this, who are going to be like, it's time to receive feedback, Mr. Leemott.

Here is by critical yet constructive feedback. Alex or Tatum or Ella is going to do that. And that's the part of this whole thing. And to your point, there's nothing more important for a society than to raise its kids. We have an opportunity because of things that have been invented and where we are in the world to totally make it awesome for the kids. And there is nothing, not just more valuable, there is nothing more rewarding. And so if I can assemble the dads and the moms who wake up every day and are like, I want this change for the kids, we have the opportunity we need to get. get all together and make this available to a billion kids around the world.

And I'm in. I'm in for the next decade, two decades, 20 years. I'm putting in the first billion. Transforming this is going to require more than that. It's a trillion dollars a year. It's going to require more than that. But there's nothing more important than all of us to work on it. Joe, this is unbelievably fun for me.

Thank you so much for your 20-year streak with us here. Give me for everyone to hear. Thanks a much for your time. Thank you. If you enjoyed this episode, visit join colossus.com where you'll find every episode of this podcast complete with hand-edited transcripts. You can also subscribe to Colossus Review, our quarterly print, digital, and private audio publication featuring in-depth profiles of the founders, investors, and companies that we admire most. Learn more at join colossus.com slash subscribe.